The Canadian resource sector’s messy duty to consult – by Dwight Newman (National Post – October 30, 2015)

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

Dwight Newman is professor of law and Canada research chair in indigenous rights, University of Saskatchewan and visiting fellow, James Madison Program, Princeton University.

This week, closing arguments were heard in a lawsuit that highlights the Ontario provincial government’s slowness in developing clear approaches to the duty to consult Aboriginal communities and in offering any clarity to those attempting to operate in the Canadian resource sector.

The decision to be rendered has widespread implications. The case has parallels to the situation of other resource companies, and it highlights the significant dangers in governments trying to muddle through the interaction between Indigenous rights and resource development without making clear decisions and enacting clear legal frameworks. Future prosperity for Aboriginal and non-Aboriginal communities alike will be affected by what happens with these sorts of lawsuits.

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He shorted Bre-X. Now fund manager is going long NexGen – by Tommy Humphreys (CEO.ca – October 28, 2015)

http://ceo.ca/

Disclosure note: Author is long NXE and biased. NXE was a CEO.CA sponsor in 2014 but is not anymore. Author will trade the stock without further notice. This is provided for information purposes only and is not investment or professional advice of any kind. Always do your own due diligence and speak to a licensed investment advisor prior to making any investment decision. Junior mining stocks such as NexGen Energy are incredibly risky and can lose their entire value. Read NexGen’s profile on www.SEDAR.com for important risk disclosures. You are responsible for your own trades.

The Toronto office of Warren Irwin, hedge fund manager and CEO of Rosseau Asset Management, is decked out with memorabilia from Bre-X Minerals Ltd., the largest and most famous gold mining fraud in history.

Irwin made a fortune as a young money manager trading Bre-X stock. He had heard about the Indonesia-focused exploration company in 1995, and had some experience in the country and with gold miners.

Irwin encouraged Deutsche Bank, his employer at the time, to take a position in Bre-X at roughly $13 per share. The bank declined, so Irwin acquired a substantial position for his personal account at approximately $18 a share.

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Gloom hangs over [Quebec] mining convention – by Robert Gibbens (Montreal Gazette – October 26, 2015)

http://montrealgazette.com/

Miners at the Quebec Mineral Exploration Association’s Xplor event in Montreal this week not only are battling the lowest metal prices in 11 years, cutting costs and scratching for capital, they’re coping with a more complicated permit process.

“It’s taking three years or more to complete federal and Quebec clearances, including environmental, sustainability, social requirements and benefits pacts with the native peoples,” said Guy Bourassa, chief executive of Nemaska Lithium Inc.

“It’s a huge and costly challenge for mine finders and developers since you don’t get financing until the permitting process is fully completed,” he said from Quebec City.

Nemaska’s $500-million Whabouchi hardrock lithium project in the James Bay area, 300 kilometres north of Chibougamau, has won full authorization.The ore will go by truck and rail to a new processing plant at Shawinigan and the resulting top-grade lithium carbonate will head for new-generation battery-makers.

“We’ve been lucky with rising lithium prices, contrary to gold, base metals, rare earths, iron ore and most other commodities, and now I’m negotiating the long-term financing needed for Whabouchi’s 2018 start-up,” he added.

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NEWS RELEASE: Canada’s Junior Miners must embrace unconventional strategies to survive continued economic challenges – PwC report

Bleak numbers lead miners on innovative paths to disrupt the downturn

TORONTO, Oct. 6, 2015 /CNW/ – The drying up of equity and debt markets coupled with new lows in cash reserves have pushed Canada’s junior mining industry on a further downward financial trend, according to PwC’s annual report on the TSX Venture’s top 100 junior mining companies. But the industry is looking to innovate and collaborate in an effort to move forward.

According to the 9th annual Junior mine report, Time for Change, the top 100 juniors raised $514 million in equity financing in 2015, down 25% from last year, while debt financing fell 27% to $278 million over the same period. Despite attempts to reduce spending, cash reserves are dwindling to new lows as the top 100’s on-hand cash dropped on average from $10 million to $7 million.

These numbers are paired with news that overall revenue is down 28% from 2014, a drop of nearly $195 million, balanced slightly by an 18% reduction in overall net losses. Market capitalization dropped significantly from $7.9 billion to $4.8 billion as of June, 2015.

“The challenges in the junior mining sector persist and the industry is really at a crossroads,” said Liam Fitzgerald, PwC’s Canadian Mining Leader.

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Canadian firm fights gold mine ban by leftist Greek government – by Angeliki Koutantou (Reuters Canada – October 2, 2015)

http://ca.reuters.com/

ATHENS (Reuters) – A Canadian company appealed to Greece’s top court on Friday to overturn a ban on its plans to develop a gold mine in a forested area of northern Greece, in a case widely seen as a test of the leftist government’s approach to foreign investment.

Vancouver-based Eldorado’s venture to extract gold and other ores on the verdant Halkidiki peninsula is seen as one of the top investments in a country racked by a debt crisis since the end of 2009. The company has put in more than $600 million since 2012 and plans to invest another $1 billion in its quest for gold, copper and zinc at two other sites.

But a day before resigning to call a general election, Prime Minister Alexis Tsipras’ government revoked Eldorado’s permit for the Halkidiki mine in mid-August, citing environmental grounds, in a move that showed Greece remains a risky bet for investors.

Eldorado then suspended all its activities at the mine and made most of its 1,300 workers temporarily redundant.

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NEWS RELEASE: Horizonte consolidates Araguaia nickel project through acquisition of Glencore project

/PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL./

LONDON, Sept. 28, 2015 /CNW/ – Horizonte Minerals Plc, (AIM: HZM, TSX: HZM) (‘Horizonte’, ‘HZM’ or ‘the Company’) the nickel development company focused in Brazil, is pleased to announce that it has reached agreement to indirectly acquire through wholly owned subsidiaries in Brazil the advanced high-grade Glencore Araguaia nickel project (‘GAP’) in north central Brazil (the ‘Proposed Transaction’). GAP combined with Horizonte’s 100% owned high-grade Araguaia nickel project (‘Araguaia’ or ‘Araguaia Project’) creates one of the world’s largest nickel saprolite projects in terms of size and grade, in a premier mining jurisdiction that has a defined path to feasibility.

Highlights

  • The combination of GAP and Horizonte’s Araguaia Project will create one of the largest saprolite nickel projects in the world (the “Enlarged Project”).
  • Additional resources with potential to provide ore grading 2% nickel for the first 10 years of mine life.
  • Higher nickel grades are expected to improve project economics delivering a shorter capital repayment period and a lower break even nickel price.
  • Upfront consideration on closing of US$2M to be satisfied through issue of HZM shares.
  • Total acquisition cost US$8M.
  • Placing of new shares to raise £1.55M through existing cornerstone shareholders.

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TMAC Resources, Pretium Resources key to future of junior mining sector – by Tim Kiladze (Globe and Mail – September 24, 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.

Few companies are reeling from the commodity collapse as badly as junior miners. Three years into the supercycle’s crash, investors who stick by the sector have largely abandoned smaller explorers and developers in favour of established companies whose projects are up and running.

The major knock against junior miners has been financing risk. No one knows if they will be able to raise the money they need to get their projects into production because shareholders have been so badly burned. That makes the recent developments at TMAC Resources Inc. and Pretium Resources Inc. all the more interesting.

In June, TMAC raised $135-million in a rare mining initial public offering, giving the company enough cash to get to the production phase. Last week, Pretium announced a $540-million (U.S.) financing package that gives the miner 70 per cent of the capital it needs to build its Brucejack mine in northern British Columbia.

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SNL Official: Exploration Spending Declines With Price Of Metals (Kitco News – September 21, 2015)

http://www.kitco.com/

(Kitco News) – The amount of exploration spending for gold and other metals has declined in the last few years along with prices, said David Cox, senior sales executive for SNL Metals & Mining, during a presentation to the Denver Gold Forum Monday.

Exploration by junior-mining companies has fallen especially sharply, with a weaker equity market cutting into the amount of money these firms can raise for drilling and other work to discover new mines, he said.

The reduced exploration and capital spending have implications for the future supply of metals. “Discovery is the only way to add new resources and reserves to supply,” Cox said.

He said over the last decade, “there has been a declining rate of discoveries in the gold sector, and now that’s being exacerbated by the capital cutbacks, in particular by the majors but also junior companies are unable to raise money to do their work.”

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How smaller Canadian gold miners are thriving despite today’s gloomy price environment – by Peter Koven (National Post – September 19, 2015)

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

KIRKLAND LAKE, ONT. – Deep underground in Kirkland Lake, 300 kilometres north of Sudbury, it is hard to think about the rich veins of gold near at hand. The heat and humidity overpower everything else.

Crews are currently working 5,400 to 5,600 feet below surface, making it one of Canada’s deepest gold mines. And in this part of the world and at these depths, a first-time visitor would find the temperature suffocating.

Work crews start dripping with sweat almost as soon as they step out from the shaft underground to begin their shift. Mining this far down is technically challenging and not for the faint of heart. But more than 100 years after the first shaft was sunk in this sturdy Northern Ontario community, it looks as attractive as ever — even if it is surrounded by an environment of gloomy gold prices.

The Kirkland Lake operation, known as Macassa, is one of the world’s richest gold mines by any measure — the data service IntelligenceMine ranks it second overall. The mine’s owner, Kirkland Lake Gold Inc., likes to say that of the world’s 10 highest-grade operations, this is the only significant one that isn’t owned by a major company.

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[Northern Superior Resources] Sudbury junior miner squares off against province – by Ian Ross (Northern Ontario Business – September 17, 2015)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North. Ian Ross is the editor of Northern Ontario Business ianross@nob.on.ca.

Barring a last-minute settlement, a Sudbury junior mining company expects to be in a Toronto courtroom in early October to take on the Ontario government in a potential landmark case that could prompt revisions to Ontario’s Mining Act concerning First Nation consultation.

“I’d rather be talking about exploration,” lamented Tom Morris, president and CEO of Northern Superior Resources, who was making preparations for a four-week trial in an Ontario Superior Court starting Oct. 5.

Northern Superior is seeking compensation from the province for failing to protect its interests in a gold exploration play in northwestern Ontario that the company was forced to abandon its mining claims after a series of disputes with a First Nation community in 2011.

Close to two years ago, Northern Superior filed a $110-million lawsuit in late 2013 to recover the $15 million it spent on exploration since 2006, plus the estimated future value of the three properties on Crown land as they worked toward a major gold discovery near the Manitoba border.

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Sudbury’s Wallbridge Mining signs $11-million deal – by Staff (Sudbury Star – September 17, 2015)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Lonmin Canada Inc. and Lonmin Plc will spend $11 million over four years in a joint venture agreement with Sudbury-based Wallbridge Mining Company Limited.

In exchange, Lonmin can earn up to a 50 per cent interest in Wallbridge’s four Parkin Properties located North of Sudbury. The deal was announced Wednesday.

“Our business plan … focuses on acquiring value-accretive near-term production opportunities, as well as advancing our exploration properties, including our Parkin Properties, through joint venture partnerships,” Marz Kord, president and CEO of Wallbridge, said in a release.

“I am pleased that we have not only advanced our discussions regarding some external assets, but have now amended the (North Range Joint Venture agreement) with Lonmin to include our Parkin Properties. This plan provides the company with sustainable cash flow, while maintaining active exploration for large-scale discovery upside in the Sudbury camp.

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Do tax credits help Northern mining? Economists and industry disagree – by Chris Windeyer (CBC News North – September 4, 2015)

http://www.cbc.ca/news/canada/north/

‘Everybody thinks it’s a magic bullet but it doesn’t do anything,’ economist says

It’s been a regular feature of Conservative federal budgets since 2006: an extension, for another year, of the 15 per cent Mineral Exploration Tax Credit.

The Conservative Party is now promising to extend that credit for another three years, if it’s re-elected, and boost the credit to 25 per cent in remote areas, including the territories and large parts of the provincial North.

There’s just one problem, says Lindsay Tedds, an economist with the University of Victoria: it may not actually work.

“Everybody thinks it’s a magic bullet but it doesn’t do anything,” Tedds says. “It does not increase investment to the point where you’re going to have increased exploration.”

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Mining makes its debut in Canadian election – by Andrew Topf (Mining.com – September 6, 2015)

http://www.mining.com/

It’s not often that mining makes headlines as an election issue in Canada, but there it was last week, when Prime Minister Stephen Harper made a scheduled campaign stop in the battleground riding of Nipissing–Timiskaming in Northern Ontario.

Harper, whose incumbent Conservative Party finds itself in a tight three-way race with the Liberal Party and the NDP, told a group of supporters in North Bay that the 15 percent mineral exploration tax credit, in place since 2006, would be extended at least another three years if the government is re-elected.

Projects that face steep overhead costs due to remote locations, such as the Ring of Fire in Northern Ontario and the Plan Nord in Quebec, would qualify for a 25 percent tax credit.

The cost of extending the credit and the new enhanced credit would be about $60 million a year starting in 2016-17. Both Liberal Party leader Justin Trudeau and the leader of the NDP, Tom Mulcair, have said they oppose the tax credit.

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Why the Mineral Exploration Tax Credit is such a bad idea – by Lindsay Tedds (MACLEAN’S Magazine – September 2, 2015)

http://www.macleans.ca/

With taxpayers worried about government spending, we should demand better than the renewal of a credit that represents a wasteful use of tax revenues

Conservative leader Stephen Harper speaks with Joe Guido, President of Premier Mining Products as he is shown drill bits during a campaign stop in North Bay, Ont., on Wednesday, September 2, 2015. THE CANADIAN PRESS/Adrian Wyld
Conservative leader Stephen Harper speaks with Joe Guido, President of Premier Mining Products as he is shown drill bits during a campaign stop in North Bay, Ont., on Wednesday, September 2, 2015. THE CANADIAN PRESS/Adrian Wyld

As I am sure all of Canada knows (and much of the world), Canada’s much awaited gross domestic production (GDP) numbers came out Tuesday. Everyone, by now, knows the punchline, but buried in those numbers were little gems that I was certain would lead to policy announcements today. And I was right. The first ones out of the gates have been the Conservative Party of Canada (CPC) which announced an extension to and enhancement of the Mineral Exploration Tax Credit.

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Fission’s uranium price – by Kip Keen (Mineweb.com – September 4, 2015)

http://www.mineweb.com/

There is a big gap between the company’s assumptions and reality.

HALIFAX – First let me say Canadian-junior Fission Uranium has its hands on a delightful discovery with the Triple R deposit. It’s already pretty big, high grade, and set to grow.

It and predecessor companies made the find a few years back in the Athabasca Basin, where the cream of the world’s uranium resides – at least in terms of grade. They recently calculated a 79.6 million pound uranium resource, indicated, at 1.58% U3O8. That’s quite sizeable and high grade by the industry’s standards.

Fission has released an early stage economic analysis (preliminary economic assessment or PEA in Canadian parlance) that puts the price tag at $1.1 billion to get it into production, with a 14-year mine life. It also anticipates pretty low operating costs per tonne – in the mid-teens per pound uranium.

But here’s my beef on the PEA and I’m not alone in having it. Fission (and RPA as the consultant) use $65/lb uranium as the base case in the PEA, giving it a catchy 35% IRR, post-tax. Yet current uranium prices are a lot lower in spot and contract markets and have been so for years.

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