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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‘This market downturn is worse than ’08’ – Scotiabank – by Kip Keen (September 1, 2015)

http://www.mineweb.com/

Comparing this downturn with others in recent memory.

HALIFAX – The last major downturn in commodities – during the 2008/09 financial crisis – was the central focus of Scotiabank analyst Patricia Mohr’s latest missive on metals and energy commodities.

Mohr – Scotiabank’s commodities guru – noted that Scotiabank’s commodities index, comprising, energy, metals, and fertilizers, dropped below levels last seen during the relatively brief rout in commodities seven years ago.

“The All Items Index is now well below the bottom touched during the ‘Great Recession’,” Mohr pointed out in a recent report.

“While many commodity prices remain above 2008/09 recessionary lows, current weakness is broader based and reflects a prolonged period of sub-par global growth.”

In particular, she highlights the latest weakness in oil prices amid declining metal prices. “An ongoing battle for market share in oil — recently exacerbated by heightened concern over a further slowing in the Chinese economy — combined with consternation over possible Fed monetary policy tightening in September have largely accounted for commodity price weakness.”

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Three-way Canada gold junior merger falls short – by Frik Els (Mining.com – September 1, 2015)

http://www.mining.com/

Shares in Gold Canyon Resources (CVE:GCU) and PC Gold (CVE:PKL) shot up on Tuesday massive trading volumes, after announcing that First Mining Finance Corp. (CVE:FF) will be acquiring all the shares of both explorers.

Vancouver-based Gold Canyon was last trading at $0.175, up 52.2%, drifting lower as the day wore on after the counter doubled at the start of trade on the TSX Venture Exchange. Gold Canyon, which owns gold projects in Canada and a rare earth prospecting licence in Tanzania is now worth $29 million in Toronto. More than 7.7 million shares changed hands (some 30 times usual volumes) making it the most active stock on the venture board.

PC Gold, based in Toronto, jumped 66% by the close affording the Ontario old mine explorer a $5.4 million market valuation after roughly 2 million shares were traded. Both counters ended well below the implied premium offered by First Mining over their 30-day average price which was 204% for Gold Canyon and 255% above PC Gold’s share price.

First Mining Finance shareholders were on the losing end of the deal – the Vancouver company which calls itself a mineral bank gave up a fifth of its value on the TSX-V by the close for a $28.2 million market cap.

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Trying to avoid the ‘extinction’ of Canada’s junior mining companies – by Simon Doyle (Globe and Mail – August 31, 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.

Simon Doyle covers lobbying and the intersection of business and politics in Ottawa. He writes for Politics Insider, which is available only to subscribers of Globe Unlimited.

The mining industry is lobbying for government help for junior mining companies and northern infrastructure as more juniors have delisted from the TSX and the commodities rout has deepened.

Minerals continued to fall early last week before a tumultuous few days on the markets. Fears about China’s economy and its metals consumption have refreshed arguments among members of Canada’s mining-industry associations for government measures to support the sector.

“The government appreciates the circumstances,” said Rod Thomas, head of mineral exploration industry group the Prospectors and Developers Association of Canada, whose group has been calling for an expanded junior mining tax credit, investment in northern infrastructure and relaxed rules for raising capital.

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Rob McEwen Interview: “This is Hurting Junior Miners More than the Gold Price” – by Angela Harmantas (Small Cap Power.com – July 28, 2015)

http://www.smallcappower.com/

Mining executive Rob McEwen spoke with SmallCapPower correspondent Angela Harmantas recently, with the former Goldcorp CEO talking about his company McEwen Mining bouncing back from a robbery, explaining how junior gold miners can remain profitable in this environment and what is driving his belief that the gold price will bounce back in a big way.

Rob McEwen is one of the more vocal members of a diminishing minority of gold bugs. He certainly has the experience to back his claim that gold will hit US$5000 an ounce in the not-too-distant future: over his 25-year mining career, he grew Goldcorp into a multi-billion dollar company that ranks as one of the world’s largest producers of precious metals. Today, as the Chairman and Chief Owner of McEwen Mining (TSX: MUX), he is hoping to achieve the rarified status of becoming one of only two gold companies on the S&P 500 (the other being Newmont Mining).

There have been a few setbacks for McEwen Mining this year, however. In April, a brazen robbery occurred at the company’s flagship El Gallo 1 mine in Mexico, a loss of nearly $8.4 million in revenue. And the beating that gold stocks are taking in the market thanks to a depressed gold price has caused MUX shares to fall to levels that threaten its inclusion on the NYSE. In addition to these insular challenges, the entire gold industry is struggling to maintain a positive outlook as gold plummeted recently to less than US$1100 after China dumped nearly 5 tons of bullion and Morgan Stanley analysts predicted gold could soon hit $800.

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Rio wants exploration collaboration to discover next big seam – by Tess Ingram (Sydney Morning Post – August 3, 2015)

http://www.smh.com.au/

Well-known West Australian explorer Mark Bennett has queried whether a plan by Rio Tinto to reinvigorate exploration in Australia through partnerships with junior mining companies will work as intended.

Rio has used its first presentation at the Diggers and Dealers conference in eight years to call for collaboration in exploration in order to find the next major mineral discovery in Australia.

The country’s miners are relying on deposits discovered at shallow depths more than 30 years ago and are struggling to discover further large, tier-one deposits at depth.

The current cost and risk of deeper exploration has meant many miners have abandoned exploration efforts altogether, opting for more bankable exploration around existing deposits (known as brownfields exploration) or in other countries, where resources remain shallow.

Speaking on the first day of the annual conference in Kalgoorlie, Rio Tinto exploration director Australasia Ian Ledlie extended an invitation to junior companies to use the global major’s mineral analysis technology to help prove up discoveries.

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Exploration option agreements need to be specific – by Julius Melnitzer (National Post -July 29, 2015)

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

Exploration option agreements negotiated by sophisticated parties mean what they say and nothing more, says the British Columbia Court of Appeal in a recent decision called American Creek Resources Ltd. v. Teuton Resources Corp.

That might sound simple — perhaps even obvious — But the American Creek decision has major implications for the way parties set up option agreements, a common way to fund exploration in the Canadian mining industry.

“The American Creek decision will definitely change industry practice for drafting the exploration agreements that are the lifeblood of the industry,” says Josh Lewis of Fasken Martineau DuMoulin LLP in Vancouver.

Typically, the company holding the property grants another company the option to earn an interest in the property by exploring it. The agreement usually prescribes the amount of the expenditures that must be made, but the description of those expenditures can vary from deal to deal.

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The weekend read: This is how the bottom looks – by Brent Cook (Mineweb.com – July 10, 2015)

http://www.mineweb.com/

Brent Cook’s take on how scary it looks out there, and why it might eventually and slowly get better.

The Rant. But then metal prices began to decline, economies slow, and profits slip away. What went wrong this time Dad? Will mining boom again? Don’t hold your breath kid. It’s bleak out there and we have a 10-year super commodity bull to work off this time.

I think what ultimately killed the recent boom was the slow realization by investors that most mining companies really couldn’t make money. Those savvy investors got the commodity boom and gold price right, and bought into the thesis that mining company profits would soar with the rising metal prices. The share prices did soar, for a while, but…

Instead of profits they got production costs rising in tandem with metal prices; capex blowouts; companies issuing equity and taking on debt whenever they could to cover the multitude of thoughtless acquisitions (supported by dubious, but 43-101 sanctioned, technical reports and financial projections) all piled on top of an eat-what-you-kill banking/brokerage community fronted by inexperienced or compromised analysts faced with the tall task of feeding the global frenzy of very short-term hedge fund gamblers with no skin in the game, trading stocks based on microsecond blips up until the shine wore off and, well, here we are today — busted again.

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[Saskatchewan] A uranium mid-cap – by Kip Keen (Mineweb.com – July 8, 2015)

http://www.mineweb.com/

Denison, Fission argue a merger of equals means a unique position as uranium mid-cap.

Fission Uranium and Denison Mines announced a merger of equals Monday that, if consummated, combines a few, key high-grade assets in a premier uranium mining region of the world in terms of grade. In selling the marriage of two key uranium juniors focused on the Athabasca Basin, the sales pitch was largely focused on the benefit of being a bigger company in a sour mining market.

Fission has emerged in recent years with an important uranium discovery, called Triple R, and first resource that catapulted its prospects as a uranium developer. It has gone from a virtual unknown, chasing a U3O8-mineralized boulder train, to one of the relatively rare junior explorers with a market capitalization counted in the hundreds of millions (~C$400m).

That has helped it catch up to and near equal Denison, a Lundin Group company that has a more established position in the Athabasca Basin. Denison’s assets include another, deeper, but uber grade uranium deposit (60% Wheeler project) and a 22.5% stake in a sizeable uranium toll mill operated by Areva, which processes ore from Cameco’s Cigar Lake mine.

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NEWS RELEASE: Denison and Fission Announce Transaction to Create Leading Diversified Uranium Company

TORONTO, ONTARIO–(Marketwired – July 6, 2015) – Denison Mines Corp. (TSX:DML)(NYSE MKT:DNN) (“Denison”) and Fission Uranium Corp. (TSX:FCU)(OTCQX:FCUUF)(FRANKFURT:2FU) (“Fission”) are pleased to announce the execution of a Binding Letter Agreement (the “Binding Agreement”) to combine their respective businesses (the “Transaction”). The Transaction creates a leading Canadian focused diversified uranium company – combining high quality assets and the management teams of two highly respected companies. Headlining the asset portfolio of the combined company will be two world class uranium exploration and development projects: Fission’s 100% owned Patterson Lake South Project, and Denison’s 60% owned Wheeler River Project, both located in the prolific Athabasca Basin, in Northern Saskatchewan, Canada.

Subject to the terms set out in the Binding Agreement, Fission common shareholders will receive 1.26 common shares of Denison for each common share of Fission held plus $0.0001 per share in cash. Upon completion of the Transaction, the combined company, to be named “Denison Energy Corp.”, will be approximately 50% owned by each of Denison’s and Fission’s existing shareholders on a fully-diluted in-the-money basis.

The market capitalization of Denison and Fission on a combined basis is anticipated to be approximately CAD$900 million. Based on the 30 day volume weighted average price of Denison’s shares on the TSX of CAD$0.99 as at July 3, 2015, the offer implies a price per Fission common share of CAD$1.25 and represents a premium of approximately 18% to the 30 day volume weighted average price of Fission’s shares on the TSX of CAD$1.06 as at July 3, 2015.

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The exploration Elephant in the room – by Kip Keen (Mineweb.com – July 3, 2015)

http://www.mineweb.com/

Analysis: We consider a recent report on the issue of exploration by the Boston Consulting Group.

The Boston Consulting Group – one of the so-called Big Three consulting firms – takes on mineral exploration in a recent report. It calls it “Tackling the Crisis in Mineral Exploration” and, as you might guess, it deals with the elephant in the room, which is the lack of elephants in the room. That is: big, important discoveries.

In recent years, despite a massive increase in exploration spending, discoveries have dried up – ground well covered by researchers and analysts. Indeed, the Boston Consulting Group relies heavily on one of the better sources tracking the sector – Mines Consulting run by Richard Schodde – to set the scene.

Schodde shows that over the past decade the rate of deposit discovery has barely budged (even estimating for un-reported discoveries) despite a tenfold increase in exploration spending. What the Boston Consulting Group adds to the issue is a journalistic style endeavour in interviewing six of the industries better-known explorers.

These include Graham Brown, Douglas Kirwin, Jim Lalor, Sig Muessig, Andy Wallace and Dan Wood. This makes for an interesting, and at times, insightful read on industry issues, no doubt there.

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