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Canadian/International Media Resource Articles

Allana Says Concerns for Potash Supply Glut Overblown – by Christopher Donville (Bloomberg News – June 10, 2013)

http://www.bloomberg.com/news/

Allana Potash Corp. (AAA), the Canadian developer of a $642 million potash mine in Ethiopia, says predictions of a global oversupply of the crop nutrient are overblown because competing projects are being put on hold.

World potash production capacity will rise 38 percent to 96.5 million metric tons by 2017, while demand will increase 26 percent to 66 million tons, according to Green Markets, a fertilizer industry information provider.

Supply forecasts include mines that aren’t yet in production and may be shelved or canceled because of rising construction costs, said Farhad Abasov, Toronto-based Allana’s chief executive officer.

“On paper it seems like there is quite a bit of supply coming on line,” Abasov said in a May 28 telephone interview from London. “In reality only a handful of them will hit production.”

Soaring expenses are beginning to exact a toll on proposed potash mines around the world. Vale SA, the third-largest mining company, in March suspended its Rio Colorado project in Argentina after the estimated cost almost doubled to about $11 billion.

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Horizonte raises $4.7 million for Brazilian nickel project – by Lawrence Williams (Mineweb.com – June 11, 2013)

http://www.mineweb.com/

AIM and TSX junior nickel developer Horizonte Minerals has done well to raise $4.7m in the current climate and has organised an optional facility for a further $12.5m.

LONDON (MINEWEB) – AIM and TSX main board quoted Horizonte Minerals, which is concentrating its efforts on its Araguaia nickel project in Brazil’s Carajás region in Pará state – a deposit which it describes as a world leading asset in terms of size and grade – has just announced it has raised some £3 million ( around US$4.7 million) in an equity issue at 7.5 p/share, fully supported by its two major shareholders, Teck and Henderson Global Investors (HGI).

In addition it has also entered into a term sheet for an equity financing facility (EFF) for up to £8m ($12.5 million) over three years with Darwin Strategic Limited, a subsidiary of HGI. This can be drawn down at Horizonte’s option.

The Araguaia nickel deposit is a saprolitic nickel laterite located in the same area as Vale’s Onça Puma nickel mine as well as some other significant nickel projects including Glencore Xstrata’s Serra do Tapa only 60 km away.

Grades are reckoned as good for a deposit of this type and the resource is big – with considerable scope for expansion. The current NI 43-101 resource is estimated at 39.3 million tonnes grading 1.39% Ni (Indicated) and 60.9 million tonnes at 1.22% Ni (Inferred) at a 0.95% nickel cut-off. At lower cutoff grades the tonnages are far higher.

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Exiting Ecuador the right move for Kinross – by Peter Koven (National Post – June 11, 2013)

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

Kinross Gold Corp. has abandoned plans to develop the massive Fruta del Norte project in Ecuador after refusing to pay a 70% windfall profits tax demanded by the government.

It is a major disappointment for the company. Fruta del Norte was acquired for more than US$1-billion in 2008, and was expected to become one of the Toronto-based miner’s cornerstone operations. But more than two years of fruitless negotiations convinced Kinross that it was not going to get a deal that would generate good investor returns.

The Ecuadorian government played hardball with Kinross from the beginning, insisting on the monstrous windfall profits tax and never backing down. That was by far the biggest sticking point in the negotiations, chief executive Paul Rollinson said in an interview Monday. He is certain that walking away is the best move for shareholders.

“It really was a tough decision, but I do think it was the right decision,” he said. “I’m not prepared to sign anything with a 70% windfall profits tax.” Since taking over as CEO last year, Mr. Rollinson has put an emphasis on boosting profitability rather than building new mines for the sake of growth. This was clearly a project that could not generate a strong return because of the punitive tax regime.

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Canadian Company: EPA is Evil, Let Us Create Giant Alaska Mine – by Hal Herring (Field and Stream – June 10, 2013)

http://www.fieldandstream.com/

There is nothing like a good anti-federal-government advertising campaign to rally support for, well, almost anything. In this time of Internal Revenue Service scandals and accusations that the Environmental Protection Agency has charged so-called “conservative” groups for Freedom of Information Act requests that they handed over to environmental groups for free, the time was ripe for a smart advertising professional to tap in to the zeitgeist and try, yet again, to sell a highly skeptical American public on the Pebble Project—a huge proposed gold and copper mine proposed by two foreign mining corporations to be built on public lands in the headwaters of Bristol Bay, Alaska.

On June 4, Northern Dynasty Minerals, Limited, a Vancouver, Canada-based corporation that owns 50 percent of the Pebble Project, ran an ad in the Washington Post and on various political websites that demands an end to what it calls EPA’s “black box bias” against the mine. The ad also claims that the EPA is manipulating public opinion and denying science in response the results of the EPA’s 14 month-long comprehensive Bristol Bay Watershed Assessment (BBWA) show that the Pebble Project does indeed threaten the greatest salmon fishery on earth (a $500 million industry annually) and the estimated 14,000 jobs that depend upon it, thus industrializing one of America’s wildest and most pristine expanses of public land, which would forever change the culture and economy of the 7,500 people, mostly Native Americans, who now call it home.

I’m not sure what the Canadian mining executives thought the report should have said. Perhaps that Pebble Project would build the first road, first power-generating facility, and first deep-water port in the region to open up mining on tens of thousands of acres of public land in the trackless headwaters of the Nushagak and Kvichak Rivers.

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‘Mining will fuel our city’s future’ – [Queensland] North West Star Editorial (June 9, 2013)

http://www.northweststar.com.au/

BUSINESS leaders are positive about the city’s future despite a wave of public concern after news of Glencore Xstrata’s Mount Isa Mines’ prediction its local copper operations could cease by 2019.

The North West Star came under fire and wore the brunt of the response towards the revelations, titled “Is this the end?” in Friday’s edition. But many have come forward with positive outlooks for the city beyond current copper operations at the mine, saying it was simply the natural “ebb and flow” of the mining industry

Several mine workers told The North West Star that General Manager for Mount Isa Copper Operations at Xstrata Copper Mike Westerman addressed a group of employees on Thursday morning at the mine site.

The employees said Mr Westerman stated the feasibility study for the Mount Isa Open Pit (MIOP) project, which would have increased the mine’s life by 30 years, was too expensive and copper operations would either close in 2019 or operate until 2021 as a non-profit venture.

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Canada’s ‘Northern Amazon’ on the Brink – by Andrew Nikiforuk (TheTyee.ca – June 9, 2013)

http://thetyee.ca/

Report details how industry, climate change could ‘eat up’ the Mackenzie River Basin and its vital ecological services.

The Mackenzie River Basin, which occupies and protects one-fifth of Canada’s fresh water, could be severely destabilized by climate change as well as unbridled resource extraction, including hydraulic fracturing, hydro dams and oil sands mining.

That’s the uncomfortable conclusion of a new report by the prestigious University of California-based Rosenberg International Forum on Water Policy on what it calls “Canada’s northern Amazon.”

The scientific report, based, in part, on extensive input from First Nation elders, strongly recommends better environmental monitoring as well as industrial performance bonds for mining operations. It also calls for economic limits to development that give “due consideration” to the basin’s essential water-making and carbon saving ecological services.

The Mackenzie River, the longest flowing northern river on the continent, meanders through an expansive northern boreal forest and muskeg. The storied basin, the scene of gold rushes and oil booms, occupies parts of three provinces and two territories — an area three times the size of France.

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Oil more lucrative than mining [in Manitoba] – by Martin Cash (Winnipeg Free Press – June 7, 2013)

http://www.winnipegfreepress.com/

Manitoba industry hits revenue record in 2012, surpasses usual leader

For the first time, Manitoba’s oil industry has bragging rights over its resource cousins in the mining sector. In 2012, oil-industry revenue slightly nudged mineral-production receipts for top spot in Manitoba –$1.51 billion in oil and about $1.4 billion in nickel, copper, gold zinc and the rest of the underground miners’ production.

Last year, 18.5 million barrels of oil were produced. That’s 23 per cent more than 2011 and it has been growing by more than 20 per cent annually since 2005.

John Fox, assistant deputy minister of mineral resources for the Department of Innovation Energy and Mines, said there is no reason to think production won’t increase again this year.

“At 222 wells drilled already this year, we’re slightly ahead of last year,” Fox said. “We anticipate a similar 10 to 20 per cent increase in production in Manitoba in 2013. It’s not dying down.”

Manitoba’s oil production is restricted to the southwest corner of the province along the northeastern flank of the Williston Basin that extends into Saskatchewan, North Dakota, South Dakota and Montana.

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UN may license first seabed mining in 2016, but enviro scepticism lingers – by Nomvelo Buthelezi (MiningWeekly.com – June 7, 2013)

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

The United Nations (UN) has published its first plan for deep-sea mining and has announced that companies could apply for mining licences as soon as 2016. This comes at a time when this form of mining is becoming an increasingly attractive investment proposition.

After the release of a technical study by the International Seabed Authority (ISA), the UN body managing the industry, it is taking steps on how to move from bids handling mining exploration to considering how to license the first operations.

To date, the ISA has issued 17 exploration permits, while seven applications are currently being processed. They cover vast areas of the Pacific, Atlantic and Indian oceans. “We are at the threshold of a new era of deep seabed mining,” ISA legal counsel Michael Lodge told a BBC interviewer.

It is generally acknowledged that the world’s largest and most valuable resources of gem-quality diamonds are contained in the exposed marine gravel beaches along the Namibian and South African west coasts and on the submerged beaches in the adjacent territorial waters.

More than 90% of the diamonds currently mined from the sea and adjacent coastal areas are of gem quality because only the best-quality stones survived the transport-ation process to the coast.

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Why a Canadian Mining Executive Is Trapped in Colombia’s War – by Sebastian Salamanca (TheTyee.ca – June 8, 2013)

http://thetyee.ca/

Kidnapped in January, Gernot Wober is now a pawn in a long fight over resource rights.

Gernot Wober was a long way from his Canadian home when, on Jan. 18, he was taken captive by Marxist guerrillas in the town of Norosí, Colombia.

The reasons Wober is still being held are deeply entwined in a long-running war between rebels and the Colombian government. It’s a five-decade struggle to control the country’s northern region, which is called the South of Bolívar. At stake is a bounty of gold — and who gets to mine it. Multinational mining companies, as one might imagine, are lined up to exploit the resource. But the region is also home to so-called “traditional miners” — home-grown, low-tech operators who scrape out a living sifting gravel, sand and dirt for the precious ore.

Wober, a vice-president of exploration at the Toronto-based Braeval Mining Corp., is a pawn in that war over who gets the gold. And his captors, the National Liberation Army (ELN), are not likely to let him go without a bloody fight or something very valuable in return.

The ELN is the second largest guerrilla group in Colombia with roughly 2,500 armed members and a long historical presence in the South of Bolívar. On the day the ELN invaded a mining camp and took Wober, they also took hostage two Peruvians and three Colombian nationals.

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Miners may take more hits from weak gold prices after Newcrest – by Reuters U.S. (June 10, 2013)

 http://www.reuters.com/

SYDNEY/TORONTO – (Reuters) – The pain is not likely to be over for investors in mining shares after the steepest drop in gold prices in a generation led to a $6 billion asset writedown at Australia’s Newcrest Mining, fuelling speculation of more to come.

A $200 plunge in prices in two days in April heightened fears that gold’s 12-year rally may have topped out.

For nearly a month the price has languished around 1,400 an ounce, which could force more miners to write down the value of their reserves – calculated based on a higher price – and eroding the value of projects, some of which may no longer be profitable.

Gold miners were already struggling with the impact of soaring costs, including higher wages for workers and fuel prices, which have reduced margins and eaten into cash generation.

“We certainly expect we will see further writedowns from other producers as we … get closer to reporting season. It could be a trend,” said David Lennox, an analyst at Fat Prophets.

Newcrest, Australia’s biggest gold miner, said on Friday it would write down the value of mines in Australia, Papua New Guinea and Africa.

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Allana in Ethiopia Snubs Potash Supply Concern: Corporate Canada – by Christopher Donville (Bloomberg News – June 10, 2013)

http://www.businessweek.com/

Allana Potash Corp. (AAA), the Canadian developer of a $642 million potash mine in Ethiopia, says predictions of a global oversupply of the crop nutrient are overblown because competing projects are being put on hold.

World potash production capacity will rise 38 percent to 96.5 million metric tons by 2017, while demand will increase 26 percent to 66 million tons, according to Green Markets, a fertilizer industry information provider.

Supply forecasts include mines that aren’t yet in production and may be shelved or canceled because of rising construction costs, said Farhad Abasov, Toronto-based Allana’s chief executive officer.

“On paper it seems like there is quite a bit of supply coming on line,” Abasov said in a May 28 telephone interview from London. “In reality only a handful of them will hit production.”

Soaring expenses are beginning to exact a toll on proposed potash mines around the world. Vale SA, the third-largest mining company, in March suspended its Rio Colorado project in Argentina after the estimated cost almost doubled to about $11 billion.

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$3bn hit for WA’s biggest mine moguls – by Paul Garvey (The Australian – June 10, 2013)

http://www.theaustralian.com.au/business

ALMOST $3 billion has been wiped off the net worth of some of Perth’s most prominent mining executives this year, underscoring the pain being felt at the top end of a West Australian economy that appears to be cooling rapidly.

An analysis of data by The Australian has found that the average value of the shareholdings held by 10 of the biggest names in WA’s resources-dominated economy has fallen by more than 38 per cent from the peaks of the past six months.

The biggest fall in dollar terms has been felt by Andrew Forrest, whose major shareholding in Fortescue Metals Group has shed almost $2.1bn since the iron-ore miner reached its 2013 peak of $5.39 a share on Valentine’s Day.

In percentage terms, those hardest hit have come from the mining services sector.

Ron Sayers, the founder of drilling contractor Ausdrill, has seen his stake in the company plummet by 61.7 per cent in less than four months. Ausdrill stock has come under particular pressure in recent months, as investors bet on mining companies cutting back on discretionary spending on exploration drilling in an effort to rein in costs.

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Fraser Mackenzie will likely be the first of many boutique brokerages to die – by Matthew McClearn (Canadian Business Magazine (June 10, 2013)

http://www.canadianbusiness.com/

Investment dealers fade away.

Having spent 33 years in the brokerage industry, Mark Polubiec was well acquainted with its often vicious cyclicality. Even so, the gathering clouds he saw late last fall left him fearful for Fraser Mackenzie, the small firm for which he served as chairman and CEO. Although it was well capitalized, he says, its revenues dwindled abruptly. After months of considering the options, Fraser Mackenzie’s 22 shareholders (most also employees) decided in April to wind the firm down. “We could have ridden it out for at least a couple of years,” Polubiec says. “But at the end of that, if nothing had changed, we’d have squandered our capital.”

Fraser Mackenzie’s closure is emblematic of the challenges facing Canada’s approximately 185 boutique investment dealers. Like many others, it derived much of its revenues from fees earned helping early-stage resource companies raise money on equity markets. That business has dried up. According to Ernst & Young, the proceeds to mining companies from initial public offerings last year fell 81%. It’s not that resource companies don’t need the money; a report prepared for the Prospectors and Developers Association of Canada warned many juniors have “perilously low” working capital balances. But investors’ aversion to risk left juniors almost wholly unable to raise money.

Fraser Mackenzie faced another challenge that sealed its fate. It served institutional clients, helping them buy and sell shares primarily on Canada’s largest exchanges. In recent years, those clients have gained access to new, lower-cost channels such as direct market access (DMA), electronic trading facilities that allow them to bypass intermediaries and execute their own trades.

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Chinese gold miners’ hope for riches shattered by Ghana crackdown – by Kathrin Hille (Financial Times/Globe and Mail – June 9, 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.

SHANGLIN, GUANGXI PROVINCE — When Wen Haijian left home on May 20 last year to dig gold in Ghana, he promised to bring back a fortune. Those hopes were shattered when an urn with his ashes returned last month.

“A gang of armed robbers came to his mine on April 16,” says his wife, sobbing in front of two framed pictures of Wen, a serious-looking, tall man with a square mustachioed face. “When he got up at night to check on the machinery, they shot him right in the head.”

In Shanglin, a poor county in the southwestern Chinese province of Guangxi with a population of 470,000 people, most of the inhabitants are old people, women or children because so many men have gone to Ghana. The county government estimates that 12,000 people from Shanglin are still in the west African country.

In Shuitai, Wen’s remote home village where almost everyone shares his surname, 100 of the 900 inhabitants are in Ghana. “On average, they go for three years,” says Wen Ruchun, a woman whose husband is in Ghana as well. “The first year, you build up the mine and earn your investment back, the second year you start making some money, and the third year you come home.”

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OPEC’s slipping grasp on the world’s oil market – by Shawn McCarthy and Jeffrey Jones (Globe and Mail – June 8, 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.

OTTAWA and CALGARY — OPEC ministers put on a brave face when pressed about one of a number of growing threats to the cartel’s influence over world crude oil markets – surging shale oil production in the United States.

At OPEC’s home base in Vienna last week, Saudi Arabia’s powerful oil minister, Ali al-Naimi, played down the impact of the light, sweet crude that is gushing in record volumes from beneath North Dakota’s bald prairie and the scrubby landscape of South Texas. “This is not the first time new sources of oil are discovered, don’t forget history,” he said. “There was oil from the North Sea and Brazil, so why is there so much talk about shale oil now?”

Secretary-general Abdalla El-Badri was even more blunt: “OPEC will be around after shale oil finishes.” Despite the bluster from the biggest names in the 12-nation group that supplies a third of the world’s oil, however, it is clear the Organization of Petroleum Exporting Countries is getting nervous, and experts are questioning how long the cartel can act together to hold sway over global oil prices.

At the meeting, where the group kept its production ceiling of 30 million barrels a day, it also took the revealing step of forming a committee to study the impact of the hydraulic fracturing and horizontal drilling.

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