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Gold and Silver

Goldcorp chairman confident in $2.8-billion hostile bid for Osisko – by Peter Koven and Nicolas Van Praet (National Post – March 26, 2014)

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

TORONTO/MONTREAL – The shares of Osisko Mining Corp. are trading well above his offer price, and investors and analysts are clamouring for a higher bid. But Ian Telfer maintains everything is going “extremely well.”

The chairman of Goldcorp Inc. remains confident his company’s $2.8-billion hostile offer for Montreal-based Osisko will succeed. In an interview in Toronto Tuesday, he pointed out that Osisko is running out of time to find a white knight bidder, and added that the “Just Say No” defence almost never works.

“Because there’s no other bidder, we see no reason to bid against ourselves,” he said in an interview. “You can’t have an auction with only one bidder.”

Osisko delayed Goldcorp’s hostile approach with a lawsuit that got settled this month. Mr. Telfer said Goldcorp got “exactly what we wanted” out of the settlement as it eliminated Osisko’s poison pill and will allow Goldcorp to do more due diligence starting next week on Osisko’s Canadian Malartic mine in Quebec. It is his understanding that Osisko’s board pushed its management team to settle with Goldcorp.

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Canadian firms in Russia push Ottawa for support – by RACHELLE YOUNGLAI, JEFF GRAY AND RICHARD BLACKWELL (Globe and Mail – March 25, 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.

Canadian companies operating in Russia are pleading with Ottawa to ensure they aren’t sideswiped by sanctions as the federal government puts global security ahead of commercial interests in the region. On Monday Prime Minister Stephen Harper said commercial interests are now secondary in the consideration of responses to the Russian moves.

“We don’t like seeing disruption to investment or to markets or to trade but the fact of the matter is when you are looking at it from the standpoint of a greater national interest … this is not something we can subordinate to economic interests,” Mr. Harper said.

One Canadian company with significant operations in Russia, Kinross Gold Corp., has told the federal government that Ottawa needs to take into account the impact on Canadian employees and shareholders when it takes action in response to the Russian annexation of Crimea. About 27 per cent of Kinross’s production comes from Russian mines.

“We have communicated to the government of Canada our desire to see a balanced approach to resolving this situation in a way that considers Canadian interests in Russia,” Kinross spokeswoman Andrea Mandel-Campbell said.

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Goldcorp to consider Osisko Mining spinoff to sweeten offer – by Rachelle Younglai and Boyd Erman (Globe and Mail – March 25, 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. would consider spinning off Osisko Mining Corp.’s exploration assets into a separate company as a way to sweeten its unsolicited offer for the smaller gold miner, people familiar with the matter said.

Montreal-based Osisko has rejected Goldcorp’s $3-billion cash and stock offer and is courting a range of suitors for its large Canadian Malartic mine in Quebec.

With a spinoff, Osisko shareholders would not only get a stake in the much larger Goldcorp but also retain ownership in some assets with growth potential, such as Osisko’s deposits in Ontario’s Kirkland Lake area.

Getting a friendly deal would ensure that Goldcorp locks up an asset it has coveted for more than five years before Osisko signs up to sell to another bidder. It is not just a rival bidder that Goldcorp has to consider. There is the possibility that Osisko shareholders simply say no.

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Excellon CEO talks Mexican tax reform and strategy – by Anthony Vaccaro (Northern Miner – March 21, 2014)

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

Excellon Resources’ (TSX: EXN) La Platosa Mine in Durango is one of the world’s highest grade silver mines. The mine also boasts lead and zinc byproducts that help make it one of the lowest cash cost silver mines in Mexico.

The company’s CEO, Brendan Cahill, took some time to sit down with The Northern Miner at the recent Prospectors & Developers Association of Canada (PDAC) convention in Toronto to discuss recent changes to Mexico’s tax code and Excellon’s strategy for thriving in a low cost commodity environment.

The Northern Miner: Your company, like other producers in Mexico such as Sierra Metals (TSX: SMT), took a more expedited route towards production, eschewing the formalities of completing a bankable feasibility study. Is there something about Mexico that allows companies to fast-track to production?

Brendan Cahill: With all the talk of tax reform, when you go through the checklist of things a company is looking for in a country it is going to invest in — the geology, the security, the community relations, education, stability of government — it is still better than almost anywhere else in the world for building a mine.

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Top Ten Mining Events in Northern Ontario History – by Stan Sudol (March 22, 2014)

This column was also published on the Huffington Post – the “New York Times” of the web: http://www.huffingtonpost.ca/stan-sudol/ontario-mining_b_4885841.html

Klondike Versus Northern Ontario

For crying out loud, I continue to be astonished with our collective Canadian obsession over the Klondike Gold Rush while northern Ontario’s rich and vibrant mining history is completely ignored by the Toronto media establishment, especially the CBC.

Discovery Channel’s recent six-hour mini-series on the Klondike – vaguely based on Charlotte Gray’s book, “Gold Diggers: Striking It Rich in the Klondike – once again highlighted this glaring snub.

Unfairly, the Klondike did have the benefit of terrific public relations due to famous writers like Jack London, Robert W. Service and Pierre Berton, but I still don’t understand how this brief mining boom continues to dominate the “historical oxygen” in our national psyche.

At its peak, the Klondike only lasted a few years – 1896-1899 – and produced about 12.5 million ounces of gold. And unlike the California gold rush that created one of the largest and richest states in the union, the entire Yukon Territory’s population today is about 36,000. Contrast that with booming Timmins with 45,000 hardy souls who have dug out of the ground about 68 million ounces and counting of the precious metal, since the Porcupine Gold rush of 1909.

It’s enough to make to make Benny Hollinger, Jack Wilson and Sandy MacIntyre – the founders of this extraordinary deposit – spin in their collective graves!

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Osisko says $4.4-billion Canadian Malartic mine plan proves Goldcorp’s bid is far too low – by Peter Koven (National Post – March 21, 2014)

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

TORONTO – As Sean Roosen sees it, Canadian Malartic is the second most valuable gold mine fully owned by a North American producer.

The chief executive of Osisko Mining Corp. said Thursday that his shares should be worth $10 to $12 each on the value of this asset alone, or as much as 58% above the current level. He spent all day in Toronto to try to get that point across to shareholders and convince them not to tender to Goldcorp Inc.’s hostile bid.

“There’s a lot of value left on the table here that we’ve been able to highlight,” he said in an interview. Mr. Roosen’s claims are based on Osisko’s updated mine plan for Canadian Malartic, which it released on Thursday. Based on that plan, Osisko estimates that the Quebec-based mine has a net present value of about $3.1-billion. And after accounting for the relative trading multiples of other gold miners, the company figures it should be valued at about $4.4-billion.

That is far above the $2.9-billion in cash and stock that Goldcorp currently has on the table. Goldcorp will almost certainly boost its offer in the weeks ahead, so the pressure is on Mr. Roosen to show this transaction is a bad idea.

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Major role for Aboriginal partners in Northern Ontario Detour Lake mine – by Bryan Phelan (Onotassiniik Magazine – Spring 2014)

http://onotassiniik.com/

The figure seemed so high, Leonard Rickard double-checked his calculations. Rickard, Aboriginal affairs manager for Detour Gold Corporation, had been asked to determine the value of Aboriginal participation in construction of the company’s Detour Lake gold mine.

To find the answer, Rickard pored over all contracts associated with building the mine, line by line. He discovered – and confirmed upon double-checking – Aboriginal businesses and joint ventures had done more than $400 million worth of the construction work.

Surprised when presented with the information, Rickard’s supervisor also wondered whether this extraordinary level of Aboriginal involvement had really been achieved or if the number reported was just the result of a typo.

“People assumed I meant to say $40 million, something in that area,” Rickard recalls, “but to be able to say we did $400 million was quite amazing … certainly well above what we had anticipated.” It’s also a big share of the $1.5 billion total cost of construction.

The open-pit Detour Lake mine is located 185 kilometres northeast of Cochrane on a site that had been mined previously, most recently by Placer Dome in the late 1990s.

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New tech to help gold miners tackle tough veins – by Geoff Candy (Mineweb.com – March 19, 2014)

http://www.mineweb.com/

As mines get deeper and costs and safety concerns ratchet upwards so, increasingly, gold and platinum miners are looking for new technological ideas to help solve their problems.

GRONINGEN (MINEWEB) – New technologies look set to provide some solace to deep level gold and platinum miners that continue to struggle with rapidly increasing costs, narrow veins and significant safety issues.

Speaking to Mineweb on the sidelines of this year’s the Prospectors and Developers Association of Canada Conference earlier this month, Jean-Yves Therien, VP Development at Rocmec Mining, said that right now is the “best time” for the company, because its patented thermal fragmentation process solves many of the problems currently being faced by the sector.

“This technology has the potential to have the same impact on the mining sector as shale gas fracking has had on the oil and gas sector,” he says. Adding, “We will be the Apple of the mining industry, I think one day everyone will be proud to have a Dragon [the name of the machine that actually does the thermal fragmentation] in their mine, it is just a matter of time and I think that right now is the best time for it.”

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Mining the moon: The 21st century gold rush – by Stephanie Orford (MetroNews.ca – March 17, 2014)

http://metronews.ca/

Five years ago, if you had brought up moon mining among geologists, “you would have been laughed out of the room,” said Gordon Osinski, founder and director of the Canadian Lunar Research Network, and an assistant professor of geology at the University of Western Ontario.

Times have changed. Mining on the moon and on asteroids, formerly the stuff of science fiction, is clearly in the sights of governments and, increasingly, private companies.

In February, NASA announced it was accepting applications from U.S. companies to build robots for lunar prospecting, a step toward creating an economy in space.

And there’s certainly a market for what’s up there. Many elements that are rare on Earth can be found aplenty on the moon. Satellite imaging has shown that the top 10 centimetres of regolith (moon soil) at the south pole of the moon appears to hold about 100 times the concentration of gold of the richest mines in the world, according to a recent paper coauthored by Dale Boucher, the CEO of Deltion Innovations, based in Sudbury, Ont.

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Bruised gold miners start hedging output, in a limited way – by Silvia Antonioli and Clara Denina (Reuters U.S. – March 14, 2014)

http://www.reuters.com/

LONDON, March 14 (Reuters) – Increasing numbers of gold miners, battered by last year’s drop in bullion prices, are selling planned output forward to help shore up their finances for stormy times, but these hedges are only for the short term.

Large miners and their shareholders typically rail against the practice of forward sales because locking in prices ahead of production closes off opportunities to benefit from a rise in the metal’s value.

That was particularly pertinent during the 2001-2012 gold bull run, when prices swept from around $260 an ounce to a record $1,920.30 in late 2011. But last year, a 28 percent dive in bullion prices caught producers by surprise, putting balance sheets under stress.

Now some miners are warming up to the idea of selling a portion of their gold a few months forward at a fixed price, banking and industry sources said, and investors seem to agree.

“I see a short-term hedge as a weapon in the arsenal of a financial director to protect the company and generate some short to medium-term security,” said Markus Bachmann, manager of precious metals and global resources funds at Craton Capital.

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Speculators See Gold Gaining With Wheat on Ukraine: Commodities – by Debarati Roy (Bloomberg News – March 17, 2014)

http://www.bloomberg.com/

After shunning gold and wheat for most of last year, hedge fund managers are piling back in as the escalating crisis in Ukraine spurs a rebound in the prices of both commodities.

Speculators have the biggest bet on a gold rally since December 2012 and turned bullish on wheat for the first time since November, government data show. Bullion last week reached a six-month high and wheat entered a bull market as Crimea prepared for a referendum. Almost 97 percent of voters in the Black Sea peninsula yesterday backed leaving Ukraine to join Russia, the head of the election commission, Mikhail Malyshev, told reporters. The results exclude one city, Sevastopol.

Global equities erased this year’s gains last week as the turmoil in Ukraine escalated and the U.S. and the European Union discussed sanctions against Russia, poised to be this season’s fifth-biggest wheat exporter. Investors who rejected gold in 2013 are now buying the metal at the fastest pace since 2007, surprising bearish forecasters including Goldman Sachs Group Inc. Investors also bought more coffee, sugar and corn.

“We have already seen higher prices for gold because of safe-haven bids, and I expect to see more tensions unfolding if sanctions are imposed,” said Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., which oversees $290 billion.

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2013 U.S. gold production down 128,602 oz – USGS – by Dorothy Kosich (Mineweb.com – March 17, 2014)

http://www.mineweb.com/

Domestic gold mine production in 2013 was estimated to be about 227 tonnes, down 3% with an estimated value of $10.2 billion, according to the U.S. Geological Survey.

RENO (MINEWEB) – Preliminary 2013 annual U.S. gold production was 231,000 kilograms (7,426,822 troy ounces), down 4,000 kg (128,602 troy ounces) from 235,000 kg (7,555,425 troy ounces) from full-year 2012, the U.S. Geological Survey recently reported.

Gold was produced at about 50 lode mines, a few larger placer mines (all in Alaska) and numerous smaller placer mines in Alaska and in the western states. The USGS estimated that 1,140 persons were directly employed in U.S. gold mining, down from 1,673 persons in 2012.

Commercial-grade fine gold came from about 24 producers, the USGS estimated. Estimated domestic uses were electrical and electronics, 38%; jewelry, 36%; official coins, 19%; dental, 55; other, 2%, said the agency.

The state of Nevada, which led U.S. gold output, reported 172,000 kg (5,529,928 oz) of gold production last year, down from 175,000 kg (5,626,380 oz) in 2012.

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McEwen Mining’s president gives the BEST answer on why someone should consider a career in mining – by Michael Allan McCrae (Mining.com – March 16, 2014)

 

http://www.mining.com/

McEwen Mining’s president discussed innovation, why the company has not cut back on exploration and why more young people should consider a career in mining.

Ian Ball spoke with MINING.com in early March while he was preparing to meet shareholders before the Prospectors & Developers Association of Canada convention. McEwen Mining is gold and silver miner miner operating in the Americas. The company was founded by mining legend Rob McEwen, the founder and former Chairman and CEO of Goldcorp. McEwen Mining’s stated goal is to qualify for inclusion in the S&P 500.

While miners cut back on exploration expenses during the drop in commodity prices last year, Ball said McEwen Mining’s (NYSE:MUX) programs were kept in place since the company believe that is how it would ultimately out-perform its peers. He pointed to the company’s Gold Bar project.

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Johannesburg’s Golden Legacy Includes Radioactive Dump – by Kevin Crowley (Bloomberg News – February 10, 2014)

http://www.bloomberg.com/

Johannesburg sits atop the world’s most productive gold reef — a staggering 40,000 tons of the precious metal has been mined from it during a history tracing back 130 years. That legacy of riches has left behind a toxic inheritance: radioactivity from uranium hauled up in the mining process.

Scientists have found uranium quantities in rivers west of the city to be as much as 4,000 times natural levels and in tap water as much as 20 times higher. A soil sample taken by Bloomberg News and tested by government-certified WaterLab Ltd. from pumpkin roots grown a little more than a mile from a recently closed gold mine contained five times more uranium than background levels considered normal by the International Atomic Energy Agency.

Residents of Johannesburg and surrounding communities live among an estimated 600,000 metric tons of uranium buried in waste rock and covering an area four times the size of Manhattan, according to university researchers. Another undetermined amount lies below ground, where water has filled abandoned mines and leaks into the environment.

“There’s nowhere in the world where you’ll find so many people living alongside such a vast amount of ore-bearing uranium,” said Carl Albrecht, head of research at the Cancer Association of South Africa, or Cansa.

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Peter Munk: A mining magnate nears the end of his golden reign – by Eric Reguly (Globe and Mail – March 15, 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.

KLOSTERS, SWITZERLAND – On a chilly evening in early March, Peter Munk picks me up from my hotel in his tiny Fiat Punto, manual transmission, that he drives himself. His wife Melanie is stuffed in the back and our destination is the local schnitzel restaurant, where the Munks are treated like anyone else in Klosters, the Swiss ski village near Davos.

What a change. The last time I spent more than a few minutes with Mr. Munk was in 2008, in Montenegro’s glorious Bay of Kotor, the Mediterranean’s only fjord. We were on his chartered superyacht, the 50-metre Te Manu, a nautical pleasure palace with a crew of 11 that would have made any oligarch proud.

Has Mr. Munk, the founder, co-chairman and former chief executive officer of Barrick Gold Corp., fallen on hard times since then? Yes and no.

At $27-billion, Barrick is worth less than half of its peak in 2011, just before the gold price collapsed and the financial horror of the company’s now-suspended Pascua-Lama mining project in the Andes was exposed. Mr. Munk’s wealth has declined along with the share price (although he owns only 2.1 million common shares), but certainly not to the point where he is flying economy and forgoing oysters and champagne.

Instead, the Fiat represents the new, simpler life of the Hungarian emigrant to Canada who turned a motley collection of gold assets into the world’s mightiest gold producer. Mr. Munk will leave the Barrick board at the company’s annual shareholders’ meeting in Toronto on April 30, after which John Thornton will go from co-chairman to chairman.

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