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Gold and Silver

Osisko lawsuit against Goldcorp gets March trial date – by Nicolas Van Praet and Peter Koven (National Post – February 5, 2014)

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

MONTREAL and TORONTO – Osisko Mining Corp. has another month to find a white knight after a Quebec Superior Court judge set a trial date in early March to hear the merits of a lawsuit the Montreal gold miner brought against its hostile suitor Goldcorp Inc.

On Tuesday, lawyers for Vancouver-based Goldcorp rejected as “fabrication” Osisko’s claims that Goldcorp misused confidential information when it made a $2.6-billion hostile offer for Osisko, saying the Montreal-based miner launched legal action simply to buy time.

“When we see judicial procedures like these, typically the party bringing them forward is trying to torpedo the offer because there are no other bids,” said Alain Riendeau, a Fasken Martineau lawyer acting for Goldcorp.

A three-day trial has been scheduled, starting March 3. Among the witnesses expected to testify are Goldcorp chief executive Chuck Jeannes. Under the terms spelled out by Judge Louis Gouin on Tuesday, Goldcorp agreed not to challenge Osisko’s shareholder rights plan (or “poison pill”) until March 6.

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Barrick hopes to score with new measures in Tanzania – by Geoffrey York (Globe and Mail – February 5, 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.

CAPE TOWN, SOUTH AFRICA — In the midst of a drastic cost-cutting campaign at its three Tanzanian mines, African Barrick Gold PLC paused to make room for a new priority: a soccer match.

The subsidiary of Barrick Gold Corp. has been slashing costs and reducing jobs from top to bottom. But it made an exception in three areas: public relations, community relations and government relations. Those are the only departments where it is adding staff.

The new priorities are an admission of African Barrick’s need to rehabilitate its brand in Tanzania after years of protests and clashes between local villagers and police at its North Mara gold mine. Dozens of villagers have been killed or injured in clashes at the site in recent years, including another incident last month in which a man was killed and a policeman was injured.

The soccer match between the company’s managers and local community leaders is an example of the company’s new strategy. “It would never have happened a couple of years ago,” Brad Gordon, the company’s new chief executive officer, said at the annual Mining Indaba conference of African mining investors on Tuesday.

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Blasting set to begin at Hollinger open pit – by Benjamin Aubé (Timmins Daily Press – February 4, 2014)

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – The familiar sound of blasting will soon officially mark the Hollinger Mine’s return to life. With its Ministry of Environment air and noise permits safely secured and drilling having begun, Goldcorp is expecting the first blast at the historic mine to take place on Feb. 11.

“We began drilling around Jan. 28, and the first blast is now expected for this coming week,” said Paul Miller, superintendent of surface operations for the Hollinger project. “The date we’re now targeting is Feb. 11, and public notifications are being sent out and there will be some immediate analysis on the first blast.

“The initial blast will be very small, in the 3,000 to 4,000 tonne range to begin with, and located on the south-east location of the property in an area where we’re distant from residents and businesses.”

Miller, along with Goldcorp/Porcupine Gold Mines (PGM) general manager Marc Lauzier, were at council to provide an update about the open-pit mine project.

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Australia’s Super Pit gold mine gets 8-year lifeline (Reuters U.S. – February 5, 2014)

http://www.reuters.com/

SYDNEY – Feb 5 (Reuters) – Australia’s giant Super Pit gold mine was given an eight-year extension by its operator on Wednesday, delaying its closure until 2029 and allaying concerns weakening bullion prices would lead to an early shutdown.

Actual mining of gold-bearing ore will cease in around five years at what was until recently Australia’s biggest gold mine, though processing of ores already dug up and stockpiled has been extended from 2021 to 2029, according to the operator.

Kalgoorlie Consolidated Gold Mines (KCGM), which operates the Super Pit for 50-50 partners Barrick Gold and Newmont Mining, last year laid off staff as it ran cost reviews in response to falling gold prices.

Australia’s gold mining industry – the world’s second-biggest behind China – has borne the brunt of widespread job losses in mining across the nation as companies attempt to rein in costs.

By moving to process ores containing lower grades of gold, deemed mine reserves, the Super Pit will be able to keep up production for a longer period, according to KCGM.

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Low-cost production key for gold – by Barry Fitzgerald (The Australian – February 4, 2014)

http://www.theaustralian.com.au/business

IT stands to reason that in the mining world, the best defence against commodity price weakness is to be the lowest-cost producer. That goes doubly for the gold sector after last year’s price collapse.All that has panned out for those investors who responded to the massive shakedown in the gold price and equity values last year for gold producers not by fleeing altogether, but by seeking safe harbour in the lowest-cost producers.

They have been doing very nicely, thank you very much. Australia’s lowest-cost (listed) gold producer, Doray Minerals (DRM), is a case in point. Its cash costs are the lowest in the local industry if Newcrest’s Cadia operation, which gets the benefit of a copper credit, is ignored.

It’s hard to believe now but Doray got as low as 35c a share last July when the shakedown for gold stocks was in full swing. Realistically, some of that weakness was due to the fact that the group’s new Andy Well operation, north of Meekatharra in Western Australia, had yet to pour its first gold, meaning it had yet to prove itself.

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Timmins History: Dance night a treat for early prospectors – by Karen Bachmann (Timmins Daily Press – February 1, 2014)

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – A few years ago, the Auer family donated, to the museum, a selection of the journals of Charles and Mae Auer. The Auers were local pioneers, responsible for the Nighthawk Mine and the development that would become known as Mattagami Heights (today, home to our local Ford Dealership).

The diaries are an exceptional view of what life would have been like for the very early prospectors coming to the area. Today, I offer to you an excerpt that caught my attention because it sounds like something right out of a movie!

To set the stage, Charles Auer and his partner Black Jack Cole (what a name!) started to head for the Nighthawk River system in January 1908. Along with their dog team lead by Nell and Jack, they mushed their way on existing trails, breaking new ones when needed.

The temperatures plunged to -40 F and the snow was about three feet thick. The going was pretty rough. Eventually, they hit smoother ground and stopped for the night at Campbell’s Halfway House, outside of McDougall Chutes. They took care of the dogs and enjoyed a good hot meal.

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On Moroccan Hill, Villagers Make Stand Against a Mine – by Aida Alamijan (New York Times – January 23, 2014)

http://www.nytimes.com/

IMIDER, Morocco — On a hilltop nearly 5,000 feet high in the Atlas Mountains here, a tiny outpost has taken shape over the past two years. The small stone buildings are decorated gaily with graffiti, and there is an open-air gallery. Many doors bear inspirational inscriptions from people like the Rev. Dr. Martin Luther King Jr. and Mother Teresa. On the dam of a nearby reservoir, someone has painted the face of a local activist, now in jail on what the locals regard as trumped-up charges.

It is an unlikely spot for a settlement, but it was established with a purpose: to protest a mining company’s expropriation of precious water supplies, as well as the pollution that results from the mining.

The inhabitants are drawn from the nearby municipality of Imider, 6,000 people scattered over seven villages and neighbor to the most productive silver mine in Africa. But while the area may be rich in silver, it is home to some of the poorest people in Morocco.

The people of Imider (pronounced ee-me-DER) say they have grown to resent the mine because they get nothing from it except pollutants. So two years ago, some of them climbed up the hill and cut the water supply to the mine. Since then, they have occupied the hill as they continue to fight the Imiter Mettalurgic Company and, by extension, the king of Morocco, its principal owner.

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Barrick pulls off giant equity offering despite turbulent gold market – by Peter Koven (National Post – January 31, 2014)

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

The bankers behind Barrick Gold Corp.’s US$3-billion equity offering faced a tall order: sell the most shares ever issued in a Canadian bought deal; do it in a tough gold market; and do it for a company that was struggling to regain investor confidence after a series of writedowns and strategic blunders.

It was clear by last summer that Barrick, the world’s biggest gold producer, should do something about its over-levered balance sheet. Gold prices were down sharply from their highs in 2011, and analysts were warning the company could have liquidity problems if prices dropped below US$1,200 an ounce for a prolonged period.

Throughout this period, Barrick’s management was in touch with bankers from RBC Capital Markets on a potential plan to issue equity in order to retire debt. That Barrick turned to RBC was no surprise: the two firms have a longstanding relationship that dates back to the gold miner’s earliest days in the mid-1980s.

“They have done business with others. But if you look at who they have done business with over a long period of time, we’ve been privileged to have supported Barrick on a number of their milestone transactions,” said Jamie Anderson, deputy chairman of RBC Capital Markets.

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Kivalliq mine workforce worth its weight in gold – by Sarah Rogers (Nunatsiaq-online.ca – January 31, 2014)

 http://www.nunatsiaqonline.ca/

Agnico Eagle training programs growing Inuit hires

OTTAWA — With its Meadowbank mine expected to produce nearly 400,000 ounces of gold this year, and its Meliadine project contemplated to go into production for the next two years, Agnico Eagle has a good reason to invest in Nunavut.

But the Canadian-based gold producer wants that investment to produce more than just gold — the mining company wants to create a local workforce. Of the 800 people employed at Meadowbank outside of Baker Lake, 31 per cent are Inuit.

And even then, those Nunavummiut employees, who hail from nearby Kivalliq communities, haven’t come easily. The more than 200 Inuit workers at Meadowbank have been coaxed with training and support progams — efforts that Agnico Eagle and regional partners continue to build on.

“We want to be in Nunavut for a long time,” said Krystel Mayrand, who works in human resources for Agnico Eagle.

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Barrick recognized for youth technical education in Papua New Guinea (Beyond Borders – January 30, 2014)

http://barrickbeyondborders.com/

A vocational training organization has recognized Barrick as a major supporter in the drive to expand on-the-job training opportunities in the remote highlands of Papua New Guinea.

The Laigam Appropriate Technology Centre (LATC) presented an award to Barrick at the school’s ninth graduation ceremony, held in late 2013. Barrick provides on-the-job training to LATC students at the Porgera mine through the company’s Operations Education Sponsorship program. Since 2007, the company has provided placements for a total of 71 students from the LATC, now one of the Porgera district’s most thriving vocational technical institutions.

The organization’s connection to Barrick dates back to 2004 when a former Porgera mine manager donated four second-hand computers to the LATC, whose inaugural class had just five students.

LATC principal Ronaldo Diaz commended Barrick and several other companies for providing on-the-job training for LATC students over the years. “An on-the-job training program is useless without the assistance of companies such as Barrick,” Diaz says.

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Goldcorp says ‘significant number’ of Osisko investors back hostile bid – by Bertrand Marotte (Globe and Mail – January 30, 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 — Goldcorp Inc. says a “significant number” of Osisko Mining Corp. shareholders support its $2.6-billion hostile offer to take over Osisko and that the targeted company appears to have nothing to offer investors as an alternative.

Vancouver-based Goldcorp made the statements in a news release Thursday responding to Montreal-based Osisko’s launch of legal action in Quebec Superior Court on Wednesday to block the bid.

Osisko also alleges that Goldcorp misused confidential information it got in on-and-off merger talks going back more than five years.

“Goldcorp’s offer reflects the current market environment for gold and gold equities and provides a strong premium based on any reasonable valuation metric,” Goldcorp president and chief executive officer Chuck Jeannes said.

“Osisko has communicated its intention to explore value-maximizing alternatives but without new information their only strategy appears to be to wait and hope for an improved valuation.”

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COLUMN-Gold rallies won’t sustain without more China, India buying – by Clyde Russell (Reuters U.S. – January 29, 2014)

http://www.reuters.com/

Clyde Russell is a Reuters market analyst. The views expressed are his own.

LAUNCESTON, Australia, Jan 29 (Reuters) – Gold’s positive start to the year seems to be based more on hope than any real change to the factors that saw the precious metal shed 28 percent last year.

Spot bullion has gained 4.25 percent since the start of the year to the close of $1,256.09 an ounce on Jan. 28, with China and India factors helping to drive the rally.

The optimistic view for gold is that top buyer China will continue to buy record amounts and that India, which was supplanted by its Asian neighbour last year, will ease the restrictions that crimped its demand last year.

Taking India first, and the gold bulls have taken heart from comments on Jan. 27 by finance ministry officials that the curbs on gold imports will be reviewed by the end of March. India progressively hiked import taxes to a record 10 percent last year and imposed a requirement that 20 percent of imported gold must be fabricated and exported.

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Osisko CEO says Goldcorp’s $2.6-billion hostile bid bad for mining sector – by Peter Koven (National Post – January 29, 2014)

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

TORONTO – The chief executive of Osisko Mining Corp. thinks the hostile bid for his company is not only bad for his shareholders, but negative for other investors in the gold mining space.

Speaking at the TD Securities Mining Conference in Toronto, Sean Roosen said if offers as low as Goldcorp Inc.’s $2.6-billion hostile bid become acceptable in the sector, then it is hard to see how portfolio managers can make money investing in emerging growth stories like Osisko.

“Losing access to a very entrepreneurial mid-tier [miner] that’s been a top performer in the space and the management team that built it, most [fund managers] feel that’s not helping their investment model,” he told reporters.

“And I think from an overall standpoint of investors, if you’re going to invest in growth assets and they’re going to trade at a zero premium at the end of the day, that doesn’t really make a business model for portfolio managers.”

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Gold stocks best performing market sector so far this year – by Lawrence Williams (Mineweb.com – January 27, 2014)

http://www.mineweb.com/

Hong Kong based Financial Services Group, REORIENT, is decidedly bullish on gold, and on gold stocks in particular, and has set out its reasoning in a new sales commentary.

LONDON (MINEWEB) – Investors in gold equities have had little cheer in the past couple of years – indeed the period has seen a sell-off not experienced in the sector since the Bre-X fraud exposure of 1996, which had a huge downside impact on gold stocks, particularly in the junior gold sector. But so far this year – admittedly it is very early days yet – gold stocks have proven to be the sector to be in and while the major global stock indices have drifted downwards so far many gold stocks have risen by up to 30% or more.

Is this the signal the market has been waiting for to get back into what has to have been the most oversold stock market sector of the past two years?

Hong Kong based Global Financial Services specialist, the REORIENT Group, certainly thinks this is the case and is distinctly bullish on the gold stock market sector. In a note the Group puts forward a number of factors which it sees as distinctly bullish for gold stocks – and they may well have a strong point here with all of these:

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UPDATE 2-Barrick to re-calculate gold reserves at $1,100 -CEO – by Nicole Mordant and Allison Martell (Reuters U.S. – January 23, 2014)

http://www.reuters.com/

Jan 23 (Reuters) – Barrick Gold Corp will use a lower-than-expected gold price to estimate its bullion reserves, its chief executive said on Thursday, making some of its in-the-ground gold uneconomical to mine and may result in asset writedowns.

The world’s biggest gold producer will re-calculate its reserves at a gold price of $1,100, down from $1,500 a year ago, resulting in a decrease in its reserve base, CEO Jamie Sokalsky said.

At 140 million ounces, Barrick’s reserves are the biggest in the industry and equal to about 20 years of production for the miner. Reserves are those parts of an ore body that are economically feasible to extract.

“We’ve taken a conservative approach this year and we’re going to value our reserves at $1,100 per ounce as well as running the mine plans at $1,100 per ounce,” Sokalsky said at a conference in Whistler, British Columbia.

Gold’s price rise in 12 of the past 13 years made lower-grade ore profitable to extract, allowing miners to expand their reserves.

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