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Rio Tinto’s Mongolia Copper Dream Awakens 20-Year-Old Nightmare – by Elisabeth Behrmann & Yuriy Humber (Bloomberg.com – February 20, 2013)

http://www.bloomberg.com/

Rio Tinto Group’s Mongolia copper and gold mine looks a dream location sitting next to China, the biggest market. Yet, Mongolia’s bid for more control of the project draws comparison with a Rio mine that went badly wrong.

Mongolia’s government is ratcheting up criticism of Rio’s management of the $6.6 billion project, the landlocked country’s single biggest investment. Lawmakers have argued for a bigger share of profit, while President Tsakhia Elbegdorj wants more management control. He faces elections in June with a fifth of the nation’s 3 million people in poverty despite world-beating economic growth of 17.3 percent in 2011.

Rio has refused government overtures to rewrite the agreement on the mine known as Oyu Tolgoi, raising tensions and comparisons with another Rio copper mine more than two decades ago. That project known as Panguna on the island of Bougainville in Papua New Guinea was shut by local protests and is still the subject of a U.S. court case.

“In Bougainville the community felt, rightly or wrongly, they weren’t compensated adequately for the various impacts of mining they were having to absorb,” said Jeffrey Neilson, a senior lecturer in economic geography at the University of Sydney. Governments in emerging economies “have to be seen to be taking a strong stance and making sure that the benefits of their resource wealth are being shared.”

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Excerpt from “The History of Mining: The events, technology and people involved in the industry that forged the modern world” – by Michael Coulson

To order a copy of The History of Mining please click here: http://www.harriman-house.com/products/books/23161/business/Michael-Coulson/The-History-of-Mining/

Canadian J. AUSTEN BANCROFT (1882-1957) Zambian copperbelt

The name of Joe Austen Bancroft, a Canadian born in North Sydney, Cape Breton, is synonymous with the exploration and development of what is now known as the Zambian copperbelt. The exploration programme that he oversaw in then Northern Rhodesia in the 1930s was probably the most extensive scientifically-based programme seen anywhere up to that time and from it was born one of the largest copper mining provinces in the world. Bancroft pioneered the science of economic geology in the first part of the 20th century; at the time such a term would have been considered an oxymoron but now it is the driving force behind most commercial geology.

He was born in 1882 one of eight children and his father was a Methodist minister. The early part of Bancroft’s adult life, after graduating first in his class from Acadia University, Nova Scotia in 1903 and being awarded a Yale fellowship, was spent studying and then teaching geology. He joined the faculty of McGill University in Montreal in 1905 and took post-graduate courses at Leipzig University, Georgius Agricola’s alma mater, and Bonn University between 1908 and 1910.

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Teck Resources changes tune on acquisition opportunities – by Peter Koven (National Post – February 8, 2013)

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

When Teck Resources Ltd. holds its quarterly earnings conference calls, chief executive Don Lindsay is always asked about acquisition opportunities. His usual response is that Teck is looking, but price tags are too high.

That changed on Thursday’s call. He acknowledged that values have come down in recent months and more assets have come available. That includes projects in the iron ore sector, an industry that Teck has been eager to break into for years. Mr. Lindsay also speculated more assets could come available as many large mining companies are writing down projects, firing senior management and cleaning up their portfolios.

Teck has not made a major acquisition since 2008, and this would be a reasonable time to do it. In addition to the iron ore opportunities, the Vancouver-based miner is facing declining copper production over the next couple of years. Its key copper growth projects in Chile are being held up by permitting delays, meaning it is unclear when they will reach production.

“Something that might fill the gap would be of interest to us,” Mr. Lindsay said. However, he tempered speculation that Teck will do a deal. He said it remains “pretty tough” to pull off a successful transaction, and pointed out that Teck’s “stay the course” strategy of organic growth is poised to deliver major production increases for shareholders in the years ahead.

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HudBay Sees Buyers’ Market for Mining Projects – by Liezel Hill (Bloomberg.com – February 6, 2013)

http://www.bloomberg.com/

HudBay Minerals Inc., the third-best- performing Canadian mining stock this year, is willing to spend about C$400 million ($402 million) on deals to replenish its development pipeline.

The copper and zinc producer, which expects to more than quadruple copper output by 2015, will capitalize on a “buyers’ market” for mining assets as small companies struggle to raise funds and larger competitors consider sales, Chief Executive Officer David Garofalo said yesterday. HudBay would be comfortable spending about 20 percent of its C$1.99 billion market value, he said.

“We’re looking at a lot of things and I’m hoping that we can tuck something in this year,” Garofalo, 47, said in an interview at Bloomberg’s office in Toronto, where HudBay is based. “We’ve never been busier looking at opportunities.”

Exploration and development companies face funding shortfalls after mining-industry equity sales dropped for a third straight year as valuations declined and bank lending fell. At the same time, mining companies including BHP Billiton Ltd. and Rio Tinto Group, the two largest, have been looking to sell less-profitable assets.

The majors are very interested in simplifying their balance sheets, said John Hughes, an analyst at Desjardins Securities Inc. in Toronto.

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UPDATE 2-Chile’s Collahuasi says mineral resources up 19 pct in 2012 – by Fabian Cambero (Reuters.com – February 6, 2013)

http://www.reuters.com/

SANTIAGO, Feb 6 (Reuters) – World No. 3 copper mine Collahuasi said on Wednesday its mineral resources grew by 19 percent to 9 billion tonnes last year compared with 2011 levels, due in part to new drilling campaigns and improvements in mining design.

Average ore grades are 0.81 percent copper, Collahuasi said, an enviable level as grades slip in many of leading copper
producer Chile’s ancient, tired deposits. Mining reserves increased 10 percent to 3.2 billion tonnes, the mine added.

“The notable increase in our base of mineral resources gives a clear indication of the significant future potential of an
expansion at Collahuasi,” new chief executive officer Jorge Gomez said in a statement.

Collahuasi is seeking to turn the corner after a tough 2012. The deposit produced around 284,000 tonnes of red metal last
year, tumbling roughly 37.3 percent from 2011 levels. It hopes to produce more than it did in 2012, Gomez told Reuters late last month.

Global miners Anglo American and Xstrata each own 44 percent of the mine. The remaining 12 percent is owned by a consortium of Japanese companies led by Mitsui & Co.  Collahuasi is mulling expansion plans that seek to double annual production. But Xstrata’s head of copper, Charlie Sartain, said last year no progress on ambitious expansion plans would be considered for the operation until the current turnaround was complete.

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Investors look to Teck for clues to China’s path – by Pav Jordan and Brent Jang (Globe and Mail – February 4, 2013)

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.

When Don Lindsay talks about China, he can’t help but mention the 200,000 kilometres of power transmission lines the country plans to install over the next five years.

“That’s a lot of copper,” the president and chief executive of Teck Resources Ltd. told mining aficionados packed into a ballroom in Vancouver last week.

Addressing the Association for Mineral Exploration B.C. conference, Mr. Lindsay also predicted that China will enjoy robust economic growth this year, fuelling demand for the metals his company produces, like copper and zinc.

Teck Resources, Canada’s largest diversified miner and a major exporter of coking coal for steel making, reports its fourth quarter and year-end financial results on Thursday.

The results are expected to compare unfavourably against those of the prior year, reflecting one of the most tumultuous periods for the global mining industry since the recession.

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President Says Mongolia Should Get More Control of Mine – by Michael Kohn & Yuriy Humber (Bloomberg.com – February 5, 2013)

http://www.bloomberg.com/

Mongolia’s President Tsakhia Elbegdorj said the nation should have more control of Rio Tinto Group (RIO)’s Oyu Tolgoi copper and gold project after the government said costs had increased.

The total cost of the Rio Tinto-operated development in southern Mongolia has jumped to $24.4 billion, according to an e-mailed statement from the government, which gave a summary of a Feb. 1 parliamentary discussion attended by the president. London-based Rio had earlier estimated total costs at $14.6 billion, according to the statement.

“It’s time for Mongolia to have Mongolian representation on the management team,” Elbegdorj said at the session on Feb. 1, according to his website. “It’s important that the government takes the Oyu Tolgoi matter into its own hands.”

The president’s comments heighten tension with the second- biggest mining company over the ownership and future development of the project, which is currently the world’s biggest copper mine under construction. Rio is considering a temporary halt to work to protest government demands for a greater share of profit, two people familiar with the plans said last week.

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The Duluth [nickel/copper/PGMs] monster – by John Chadwick (International Mining – February 2013)

http://www.im-mining.com/

John Chadwick looks at the Duluth Complex and in particular the leading positions of PolyMet and Duluth Metals. Duluth has described the complex as holding “one of the world’s largest undeveloped strategic metals deposits of it’s kind”

Duluth Metals massive potential in Minnesota was described in the December 2012 Leader. Let’s take a more detailed look at what is there. The industry has perhaps not yet realised the magnitude of the work being done and discoveries made by Duluth Metals here.

Duluth Metals’ strategy is to “systematically explore and develop copper-nickel-PGM deposits in the north of the US State of Minnesota.” With its partner Antofagasta (which holds 40%, with Duluth holding 60%) it is progressing Twin Metals Minnesota’s project through feasibility into production.

Twin Metals is focused on three deposits, Spruce Road, Maturi and Birch Lake (running northwest to southeast) in the northern part of the Duluth Intrusive Complex. These deposits are located in a zone of copper-nickel-PGM mineralisation occurring near the base of the complex at depths of 130 m to 1,300 m. Bechtel will deliver a very detailed prefeasibility study (enabling fairly quick progress to a BFS) in 2014. Bechtel Engineering was instructed to prepare the NI-43-101 PFS on the Twin Metals (formerly known as Nokomis) project based on the following parameters:

■ A vertically integrated mining complex

■ Large scale phased underground mine plan and development

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Rio Tinto faces tough talks in Mongolia over giant mine – by Terrence Edwards and Sonali Paul (Reuters.com – February 1, 2013)

http://www.reuters.com/

ULAN BATOR/MELBOURNE, Feb 1 (Reuters) – Rio Tinto faces tough negotiations next week in Mongolia, where the government is under pressure to plug a budget deficit and increase its share of the wealth from the $6.2 billion Oyu Tolgoi copper and gold mine.

Oyu Tolgoi, 34 percent owned by Mongolia and controlled by Rio Tinto, produced its first concentrate this week and is on track to start supplying metal and paying royalties by June.

The success of the mine is crucial for both sides as, at full tilt, Oyu Tolgoi will account for nearly a third of Mongolia’s economy, while Rio Tinto is depending on the mine to drive growth beyond its powerhouse iron ore business.

Rio Tinto is not expected to have to give up a bigger share of the mine, but some analysts say it could end up agreeing to provide more funding in areas like infrastructure to remove uncertainty over a project that is expected to produce 425,000 tonnes of copper and 460,000 ounces of gold a year. Rio Tinto and its subsidiary, Turquoise Hill Resources Ltd , last year fended off an attempt by Mongolia to renegotiate their 2009 investment agreement on Oyu Tolgoi.

The government is drafting a law that would require Mongolians to hold at least a 34 percent stake in mines, however talk that this would apply to Oyu Tolgoi has died down.

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Rio Tinto considering halting work at Oyu Tolgoi mine over dispute – by Christopher Donville, Todd Baer and Yuriy Humber (Bloomberg News/National Post – January 31, 2013)

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

Rio Tinto Group, the second-biggest mining company, is considering a temporary halt to construction work at its US$6.2-billion Oyu Tolgoi copper and gold project in Mongolia as the government demands a greater share of profit from the mine, according to two people familiar with the plans.

The London-based company is discussing the suspension to protest the central Asian nation’s demands for a bigger stake in the project and new mining royalty rates, said the people, who asked not to be identified because they aren’t authorized to comment publicly. A suspension of work, which may halt mining and processing, isn’t certain and is among options that managers are discussing in London, one of the people said.

“We continue to work together with all stakeholders including the government of Mongolia to bring the benefits of Oyu Tolgoi to all parties,” said Bruce Tobin, a spokesman for Rio in Melbourne. He declined to comment on whether it’s considering a temporary halt.

The dispute comes as Mongolian Prime Minister Norovyn Altankhuyag’s government tries to maintain support for foreign investment amid growing nationalism and wealth disparity. In October, Rio rejected a second move by Mongolia to renegotiate a 2009 investment agreement for the development of Oyu Tolgoi, which is currently the world’s biggest copper project under construction.

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Armed clash at Canadian-owned copper mine in Peru injures at least 4 – by Franklin Briceno (Vancouver Sun – January 25, 2013)

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

The Associated Press – LIMA, Peru – At least four people were wounded Friday when police turned back several hundred peasants who were trying to enter a Canadian-owned copper mine where drilling began last month.

A local doctor told The Associated Press by phone that at least a dozen were wounded in the clash in the temperate Quechua-speaking highlands of Peru’s northern state of Lambayeque.

The doctor said one protester, 57, was shot in the back. The doctor spoke on condition of anonymity out of fear for his safety. Hermogenes Tantarico, the wounded man’s son, said his father “received a bullet in the back and a lot of shotgun pellets in the legs and elsewhere that left him unconscious.”

Regional police commander Col. Jorge Linares denied live ammunition was used. He said police only used tear gas and rubber bullets. One of the protesters, Florentino Barrios, said 27 were hurt, a lot from shotgun pellets.

International human rights groups criticized Peru’s government last year for so readily using live ammunition against protesters after five were killed in anti-mining protests in July.

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Xstrata Copper in Timmins extends support for sturgeon restoration biodiversity initiative

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

Ontario Mining Association member Xstrata Copper’s Kidd Operations in Timmins has committed $21,000 to the Wintergreen Fund in support of the Mattagami River Sturgeon Restoration Project. “We are committed to supporting sustainable environmental projects, such as this one, that address identified needs and bring together community partners with common goals,” said Tom Semadeni, General Manager of Xstrata Copper’s Kidd Operations.

This contribution extends Kidd Operations support of the sturgeon initiative through to 2014. The funding will be used to acquire stationary monitors, nets, transmitters and other fish monitoring equipment. Along with the financial support, Kidd Operations will continue to provide in-kind donations of helicopter and personnel time for sturgeon habitat mapping and monitoring.

The Mattagami River Sturgeon Restoration Project began in 2002 in efforts to re-establish Lake Sturgeon in the local watershed. A once large population of Lake Sturgeon had been reduced significantly due to overfishing, log drives, habitat fragmentation caused by the construction of hydro-electric dams and to a lesser degree pollution. This project’s efforts have provided valuable data on the size and location of the fish population, where they gather to breed and how the river environment can be improved to encourage reproduction.

Lake Sturgeon are descendants of a prehistoric fish going back to the Mesozoic Era (dinosaur age). The fish appear to be much the same today as 100-million-year-old fossils, which have been found.

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Inmet digs in its heels on Cobre Panama’s value – by Pav Jordan (Globe and Mail – January 23, 2013)

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 $5.1-billion takeover bid for Inmet Mining Corp. does not begin to capture the value of its star copper asset in Panama, said chief executive officer Jochen Tilk, and the project may be even bigger than currently proposed.

“[The bid amount] is simply too low,” Mr. Tilk said in an interview after the Toronto mining company filed a circular on Tuesday that recommended shareholders vote against a hostile, $72-a-share bid from rival First Quantum Minerals Ltd.

Citing the conclusions of a special committee of independent directors as well as input from financial and legal advisers, the Inmet board also said it is talking to a number of third parties regarding strategic alternatives to the hostile bid, and has signed confidentiality and standstill agreements with “a number” of those.

Cobre Panama is due to come on stream in 2016, which would add, under the current design, 300,000 tonnes of copper to global production at a time when demand is expected to rise and there will be scant new supply.

The $6.2-billion project will be the largest mining development in Central America and Mr. Tilk said that by adding another one or two milling lines on top of what is already contemplated, there is the potential for a mine with annual output of as much as 500,000 tonnes.

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Inmet urges shareholders to reject First Quantum bid – by Pav Jordan (Globe and Mail – January 22, 2013)

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.

Inmet Mining Corp. has recommended that shareholders reject a hostile takeover bid from First Quantum Minerals, saying the $5.1-billion cash-and-stock offer fails to reflect the value of its massive Cobre Panama project.

Citing the conclusions of a special committee of independent directors as well as input from financial and legal advisers, the Inmet board says the offer is below precedent for recent deals in the mining sector. It says it has approached a number of third parties who have expressed interest in considering strategic alternatives to the First Quantum bid, going so far as to sign confidentiality and standstill agreements with “a number” of those.

Cobre Panama will be one of the world’s largest new copper mines when construction is complete in 2016. The mine will cost some $6.2-billion to build and will produce about 300,000 tonnes of the vital industrial metal annually and is a bet that copper prices will continue to rise as demand strengthens further in China and the economies of Europe and the United States recover.

“The Inmet Board has concluded that the First Quantum Offer fails to adequately compensate shareholders for Inmet’s low risk asset base and its strong prospects for growth and value creation at Cobre Panama, which has the potential to become one of the world’s largest copper mines,” Inmet board chairman David Beatty said in a statement that marks Inmet’s first official response to the First Quantum bid since it was made in mid-December.

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Franco-Nevada confident in Inmet despite First Quantum’s $5.1B takeover bid – by Peter Koven (National Post – January 22, 2013)

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

TORONTO – Inmet Mining Corp. has received a vote of confidence from royalty firm Franco-Nevada Corp., which is not convinced that First Quantum Minerals Ltd. is the best company to build the Cobre Panama project.

Franco-Nevada has committed US$1-billion to Inmet for the development of Cobre Panama, so it has a unique interest in First Quantum’s $5.1-billion hostile bid for the company. Franco chief executive David Harquail said he has been very impressed with Inmet’s handling of the project so far, and has some ongoing questions about First Quantum’s proposal to build the mine for significantly less money. First Quantum has not approached him yet, he said.

“Our worry is what messages [First Quantum] is sending to Panama and the community when they say they have a different plan or scenario going forward and they expect to spend that much less money. Our preference is to have a more steady-state approach,” Mr. Harquail said in an interview.

“Right now, we’re supporting the folks who have brought us to the table and we have to reserve judgment on the new plans.”

That has to be music to Inmet’s ears. The Toronto-based miner is about to formally reject First Quantum’s bid, and will try to argue that it is the better caretaker of the US$6.2-billion mega-project. First Quantum has talked about reducing capital costs at Cobre Panama, but has not offered up firm numbers.

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