Canadian Media Resource Articles – Page 596

Potash Corp profit to take $100-million hit this year after Saskatchewan tax-rule changes – by Peter Koven (National Post – March 20, 2015)

March 20, 2015

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

Saskatchewan is preparing to review its byzantine potash royalty regime, and Premier Brad Wall thinks it is long overdue.

“Without the incentives that are overlaid on top of the royalty structure for brownfield and greenfield investment, we have the highest potash taxes on earth,” he said in an interview. “Higher than Russia.”

But in this week’s budget, Mr. Wall introduced one interim tax change that has already drawn a furious response from the world’s biggest fertilizer company.

Saskatchewan is stretching out the timing in which miners make deductions for expansions and maintenance spending. That has a significant impact on Potash Corp. of Saskatchewan Inc., which is wrapping up a $6-billion expansion program in the province. Potash Corp. expects budget proposals will cut its pre-tax earnings by $75-million to $100-million this year.

“Changing the rules midstream impacts the ability of our shareholders to earn a fair return on their capital and undermines Saskatchewan’s relative competitiveness,” chief executive Jochen Tilk said in an uncharacteristically harsh statement.

It takes chutzpah for Potash to protest new tax regime – by Sean Silcoff (Globe and Mail – March 20, 2015)

March 20, 2015

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.

Saskatchewan is blessed with the world’s largest bounty of potash – and cursed with the worst tax system for capitalizing on its bounty of the naturally-occurring fertilizer. It is a regime so complex that nobody – miners, investors or governments – has a clue how to forecast the tax outlay from year to year. Even University of Calgary tax expert Jack Mintz, who has written extensively about it, calls the regime “the most complicated thing I’ve seen in my whole career.”

Finally, after much prodding, the government of Brad Wall is promising to do something. In the provincial budget tabled this week, the Premier promised “a broad review of the entire potash tax regime.” Change can’t come soon enough. Potash Corp. of Saskatchewan, the industry’s largest miner, isn’t happy, but it has a lot of nerve to complain.

Saskatchewan’s potash tax system, according to a recent paper co-written by Dr Mintz, is convoluted, inefficient and uncompetitive. There are three levels of levies, creating a “tax jungle” that leaves producers subject to marginal effective tax and royalty rates last year ranging from 0.3 per cent to 22.6 per cent. It’s a wild and ridiculous range, especially considering the rate in other potash-producing countries amounts to one number, usually in the mid-teens or low 20s.

Yukon Zinc granted creditor protection after mine closure (CBC News North – March 19, 2015)

March 20, 2015

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

Yukon Conservation Society concerned about $3 million environmental security owed by Wolverine Mine

Yukon Zinc has been granted creditor protection by the Supreme Court of British Columbia, nearly three months after closing the Wolverine Mine, located north of Watson Lake.

The company owes more than $646 million to hundreds of creditors, but documents listed with PricewaterhouseCoopers Inc. show that most of the debt is owed to its parent company, JinDui Cheng Canada Resource Corporation Limited, which has a head office in Vancouver.

About $50 million is owed to businesses in and outside Yukon including Alkan Air, Air North, P.S. Sidhu Trucking, Northern Industrial Sales and Small’s Expediting Services. The Companies’ Creditors Arrangement Act, which Yukon Zinc is protected under, is a federal law that basically gives a company time to try to work out its financial difficulties with its creditors.

In this situation, Yukon Zinc says its creditors are required to continuing providing goods and services to the mine in accordance with existing agreements. Invoices after March 13 will be paid in full by the company, but invoices before that date “cannot be paid.”

Bay Street loses millions on Silver Wheaton bought deal – by Tim Kiladze (Globe and Mail – March 19, 2015)

March 20, 2015

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.

The unsold shares from Silver Wheaton Corp.’s billion-dollar financing are finally sitting in the hands of investors, but getting them there required the underwriters to endure substantial losses.

Earlier this month, the company, which specializes in buying royalty streams from miners, launched an $800-million (U.S.) share offering, worth roughly $1-billion (Canadian), to help finance the acquisition of a gold stream from Vale SA. The money was raised by way of a bought deal, in which a company issues equity to a syndicate of underwriters who then re-sell the shares.

Investors have been more than willing to help fund asset purchases over the past few months by buying shares in bought deals, such as Fairfax Financial Holdings Ltd.’s $650-million offering that was tied to its $1.88-billion (U.S.) acquisition of Brit PLC. For this reason, Silver Wheaton’s underwriters hoped — perhaps justifiably — their deal would sell quickly, but it ran into trouble from the get-go.

As soon as word got out that the deal was struggling, investors backed away, and multiple sources said the deal was likely only one-third sold. To get rid of the remaining shares, the investment banks re-priced the remaining stock this week at a substantial discount to the original offer price.

COMMENT: Quebec okays controversial Arnaud apatite [phosphate rock] mine – by Marilyn Scales (Canadian Mining Journal – March 19, 2015)

March 20, 2015

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.

One of the hottest topics debated by residents of the town of Sept-Isles, QC, lately has been the fate of the proposed Arnaud open pit apatite mine. The project is owned by Invstissement Quebec and Yara International, a Norwegian fertilizer manufacturer.

Not surprisingly many residents of the North Shore town are wildly opposed to a large open pit on the edge of town. Even the Bureau d’audiences publicques sur l’environement (BAPE) said the project was “unacceptable” in its present form last year. The bureau cited the risk of water contamination and landslides.

Union members and the potential pool of workers for the project insist it must go ahead if the region is to have any economic hope. The Arnaud mine would create perhaps 330 jobs over its 30 year life, and it would be a welcome step toward diversifying the local economy.

Then on Monday, March 16, 2015, Quebec environment minister David Heurtel gave the project the province’s blessing. He said the operator has agreed to 11 conditions spelled out by BAPE to lessen the impact of the mine. And the new development is in line with the province’s Plan Nord.

Mining critics barred from Canada – by Jason Warick (Saskatoon StarPhoenix – March 20, 2015)

March 20, 2015

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

A group of farmers critical of Canadian mining interests in their native Dominican Republic has been blocked from travelling to Saskatoon, Toronto and other cities. “It’s so preposterous,” said Irena Smith of St. Thomas More College at the University of Saskatchewan. The three farmers, representing La Federación de Campesinos Hacia el Progreso, were due to arrive in Toronto Wednesday and travel to Saskatoon on Saturday to speak at various events.

Smith, an organizer for the Saskatoon leg of the speaking tour, said the farmers planned to speak about their work forming co-operatives and implementing environmentally-friendly innovations such as shadegrown coffee.

The farmers also planned to speak critically about Canadian mining companies and their multi-billion dollar operations in that country. The cross-Canada speaking tour has been in the works for a year, Smith said.

The farmers went to the Canadian embassy in the Dominican capital of Santo Domingo this month, bringing letters of support from the University of Saskatchewan, the University of Toronto, the Canadian Catholic Organization for Development and Peace and its youth wing, Just Youth, as well as other groups.

[Aboriginal/Mining partnerships] Combined forces – by Chris Windeyer (CIM Magazine – March/April 2015)

March 20, 2015

http://magazine.cim.org/en/

A new partnership will jump-start mining contracts for First Nations in northern Ontario

The First Nations Mining Corporation (FNMC) is emerging as an example of a new kind of partnership to further aboriginal interests in mining development in Ontario. Centred in northern Ontario and formally launched in early 2014, FNMC is a joint venture between four First Nations and three corporate heavyweights in the Canadian mining industry. Lac Seul, Flying Post, Mattagami and Wahgoshig First Nations own 51 per cent of the registered corporation, with SNC-Lavalin, Cementation Canada and the Morris Group holding minority stakes.

“What we had envisioned for [FNCM] was finding a way that the communities can participate actively in mine construction, operation, and closure,” says Jason Batise, economic development and technical services advisor to the Wabun Tribunal Council, which represents the participating First Nations.

According to the Ontario Mining Association, about one out of every 10 people working in Ontario’s mining industry has an aboriginal background. What is changing is that aboriginal communities are moving beyond participation via impact and benefit agreements (IBAs); they are now organizing businesses and joint partnerships to spearhead mine development.

For the Wabun Tribal Council, mining is nothing new, says Batise. WTC is headquartered in Timmins, where gold mining has been going on for over a century.

Live wire act [Mining power costs] – by Chris Windeyer (CIM Magazine – March/April 2015)

March 19, 2015

http://magazine.cim.org/en/

No other significant cost factor varies so widely as electricity – internationally, more than 800 per cent variation in the price of electricity from one jurisdiction to another is accepted as normal. So what can miners do to turn such risks into opportunities? The cost of electricity is generally the second biggest cost factor that miners face. Only the workforce costs more. In Canada alone, miners (excluding coal) spent $2.4 billion on energy costs in 2012, according to figures from Natural Resources Canada.

That was up from a 2011 tally of $2.2 billion that included coal. At the same time, no other significant cost factor varies so widely – internationally, more than 800 per cent variation in the price of electricity from one jurisdiction to another is accepted as normal. So what can miners do to turn such risks into opportunities?

“If you’re sitting in northern Quebec and you have access to the hydro grid, there’s nothing that will beat Hydro Quebec’s rates,” says Steve Letwin, CEO of Toronto-based Iamgold, which owns mines in Quebec, Suriname, Mali, and Burkina Faso. Letwin says Quebec’s electricity costs 3.5 cents per kilowatt- hour (kWh), compared with off-grid Africa, where Iamgold relies on diesel and heavy fuel oil, and costs can reach 30 cents per kWh.

The recent decline in oil prices has knocked those off-grid costs down to around 21 cents per kWh, which Letwin says translates into cash cost savings of around $200 per ounce. At Iamgold’s Essakane mine in northeast Burkina Faso, currently operating with costs of around $1,000 per ounce, Letwin says halving the mine’s power costs would bring cash costs down to about $800 per ounce; it is roughly the same impact as doubling the grade.

PDAC 2015: John Kaiser on retail investors, systematic flaws (Northern Miner – March 19, 2015)

March 19, 2015

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

Retail investors, historically the “life blood” of the junior sector, are largely gone from the picture, but need to return for the sector to survive the current downturn, says John Kaiser.

The editor of Kaiser Research Online notes in the 1980s, retail investors depended largely on brokers to access information to invest in juniors. “To a large degree, it was a momentum driven market, and the focus in the ’80s was largely on gold exploration,” he said in early March at the Prospectors & Developers Association of Canada (PDAC) conference.

In 1990s, the sector uncovered several large discoveries, including the Voisey’s Bay nickel deposit and the Ekati diamond deposit, attracting institutional investors through private placements, Kaiser said. “That period was all about discovery exploration.” It also coincided with the deregulation of brokerage industry and the emergence of the Internet, which minimized the role of brokers as intermediaries between juniors and investors.

That discovery exploration phase came to a halt in 1997 following the Bre-X betrayal, “when the greatest gold deposit ever turned out to be a fraud,” Kaiser says. Consequently, the sector sank into a five-year bear market. But on a positive note, that scandal led to the introduction of the National Instrument 43-101 that required companies to backup their findings with technical reports, identifying project risks.

Finnish community in Thunder Bay struggles to save landmark restaurant – by Allan Maki (Globe and Mail – Marc 19, 2015)

March 19, 2015

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.

It has stood for 105 years as a measure of Thunder Bay’s history, a three-storey building with a restaurant that has fed generations of locals, many of them of Finnish descent. Others too, passing through or staying on the north shore of Lake Superior, have found comfort at the hallowed Hoito.

But now that building, once home to political activists, and its restaurant, the Hoito, are on the brink of financial ruin. With a debt load of more than $700,000, those working to keep the Hoito going are facing a hard fight. They understand what they’re up against and they know what could be lost.

“It’s filled with history,” said Kelly Saxberg, a member of the city’s Finlandia Association which oversees what was once the Finnish Labour Temple and is now a national historic site. “It’s a living museum.”

If you mention Thunder Bay to Canadians who live elsewhere, it won’t take long for them to mention the Hoito. The restaurant draws them all – workers, locals, tourists, even celebrities. Comedian Rick Mercer tried his hands at pancake making. Hockey legend Gordie Howe and his wife Colleen ate there. In 2009, Jordan Staal, then with the Pittsburgh Penguins, ate there and brought the Stanley Cup with him.

Ontario’s Power Trip: No windfall in selling off part of Hydro One – by Mike Hilson and Tom Adams (National Post – March 19, 2015)

March 19, 2015

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

A proposal leaked out from Ontario Premier Kathleen Wynne’s government to privatize a portion of Hydro One, the Crown-owned electricity transmission and distribution company. Although the Premier stressed that the decision wasn’t final and that it will remain regulated to protect ratepayers, she has been clear about her motivation.

Referring to the ongoing Advisory Council on Government Assets headed by former TD Bank CEO Ed Clark, she stated that the reason for the asset review is to leverage dollars to invest in transit and transportation infrastructure across the province.

The prospect of an IPO for Hydro One had commentators, opponents and supporters debating whether to cash in on the “windfall” and how much the haul might be. Generally agreed is the proposition that a sale would, as one columnist wrote, “generate a one-time cash haul for the government.”

The government’s proposal and the discussion around it has so far almost completely ignored the basic facts of financial life underpinning Ontario’s electricity system.

Hydro One’s numbers seem impressive – it claims $22.55 billion total assets and net equity of $7.93 billion – but there is a catch. Hydro One’s entire value is already spoken for.

Budget upsets potash producers – by Bruce Johnstone (Regina Leader-Post – March 19, 2015)

March 19, 2015

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

Sask. to gain, industry to lose

A change in the province’s potash royalty regime in the 2015-16 budget will net the Sask. Party government $150 million this year, Finance Minister Ken Krawetz announced Wednesday. The government also promised to revamp the province’s complex potash royalty scheme in consultation with the industry over the next year or two.

But the province’s biggest potash producer indicated the royalty change will negatively affect earnings and amounts to “changing the rules midstream.’ The budget said changes will be made to the Potash Production Tax “to defer the timing of capital deductions in order to prove an immediate and temporary increase in revenue from potash companies. The total amount of deductions producers received from their capital spending will now be utilized over a longer period of time.

“This is an interim step that will be followed by a review of the entire potash royalty and taxation regime.’ Krawetz told reporters that the government has held “ongoing consultations with the potash industry’ about the impact of the changes.

“After these smaller changes that we’ve been working on for a number of months, there will be a broader review over the next year or two. We want to ensure that the people of Saskatchewan who own the resource are rewarded at an appreciative rate,’ Krawetz said.

Kiggavik uranium hearing ends with no plebisicite in Baker Lake – by Sarah Rogers (Nunatsiaq News – March 18, 2015)

March 18, 2015

http://www.nunatsiaqonline.ca/

“Inuit are like caribou — they stay away from danger and conflict”

A public hearing into Areva Resources Canada’s proposed Kiggavik uranium in Nunavut project has wrapped up, but the Nunavut Impact Review Board might never know how the people of the community closest to the proposed mine — Baker Lake — actually feel about it.

On March 14, the final day of the hearing, Baker Lake’s deputy mayor, Silas Arngna’naaq, made a motion to keep the hearing’s record open until the hamlet holds a plebiscite to gauge local opinion on the project, which proposes to sink $2 billion into an open pit and underground uranium mine 80 kilometres outside the Kivalliq community.

The motion didn’t pass and that record is now closed — the NIRB said that the hamlet had plenty of time to host a plebiscite beforehand.

“I don’t know how much sway it would have,” Arngna’naaq said. “But I know they wanted to get the view of the closest community to the project. And they never got the full community’s perspective on this.”

A number of residents had tried to launch a local referendum which, under territorial legislation, requires a certain number of residents in a community to sign a petition.

PDAC 2015: Scotiabank’s Patricia Mohr predicts only ‘modest’ recovery (Northern Miner – March 17, 2015)

March 18, 2015March 18, 2015

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

Zinc is Mohr’s number one pick, and she forecasts prices will move up to US$1.50 per lb. in 2016.
Copper, she says, will remain flat at about US$2.75 per lb. for the next two years, but longer
term should reach US$3.50 per lb. She estimates the nickel price will reach about US$10.55 per lb.
in 2016. “I think nickel will do exceptionally well,” she predicts, “and Sudbury is going to come
back into its own in 2016.” (Patricia Mohr, Scotiabank Vice President Economics)

Commodity prices as of January this year have fallen below the previous recessionary lows of early 2009, and are now at levels not seen since January 2007, Patricia Mohr, vice president economics at Scotiabank, said during a presentation at the recent Prospectors & Developers Association of Canada conference in Toronto.

China’s massive infrastructure spending program helped lift commodity prices in 2009, but the latest dip in prices, Mohr says, is mostly due to “a fight for market share” in a very lackluster global economy. The world is entering its fourth year when global GDP growth has been just a little over 3% per annum, she warns.

“I’m beginning to realize that 3% per annum — while it is enough to turn over the global economy — it’s not high enough to really put any momentum behind global commodity prices and markets,” she says. “And when you get some capacity expansion, for example, such as in copper, and massive expansion in iron ore, and huge expansion in oil production from U.S. shales, all of this is occurring in a very lackluster market around the world, and leading prices lower.”

What Saskatchewan is doing right to attract mining investment – by Ravina Bains and Taylor Jackson (National Post – March 18, 2015)

March 18, 2015

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

“Furthermore, Saskatchewan has taken ownership of the consultation process; the provincial government
makes it very clear that it, not project proponents, is “responsible and ultimately accountable for
managing and implementing the duty to consult.” Saskatchewan is also home to innovative mining
partnerships between First Nations and resources companies. For example, Muskowekwan First Nation
and Encanto are undertaking a joint venture to develop the first on-reserve potash mine in Canada
that will generate 2.8 million tons of potash annually and create approximately 1,000 jobs.”
(Ravina Bains and Taylor Jackson)

The mining industry contributes mightily to Canada’s economic prosperity, adding $54 billion to Canada’s GDP and employing roughly 383,000 Canadians at an average annual salary of more than $110,000 in 2013.

But Canada has a serious problem with land-use certainty that may threaten future investment in the sector. Across the country, uncertainty surrounding disputed land claims remains a significant barrier to investment in the development of natural resources, particularly investment in the mining sector.

For example, every year the Fraser Institute surveys miners around the world to determine what makes a jurisdiction attractive — or unattractive — to investment. According to the most recent survey, in eight out of 12 Canadian provinces and territories in 2014, uncertainty over disputed land claims was the top barrier to investment.