Money Flowing Again for Best Mining Projects – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

There is light at the end of the ramp. There have been several financings in the hundreds-of-million-dollar range since the beginning of the year, and that leaves me hoping the worst is over for the mining community.

In early February, Osisko Mining of Montreal closed a bought deal worth C$350 million. That money is earmarked for completion of the Malartic gold project in Quebec.

Then Kinross Gold of Toronto completed a US$415-million public equity offering. The money will be used to pay down debt incurred with recent acquisitions.

Uranium producer Cameco of Saskatoon completed a bought deal that raised C$460 million. The money will strengthen the company treasury as Cameco looks for opportunities in today’s economic environment.

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Hidden Opportunity in Mining Sector Hard Times – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Unless you are recently returned from a remote, primitive tropical island, you are inundated daily by doom and gloom reports, not only for the mining industry but for a broad range of banking, retail, real estate, automobile and more sectors.

“Dismal” is what the latest PricewaterhouseCoopers study calls last year for juniors.

The numbers tell a “sobering tale”, Ernst & Young said of the toll the global credit crisis is taking on the market capitalization of TSX-listed companies.

The Fraser Institute called the outlook “gloomy”, expecting at least 30% of exploration companies to fail.

“The mining industry, generally, is gripped by panic and the vast majority of firms are in lock-down mode,” says Jon Wylie, managing director of Proudfoot Consulting in Canada. “They have reacted to sharply lower commodity prices by scaling back and closing older, higher-cost mines.”

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The Honourable Lisa Raitt – Canada’s Minister of Natural Resources – 2009 PDAC Speech

Toronto, Ontario
March 2, 2009

Check Against Delivery

Introducation

Thank you for that introduction.

I am pleased to be here, and extend a warm welcome to everyone – especially those of you visiting Canada for the first time.

The Prospectors and Developers Association of Canada (PDAC) is one of the premier mining associations in this country. It hosts the largest conference on mining exploration and development in the world.

I’m grateful for the opportunity to comment not only on the challenges your industry currently faces but also on the action that our Government is taking with industry and with mining communities to weather the current economic recession.

This collaborative approach will see us emerge from the current downturn to take advantage of the rebound.

Major Assets

As you know, mining is a mainstay of the Canadian economy and is vital to some 150 rural northern and Aboriginal communities across the country.

The industry directly employed over 363,000 people in 2007, and contributed $42 billion to Canada’s GDP from mining to downstream processing.

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Donald Coxe Speech for the 2009 Prospectors and Developers Association of Canada (PDAC) Convention

With 35 years of institutional investing and money management experience in the United States and Canada, Donald Coxe has a unique background in North American and global capital markets. www.donaldcoxe.com

Due to illness, Mr. Coxe could not give this keynote address at the PDAC convention. PDAC and Mr. Coxe have graciously allowed Republic of Mining.com to post the speech. www.pdac.ca

“WHEN YOU COME TO A FORK IN THE ROAD—TAKE IT”
Don Coxe,
Chairman, Coxe Advisors LLC.

Hello Toronto—I truly wish I were with you. This is a desire that goes back a long way.

Nearly 6 decades ago, when I started reading The Northern Miner, I concluded that the Prospectors and Developers Association convention must be the neatest convention in the world, and the biggest thrill would be to be giving the keynote address to that convention. I could never aspire, then, to that happening. I had to live a long time, and then I proceeded to get sick.

In that sense, it’s an abbreviation of what has happened to us all, which is that, as of a year ago, it seemed that we’d got what we wanted. It was all coming true—and all of a sudden, a financial collapse hit Wall Street. As you know, for the last 6 years, I’ve been telling people that “We are living through the greatest simultaneous efflorescence of personal economic liberty in human history.”

By that, I mean people who for the first time, (after having led lives of privation and poverty) are moving into dwellings with indoor plumbing, electricity, basic appliances, and acquiring access to private motorized transportation. The people who have those things have more personal economic freedom than 99% of the people whom have ever lived.

What’s happened in this decade is simply that a whole section of the world began to catch up to where we in the industrial world had long been, thereby transforming the outlook for the mining industry.

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The Honourable Lisa Raitt – Canadian Minister of Natural Resources – Economic Club of Toronto Speech

Economic Club of Toronto

Toronto Ontario
January 9, 2009

Check against delivery

Thank you very much (emcee), and thanks very much to the Economic Club of Canada for the opportunity to speak here today.

Let me begin by saying what an honour and a privilege it is to serve as Canada’s Minister of Natural Resources.

I guess more people in these parts know me from my time at the Toronto Port Authority and left wondering how that meshes with my new role.

But I am also the daughter of a Cape Breton coal miner. So I understand, in a very personal way, what it means to live in a household that depends on our resource industries.

And, if anything, my time in the boardroom only further hammered home the point that so much of Canada’s trading economy still depends, in large part, on our resource industries. Something we see most clearly in how the Canadian dollar often tracks closely to commodity prices.

So I came into this job with an understanding of the importance of our resource industries to the people who work in them- as well as the impact they have on our economy as a whole.

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Canadian Federal Budget Extends Exploration Tax Credit – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators. Canadians listened hopefully as federal Minister of Finance Jim Flaherty stood in his new, steel-toed shoes to deliver the Conservative’s budget on Jan. 27. It contained a wide range of spending …

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Good News From Canadian Gold Miners – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Look to the gold sector for good news from Canadian miners. While base metal, coal and potash producers continue to trim output, companies such as Vancouver’s Goldcorp have recorded record quarterly production. Gold output at all of the company’s operations was 692,000 oz during the last quarter, bringing the 2008 total to 2.3 million oz.

Nor is that the only good news from Goldcorp. Although the calculation of operating costs for 2008 has not yet been completed, the company expects total cash costs will be $300/oz of gold on a byproduct basis.

The company is also predicting it will produce another 2.3 million oz of gold in 2009 at a total cash cost of $365/oz on a byproduct basis. Increases will be achieved at most mines, but production at the Alumbrera mine in Argentina and El Sauzal mine in Mexico will be significantly lower than previous years. The 2009 forecast for Goldcorp’s Canadian operations include 620,000 oz from Red Lake mines, 290,000 oz from the Porcupine division, and 235,000 oz from Musselwhite mine.

Nor is Goldcorp the only bright spot.

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No IPO on TSX for Last Half of 2008 – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

There was not a single initial public offering (IPO) made on the Toronto Stock Exchange (TSX) during the last six months of 2008 making it the worst year for IPOs in the last 10 years. The dearth of opportunity is highlighted in PricewaterhouseCoopers’ (PwC) annual look at activity on the exchange.

A meagre 57 new issues struggled to reach Canada’s equity markets in 2008, according to PwC, with a mere 10 registered on the TSX in the year ended Dec. 31, 2008. There were no new IPOs on the TSX in the final six months of the year. By comparison, there were 100 IPOs on all of Canada’s exchanges in 2007, with 36 new issues on the TSX.

The value of all issues on Canadian markets in 2008 was $682 million, down 80% from the $3.4 billion in 2007, the survey showed. The value of all issues on the TSX in 2008 was $547 million, off from $3.0 billion in 2007.

A quick look at the TSX numbers reveals that the mining industry successfully floated 13 IPOs on the senior exchange and 47 IPOs on the venture exchange in 2007. Activity included the largest IPO in North American history ($1.26 billion by Franco-Nevada Corp.) and B2 Gold’s $100-million issue on the venture exchange.

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No news is … ? – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators. Never in over 30 years of writing for CMJ, have I seen a week so devoid of news in the mining industry. It has been said that no news is good …

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Good News Gold, Bad News Base Metals – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Let’s start with the really good news. Agnico-Eagle Mines of Toronto has declared its 27th consecutive annual cash dividend. The payment of US$0.18 per common share will be made on March 27, 2009, to shareholders of record as of March 13, 2009. 

Hearing from an optimistic miner in these times is very good news, indeed.

“Agnico-Eagle enters 2009 with a strengthened balance sheet and the expectation that over the next 15 months we will complete the construction of three more gold mines. We also anticipate further increases in gold reserves and resources in 2009 as we continue with an extensive exploration program on our large gold deposits”, said Sean Boyd, vice-chairman and CEO. “We also look forward to providing the results of our ongoing studies on four internal production growth opportunities that give the potential to enhance our superior growth beyond 2010,” he added.

Agnico is in the enviable position of doubling its gold output next year and doubling it again to 1.2 million oz in 2010. Cash costs are expected to be less than US$300/oz in 2010, and only US$320/oz from 2010 to 2018. 

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HudBay, Lundin Combo Under Fire – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

I wonder who first said, “No good deed goes unpunished.” Wherever that bit of wisdom came from it would seem to apply perfectly to the proposed friendly business combination of Toronto’s HudBay Minerals and Vancouver’s Lundin Mining. Major backers are weighing in with their opposition, and shareholders have voted with their wallets.

On Nov. 21, HudBay and Lundin announced their intention to create “a new Canadian leader” in the mining sector. Lundin would become a wholly owned subsidiary of HudBay with each Lundin shareholder receiving 0.3919 of a HudBay common share. The offer represents a 32% premium over Lundin’s 30-day average trading price. HudBay CEO Allen J. Palmiere will be CEO of the combined company. Other members of the HudBay board will be Philip J. Wright, Lukas Lundin, M. Norman Anderson, Colin K. Benner, Donald K. Charter, Ronald P. Gagel, R. Peter Gillin and William A. Rand.

The combined company will be Canada’s second-largest base metals producer as measured by market capitalization. It will have a portfolio of mining assets in Canada, Portugal, Sweden, Spain and Ireland. It will have development projects in the Democratic Republic of Congo and Guatemala.

If all goes according to plan, HudBay will have cash-on-hand of $900 million and a total debt of US$240 million (as of Sept. 30, 2008), it says. HudBay will then loan Lundin $135.8 million for capital investments and general corporate purchases. Lundin will issue 97.0 million common shares to HudBay in return.

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Taking the Message to Canada’s MPs – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Last Tuesday, Nov. 18, mining executives from across Canada met in Ottawa for their annual Mining Day on the Hill. Organized by the Mining Association of Canada (MAC), the event puts industry supports in the offices of select Members of Parliament and federal officials to deliver the message that our industry deserves their support.

“A strong mining sector benefits Canadians in every riding across this country,” said Jim Gowans, president and CEO of De Beers Canada and MAC chair. “We are all facing difficult economic times. Now it is more important than ever that we work with government to ensure that programs, regulation and legislation help to sustain mining jobs across Canada. This is more relevant in remote locations where economic development options are limited and operating costs are high.”

The mining industry has enjoyed one of the longest prosperous periods in history, but it is not immune from worldwide economic events. Due to the financial crisis, all capital expenditures are under review as is the level of discretionary expenditures on exploration. All spending will be reduced in line with changing market realities. Canadian policymakers and businesses cannot be complacent.

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Mining Sector Budget Cuts Go Global – by Marilyn Scales

Marilyn Scales - Canadian Mining JournalMarilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

At the risk of being the bearer of even more bad news, I have been watching the world’s mining industry react to the turmoil in global stock and money markets. Not only in Canada, but around the world companies big and small are conserving capital and cutting output.

Let us recap: Liberty Mines has placed its Redstone and McWatters nickel mines in Ontario on care-and maintenance. Breakwater has suspended mining at its Langlois base metals mine in Quebec and its Myra Falls base metal producer in British Columbia. Teck is paying particular attention to debt reduction. Capital budgets have been trimmed at Suncor’s oil sands project in Alberta.

And the announcements just keep coming. It seems producers of all commodities and all parts of the world are announcing cutbacks.

Rio Tinto is slicing approximately 10% from its iron ore output in the Pilbara region of Western Australia.

BPH Billiton also expects to send fewer shiploads of iron ore to China next year.

Brazilian mining giant Vale will be slowing iron ore shipments to customers. Additionally, it has suspended a pre-feasibility study for a new bauxite and aluminum project in Ghana.

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Hopes Fades for Crystallex’s Las Cristinas Gold Project – by Marilyn Scales

Marilyn Scales - Canadian Mining JournalMarilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

The history of the Las Cristinas gold project that CRYSTALLEX INTERNATIONAL of Toronto has tried to lay claim to is steeped in controversy and delay. But the squabbling may soon come to an end if Venezuelan president Hugo Chavez gets his way. He wants to nationalize the Las Cristinas project along with several other industries.

Placer Dome was one of the first companies to drill the Las Cristinas deposit in the early 1990s. The Canadian company formed a joint venture with Corporacion Venezolana de Guayana (CVG), and CVG remains the owner to this day. Crystallex was drilling the adjacent Albino concession at the time.

The entire Kilometre 88 area of Venezuela became one of the hottest gold plays in Latin America during the early 1990s. But the Las Cristinas deposit with 16.9 million contained oz of gold is the richest.

In 1997 Crystallex bought up a privately owned Venezuelan company said to own the rights to part of the Las Cristinas property. Placer Dome called the claim groundless, but it decided to suspend construction at Las Cristinas until the ownership question could be settled. In June 1998 the Venezuelan court dismissed Crystallex’s claim, clearing the way for Placer Dome and CVG to move forward. The next year low gold prices forced Placer Dome put the project on hold.

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Canadian Gold Hunters Undeterred by Sliding Price – by Marilyn Scales

Marilyn Scales - Canadian Mining JournalMarilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

It seems like only yesterday pundits looked at the price of gold as it topped US$1,000 an ounce and predicted it could only go up. Actually it was seven months ago, near the middle of March 2008, and we all wish the price would return to that level. Instead, the mess in the global financial markets has for some reason made the U.S. dollar stronger and the price of gold dip to the $750/oz range.

Nonetheless, many Canadian juniors are pressing ahead with work at what they hope will someday be this country’s next generation of profitable gold mines. Here is a sampling that have landed in my inbox during the last two weeks.

ALTO VENTURES of Vancouver sais drilling has begun on targets at its Mud Lake and Three Towers properties in the Beardmore-Geraldton Gold Belt in Ontario. High grades have been unearthed in the region in the past. (www.AltoVentures.com) WESCAN GOLDFIELDS of Saskatoon is earning a 50% interest in the Mud Lake project.

BRIGADIER GOLD of Toronto has extended the gold zone to more than 200 metres vertical depth at its Larder Lake project near Kirkland Lake, Ontario. The intersections were made beneath trenches in which visible gold was discovered in 2005. (www.BrigadierGold.com)

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