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Gold and Silver

Gold rush threatens West Africa’s cocoa future – by JOE BAVIER AND LOUCOUMANE COULIBALY (Reuters U.S. – April 11, 2014)

http://www.reuters.com/

YOHO, Ivory Coast – (Reuters) – A month ago, Bouafu Kouassi dug a neat circular hole in the middle of his one-hectare cocoa plantation in western Ivory Coast, and, sifting through the gravel on his shovel, found the unmistakable traces of gold dust.

With luck, it could transform his life, but it could just destroy his farm. And as the story repeats across the cocoa heartland of the world’s top producer and neighboring Ghana, the second-largest, it could do lasting damage to the industry.

Today, nearly three dozen vertical shafts plunge down into the soil beneath Kouassi’s cocoa trees, branching out into a web of underground tunnels 10 meters below the surface.

The 35-year-old, who once struggled to pay school fees for his five children, has in a matter of weeks pocketed as much as he could hope to earn in five years growing cocoa. “As long as there’s gold here, we’ll be working,” he says, with the giddy smile of a man who thinks he’s won the lottery. With high prices for the precious metal fuelling a gold rush in Ivory Coast and Ghana, diggers are scurrying to cash in.

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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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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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Goldcorp sweetens hostile Osisko bid to $3.6-billion – by Bertand Marotte and Rachelle Younglai (Globe and Mail – April 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.

MONTREAL/TORONO — Goldcorp Inc. is raising its hostile bid for Osisko Mining Corp. to $7.65 per share or $3.6-billion in an attempt to knock out a friendly deal between Osisko and Yamana Gold Inc.

Vancouver-based Goldcorp said on Thursday its offer now stands at 0.17 of a Goldcorp common share plus an increase in the cash portion of its offer to $2.92 for each Osisko share, from 0.146 and $2.26 respectively.

Goldcorp’s previous unsolicited bid was valued at about $6.30 per share. The agreement between Montreal-based Osisko, Yamana and two of Canada’s biggest pension funds is valued at $7.57 a share. The key asset Goldcorp is after is Osisko’s Canadian Malartic gold mine in northwestern Quebec.

Osisko chief executive officer Sean Roosen said Goldcorp’s offer is an improvement but does not sufficiently value Malartic’s potential. “It’s more respectful but it certainly doesn’t offer the same potency and the upside to Canadian Malartic that the Yamana-Osisko bid does,” he said in an interview.

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At South African Mine, It’s a Long, Long Way Down – by Christopher Torchia (Associated Press/ABC News – April 4, 2014)

http://abcnews.go.com/

For those who grumble about their daily commute, imagine this ride to work: clamber into an elevator cage and plummet 2.4 kilometers (1.5 miles) into the earth, so fast that ears pop from the changing air pressure. Then board a small railroad car that creaks and grinds the same distance to the outer reaches of a South African gold mine.

It gets humid down below. Sweat flows. For the unaccustomed, the din of drills and other machinery is disorienting. Travelers are weighed down by boots and a jumpsuit, a helmet with a mounted flashlight and a “self-rescuer,” a metal canister with a breathing tube and an oxygen supply in case something goes wrong.

Miners have a chain of command, but the extreme conditions are a kind of leveler.

“We’re all equal underground,” Gerard Pienaar, senior operations manager at South Deep mine, said on a recent tour of the flagship operation of Gold Fields Limited that provided a look at some of the conditions in South Africa’s mining industry that drives the continent’s biggest economy.

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How Quebec politicians are piggybacking on the battle for Osisko Mining – by Nicolas Van Praet (National Post – April 4, 2014)

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

MONTREAL – Business and politics mix freely in Quebec, sometimes in dangerous ways.

So when Yamana Gold Inc. announced early Wednesday it had struck a friendly deal to buy half of Montreal-based Osisko Mining Corp.’s mining and exploration assets while maintaining Osisko’s head office, it didn’t take long for provincial politicians to react. We are in an election campaign after all and in the eyes of some, there are points to be scored piggybacking on the affairs of private enterprise.

The governing Parti Québécois, eager to cast itself as the best defender of made-in-Quebec businesses, quickly called a press conference to discuss the transaction.

“This is very good news for Quebec’s mining industry,” declared natural resources minister Martine Ouellet, noting the partnership will split assets including Osisko’s flagship Canadian Malartic gold mine in the Abitibi region of Quebec. Finance Minister Nicolas Marceau focused on the role of the Caisse de dépôt et placement du Québec in the deal, saying the pension fund’s presence as a financial backer ensures Osisko will remain an independent publicly traded company.

For its part, Quebec’s Liberal Party, which is set to take power April 7 according to the latest poll, has insisted it wants any deal for Osisko to be a friendly one.

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Editorial: Barrick rejigs exec pay – by John Cumming (Northern Miner – April 2, 2014)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry. Editor John Cumming MSc (Geol) is one of the country’s most well respected mining journalists.  jcumming@northernminer.com

Businessman and Bay Street veteran Peter Crossgrove, the one-time Placer Dome CEO and long-time Barrick Gold director, published his memoirs last year, and it makes for some lively and insightful reading, especially in light of Barrick’s newly revamped executive compensation program.

In his book titled “Boardroom games: You’re fired! When core values, respect and meaningful business practices are compromised for money and prestige,” Crossgrove is blunt in his criticism of the Barrick board, from which he was booted a couple of years ago to make way for Goldman Sachs’ John Thornton, who will become full Barrick chairman at the April 30 annual meeting, as founder Peter Munk retires.

“What do I think Barrick has to do to recover?” writes Crossgrove in 2013. “First of all, I would say they should find at least three directors who know the operating side of the business and form a technical committee . . . I suggest the chair, vice-chair and board members’ salaries be cut by 70%. They should only allow the chief operating officer the use of the corporate jet and get rid of the advisory board, which is a large expense and should be deleted . . . in 22 years I can only recall one meeting with the advisory board, whom I believe meet one day a year and are paid $100,000 per year.”

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Osisko finds white knight in Yamana Gold deal aimed at fending off Goldcorp – by Nicolas Van Praet (National Post – April 3, 2014)

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

MONTREAL – Osisko Mining Corp. chief executive Sean Roosen had to come back to his shareholders with an attractive alternative to Goldcorp Inc.’s bid or risk embarrassment. What he’s given them instead is a tricky transaction with Yamana Gold Inc. and two pension funds that the market is still struggling to digest.

Now, with its bid set to expire Friday, Goldcorp has to decide whether to raise its offer or walk away in a politically charged battle for Canada’s largest gold mine.

In a surprise agreement that values Osisko at about $3.4-billion, Toronto-based Yamana said Wednesday it will buy a 50% interest in Montreal-based Osisko’s mining and exploration assets. The two companies would be equal partners in Osisko’s operations and Osisko would maintain its head office in Montreal. Osisko’s flagship Malartic gold mine in Quebec would be run through a joint operating committee.

“This allows our Osisko shareholders to maintain their ownership in Canadian Malartic [while monetizing] shareholders who want to receive liquidity,” said Mr. Roosen, who owns 5% of Osisko.

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Osisko finds white knight in Yamana – by Rachelle Younglai (Globe and Mail – April 3, 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.

In an effort to block Goldcorp Inc.’s hostile bid, Osisko Mining Corp. cut a complicated deal with Yamana Gold Inc. and two Canadian pension funds that will allow Osisko to operate its large gold mine in Quebec.

Toronto-based Yamana will use cash and its stock to buy a 50-per-cent interest in Osisko’s mining and exploration assets for $1.37-billion. Osisko will keep the rest of its company. That will give Osisko shareholders cash, a stake in Yamana, and a new common share of Osisko that’s worth $3.35 apiece, according to the companies.

Combining the new Osisko and the Yamana offer, the total per-share value is $7.60 for every Osisko share, the companies said. That is 10 per cent higher than Osisko’s closing price on Tuesday and 20 per cent more than Goldcorp’s current cash-and-stock offer of $6.33 a share.

As part of the friendly arrangement, Osisko will keep its head office in Montreal and continue to operate its flagship Canadian Malartic gold mine. The Quebec connection has become a key talking point for Osisko, whose chief executive officer Sean Roosen has been playing up the company’s ties to the province ahead of a provincial election next Monday.

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PRESS RELEASE: Osisko Mining Corporation-Yamana Gold Inc. Announce Partnership

 April 2, 2014, 9:30 a.m. EDT

Superior Value for Shareholders Caisse de depot et placement du Quebec and Canada Pension Plan Investment Board to Invest $550 Million

MONTREAL, QUEBEC, Apr 02, 2014 (Marketwired via COMTEX) — Osisko Mining Corporation (“Osisko”) CA:OSK +4.80% (frankfurt:EWX) and Yamana Gold Inc. (“Yamana”) CA:YRI +1.24% AUY +1.48% are pleased to announce they have entered into an agreement (“the Agreement”) pursuant to which Yamana will acquire a 50% interest in Osisko’s mining and exploration assets for C$441.5 million in cash and 95.7 million common shares of Yamana having an aggregate value of C$929.6 million (the “Yamana Consideration”). Upon implementation of the Agreement, each outstanding Common share of Osisko will be exchanged for (i) C$2.194 in cash, (ii) 0.2119 of a Yamana common share, and (iii) a new common share of Osisko.

The value of the interest in the Yamana share is C$2.06 (based on the closing price of the Yamana shares on the Toronto Stock Exchange as of April 1st, 2014), and the ascribed value of the new common share of Osisko is C$3.35(1), for an aggregate of cash and the implied share value equal to C$7.601 for each currently outstanding Common share of Osisko.

Under the Agreement, Yamana will become an equal partner in all of Osisko’s mining and exploration assets. Osisko will continue to operate the Canadian Malartic Mine and all other projects under the guidance of a joint operating committee, and will also maintain its head office in Montreal.

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REVIEW: Bre-X – Dead Man’s Story – by Marilyn Scales (Canadian Mining Journal – April 1, 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.

You don’t have to be an industry insider to remember the story of Bre-X – the 200 million oz of gold in the jungles of Borneo that disappeared overnight. The story of the company’s rollercoaster ride – propelled by enormous greed – made headlines all over the world and severely damaging the reputation of Canada’s stock exchanges and mining community.

The facts should be familiar. A junior explorer sets out in a remote part of Indonesia to make a gold mine. They drilled, and released promising results. Investors invested, driving up the Bre-X stock price, and the company suddenly had no shortage of investors. More drilling was done, and even better results were released. The analysts loved the project. Bre-X management made higher and higher contained gold estimates – 20 million, 30 million, 100 million, and finally 200 million oz of gold just waiting to make everyone rich.

Of course, promises of huge riches attracts huge appetites. Bigger companies considered buying out Bre-X and gaining control of the Busang gold. The head of the Indonesian government, Suharto, wanted the pot of gold enough to usurp Bre-X’s claim to the property and asked an American miner to develop the project.

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Barrick Gold slashed chairman’s pay to US$9.5M last year after investor outrage – by John Shmuel (National Post – April 1, 2014)

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

TORONTO — Barrick Gold Corp. unveiled a new compensation package for executives Monday, a year after management faced heavy blowback for a generous signing bonus that made incoming chairman John Thornton one of the highest paid executives in Canada.

The world’s largest gold miner said it had scaled back Mr. Thornton’s pay for 2013 to US$9.5-million, compared with US$17-million the prior year. Mr. Thornton’s original pay package, which included a US$11.9-million signing bonus, caused a rare rejection last year by shareholders of the company’s executive compensation plan.

“We heard shareholders loud and clear,” said Brett Harvey, Barrick’s lead director, adding that he saw the new compensation model as one that others in the industry are “going to follow.”

The new “scorecard” system will see Barrick pay a large chunk of compensation in stock that executives will have to hold until they retire or leave the company. It will also base salary on a number of performance metrics, including delivering planned cash flow, achieving cost targets and meeting earnings expectations. As chairman, Mr. Thornton will not fall under the new scheme.

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Kinross announces lower capital costs for Tasiast in Mauritania – by Henry Lazenby (MiningWeekly.com – April 1, 2014)

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

TORONTO (miningweekly.com) – Canadian miner Kinross Gold on Monday announced the results of a feasibility study that examined the viability of significantly expanding output at its Tasiast mine, in Mauritania, saying that the expected capital cost would be less than what a prefeasibility study (PFS) estimated last year.

The TSX- and NYSE-listed miner said that the initial capital cost to expand the mine would be $1.6-billion, compared with its PFS estimate of $2.7-billion. A thorough review of project design, execution and scope produced about 230 cost-saving initiatives worth about $493-million.

Examples of the cost savings included pre-assembled plant modules, concrete precasting and greater reliance on in-house technical expertise for mine planning, engineering, geological modelling and overall project oversight.

The company also expected a decrease in Tasiast’s expected water demand owing to a planned reduction in dump-leach processing, more accurate mill modelling and greater-than-expected water availability from current sources, which had resulted in the company being able to defer the need to begin building a sea water pipeline from the coast to the mine until 2018.

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Barrick to revise executive compensation rules – by Rachelle Younglai (Globe and Mail – March 31, 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.

Barrick Gold Corp. will unveil pay packages for outgoing chairman Peter Munk and his successor John Thornton, as well as new executive compensation methods, after shareholder uproar over the incoming chair’s signing bonus.

Mr. Thornton’s $11.9-million (U.S.) bonus galvanized the traditionally passive Canadian pension funds to demand changes to how Barrick was governed, triggering the company to overhaul its board of directors late last year.

Barrick’s management proxy circular, to be filed on Monday, will present a new compensation scheme designed to align management’s pay even more closely with the miner’s performance. The company’s plan is expected to require executives to hold their shares until they leave the company.

That would be a departure from the previous arrangements, which allowed management to exercise their stock options at certain dates. “This is coming after they paid Thornton his big bonus. In some respects it’s like shutting the barn door after the horses have left,” said Robert Gill, vice-president and portfolio manager at Lincluden Investment Management, which holds $3.3-billion in assets including Barrick.

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Gold bugs invade Northern Ontario – by Marilyn Scales (Canadian Mining Journal – March 26, 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.

It’s already bug season in Northern Ontario – gold bug season that is. The numbers of junior exploration companies eager to drill the region are almost as many as there will be blackflies when the weather warms up. Well … maybe not quite as many, but the winter drilling programs are promising for some.

Toronto’s Harte Gold Corp. is examining its Hemlo style Sugar zone property, located 60 km east of the Hemlo camp, between White River and Hornepayne. Having discovered what it calls the “Peacock Boulder” with gold values up to 87 g/t, Harte has mounted surface and airborne surveys. The next step is to conduct an induced polarization and magnetic survey to targets for additional drilling. The Sugar zone gas a 43-101 compliant indicated resource of 1.12 tonnes grading 8.41 g/t and an inferred resource of 417,000 tonnes grading 7.13 g/t. (HarteGold.com)

Lake Shore Gold has identified new, high grade structures near the current mining at the Bell Creek Labine deposit in the Timmins area. The previously untested gap in the North A zone and two hanging wall structures returned 14.12 g/t over 10.2 metres, 8.41 g/t over 12.0 metres, and 7.01 g/t over 10.7 metres. Near the active 685 level mine workings, core assayed 11.42 g/t over 3.6 metres, 8.47 g/t over 4.6 metres, 7.76 g/t over 8.7 metres, 5.96 g/t over 6.5 metres, and 6.38 g/t over 6.0 metres.

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