Canada Mining – Page 286 – Republic of Mining

HudBay Low Bid for Arizona Copper Invites Rival Offer: Real M&A – by Tara Lachapelle (Bloomberg News – February 11, 2014)

February 12, 2014

http://www.businessweek.com/

The prospect of mining copper in Arizona has traders lining up bets that Augusta Resource Corp. (AZC), the target of an unsolicited bid by HudBay Minerals Inc. (HBM), will win a higher offer.

Shares of Vancouver-based Augusta rose 15 percent above HudBay’s all-stock bid, which was valued yesterday at C$2.78 a share, or about C$440 million ($400 million) including net debt. The gap, one of the widest among pending North American deals in which traders expect bidding wars, indicates investors are anticipating a boost from HudBay or another suitor.

Augusta’s Arizona copper project is in the last stages of attaining necessary permits. Laurentian Bank of Canada said it’s large enough to attract other producers including OZ Minerals Ltd. (OZL) and Teck Resources Ltd. (TCK/B) and estimates the company’s value is at least C$3.89 a share based on similar deals. Freeport-McMoRan (FCX:US) Copper & Gold Inc., based in Arizona, is another possible suitor with the financial (FCX:US) strength to outbid HudBay, according to National Bank Financial.

“The market expects that this may be the initial offer and Augusta could negotiate better terms,” Shane Nagle, a Toronto-based analyst at National Bank, said in a phone interview. “It’s a high-quality asset. There is room certainly to sweeten the offer.”

CA miners applaud exploration tax credit extension, skills training – by Dorothy Kosich (Mineweb.com – February 12, 2014)

February 12, 2014

http://www.mineweb.com/

As Canada’s Minister of Finance Jim Flaherty Tuesday tabled his Economic Action Plan of 2014, he committed to a balanced federal budget in 2015.

RENO (MINEWEB) – Two prominent Canadian mining organizations Tuesday hailed Minister of Finance Jim Flaherty’s Economic Action Plan 2014, which extends a mining exploration tax credit. Economic Action Plan 2014 proposes no new taxes on Canadian businesses and projects the country’s deficit will decline to C$2.9 billion in 2014-15. A C$6.4 billion budget surplus is anticipated in 2015-16.

The Association for Mineral Exploration BC (AME BC) said it welcomed the extension of the Mineral Exploration Tax Credit contained within the federal budget. David McLelland, chair of AME BC, said, “Many of our members are having difficulty raising capital in these financially challenging times, and the renewal is much appreciated.”

The Mineral Exploration Tax Credit increases exploration financing through providing individuals who invest in companies that are exploring for minerals in Canada with a 15% tax credit on eligible expenditures.

UPDATE 2-Miner Cliffs to slash 2014 capital spending, cut 500 jobs – by Nicole Mordant (Reuters U.S. – February 11, 2014)

February 12, 2014

http://www.reuters.com/

Feb 11 (Reuters) – Under pressure from an activist shareholder, Cliffs Natural Resources Inc said on Tuesday it will slash capital spending, forego a planned expansion at a key Canadian mine and shut another mine in Canada, cutting about 500 jobs.

Cliffs, a Cleveland-headquartered iron ore and coal producer, said it plans to reduce its capital spending in 2014 by more than 50 percent to between $375 million and $425 million as it cuts back its Bloom Lake Mine expansion and idles production at its Wabush Mine.

The miner has recently been targeted by an activist shareholder who wants the company to be broken up and Cliffs to spin out its “riskier” international operations, including the Bloom Lake and Wabush mines, into a separate business from its strong cash-generating U.S. operations.

Cliffs acquired Bloom Lake as part of its takeover of Consolidated Thompson Iron Mines Ltd in 2010 but higher-than-expected costs at the mine have weighed on Cliffs’ earnings. Cliffs delayed a planned expansion in 2012, and a year ago took a $1 billion goodwill writedown related to the Consolidated Thompson deal.

Royal Nickel Corp: Indonesian Ore Export Ban Opens Door to the Next Generation of Nickel Mines (The Gold Report – February 11, 2014)

February 12, 2014

http://www.theaureport.com/

DISCLOSURE: Royal Nickel Corp. paid The Mining Report to conduct, produce and distribute the following interview.

Nickel prices have been weak, but the recent Indonesian government announcement banning ore shipments outside the country may be the shock that reverses the trend. In this interview with The Mining Report, Mark Selby, senior vice president of business development for Royal Nickel Corp., walks through his analysis that indicates nickel price increases and inventory reductions are imminent, while demand continues to grow and over a quarter of global mine supply is shut in.

He considers nickel in 2014 one of the best commodity trades in a generation. To capitalize on this unique set of circumstances, Royal Nickel’s Dumont Nickel Project follows the path of other large-reserve, large-scale mines in the copper and gold sectors that have changed the mining industry and made early investors fortunes.

The Mining Report: The nickel industry has been through tectonic changes in the last 10 years, including large corporate takeovers and fundamental changes in supply available to the market. Can you summarize where the nickel industry has been and where it is going?

Mark Selby: Over the past five years, we’ve seen continued robust growth in nickel demand. Over that period, global nickel demand grew in the high single-digits, while Chinese nickel demand grew at double-digit rates.

Barrick Gold Production Seen Hitting Nine-Year Low – by Liezel Hill (Bloomberg News – February 11, 2014)

February 11, 2014

http://www.bloomberg.com/

Barrick Gold Corp. (ABX) is poised to cut output to a nine-year low, a sign the world’s largest gold miner is making headway on its plan to put profits before growth.

Barrick may produce 6.3 million ounces of gold this year, based on the average of four analysts’ estimates compiled by Bloomberg. That would be as much as 15 percent less than last year and the lowest since the company became the gold industry leader in 2006.

The Toronto-based miner, which is expected to issue 2014 forecasts when it reports fourth-quarter earnings Feb. 13, isn’t alone in its strategy. Gold producers have cut budgets, sold mines and curtailed operations after the metal plunged last year by the most in more than three decades.

“Barrick represents a turnaround situation,” Robert Gill, who helps manage C$3.3 billion ($3 billion) including Barrick shares at Lincluden Investment Management, said yesterday by phone. “It’s a different company now than what it was for much of its existence.”

The miner led an industrywide pursuit of expansion over the past decade as gold producers sought to capitalize on prices that rose for 12 straight years.

Why the world’s biggest miners may get some more attention from investors (National Post/Reuters – January 11, 2014)

February 11, 2014

The National Post is Canada’s second largest national paper.

Aggressive cost cutting, volume growth and stable commodity prices will drive a rise in half-year profits for the world’s biggest miners, paving the way for healthy dividend hikes now and anticipated capital returns in 2015.

The latest round of results could tempt investors back into the sector, analysts say, after steering clear amid fears of cooling growth in China and a yet-to-occur slump in iron ore prices. Top miners BHP Billiton , Rio Tinto and Brazil’s Vale are expected to book solid growth in cash flows, having slammed the brakes on building new mines 18 months ago and embarked instead on massive cost cuts and debt repayments.

“Cash flows have been negative because they’ve been spending on projects and developments. You want to start to see a sign that that’s starting to reverse,” said Darko Kuzmanovic, a portfolio manager at Caledonia Investments in Sydney.

“Hopefully that’s the catalyst for people to be more comfortable with these names and start thinking about investing in them, because they don’t look particularly expensive.”

HudBay’s $428-million hostile bid for Augusta provides jolt to Canadian mining sector – by Peter Koven (National Post – February 11, 2014)

February 11, 2014

The National Post is Canada’s second largest national paper.

TORONTO – For the second time this year, a large hostile bid has breathed much-needed life into the Canadian mining sector.

HudBay Minerals Inc.’s $428-million offer for Augusta Resource Corp. has prompted strong speculation of a rival bid from analysts and investors. It has been months since the sector had a major takeover battle with multiple bidders, and the bid is seen as a potential catalyst for further M&A activity. “All of a sudden it lights a fire under everyone in this space,” said John Stephenson, senior vice-president at First Asset Investment Management.

The HudBay offer comes a few weeks after Goldcorp Inc. launched a $2.6-billion hostile bid for Osisko Mining Corp. The two moves have brought energy back into the mining space, which has suffered over the past 18 months because of lacklustre commodity prices, writedowns and investor disinterest.

Both the Augusta and Osisko bids reflect current realities in the sector: while they are priced well above the recent trading ranges of the stocks, they are worth fractions of what these companies traded at a few years ago.

On Bay Street, a battered mining industry turns hostile – by Boyd Erman (Globe and Mail – February 11, 2014)

February 11, 2014

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

There was a time when nothing was better than getting a hostile bid for your mining company shares. This is not that time. Hostile acquisitions are creatures of the extremes of the mining cycle. There are now two big ones outstanding in Canada, and there are likely going to be more. And it’s not going to be very much fun to be the target.

In better times, getting put into play is like winning a lottery. The hostile acquirer invariably starts a bidding war that ends in a top-dollar sale. Exuberant chief executives decide they have to have something and can’t stop raising their offers. Shareholders of Alcan Inc., Inco and Falconbridge Ltd. probably still haven’t spent their winnings, years after the last round of such sales.

Most of the CEOs who overpaid for those companies ended up pulling the ripcord on their golden parachutes.Now, at the bottom of the cycle, hostile offers usually result from a disconnect about value. Mining shares have plunged, and target boards don’t want to think about selling at such low prices. Frustrated acquirers give up on negotiations and send their bid directly to shareholders.

HudBay makes hostile C$540m all-share bid for Augusta Resource – by Dorothy Kosich (Mineweb.com – February 10, 2014)

February 10, 2014

http://www.mineweb.com/

HudBay launched a hostile bid for Rosemont project partner, Augusta Resource, claiming it is in a much better position to develop the Arizona copper mine.

RENO (MINEWEB) – HudBay Minerals announced Sunday that it intends to make a C$540 million hostile all-share bid for Augusta Resource Corporation.

HudBay owns 15% of Augusta Resource’s Rosemont copper project in Arizona. Augusta Resource said its board of directors would discuss the bid offer this coming week. Under the terms of the HudBay offer, Augusta shareholders will receive 0.315 of a HudBay share for each common share held, estimated at C$2.96 per Augusta common share.

“Since our initial investment in August in 2010, we have been excited about the potential of the Rosemont project. We view the Rosemont project as an attractive complement to our existing portfolio of high quality, long-life assets that fits well with our construction timeline at Constancia,” said HudBay CEO David Garofalo.

Principle and pragmatism – by Matthew Pearson (Ottawa Citizen – February 9, 2014)

February 10, 2014

http://www.ottawacitizen.com/index.html

Premier Wynne has made First Nations a priority during her first year in power, but the true test of her words awaits

TORONTO — On the day Kathleen Wynne was sworn in as premier — a year ago Tuesday — she chose to add something a little different to the dry ceremonial program that had been used for the two dozen men who had come before her.

In addition to the presence of Ontario’s lieutenant-governor, a minister and the tones of O Canada, the premier-to-be requested that First Nations traditions be included in the ceremony. And so it was for the first time on the floor of the Queen’s Park legislature that seven aboriginal women drummed and sang an honour song in Ojibway.

While most of that day’s news reports focused on other firsts — namely, Wynne as the first female premier in Ontario and first openly gay premier in Canada — the inclusion of drummers was in fact more significant to some.

“It sent a signal that we were going to be important as part of her premiership,” said Sylvia Maracle, executive director of the Ontario Federation of Indian Friendship Centres.

Gold miners to slash reserves as price drop forces revision – by Rachelle Younglai (Globe and Mail – February 10, 2014)

February 10, 2014

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

After years of costly mistakes, the new chief executives of Barrick Gold Corp. and Kinross Gold Corp. have ushered in an era of austerity in the precious metal sector.

The results of their labour will be on display when Canadian mining companies report fourth-quarter earnings this week. Investors are already expecting gold producers to reduce their bullion reserves, write down more assets and record lower profits.

But the bad news may soon be ending with companies adjusting to the lower gold price. “The worst is over,” said John Ing, president of investment firm Maison Placements Canada Inc. in Toronto. That doesn’t mean the picture will be pretty this quarter.

Barrick CEO Jamie Sokalsky told investors that the company will use a $1,100 (U.S.) price to calculate its unmined gold. That is down sharply from the $1,500 price assumption used to calculate last year’s reserves.

Gold miner results to get ‘another kick in the pants’ on reserve losses – by Peter Koven (National Post – February 8, 2014)

February 10, 2014

The National Post is Canada’s second largest national paper.

Kinross Gold Corp. did the unthinkable last year: it consciously decided to own less gold. The Toronto-based gold miner went against conventional wisdom by maintaining a price of US$1,200 an ounce to calculate reserves, and US$1,400 for resources.

Given gold was closer to US$1,700 and on the way up, rivals were using much higher prices and, as a result, adding more low-grade ounces into their mine plans and boosting reserves.

The opposite happened to Kinross: its reserves fell by three million ounces. That is a traditional no-no in the gold sector, especially when prices are on the upswing.

“That was a tough decision, to hold the line and shrink the resource,” chief executive Paul Rollinson said in an interview last year. “But the good news is we created value because we’re not chasing those last marginal ounces at the bottom of a pit.”

Today, the other gold mining CEOs only wish they followed Kinross’s lead a year ago, because they are about to pay the penalty for being too aggressive back then.

OSC review finds juniors struggling with disclosure – by Alisha Hiyate (Mining Markets – February 7, 2014)

February 10, 2014

http://www.miningmarkets.ca/

Ontario’s junior mining companies are struggling to meet disclosure requirements, a review by the Ontario Securities Commission (OSC) has found.

The review looked at the Management’s Discussion and Analysis filings (or MD&A’s) of 100 Ontario-based junior mining issuers with a market capitalization of less than $100 million. Focusing on key areas of disclosure, including: discussion of operations, liquidity and capital resources; related-party transactions; and reporting on use of financing proceeds, the biggest problem the OSC found was failure to fully disclose information, rather than a total absence of disclosure.

In particular, companies are relying too much on boilerplate disclosure and not including enough specifics in their MD&A’s, said Kathryn Daniels, deputy director of the OSC’s finance branch.

Part of the OSC’s outreach to small and medium sized enterprises (SMEs), the review was carried out to better understand and support smaller issuers in their efforts to raise capital and meet their disclosure obligations, Daniels says. “We are alive to the fact that that segment of our market is under pressure and finding it very difficult to raise capital,” she said in an interview.

We’re One Step Closer to Mining Transparency in Canada – by Claire Woodside and Pierre Gratton (Huffington Post – February 7, 2014)

February 10, 2014

http://www.huffingtonpost.ca/

It’s hard to have a conversation about Canada’s economy these days without it touching on our natural resource wealth, and the global reach of our mining companies.

But there’s one part of this conversation that Canadian provinces may be missing: how they can become global leaders in a burgeoning international effort to improve governance and transparency in the extractive sector. Should they choose to meet the challenge, they would get support from an unexpected coalition of partners.

Following over a year of dialogue, civil society organizations and the Canadian mining industry have taken a united stand for transparency in the mining sector. In January of this year this unique collaboration — known as the Resource Revenue Transparency Working Group — published recommendations that call on Canadian governments (federal and provincial) to implement strong standards requiring that mining companies report the payments they make to governments both at home and abroad.

For the members of this group — the Mining Association of Canada, the Prospectors and Developers Association of Canada, Publish What You Pay Canada and the Revenue Watch Institute — these recommendations provide a blueprint for the creation of a new transparency standard for the mining sector.

Osisko-Goldcorp battle turns bitter (Northern Miner – February 6, 2014)

February 7, 2014

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

VANCOUVER – How quickly relationships between potential partners can sour.

For more than five years Osisko Mining (TSX: OSK) and Goldcorp (TSX: G; NYSE: GG) considered joining forces in a series of meeting that gained momentum as Osisko finished building and commissioning one of the world’s largest gold mines.

The Canadian Malartic mine in Quebec produced 475,277 oz. gold in 2013 at an average cash of $760 per oz. According to Osisko’s calculations, only 13 of the 55 gold mines owned by North America’s five largest gold miners produced more, and Osisko expects production to increase and costs to decline at Malartic in 2014.

Goldcorp is one of those five gold majors and it wants Malartic. The mine sits on more than 10 million oz. of gold reserves in a low-cost, politically stable environment, making it precisely the kind of asset gold majors are seeking today.

Goldcorp’s interest in Osisko is no secret. Osisko and Goldcorp talked informally but regularly between 2008 and 2012, a relationship that led to three separate takeover bids that Osisko rejected as inadequate.