Canada Mining – Page 330 – Republic of Mining

Inmet faces hard sell in snubbing First Quantum’s $5.1B hostile bid – by Peter Koven (National Post – January 8, 2013)

January 8, 2013

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

For Inmet Mining Corp., the hard work is about to begin.

With First Quantum Minerals Ltd. expected to file its takeover circular imminently, the pressure will be on Inmet chief executive Jochen Tilk to explain why the $5.1-billion hostile offer for his company is inadequate. Inmet shares have jumped nearly 40% since news of a bid surfaced in November, and are trading roughly in line with the offer price of $72 a share.

It is understood Inmet hired CIBC World Markets as a financial advisor, and the Toronto-based miner is likely to argue the bid is far below fair value for Cobre Panama, one of the world’s largest copper deposits.

Analysts and investors generally agree the offer is low. However, they said Mr. Tilk could have a tough time fighting off First Quantum.

The central issue boils down to a question: Which company is better suited to build Cobre Panama? First Quantum has an outstanding track record of building large projects at lower cost than competitors, and has claimed it can do the same with this one. Mr. Tilk will try to prove Inmet can build the US$6.2-billion mine just as quickly and efficiently, and with no more of the cost inflation that has plagued this project and many others.

Asian-led group takes $1.1-billion stake in Canadian unit of ArcelorMittal – by Josh O’Kane (Globe and Mail – January 2, 2013)

January 2, 2013

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.

A consortium that includes South Korea’s biggest steel maker is buying a $1.1-billion (U.S.) stake in Montreal’s ArcelorMittal Mines Canada Inc., the latest sign of international enthusiasm for Canada’s resource sector.

A person familiar with the deal said South Korea’s Posco is “one of the more important players” in the consortium, which also includes Taiwan’s China Steel Corp. The consortium is taking a 15-per-cent stake in ArcelorMittal Mines – the second time in as many years that Posco has bought into a Canadian mining firm.

While Prime Minister Stephen Harper clamped down on foreign acquisition rules in December, it is expected that the minority-stake investment is among the types of transactions he was hoping to encourage in order to fund the expansion of Canadian businesses.

Paul Boothe, a past Industry Canada senior associate deputy minister, said that in the case of a resource-sector portfolio investment such as this, “the administration of the Investment Canada Act appears unchanged,” meaning such a deal should not face any harsh setbacks in the form of an economic review.

ArcelorMittal Mines Canada, among the country’s leading suppliers of iron ore for steel markets, would increase Posco’s access to its essential commodity. The Montreal company, which has two large open-pit mines in Quebec, says it produces about 15 million metric tonnes of iron ore concentrate annually, as well as nine million tons of iron oxide pellets.

Idle No More protests beyond control of chiefs – by James Bradshaw and Shawn McCarthy (Globe and Mail – January 2, 2013)

January 2, 2013

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 OTTAWA – The Idle No More movement is broadening into a call to shake off apathy, absorbing a range of issues from aboriginal rights and environmental safeguards to the democratic process. And as it swells, organizers are warning first nations leaders that the movement will not be corralled by aboriginal politicians even as the country’s chiefs look to use the protests’ momentum to press Ottawa on treaty rights and improved living standards.

Hundreds of people gathered Tuesday afternoon in Toronto’s Yonge-Dundas Square, many of aboriginal heritage but nearly as many not, joining hands in round dances and lighting candles to honour Chief Theresa Spence, who was on day 22 of her hunger strike demanding Prime Minister Stephen Harper meet with aboriginal leaders.

The gathering attracted aboriginal peoples calling for greater consultation on changes to reservation land management and the Indian Act, but also environmentalists and government critics charging that the federal omnibus budget bill is bypassing vital public debate.

Started by four Saskatchewan women, the grassroots Idle No More movement has gone viral, with supporters across Canada and internationally holding protests, blocking rail lines and launching hunger strikes. While national chiefs support the effort, organizers are resisting any effort to hand over leadership to their elected representatives.

China North: Canada’s resources and China’s Arctic long game – by James Munson (iPolitics.ca – December 31, 2012)

December 31, 2012

http://www.ipolitics.ca/

China’s designs for a greater role in the Arctic could be built on Canadian resources.

Chinese firms have invested over $400 million in northern Canada through various mineral and petroleum projects, while the Chinese government tries to simultaneously edge its way into the region’s key governance body, the Arctic Council.

While most of these deals are small, the resource sector is intiminately linked to the larger policy questions facing Arctic nations, which range from environmental protection to shipping corridors. If China gains influence in Artic affairs in the coming years, the impacts could be felt in Canada’s northern backyard.

“They have demonstrated that they will play hardball politics in terms of their interests,” said Rob Hubert, an associate professor at the University of Calgary who tracks China’s economic and strategic creep into the Arctic.

Ottawa enacted new restrictions on the foreign ownership of oilsands and other sectors in early December, signalling that the Asian powerhouse’s interest aren’t always concurrent with Canada’s.

Yet the two countries are engaged in a “strategic partnership,” an economic relationship that has a don’t-ask, don’t-tell approach to issues with more friction like human rights and foreign policy.

It’s a balancing act in constant evolution and the North — filled with oil, gas and minerals that could one day be feeding Chinese homes — is one place where the relationship could one day get icy.

Harper’s cabinet mulls massive Chinese resource project in Arctic – by Bob Weber (The Canadian Press/Globe and Mail – December 28, 2012)

December 28, 2012

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.

Another massive Chinese-owned resource project is before Prime Minister Stephen Harper’s cabinet.

Some time in the new year, four federal ministers are to decide how to conduct an environmental review for the Izok Corridor proposal. It could bring many billions of dollars into the Arctic but would also see development of open-pit mines, roads, ports and other facilities in the centre of calving grounds for the fragile Bathurst caribou herd.

“This is going to be the biggest issue,” said Sally Fox, a spokeswoman for proponent MMG Ltd., a subsidiary of the Chinese state-owned China Minmetals Corp., formerly called Minmetals Resources Ltd.

It would be hard to exaggerate the proposal’s scope. Centred at Izok Lake, about 260 kilometres southeast of Kugluktuk, the project would stretch throughout a vast swath of western Nunavut. Izok Lake would have five underground and open-pit mines producing lead, zinc and copper. Another site at High Lake, 300 kilometres to the northeast, would have another three mines.

MMG also wants a processing plant that could handle 6,000 tonnes of ore a day, tank farms for 35 million litres of diesel, two permanent camps totalling 1,000 beds, airstrips and a 350-kilometre all-weather road with 70 bridges that would stretch from Izok Lake to Grays Bay on the central Arctic coast.

[Toronto’s Leading Junior Explorer Financier] Ned Goodman looks ahead to 2013 – Interview by Susan Kirwin (Mining Markets – December 2012)

December 21, 2012

Please click here for the entire digital version of December issue of Mining Markets: http://www.miningmarkets.ca/issues/de.aspx

As we say goodbye to 2012, Mining Markets sought the advice of one of the mining industry’s most seasoned investors to find out what 2013 and beyond might have in store. Toronto-based journalist Susan Kirwin sat down with Ned Goodman, president, CEO, and founder of Dundee Corp., in a boardroom on the 21st floor of the Dundee Place tower in downtown Toronto on Nov. 19.

With 50 years of experience in the mining industry, the geologist and financier still visits the odd mining project to “kick the tires,” and was in Sierra Leone just a few months ago. Goodman, a self-described optimist, explains why commodity prices will keep rising, why a return to the gold standard makes sense, and offers some tough-love advice for would-be investors.

Mining Markets : What’s your outlook for the mining industry in 2013 — what commodities do you think will do well and where will you invest your money?

Ned Goodman : My commodity would be gold. My view is that the world is basically in a pretty desperate situation except that the world population is increasing and the population of the world is far more knowledgeable about what is going on in the world so people are asking for more. Clearly, something’s got to happen that will take Europe out of the mess that it’s in and something that would take the United States out of the mess that it’s in.

Why First Quantum’s bid for Inmet likely won’t be its last – Bloomberg News (National Post – December 18, 2012)

December 20, 2012

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

The cheapest copper mining deal in five years has traders convinced that First Quantum Minerals Ltd.’s latest bid for Inmet Mining Corp. won’t be its last.

The C$5.1 billion ($5.2 billion) offer values Inmet, owner of the second-biggest copper mine under construction, at the lowest multiple of earnings before interest, taxes, depreciation and amortization for a deal of its size in the industry since 2007, according to data compiled by Bloomberg. Inmet shares climbed yesterday 1.2 percent above the C$72-a-share proposal — First Quantum’s third offer for the Toronto-based company since October — indicating arbitrageurs who bet on acquisitions expect another boost, the data show.

After Inmet last week raised estimates for the amount of copper contained at its Cobre Panama mine, Canaccord Financial Inc. said it would take a bid of at least C$80 a share to win over investors, particularly with the top shareholders controlling a majority of the stock. While Inmet could draw other suitors, Vancouver-based First Quantum’s desire for a friendly deal suggests it may be willing to pay more whether or not there are rival bidders, according to Bank of Montreal.

“The market is clearly saying that we are going to need a higher price to push this through,” Barry Schwartz, a Toronto-based fund manager at Baskin Financial Services Inc., which oversees about C$450 million including Inmet shares, said in a telephone interview.

Cobre Panama “is going to be one of the greatest mines that’s going to come on stream in the second half of the decade. We’re running out of quality finds of copper, and Inmet has one of them.”

The Northern Miner’s 2012 Mining Person of the Year: Garofalo a steady hand on the Hudbay tiller – by John Cumming (Northern Miner – December 19, 2012)

December 19, 2012

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry. Editor John Cumming MSc (Geol) is one of the country’s most well respected mining journalists.jcumming@northernminer.com

In these times of economic and political turmoil, boring has become the new exciting.

With mining companies of all stripes running aground on the shoals of cost overruns, nationalization movements and environmental opposition, any executive that manages to guide a company to fiscal health, sustainable growth and positive community relations stands head and shoulders above his peers. And so this year, Hudbay Minerals president and CEO David Garofalo is our Mining Person of the Year for his fine job in making Hudbay a standout success story amid the dwindling list of mid-tier base metal miners.

Garofalo is a accountant by training, with a B.Comm. from the University of Toronto and a Chartered Accountant designation. He started out in 1990 as treasurer of Inmet Mining before joining Agnico-Eagle Mines in 1998 and becoming CFO in 1999. That was back when it only had one gold mine — the pre-expansion LaRonde in Quebec’s Abitibi region — and penny pinching was the order of the day, as gold traded for just US$250 per oz.

Garofalo helped Agnico nail down financings that allowed the company to grow prudently through mine expansions and asset purchases, without having to hedge production in a rising gold environment. In 2009, a year in which Agnico raised about a billion dollars, Garofalo won the award for “Canada’s CFO of the Year,” an honour that’s usually handed out to CFOs from much larger and more established Canadian companies.

Potential suitors eye Inmet’s Panama project – by Pav Jordan (Globe and Mail – December 19, 2012)

December 19, 2012

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.

If it’s a white knight Inmet Mining Corp. is looking for, there’s no shortage of candidates it might lure to its massive world class copper project in Panama.

Inmet has yet to comment on the merits of a $5.1-billion hostile takeover offer from rival First Quantum Minerals, the Canadian copper miner that wants to combine the companies and become a top five producer. Late last month Inmet rejected an informal approach from First Quantum that valued it at $4.9-billion, saying it was highly conditional.

Industry experts say Inmet has essentially put itself up for sale, and expect it to start an auction process to attract a bid higher than the $72 per share on offer from First Quantum.

“The next question is who, because so often a bidder comes out of the woodwork and you say, ‘Oh, I didn’t think of them,’ ” said Raymond Goldie, an analyst with Salman Partners in Toronto, pointing to Teck Resources Ltd., Canada’s largest diversified miner, as a potential candidate.

Three of four top NA gold miners burdened by debt and rising costs – S&P – by Dorothy Kosich (Mineweb.com- December 19, 2012)

December 19, 2012

http://www.mineweb.com/

North American gold miner Goldcorp “has stood alone among gold miners” in increasing production and earnings without adding large amounts of debt, says Standard & Poor’s analysts.

RENO (MINEWEB) – In spite of favorable gold prices and strong operating cash flow, Standard & Poor’s analysts have been unhappy with gold producers’ rising costs and higher debt burdens.

In an analysis published Tuesday, S&P Credit Analysts Donald Marleau and George Economou observed, “Rating pressure is emerging in the gold mining industry as companies struggle to boost returns, despite the long-standing run of gold prices.”

“In fact, some of these companies are taking on unprecedented levels of debt to fund large, risky investments or acquisitions to increase—or even merely sustain—gold output,” they said.

Of the four North American gold companies reviewed by S&P, Goldcorp’s “track record of growing output, lower costs, and stable debt compares favorably with its larger, more diverse ‘BBB+’ rated peers Barrick and Newmont,” said S&P, “Moreover, the company’s ‘modest’ financial risk profile acts as a considerable buffer against potential shocks, such as unstable prices and costs or sudden spikes in capital spending needs.”

Inmet investors bet on a higher bid – by Pav Jordan – (Globe and Mail – December 18, 2012)

December 18, 2012

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.

Inmet Mining Corp. shares rose more than 4 per cent Monday as investors in the Toronto miner bet that an ardent suitor has not played its last card with its $5.1-billion hostile takeover bid.

First Quantum Minerals Ltd. offered Inmet shareholders $72 a share over the weekend, sweetening for the second time its offer for the owner of a large copper asset in Panama. A first, informal approach on Oct. 28 valued the company at $62.50 a share and a Nov. 28 offer was for $70 a share, or $4.9-billion.

“We’re happy but, you know, not a lot has really changed,” said Terry Thib, a portfolio manager with Norrep Funds in Toronto that holds Inmet shares. “You could say it’s below where it should go out, given they are not working with a full set of data.”

Investors point out that the way the stock-and-cash offer is structured, it is worth about the same today as it was a few weeks ago because First Quantum shares have lost some of their value in the interim, including a 4-per-cent drop on Monday.

Conflicts surrounding Canadian mines ‘a serious problem’ – by Catherine Solyom (Montreal Gazette – December 18, 2012)

December 18, 2012

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

This series was made possible thanks to a Bourse Nord-Sud grant attributed by the Fédération professionnelle des journalistes du Québec and financed by the Canadian International Development Agency.

Last of a three-part series.

Canadians abroad have long benefited from what psychologists call “the halo effect”: Because of its reputation as a peace-loving, human-rights respecting, tree-hugging land, Canada can do no wrong.

But perceptions in Latin America are changing, say observers here and there, as conflicts pitting Canadian mines against local communities become entrenched and spread across continents, and the line between those companies and the Canadian government becomes increasingly blurred.

“Last week, there were demonstrations outside the Canadian Embassy in Mexico. But it’s not just Mexico, it’s throughout the region,” says Daviken Studnicki-Gizbert, a history professor at McGill University and the coordinator of the McGill Research Group Investigating Canadian Mining in Latin America. “What embassy in Latin America has not been the locus of protests because of a Canadian mine?

Clean capitalism gets mixed results in the Andes – by Catherine Solyom (Montreal Gazette – December 17, 2012)

December 18, 2012

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

Barrick Gold has been funding projects near its controversial Pascua Lama mine, in the name of corporate social responsibility. But local citizens wonder what will happen to them when the gold runs out

ALTO DEL CARMEN, CHILE/SAN JUAN, ARGENTINA — Houses for the homeless, wireless Internet for remote villages, new computers for the local school, kite-sailing competitions, a centre for the disabled.

These are a few of the things Barrick Gold has helped finance during the last few years in communities living near its controversial Pascua-Lama mine, under construction in the Andes mountains on the Chile-Argentina border, as part of its commitment to corporate social responsibility (CSR), or as it is called in Spanish, “mineria responsable.”

If these programs sound like they are beyond the normal purview of a Canadian gold mining giant, that’s because they are. Barrick often works with local non-governmental organizations (NGOs) who are better acquainted with health and social problems in their own communities. The NGOs share their expertise; Barrick puts up the money. It’s hard to be against CSR, now part of the playbook of most Canadian mining companies wherever they have set up shop around the world.

Glaciers, protests and court cases slow Barrick in Pascua-Lama – by Catherine Solyom (Montreal Gazette – December 17, 2012)

December 18, 2012

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

At the beginning of November, Barrick Gold’s CEO, Jamie Sokalsky, announced yet another jump in the estimated capital costs of the Pascua-Lama mine, from less than $1 billion in 1997, to $3 billion in 2009, to $8 billion in July, to $8.5 billion last month – with “first gold” extracted from the Andean mine closer to the end of 2014 than to the beginning.

But, Sokalsky assured shareholders once again, Pascua-Lama is the company’s “top priority.”

There are, however, a number of obstacles remaining on the bumpy road to Pascua-Lama, to the delight of some and the dismay of others, from legal wrangling in Chile over the deeds to the vast, frigid territory, to a Supreme Court of Argentina decision over whether any mining can take place there at all, given the presence of glaciers so close to the mine pit.

Capital costs, which may yet rise again when the company releases its year-end results in February might be the least of Barrick’s worries.

The seduction of gold in Pascua-Lama – by Catherine Solyom (Montreal Gazette – December 15, 2012)

December 18, 2012

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

Who can resist it? Not Canadian giant Barrick, which is sinking $8.5 billion into a mine in the snow-capped Andes. Not Chile and Argentina, whose border is home to the massive project. Not a portion of the arid region’s residents who are benefiting from Barrick’s largesse. But with seduction comes risk, division and fear.

PASCUA-LAMA, ON THE BORDER OF CHILE AND ARGENTINA — Standing on a precipice 5,200 metres above sea level, the air is thin and the vistas are long.

Just breathing is difficult at this altitude, with a howling wind disturbing the utter majestic silence of the snow-capped Andes mountains, threatening to blow you over the edge. You’d think you were alone at the top of the world.

But what happens up here in Pascua-Lama, where Canadian mining giant Barrick Gold is developing the first open-pit gold mine to straddle two countries, will have a huge impact on the people living in the valleys below on both sides of the border – for better or for worse.