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Canadian Media Resource Articles

Goldcorp founder doesn’t see rival bids for Osisko – by Rachelle Younglai (Globe and Mail – March 13, 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.

Goldcorp Inc. founder Rob McEwen said he believes his former company will not face competition in its quest to own Osisko Mining Corp.

Goldcorp, which Mr. McEwen built into a serious gold player before leaving in 2005, is entangled in a hostile bid for Osisko and its large Canadian Malartic gold mine in Quebec. “The big guys aren’t looking, they are shrinking,” Mr. McEwen said.

Goldcorp’s cash and stock bid is valued at $3-billion and is the biggest deal in the Canadian mining space in more than a year.

Investors are expecting a higher bid to emerge. But there are not many other miners that can save Osisko from Goldcorp, as the major gold producers are hampered by costly acquisitions made during the commodity boom.

Mr. McEwen suggested that more work had to be done at Osisko’s prized mine. The former Goldcorp chairman said he remembers looking at Canadian Malartic’s ore grade and thinking to himself: “Wow, look at Osisko, they have less than a gram and they are going to process all this [rock].”

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Water from a stone: Tiny diamond contains secrets of Earth’s mantle – by Tu Thanh Ha (Globe and Mail – March 13, 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.

A pea-sized diamond picked up a decade ago by a Brazilian prospector has unlocked evidence that, hundreds of kilometres under our feet, Earth’s mantle holds as much water as all of our planet’s oceans.

The discovery by a University of Alberta team bolsters theories about the existence of a water-saturated zone between the Earth’s rocky layers that would explain volcanic activities and the interaction of tectonic plates.

The diamond’s route from the alluvial plains of Brazil’s Mato Grosso province to the University of Alberta’s labs is a tale blending an exotic setting with reminders of Jules Verne’s classic science fantasy of a sea in the centre of Earth. The research, published this week in the journal Nature, confirms the terrestrial existence of ringwoodite, a high-pressure form of a common silicate.

What was most striking about the ringwoodite discovery, by a team led by University of Alberta professor Graham Pearson, was that 1.5 per cent of it was water, bound chemically to the mineral. Based on projections of how much ringwoodite scientists believe is in the Transition Zone, between 410 and 670 kilometres down, Dr. Pearson estimated that it contains “a very, very large amount of water.”

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Why miners aren’t panicking about the latest commodity drop – Peter Koven (National Post – March 13, 2014)

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

While steep declines in copper, iron ore and coking coal prices have spooked investors, they are not severe enough to disrupt the mining sector at this stage.

The vast majority of projects can generate decent margins at these price levels, according to experts. Though in the case of coal, there has been enough of a drop to make high-cost producers nervous.

Prices for all three commodities have been under pressure throughout 2014, but they plummeted over the last several days due to economic concerns out of China. Manufacturing activity has been weaker than expected, and a bond default by a solar company raised fears of tighter credit conditions. That hit the copper market in particular, as many Chinese companies use the red metal as collateral to raise money.

Chinese steel mills are also being threatened as the government tightens environmental standards. That is putting pressure on coal and iron ore.

Copper has sunk to near a four-year-low, falling below the psychological barrier of US$3.00 a pound.

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In Ukraine’s coal-fired industrial east, some see a better past, and future, as part of Russia – by John-Thor Bahlburg (Associated Press/Montreal Gazette – March 12, 2014)

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

LUHANSK, Ukraine – Lidia Gany had some tea and bread, all she can afford these days for most meals, put on her duffel coat with the fake purple fur collar, and came down to the main square of this down-at-the-heels industrial city at Ukraine’s eastern edge to join fellow ethnic Russians in urging Moscow to send troops across the border and protect them.

“Only Russia can save us,” said the 74-year-old pensioner, crossing herself.

Since Russian troops rolled into Crimea, and lawmakers there scheduled a referendum for Sunday on whether to join Russia, the world’s attention has focused on the fate of the lush peninsula that juts into the Black Sea. But here in Ukraine’s coal-fired industrial east, where huge numbers of Russians have lived for more than two centuries, a potent mix of economic depression, ethnic solidarity and nostalgia for the certainties of the Soviet past have many demanding the right to become part of Russia as well.

“I’m for living in one country, with no borders, like we used to. Like the fingers on one hand,” said 60-year-old Lyudmila Zhuravlyova, who signed a petition asking for Russian President Vladimir Putin’s military invention to stop “political persecution and physical annihilation of the Russian-speaking and Orthodox population.”

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Canada’s mining industry supports new free trade agreement with S Korea – by Henry Lazenby (MiningWeekly.com – March 11, 2014)

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

TORONTO (miningweekly.com) – The Mining Association of Canada (MAC) on Tuesday voiced support for Canadian Prime Minister Stephen Harper’s announcement that Canada and the Republic of Korea had concluded negotiations for a bilateral free trade agreement that would significantly boost trade and investment ties between the two countries.

The free trade agreement, Canada’s first with an Asian market, was expected to create thousands of new jobs in Canada and provide Canadian businesses and workers with a gateway to Asia, enhancing their global competitiveness. It would also level the playing field for Canadian companies competing with South Korea’s other trading partners, including the US and the European Union, which already have free trade agreements with Korea.

“Our government recognises the importance of opening new markets for Canadian goods, services and investment, which is why we launched the most ambitious trade agenda in Canadian history. The Canada-Korea free trade agreement will create jobs and open the door to the lucrative Asia-Pacific market for Canadian businesses.

“The Canada-Korea free trade agreement not only reflects the input of all sectors of the economy, provinces and territories, it will deliver significant benefits for Canadians from coast to coast to coast,” Harper said.

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Copper’s freefall is freaking out world markets – by Marc Jones (National Post/Reuters – March 12, 2014)

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

LONDON — A dizzying fall in copper to a near four-year low compounded increasing concern in China over its economic slowdown on Wednesday to send a wave of unease sweeping through world markets. World shares fell for fourth day, but it was copper, often seen as a proxy for China’s fortunes, that grabbed the headlines as Shanghai futures fell by their 5% daily limit again and benchmark prices of the metal slumped to their lowest since 2010.

In Europe, bourses from London to Lisbon tumbled in early deals and safe-haven German government bonds were in demand as the jitters compounded the geopolitical tug-of-war between Russia and Kiev and the West over Crimea.

“Markets are watching what is happening in copper, with awe and trepidation,” said Societe Generale head of currency strategy Kit Juckes. “It’s partly ongoing concern about Chinese growth (or lack thereof) and nagging worries about the Ukraine. And partly it is just that the commodity bubble burst last year and not everyone noticed.”

Copper’s plunge comes in the wake of China’s first domestic bond default which has sparked concerns about the potential unravelling of loan deals where the industrial metal has been used as collateral.

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The Borealis Initiative: Mining dialogue is democratic, not damaging – by Pierre Gratton and Alan Young (National Post – March 12, 2014)

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

Merely satisfying regulatory requirements won’t always meet the needs of future generations

With the world’s largest mining convention officially over in Toronto, we are reflecting on some differing views regarding the Canadian mining industry’s relationship with NGOs. What we have discovered is that there are some misconceptions that should be cleared up.

Peter Foster’s column (Mining in an ENGO hole, March 5) is one such example. It totally misconstrues how the Canadian mining industry and NGOs cooperate with each other on social and environmental issues. Instead of recognizing the important role of dialogue among different actors in earning and maintaining the privilege to operate, Foster characterizes NGOs as troublemakers that currently have the mining industry at the mercy of their whims by “breathing down industry’s necks.”

This misleading view paints the industry as purely reactionary to the actions of NGOs, which is far from the truth. A good many in both of our sectors recognize that real progress can be made by working constructively with people from different backgrounds and areas of expertise. For its part, the Canadian Boreal Initiative has embraced this approach in its work to protect and sustainably develop Canada’s boreal forest.

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The Borealis Initiative: Going beyond the law is dangerous territory – by Peter Foster (National Post – March 12, 2014)

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

Why do we need extra legal forces, particularly foreign-funded ones, to protect the Canadian environment

I have no doubt that the Mining Association of Canada’s Towards Sustainable Mining (TSM) program is a model of environmental and community responsibility. The Canadian mining industry is here, as in many other respects, a world leader. Where I continue to beg to differ with the association is in the nature and significance of its relationship with the Canadian Boreal Initiative, CBI.

The co-authored response to my recent column suggests that “dialogue” is an important part of the “privilege to operate.” But surely it is strange to regard the creation of jobs, growth and tax revenue as a “privilege” which requires “licence” from foreign-funded groups such as the CBI, especially as those groups require no licence of their own.

Without such ENGO licence, however, a company or industry opens itself to potential “reputational damage,” that is, the spreading of disinformation about it, and the harassment of its customers. Such harassment was important in forcing the forest industry into the 2010 Canadian Boreal Forest Agreement, CBFA, which was promoted and “brokered” by the Philadephia- based Pew Charitable Trusts.

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HudBay CEO Eyes More Deals Beyond Augusta Bid: Corporate Canada – by Liezel Hill (Bloomberg News – March 11, 2014)

http://www.businessweek.com/

HudBay Minerals Inc. (HBM), the 87-year-old company making a C$334 million ($301 million) hostile bid for a smaller Canadian copper-mine developer, is looking for more acquisitions even if it doesn’t pull off that deal.

HudBay made its all-stock offer on Feb. 9 for Augusta Resource Corp. (AZC), the owner of the Rosemont copper project in Arizona. The bid was 16 percent less than Augusta’s closing price yesterday in Toronto, indicating investors are anticipating a higher offer. That’s also the widest discount for any current Canadian takeover, data compiled by Bloomberg show.

While HudBay recently started up two Canadian mines and is close to completing a new Peruvian operation, it’s not yet clear where growth will come from further in the future, according to Chief Executive Officer David Garofalo. Hudbay is still a few years away from developing a sustainable pipeline, he said in a March 4 interview at Bloomberg’s Toronto office. “We’re ready to move onto other things whether or not we get Rosemont,” he said.

Garofalo, 48, a former chief financial officer at Canadian gold producer Agnico Eagle Mines Ltd., took up his current post in July 2010, more than a year after HudBay abandoned an agreement to buy Canadian competitor Lundin Mining Corp. Garofalo said that when he became CEO, he found the Toronto-based company’s project pipeline was empty, while two of its three mines were nearing the end of their lives.

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More disciplined M&A on tap for gold miners in 2014 – by Alisha Hiyate (Mining Markets – March 10, 2014)

http://www.miningmarkets.ca/

When the market was hot from 2010 through 2012, mid-tier Alamos Gold (TSX: AGI; NYSE: AGI) stayed on the sidelines of an otherwise active M&A scene because valuations for companies were “through the roof,” says the company’s president and CEO, John McCluskey.

“The only way you could step into that market and feel at all comfortable is if you felt gold was going to US$3,000 an oz. or something – which we did not.”

More recently, as the gold price started to cool, Alamos found valuations were at last coming down to more reasonable levels. Last year, the debt-free company, which produced 190,000 oz. of gold at its Mulatos gold mine in Mexico in 2013, was involved in three takeover bids.

However, despite the decline in valuations since 2012, McCluskey says it’s still difficult to find compelling transactions.

“Generally we’re trying to acquire public companies and there’s a sufficient amount of information in the public realm for us to do a desktop analysis,” he says.

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UPDATE 2-Barrick to sell part of its stake in African Barrick – by Euan Rocha (Reuters U.S. – March 10, 2014)

http://www.reuters.com/

(Reuters) – Barrick Gold Corp said on Monday it plans to sell about 13.5 percent of its holdings in its majority-owned subsidiary African Barrick Gold .

Toronto-based Barrick, which currently owns a roughly 303.25 million shares in African Barrick, is selling 41 million shares. The gold miner will still own a majority stake of just over 60 percent in the Africa-focused miner following the close of the transaction.

Barclays analyst Farooq Hamed believes the stake sale will result in proceeds of just over $200 million that will help bolster the gold miner’s balance sheet and allow it to trim its debt load.

The move is the latest attempt by the world’s largest gold miner to trim its asset base and reduce its exposure to higher cost assets. In 2012, the company attempted to sell a part, or all of its interest in African Barrick Gold to China National Gold Group, but those talks fell apart last year.

The company has since gone on to sell a number of non-core assets. In January, Barrick Gold agreed to sell its Kanowna gold mine in Western Australia to Northern Star Resources for A$75 million.

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‘Dr. Copper’ sinks to eight-month low amid concerns about China – by Peter Koven (National Post – March 11, 2014)

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

Copper goes by the nickname “Dr. Copper” because history shows the red metal is a leading indicator of the global economy’s health. Unfortunately, it hasn’t been telling us anything good lately.

The red metal has recently been in a swan dive, dropping close to 10% since mid-February and falling steeply in the past couple of trading days. The key futures contract on Monday briefly sunk below US$3 a pound, its lowest level in eight months.

As is usual with commodities, China appears to be the culprit. Investors were spooked by recent Chinese trade data that showed a stunning 18.1% year-over-year drop in exports in February. That left a trade deficit of US$23-billion.

“It was a big number that probably surprised people,” said Kerry Smith, an analyst at Haywood Securities.

There was already a lot of concern in the market about the Chinese economy, particularly after its first-ever corporate bond default last week. But copper, much like China, has shown remarkable resilience in recent years.

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RIP commodity supercycle, 2002-2014 – by Scott Barlow (Globe and Mail – March 11, 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.

Metals prices in China were crushed Monday as the country’s economic numbers continued to drive nails into the coffin of a global commodity supercycle that has enriched so many Canadians since 2002.

Copper prices in Shanghai fell 5 per cent Monday after the government released trade statistics showing an 18.1-per-cent year-over-year decline in exports. The copper price now stands 8.6 per cent below highs hit on Feb. 17. Commodity price carnage was also apparent in iron ore. The spot price fell 8.3 per cent Monday, and is now lower by 20 per cent year to date.

The export data was extremely disappointing to economists who had predicted a 7.5-per-cent increase. Seasonal factors were definitely in play – Chinese New Year celebrations always skew the early-year data. Even so, the number is easily soft enough to confirm the economic weakness suggested by a March 2 PMI report that showed a contraction in manufacturing activity.

Economists expect that China’s gross domestic product growth will reach the government target of 7.5 per cent this year, so at first glance the recent volatility in commodity markets makes little sense.

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COMMENT: Chilean court cancels Pascua-Lama fine, retains suspension – by Marilyn Scales (Canadian Mining Journal – March 10, 2014)

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.

As we are used to hearing – there is good news and bad news. This time Toronto’s Barrick Gold is on the receiving end of both, thanks to the environmental court in Chile. At issue is the future of the expensive Pascua-Lama gold project that straddles the Chile/Argentina border.

Last week, Chile’s second environmental court annulled the fines imposed by a local environmental regulator (SMA). The amount is small – $16 million compared to the projected $8.5-billion cost of the project. The higher court cited “errors and illegalities” in the SMA’s resolution, and removed the fines. The SMA will now consider each of 23 charges separately, and readers can expect that the fines will be re-imposed.

That was the good news. Now the bad. At the same time the court upheld the suspension of work order imposed on the Chilean portion of Pascua-Lama. The only project Barrick has been allowed to work on is the water management system.

The Pascua-Lama project has been one of the most difficult any mining company tried to develop.

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Rejected in 2008, Kemess gold-copper mine proposal on table again – by Wendy Stueck (Globe and Mail – March 10, 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.

VANCOUVER — A mine rejected in 2008 on environmental grounds is back in play, with a different company at the helm and plans for an underground, rather than an open-pit, operation.

Toronto-based AuRico Gold filed a project description for the Kemess Underground Mine Project with the B.C. Environmental Assessment Office last month, reviving plans for a gold-copper deposit about 250 kilometres north of Smithers and about 6.5 kilometres north of former producer Kemess South Mine, which was in production from 1988 to 2011.

In the years leading up to Kemess South being depleted, former owner Northgate Minerals made plans to extend operations by developing the nearby Kemess North deposit. Plans at the time called for disposing of tailings and waste rock from expanded operations in Duncan Lake, also known as Amazay Lake.

That plan did not sit well with aboriginal groups that had historic and cultural connections to the lake. In 2007, a federal review panel concluded Kemess North as it was then designed was not in the public interest “because of significant adverse environmental, social and cultural effects, some of which may not emerge until many years after mining operations cease.”

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