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Private equity investment still circling mining sector – by Simon Rees (MiningWeekly.com – April 14, 2014)

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

TORONTO (miningweekly.com) – The growth in private equity investment within mining and metals has provoked greater debate about its role as a driving force within the sector over the past year. However, private equity is selective about when and where it deploys capital; it cannot be viewed as an industry panacea.

“It’s also fair to say that private equity funds usually approach the sector with a long-term perspective,” Norton Rose Fulbright partner Janet Howard told Mining Weekly Online.

Howard specialises in mergers and acquisitions, corporate and securities law, with emphasis on the mining and natural resources sectors. “Private equity firms view themselves as part of the team directed at problem solving,” she said. “They might say: ‘tell us what you think the potential problems are and we’ll help you fix it’.”

“Their money is sophisticated, deliberate, focused and professional. Often they’ve worked in other sectors during difficult times, so they understand where the risks are and form the necessary solutions,” she added.

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Is sad sack Ontario ‘dragging down’ the rest of Canada? – by Armina Ligaya (National Post – April 15, 2014)

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

Ontario’s government is facing growing calls to get its fiscal house in order, with a Fraser Institute study pegging the province as an economic ball and chain “dragging down the country as a whole.” Respected tax policy expert Jack Mintz made a similar claim in a Financial Post opinion piece last week.

“Ontario is sagging under the weight of monstrous public debt, uncompetitive energy prices and rising taxes,” wrote Mr. Mintz, Palmer Chair, School of Public Policy, University of Calgary. “Given Ontario’s size, other regions of Canada are being hurt.”

But economists are split over how much a weak Ontario — with its shrinking per-capita GDP and weak private-sector employment amid other struggles — is being felt across the country, or whether the province is bearing the brunt of its own demise itself.

Livio di Matteo, a senior fellow at the Fraser Institute and lead author of the think-tank’s study released Monday, says Ontario’s economic struggles over the last decade to become a “have-not” province, receiving federal transfers instead of serving as a foundation for the national economy, has implications beyond its borders.

He blames an “incomplete transition to a more competitive world economy,” aggravated by high energy costs, reliance on manufacturing tied to the U.S. market and interventionist government policies.

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First Nations proposes Northern Gateway pipeline alternative following plebiscite setback – by Yadullah Hussain and Jeff Lewis (National Post – April 15, 2014)

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

TORONTO/CALGARY — As Enbridge Inc. reels from the rejection by residents of Kitimat, B.C. of the Northern Gateway pipeline, a First Nations-led consortium is seeking to build an alternative project that would link Alberta’s oil sands to the British Columbia coast.

Eagle Spirit Energy Holdings Ltd. and Vancouver-based Aquilini Group say they have signed non-disclosure agreements with a “substantial number” of First Nation groups in northern B.C., including some “staunchly opposed” to the Enbridge project.

The one-million barrel-per-day pipeline has a tentative 2020 start date once it secures a “social licence” from First Nations to operate, the group said at a media conference in Vancouver on Monday.

“The only licence that matters to do this [project] in British Columbia is the social licence from the First Nations community,” said Calvin Helin, chairman and president of Eagle Spirit Energy Holdings, noting that he spent a year and a half listening carefully to the feedback from and concerns of First Nations. The group will file an application with the National Energy Board only after it has addressed all First Nations’ concerns and issues.

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Scotiabank raises nickel price outlook in light of Indonesian export ban – by Craig Wong (Canadian Press/CTV News – April 14, 2014)

http://www.ctvnews.ca/

OTTAWA — Scotiabank is raising its outlook for the price of nickel — a key component in stainless steel — following an Indonesian export ban on unprocessed ore that took effect earlier this year. Nickel prices have been rising following the Indonesian ban that was enacted in an attempt to encourage foreign investment in ore processing in the country.

“While the export ban was announced more than four years ago with an unchanged starting date of January 2014, few market observers, including ourselves, believed that Indonesia would have the resolve to stick with this agenda,” Scotiabank said in a report Monday.

“However, after three months and no signs of the ban being eased or watered down, the nickel market has begun to panic, with prices moving up sharply.”

The bank said it now expects nickel to average US$7.66 per pound this year, up from earlier expectations for US$6.75. Scotiabank also raised its outlook for 2015 to US$9 from US$7 for 2016 to US$10 from US$7.50. The price of nickel was US$6.82 per pound last year.

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Chinese group buys Las Bambas mine for $5.85-billion, giving boost to sector – by Rachelle Younglai (Globe and Mail – April 14, 2014)

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.

Glencore Xstrata PLC sold its massive Peruvian copper project to Chinese investors for $5.85-billion (U.S.) in cash, the biggest deal in the mining sector in more than a year and an encouraging sign for an industry that has been hit hard by lower metal prices.

The sale of Las Bambas to a consortium led by state-owned China Minmetals Corp. could inject more life into the mining sector, which has struggled with fears that China’s slowing economy will crimp demand for raw materials.

“This shows you that Chinese companies still really believe in China. Westerners are overreacting to the lower economic growth,” said John Gravelle, mining leader with consultancy firm PricewaterhouseCoopers LLC.

The large Las Bambas copper mine is mostly built and scheduled to start production next year. It is scheduled to produce 400,000 tonnes of copper a year from 2015, equivalent to 12.5 per cent of 2013 imports of copper metal by China. Chinese regulators required the divestiture of the Peruvian asset when Switzerland-based Glencore bought Anglo-Swiss Xstrata.

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Vancouver Island First Nation declares ‘tribal park’ to protect land – by Gordon Hoekstra (Vancouver Sun – April 13, 2014)

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

Latest park meant to thwart potential Imperial Metals mining project near Tofino

The Tla-o-qui-aht First Nation on Vancouver Island has used a unilateral tribal park declaration to try to control development on their traditional territories. The Tranquil Valley tribal park in Clayoquot Sound — where Imperial Metals is investigating the possibility of a mine — is the third tribal park the First Nation has declared.

The Tla-o-qui-aht has declared this territory, about 20 kilometres northeast of Tofino, off limits to mining activity after the province issued a gold exploration permit to the Vancouver-based company last summer.

While tribal parks have not been recognized by the province, Parks Canada worked with the Tla-o-qui-aht on a “tribal parks establishment project” in one of its declared parks in 2009.

The tribal parks are meant to create a management system to protect the land, but also create sustainable jobs. The Tla-o-qui-aht First Nation has done that, for example, with hatchery programs to improve fisheries, bear watching and run-of-the-river hydro projects.

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China-backed group pays US$6B for Glencore’s Las Bambas copper mine – by Karen Rebelo and Silvia Antonioli (Reuters/National Post – April 14, 2014)

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

A Chinese consortium bought the Las Bambas copper mine in Peru from Glencore Xstrata for US$6 billion, the high end of analysts’ forecasts in China’s biggest acquisition of a mine, showing the strength of its long-term need for copper.

MMG Ltd, the Hong Kong-listed offshore arm of China’s state-owned Minmetals Corp, led the winning bid in partnership with Hong Kong-registered Guoxin International Investment Corp and state-owned investment giant CITIC Group.

Commodity trader Glencore had agreed to sell Las Bambas to secure approval from China’s competition authorities for its takeover of miner Xstrata. Beijing made this condition to prevent the merged group from having potentially too much power over the global copper market.

A Chinese buyer had been considered a virtual certainty since Las Bambas was put on the block, given the deep pockets of China’s state-owned enterprises and its hunger for copper as the world’s top consumer of the metal.

Glencore will receive about US$5.85 billion in cash upon completion of the deal, which compared with analysts’ forecasts between US$5 billion and US$6 billion.

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On the road to reconciliation, tension between miners and Aboriginals grow – by Henry Lazenby (MiningWeekly.com – April 11, 2014)

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

TORONTO (miningweekly.com) – While Canada has come a long way in reconciling pre-existing Aboriginal sovereignty with assumed Crown sovereignty, tension is rising between the proponents of several new mining projects located on Crown lands, or within Aboriginal reserves, and Aboriginals, who increasingly assert their rights.

In recent weeks, several Aboriginal communities have voiced their concerns regarding proposed mining projects, insisting on their right to self-determination.

For example, this week the West Moberly First Nations were in the Supreme Court of British Columbia, in Nanaimo, where they argued their case against a proposed coal project in an area 34 km north of Chetwynd, in north-east British Columbia, which had been deemed of “critical spiritual and cultural importance” by the community.

Last summer, the Energy and Mines Ministry issued mining permits to Canadian Kailuan Dehua Mines – a Chinese-backed mining company – for its Gething project, authorising the company to remove 100 000 t of material, transport 15 000 t of coal and construct the main components of a mine that would operate for about 30 years.

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The LNG race: The lessons Canada can learn from Australia – by Iain Marlow and Brent Jang (Globe and Mail – April 12, 2014)

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.

GLADSTONE, AUSTRALIA and VANCOUVER – On a warm evening in late February, on an island just off the coast of eastern Australia, workers started to pour the concrete roof of an enormous liquefied natural gas tank that stretches 90 metres in circumference and rises 10 storeys into the sky.

The workers toil away late at night to avoid the searing heat of Australia’s late summer sun. They had recently built the roof for an identical adjacent container, both part of the $24.7-billion Australian ($25.5-billion Canadian) joint venture Australia Pacific LNG, owned by American oil and gas firm ConocoPhillips Co., Australian energy giant Origin and China’s state-owned Sinopec.

The two enormous tanks will hold natural gas tapped from the deep coal beds further inland and piped hundreds of kilometres to the LNG export terminal on Queensland’s Curtis Island. Facing the sheltered harbour of the industrial port city of Gladstone, the gas will be chilled until it condenses to one-six-hundredth of its original size – essentially from the size of a beach ball down to a table tennis ball – making it possible to load the liquid gas onto LNG carriers with enormous domed tanks and ship it off to the surging economies of Asia.

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UPDATE 4-Osisko takeover battle heats up as Goldcorp raises offer – by Allison Martell and Nicole Mordant (Reuters U.S. – April 10, 2014)

http://www.reuters.com/

Osisko Mining Corp on Thursday, squeaking above a white knight bid by Yamana Gold Inc and heightening a bidding war that has helped inject life into a depressed gold mining sector.

Vancouver-based Goldcorp, the world’s second-biggest gold miner by market value, said early on Thursday it increased its offer for Osisko by some 38 percent to about C$3.6 billion ($3.3 billion), or C$7.65 a share.

Osisko is a smaller Canadian gold miner with one producing mine, Canadian Malartic in Quebec. The mine is an attractive asset as it is large and low-cost and located in a stable political jurisdiction.

Goldcorp shares fell nearly 4 percent following the news, reducing the value of its cash-and-stock bid to around C$7.47 a share. Still, the offer remained around 4 percent higher than Yamana’s cash-and-shares offer, based on analysts’ estimates.

Yamana, another Canadian gold miner, launched a complex offer for 50 percent of Osisko’s assets last week. It said at the time that its offer was valued at C$7.60 a share although analysts have pegged it lower than that. Some Osisko shareholders said the new Goldcorp bid was no blockbuster.

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Stornoway lands $944M financing agreement to build Renard diamond mine – by Alisha Hiyate (Mining Markets – April 10, 2014)

http://www.miningmarkets.ca/

Stornoway Diamond (TSX: SWY) has lined up a $944-million financing deal to build its Renard diamond mine in Quebec. The binding agreement signed with three parties constitutes the largest ever project financing package for a publicly listed diamond company.

The complex deal involves debt, equity and streaming components, and involves funding from the Quebec government, a private equity firm, an institutional fund, and an equipment manufacturer. The company expects to start construction in June, plant commissioning in the third quarter of 2016, and commercial production in the second quarter of 2017.

Private equity firm Orion Co-Investments will provide US$360 million (C$396 million): US$110-million in equity financing; US$200 million for a 16% streaming interest; and US$50 million in a 7-year, unsecured convertible loan with an interest rate of 6.25%.

Resources Quebec, a subsidiary of provincial agency Investissement Québec, will provide $220 million: $100 million in equity financing; $100 million in a 10-year senior secured loan at an interest rate of prime plus 4.75%; and another $20 million in a senior secured loan for credit overrun facilities.

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Holcim-Lafarge cement mega-merger to be felt in Canada – by Nicolas Van Praet (National Post – April 8, 2014)

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

MONTREAL – Holcim Ltd. and Lafarge SA confirmed they will merge to form the world’s biggest cement maker in a deal with significant market concentration implications in Canada and other countries.

The two companies are already among the world’s largest suppliers of cement, crushed stone and sand and gravel. In combining into a new producer with annual revenue of US$40-billion, management of the two companies believe they will be required to sell assets representing about 18% of that revenue to satisfy competition regulators.

In Canada, Lafarge and Holcim together employ about 9,000 people and hold about half of the cement market, according to a 2008 estimate published by the Cement Association of Canada. The industry is centered in Ontario and Quebec.

Rivals such as Bolton, Ont.-based James Dick Construction Ltd. said they were surprised by the announcement, but added it could create an opportunity to grow their own businesses by buying what Lafarge and Holcim are forced to discard. Dick specializes in so-called aggregates, which are granular construction materials such as gravel and sand.

“I don’t think it’s bad news. It’ll open it up a bit for us,” company president Jim Dick said Monday. “We would expand if it makes sense.”

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Goldcorp Inc hikes hostile bid by $1-billion, but Osisko Mining Corp. still favours Yamana – by Peter Koven (National Post – April 11, 2014)

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

TORONTO – The shareholders of Osisko Mining Corp. face a tricky choice: take the clean takeover bid and walk away, or take a more complex deal with a disputed value that management firmly believes is better.

Goldcorp Inc. hiked its hostile bid for Montreal-based Osisko on Thursday to $3.6-billion, or $7.65 a share in cash and stock. The dollar value is roughly $1-billion more than Goldcorp offered in January, when its own share price was significantly lower.

That bid is going up against the multi-faceted transaction Osisko unveiled last week with Yamana Gold Inc., in which Yamana will buy 50% of Osisko’s assets and Osisko will receive funding from two pension funds. The result is that Osisko would distribute about $1-billion to shareholders while continuing to operate its flagship Canadian Malartic mine in Quebec.

To determine which offer is better, investors must decide what they think the new Osisko would be worth after the Yamana transaction. And that is a source of considerable debate. When Osisko announced the deal with Yamana, it assumed a valuation for the new Osisko (“Osisko 2” or “O2”) of $3.35 a share. That gave the whole transaction a value of $7.60 a share, which is very close to Goldcorp’s bid.

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Brian Mulroney’s green gall – by Peter Foster (National Post – April 11, 2014)

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

The former PM’s speech featured a lack of historical context, presumably because it would have been too embarrassing

Brian Mulroney’s speech earlier this week to Canada 2020 – a “progressive” group of PR/government advisory types who pretend to chart the country’s future – presumably involved walking a fine pipeline. Progressives tend not to be great fans of Canada as an “energy superpower,” and no fans at all of Stephen Harper, that notion’s main proponent.

However, energy superpower-dom was essentially what Mr. Mulroney was promoting, so he leavened his recommendations with an attack on Mr. Harper’s leadership on energy and climate issues.

I’m not sure how far that spoonful of vitriol helped the medicine go down, but Mr. Mulroney’s speech, while it contained a great deal of obvious good sense and some inevitable blarney, also featured a lack of historical context, presumably because it would have been too embarrassing.

Mr. Mulroney suggested that Canada lacked a “coherent plan” to harness its vast resources, but shouldn’t the man who dismantled the National Energy Program be a little more skeptical about grand strategies?

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Challenges ahead to sustain Saskatchewan’s rate of economic growth – by Meaghan-Craig (Global News – April 9, 2014)

 

http://globalnews.ca/toronto/

SASKATOON – Experts and mining leaders are weighing in on a new report that suggests Saskatchewan cannot sustain its current rate of economic growth.

According to a new study released Wednesday, while it’s a good time to be living in Saskatchewan, we may be relying too heavily on high commodity prices.

“For opportunity to continue you can’t rest on your laurels and what worked 10 years maybe doesn’t work the same way anymore,” said Doug McNair, with Certified Management Consultants of Saskatchewan.

The report by The Institute of Certified Management Consultants of Saskatchewan says the province’s rapid growth has been strongly influenced by the global commodity supercycle.

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