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Canada Mining

Asia, Australia risk mining investment as rankings slip – by Clyde Russell (Reuters India – April 11, 2013)

http://in.reuters.com/

Clyde Russell is a Reuters market analyst. The views expressed are his own.

LAUNCESTON, Australia, April 11 (Reuters) – Asia-Pacific countries are the best-placed to supply the region’s future commodity demand, but rather than encouraging mining it appears they are making it harder for explorers and producers.

Virtually every key resource-rich nation in the region slipped in annual rankings compiled by the Fraser Institute, a Canadian-based free-market think-tank that surveyed 742 mining companies for its report, released in February.

And it’s not just that Asian commodity producers slipped, the results showed that Indonesia was the worst mining jurisdiction, and was joined in the bottom 10 by Vietnam and the Philippines.

Australia, which prides itself on being a welcoming and secure place to do business, also saw the rankings of five of its six states and the Northern Territory decline, although all remained in the top 50 jurisdictions.

And while China and India are both major commodity importers, they are also significant producers and for them the survey was bleak reading.

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Tibet’s mining disaster draws criticism in Canada – by Yeshe Choesang (The Tibet Post International – April 11, 2013)

http://www.thetibetpost.com/

Toronto: – Following the devastating landslide in Tibet that left 83 dead, dozens of Tibetan-Canadians and supporters rallied in front of the Toronto Stock Exchange (TSX) Wednesday demanding that the Vancouver-based China Gold International Resources stop its destructive mining operations in Gyama township near Tibet’s capital Lhasa.

Students for a Free Tibet (SFT) Canada members simulated a landslide in front of the TSX (where China Gold International Resources is listed as CGG) with Tibetans lying on the sidewalk to represent the fatal impacts of mining-related environmental destruction in Tibet.

“This catastrophic landslide shows how China Gold International Resources, a Canadian-based mining company, is tearing apart the fragile ecology of Tibet and triggering devastating impacts on the Tibetan people. This is but a glimpse of the fatal consequences mining in Chinese-occupied Tibet poses for all involved, and particularly for the Tibetan people who are not in a position to give their free, prior and informed consent over the mine operations,” said Urgyen Badheytsang, National Director Students for a Free Tibet Canada.

“Canadian and Chinese mining companies are turning the beautiful Meldro Gungkhar valley into the tar sands of Tibet, and this is only confirmed by the pressure from Chinese State media to stick to their reports on this incident.”

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Canadian uranium industry a step closer to trading with India – by Henry Lazenby (MiningWeekly.com – April 10, 2013)

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – The Mining Association of Canada (MAC) said it supported the Canadian Nuclear Safety Commission and India’s Department of Atomic Energy finalising and signing the Appropriate Arrangement for Nuclear Cooperation agreement on Monday, which placed the Canadian uranium industry one step closer to trading with India.

“This is tremendous news for Canada’s uranium mining industry, which is the second largest in the world. This puts Canada in position to capitalise on growing global demand for nuclear energy and opens up the uranium sector to India, which is a large and strategic emerging market for the commodity as a key source of power,” MAC president and CEO Pierre Gratton said.

Finalising the arrangement followed on the heels of the Agreement between the Government of Canada and the Government of India for Cooperation in the Peaceful Uses of Nuclear Energy.

The arrangement outlined the tracking, monitoring and reporting requirements that would ensure the material is used for peaceful civilian purposes only. It was the next step towards full implementation of the Nuclear Cooperation Agreement (NCA) between Canada and India, which was signed in 2010.

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Agrium fends off Jana’s 10-month siege – by Boyd Erman and Kelly Cryderman (Globe and Mail – April 10, 2013)

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.

TORONTO and CALGARY — Agrium Inc. has defeated a boardroom challenge from dissident shareholder Jana Partners LLC, with investors choosing to back the company’s board slate after an acrimonious months-long campaign that ended in a flurry of accusations of unfair play.

Agrium chief executive officer Mike Wilson said he regretted that the process took 10 months to come to a resolution but he’s glad the proxy battle – which pitted the Calgary-based agriculture and fertilizer giant against a U.S. hedge fund investor that wanted to install its own board members and break up the business – is in the rear-view mirror.

While Jana founder Barry Rosenstein pledged Tuesday that it wasn’t the end of the heated dispute, Mr. Wilson said the company can once again focus on operations and growth.

“I don’t know why they chose us. They obviously chose the wrong target,” Mr. Wilson said of the New York-based hedge fund Jana Partners, Agrium’s largest shareholder.

The long-time Agrium CEO suggested that, combined with the experience of Canadian Pacific Railway Ltd., when Pershing Square Capital Management successfully launched a fight to change the strategy and management at that Canadian institution, CEOs need to be on guard.

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Arie Papernick: A New Mining Investment Landscape Explained – Interviewed by Brian Sylvester (The Metals Report – April 9, 2013)

http://www.theaureport.com/

Life is difficult for junior resource companies. Not only are stocks and commodity prices moving sideways, but tax changes in Canada may signal less friendly treatment for exploration investment. But not all is grim, according to Arie Papernick, the head of equity capital markets at Secutor Capital Management Corp. in Toronto.

In this interview with The Metals Report, Papernick says investors can still make money if they focus on companies that are producing or near production with an attractive capital structure and strong balance sheets. Royalty plays are another favorite. He reveals that the next big opportunity may be coming in the energy metals space.

The Metals Report: Arie, the Canadian government recently introduced a new budget that contains changes to the tax code that are expected to affect mining companies with producing mines. John Gravelle, a mining expert for PricewaterhouseCoopers, recently called this legislation “a form of stealth resource nationalism.” What’s your view?

Arie Papernick: The budget proposes reductions to some of the tax benefits that can be passed to flow-through shareholders. The major impact is that some traditional pre-production expenses, also called Canadian exploration expenses (CEE), which previously could be 100% written off in the year incurred, will be phased out over the next few years. Starting in 2018, only 30% of these expenses can be deducted on a declining basis as Canadian development expenses (CDE). This will potentially hurt resource companies’ ability to raise capital through flow-through shares as the flow-through investor community generally insists on receiving only CEE deductions.

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Despite its many doubters, the coal industry could soon roar back to life – by Bryan Borzykowski (Canadian Business Magazine – April 8,2013)

http://www.canadianbusiness.com/

Following a brutal year.

The darkest day in the coal industry’s recent past arrived on July 9, 2012. About five minutes after the market closed, St. Louis–based Patriot Coal Corp. filed for bankruptcy and destabilized an already troubled sector. The company, one of the largest metallurgical coal producers in the U.S., had nearly as much in debt as it had assets and, thanks to plummeting prices, its balance sheet was simply under too much pressure.

Stock prices across the sector fell quickly. James River Coal Co., which many thought would follow Patriot into bankruptcy, saw its shares drop 44% that week. Some of the more stable businesses, such as Consol Energy and Cloud Peak Energy, fell by 10%.

At the time, no one was sure when or even if coal would recover. But after a lousy year that saw the commodity’s price get slashed nearly in half, many experts believe that the sector has finally hit its nadir. The industry will still be volatile this year, and may see another bankruptcy or two, but stock prices have nowhere to go but up. “You need to get in early,” says Matthew Peterson, a portfolio manager with Newgate Capital Management. Coal stocks move quickly, he says, so if you wait for good news, you’ll have already missed much of the upside.

While coal experiences more ups and downs than other commodities—the weather can have an effect on prices—the black rock has been in use for centuries. Even though it’s considered the dirtiest of fossil fuels and as a result is being burned less in many developed countries, there’s no way that it would suddenly stop being used.

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Copper’s slump a warning sign for economy – by Pav Jordan (Globe and Mail – April 8, 2013)

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.

Asharp drop in copper prices last week may be just the start of more woes for the industrial metal that has best weathered the global economic crisis.

Copper markets are threatening to move into surplus this year as demand is subdued by a slack global economy and new production comes into the market.

“One of the reasons why copper prices have been so incredibly strong in the past five years has been the fact that there’s been very little new mine supply come on stream,” said Patricia Mohr, vice-president of economics and commodity market specialist at Bank of Nova Scotia.

“Copper has been in a deficit until fairly recently, but it seems it may shift this year into a surplus,” she said, pointing to expansions and new mine construction in countries from Chile and Peru to Indonesia, the African continent and Canada.

Copper’s inability to maintain firm prices is a worrying signal that the outlook for the global economy is too weak to provide solid demand.

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New northern riches? [Diamond mining Marketing Feature] – by Marc Davis (Vancouver Sun – April 8, 2013)

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

It was like a scene from an Indiana Jones movie. After the engine failed, the helicopter plunged into a rain forest canopy. But the dense vegetation prevented the crippled machine from crashing to Earth, sparing the lives of those on-board.

Among its three occupants was a young geologist called Buddy Doyle, who found himself hanging upside down in the upturned helicopter. The pilot was badly injured. So Doyle grabbed the damaged radio and blurted out a call for help. The survivors spent the night huddled in the cockpit, hoping and praying that someone had heard their distress call. Fortunately, they were plucked to safety by a helicopter crew from a rival company the following day.

Doyle’s brush with disaster happened over 20 years ago, when he was working for mining giant Rio Tinto Plc, exploring for gold in remote Papua New Guinea. But his nightmarish ordeal wasn’t for nothing. He was eventually credited with discovering one of the world’s richest gold finds: the Lihir mine, which has produced well over 20 million ounces of gold to date.

As his reward for toiling for years in steaming jungle terrain, where he suffered bouts of malaria and foot rot, Dolye was hurried off to a place that seemed like a different planet in comparison – Canada’s frozen northern tundra.

This is where his sharp geological acumen and dogged determination served him well once again.

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‘Common ground’ sought in mega-mine dispute – by Don Cayo (Vancouver Sun – April 2, 2013)

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

Mongolia, Rio Tinto both have reasons to settle in time to meet June deadline

A cost overrun of a couple of billion bucks at Oyu Tolgoi (Turquoise Hill), Mongolia’s new mega-mine, is no doubt significant even to a big company such as Rio Tinto with sales last year topping $50 billion.

But to a “little” country like Mongolia – which may have a land mass about twice the size of B.C., but has barely more than half the number of people and a much smaller fraction of our wealth – it’s a staggeringly large sum. It accounts for fully a fifth of last year’s GDP – in relative Canadian terms, the equivalent of about $350 billion.

Which goes a long way to explain the tension between the company, a two-thirds partner in Vancouver-based Turquoise Hill Resources, which owns the just-opened world’s largest copper mine in remote Mongolia, and the country, which has a 34-per-cent stake.

Mongolia’s parliament signed on in 2009 to borrow a third of the money to fund a $4.2-billion project, says parliamentary president Zandaakhuu Enkh-bold, who was in Vancouver last week at the end of a cross-Canada visit.

“If at that time they had told us the cost will be $6.2 billion, then we would have thought twice,” he said in an interview with The Vancouver Sun.

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Canadian mining companies subject of worldwide protests – by Santiago Ortega Arango (CBC News – April 3, 2013)

http://www.cbc.ca/news/

Citizen’s groups in at least 10 countries complaining about gold and silver miners’ environmental practices

Tens of thousands of Colombians took to the streets of Bucaramanga, the country’s sixth-largest city, last month to defend their water supply from a Canadian-owned gold-mining project.

The chief target of their protest was Vancouver-based Eco Oro Minerals Corp. The company is exploring for gold and silver in a high-altitude, environmentally sensitive area that is the main source of water for Bucaramanga’s one million inhabitants.

This was the fourth anti-gold-mining demonstration in the area since 2010, and one of the biggest. But Eco Oro shouldn’t feel singled out. It is only one in a string of Canadian mining and exploration companies that have drawn the ire of local communities around the world.

On March 12, for example, more than 10,000 Greeks protested in Thessaloniki against several gold mining projects owned by Vancouver-based Eldorado Gold.

Then on March 21, Catholic priests marched with 5,000 locals in Matagalpa, Nicaragua, against a project owned by Vancouver-based B2Gold Corp.

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Giant Mine to cost billions to cleanup and look after for thousands of years – by Jack Caldwell (Mining.com – April 3, 2013)

http://www.mining.com/

The news wires are alive with reports of a billion dollar estimate for remediating the Giant Mine in Yellowknife, Northwest Territories. Here is an extract from one report:

Documents obtained by northern environmentalists show the government expects the cost of cleaning up the Giant Mine just outside Yellowknife to be nearly a billion dollars – perhaps the largest single environmental cleanup in Canada and paid for entirely by taxpayers. Initial estimates for safely dealing with the huge site, which includes a toxic smorgasbord of buildings, tailings ponds and a quarter-million tonnes of arsenic stored underground, were about $488 million. A federal progress report on the project says costs have increased as more has become known about the scale of the problem.

“The increase in estimated costs occurred as a result of the normal progression through the preliminary phases of the remediation project (… increased site information and detail obtained over time),” the report says. Rising labour and equipment costs are also part of the problem. So is the current state of the mine, which is so bad that emergency measures need to be taken this summer before large amounts of arsenic start escaping from collapsing buildings. The official price tag of $903 million could get higher yet.

The 2010 764-page Giant Mine Remediation Project Developer’s Assessment Report is available at this link:

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First Quantum starts cost-cutting at Cobre Panama mine, suspends SNC-Lavalin contract – by Pav Jordan (Globe and Mail – April 3, 2013)

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.

First Quantum Minerals Ltd. has suspended engineering contracts with SNC-Lavalin Group Inc. and other partners at Cobre Panama, taking a first swipe at cutting costs on the massive copper project acquired with the takeover of Inmet Mining Corp.

SNC-Lavalin said in a statement on its website that it was de-booking suspended and terminated work related to the process plant at Cobre Panama worth $120-million in anticipated services revenues.

“Subsequent to this acquisition, a joint venture led by SNC-Lavalin International Co. Inc., a member of SNC-Lavalin Group Inc., and including GyM S.A. and Techint International Construction Corp, has received a notice of suspension from Minera Panama S.A. (a subsidiary of Inmet) related to the majority of the work to be performed under its EPCM contract for the balance of plant of the Cobre Panama copper mine, “ the Canadian engineering firm said.

It did not state the value of business affected at engineering partners GyM S.A. and Techint. International Construction Corp.

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Banro Leading Miners in Worst Drop Since 1990 – by Eric Lam & Christopher Donville (Bloomberg.com – April 2, 2013)

http://www.bloomberg.com/

Canada’s raw-materials stocks are forecast to extend their longest losing streak in more than 20 years, as companies such as Banro Corp. (BAA) and Teck Resources Ltd. (TCK/B) struggle with falling metals prices and concern China’s growth will slow.

The Standard & Poor’s/TSX Materials Index of 60 stocks posted its fifth monthly drop in March, the longest string of declines since April 1990. The index has plunged 18 percent over that period, led by a 62 percent slump in gold miner Banro. Teck, the country’s largest diversified miner, has tumbled 22 percent this year.

Producers of raw materials from copper to coal and gold have slid amid concerns China is settling into a slower growth path, mining companies face escalating costs and gold’s status as a safe haven is diminishing as the U.S. economy gains momentum.

“China’s economy is growing, just not fast enough, and it’s hard to see a lot of upside for mining and materials companies,” John Stephenson, a fund manager with First Asset Management, said April 1 by phone from Toronto. Stephenson helps manage C$2.8 billion ($2.8 billion), including Teck shares.

Growth in China, Canada’s second-biggest trading partner, grew at an average quarterly pace of 8.5 percent from 2011 to 2012, down from 9.4 percent in the previous eight quarters. Growth fell to a three-year low of 7.4 percent in September, before rebounding to 7.9 percent in the fourth quarter of 2012.

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Mining IPOs dry up in first quarter: PwC – by Canadian Press (iPolitics.ca – April 1, 2013)

http://www.ipolitics.ca/

TORONTO – For the first time in a decade, neither of Canada’s two largest stock markets had a mining IPO in the first quarter of 2013 — a sign of deep investor impatience with a sector that performed badly for them last year.

A report released Monday by PwC says the mining sector — a mainstay of the Canadian stock markets — raised only a tiny amount of money in the first three months of 2013 by initial public offering.

Of the $422 million total in IPO activity counted by PwC, only $250,000 was in the mining sector and it was placed on the Canadian National Stock Exchange — not the bigger Toronto Stock Exchange or TSX Venture Exchange.

“The complete lack of activity in mining, a sector that has been a pillar of Canada’s equity market, is unprecedented,” Dean Braunsteiner, PwC’s national IPO services leader, said in a statement.

The PwC study excluded certain types of new issues, including IPOs for exchange-traded funds and investment vehicles known as structured products.

According to PwC’s comparison, there were 13 new IPOs on all Canadian exchanges — all but one in mining — in the first quarter of 2012, for a total value of $20 million of stock issued.

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So who got hosed? [Canadian mining foreign takeovers] – by Eric Reguly (Globe and Mail – March 29, 2013)

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.

Yes, Canada lost a lot of head offices in the foreign takeover binge, but we sure sold out at the right time

The $165-billion merger of AOL and Time Warner in 2000 was so disastrous that it was celebrated as the biggest, stupidest deal ever, one that will be studied for decades by MBA students with a taste for financial gore (all currency in U.S. dollars). The copycat calamities in other industries, if on somewhat smaller scales, will make for fun reading too.

In banking, one of the biggest debacles came in 2007, when the carve-up of Dutch bank ABN Amro helped wreck the Royal Bank of Scotland (it had to be nationalized by the British government after the 2008 financial crisis). The mess is now bringing down Italy’s Monte dei Paschi di Siena, which bought the Italian arm of Amro at an outlandish price. In mining, Rio Tinto, one of the world’s largest mining companies, bought Montreal’s Alcan at the peak of the market in 2007 (a bad year, that one) for an eye-watering $38 billion. Since then, Rio has written down Alcan’s value by about $30 billion. For his sins, Rio CEO Tom (Honey, I Shrunk the Equity) Albanese was fired this past January.

Albanese was not alone in the bonehead department. Many foreign takeovers of Canadian companies made between 2006 and 2008 – the bubble years – have come to grief, with writedowns galore. Indo-European steel giant ArcelorMittal vastly overpaid for Hamilton’s Dofasco.

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