First Quantum closes in on Inmet Mining takeover – by Pav Jordan (Globe and Mail – February 25, 2013)

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.

A hostile takeover bid for Inmet Mining Corp. is looking ever more likely to succeed as the deadline approaches for shareholders to vote on the $5.1-billion offer, as the odds of a counter-bid ebb along with softening copper prices.

With just a few days to go before the First Quantum Minerals Ltd. bid expires on Feb. 27, and two months after the $72-per-share was made, there are no signs of a rival offer emerging.

Vancouver-based First Quantum began courting Inmet well before that, proposing bids at $62.50 a share and $70 a share in October and November as it pursued Inmet’s massive Cobre Panama project, one of the world’s largest undeveloped copper deposits, amid buoyant prices for the metal.

But copper prices have since retreated along with a less optimistic outlook for demand and big base metals companies appear to have lost their appetite for deal-making amid massive cost overruns.

“I’m still hoping the deal goes through with a premium to the current offer, but it’s looking in this current environment that it might just go through as it is,”said Terry Thib, a portfolio manager with Norrep Funds in Toronto, which holds Inmet shares.

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Excerpt from “The History of Mining: The events, technology and people involved in the industry that forged the modern world” – by Michael Coulson

To order a copy of The History of Mining please click here: http://www.harriman-house.com/products/books/23161/business/Michael-Coulson/The-History-of-Mining/

DANIEL GUGGENHEIM (1856-1930) MINING EMPIRE

These days the name Guggenheim is synonymous with the world of modern art and the Guggenheim Museum in New York. However in the 19th and the early 20th centuries the Guggenheims were better known as the most powerful force in US mining, having built a mining empire in both North and South America.

A Jewish immigrant from Switzerland, Meyer Guggenheim started his business career in the US in manufacturing and then in importing fine lace from Switzerland. He invested some of the gains from his importing business in silver and lead mines at Leadville, Colorado. In 1884, encouraged by the success of his Leadville investment, and of the rapid industrialisation of the US, he closed the lace business to concentrate on mining interests and founded Philadelphia Smelting and Refining to treat his Leadville mining output.

At that time he was almost 60 and his eldest son, Daniel, one of eleven children, who had worked for the Swiss end of the family’s importing business, took up the reins, and progressively became the driving force behind the family’s mining strategy. Daniel was educated at a Catholic high school in Philadelphia and by-passed university to enter the family business and was supported by five of his six brothers.

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Brazil wants more research on Amazon gold mine before Canadian company proceeds – by Tanya Talaga (Toronto Star – February 15, 2013)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Brazilian government urges more studies on how Belo Sun Mining Corporation’s Volta Grande venture will affect the environment and indigenous peoples.

The Brazilian government wants to see more research on a massive gold-mining project near the Amazon River before the Canadian firm behind it goes ahead with developments.

Brazil’s Federal Public Ministry has asked state authorities to obtain more information on how the Belo Sun Mining Corporation’s Volta Grande venture, one of the largest gold mining projects near the Amazon, will affect the ecologically sensitive area and the indigenous people living there. It also wants details on any effects the project will have on the nearby Belo Monte dam, the third largest hydroelectric project in the world.

The Amazon River basin is one of the most precious ecosystems in the world. Deforestation and development in the area is a cause of global concern.

The Volta Grande is 60 kilometres southwest of the city of Altamira in the northern Para state. Belo Sun controls the mining and exploration rights covering 1,305 sq. km.

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Barrick ad campaign counters Dominican criticism – by Joachim Bamrud (MiningWeekly.com – February 12, 2013)

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

SANTO DOMINGO (miningweekly.com) – Canada-based Barrick Gold has started a media campaign in the Dominican Republic to counter often repeated, but false, statements about its 2009 contract to develop the $4-billion Pueblo Viejo gold mine.

Pueblo Viejo, which is 60% owned by operator Barrick and 40% by Canada-based Goldcorp, is the largest foreign investment in the Dominican Republic. It started production in January and is expected to account for as much as 15% of Dominican exports over the next decade.

However, during the past two weeks Dominican legislators – including from the ruling PLD party – have requested that the contract be revised as a result of the increase in international gold prices since the contract was negotiated.

“We expect their executives to make a move so that the government and Barrick examine the contract [and] that they sit with the government to find a solution that benefits the country,” Abel Martinez, the head of the Dominican congress, said last week. “But this revision is urgent and the Chamber of Deputies has made the firm decision to act in this regard.”

Alexander Medina, the head of the government’s mining agency, last week also joined the ranks of those demanding a contract revision.

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UPDATE 2-Chile’s Collahuasi says mineral resources up 19 pct in 2012 – by Fabian Cambero (Reuters.com – February 6, 2013)

http://www.reuters.com/

SANTIAGO, Feb 6 (Reuters) – World No. 3 copper mine Collahuasi said on Wednesday its mineral resources grew by 19 percent to 9 billion tonnes last year compared with 2011 levels, due in part to new drilling campaigns and improvements in mining design.

Average ore grades are 0.81 percent copper, Collahuasi said, an enviable level as grades slip in many of leading copper
producer Chile’s ancient, tired deposits. Mining reserves increased 10 percent to 3.2 billion tonnes, the mine added.

“The notable increase in our base of mineral resources gives a clear indication of the significant future potential of an
expansion at Collahuasi,” new chief executive officer Jorge Gomez said in a statement.

Collahuasi is seeking to turn the corner after a tough 2012. The deposit produced around 284,000 tonnes of red metal last
year, tumbling roughly 37.3 percent from 2011 levels. It hopes to produce more than it did in 2012, Gomez told Reuters late last month.

Global miners Anglo American and Xstrata each own 44 percent of the mine. The remaining 12 percent is owned by a consortium of Japanese companies led by Mitsui & Co.  Collahuasi is mulling expansion plans that seek to double annual production. But Xstrata’s head of copper, Charlie Sartain, said last year no progress on ambitious expansion plans would be considered for the operation until the current turnaround was complete.

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Vale Brazil – Carajás Iron Ore Mine – by Will Daynes (Business Excellence – January 30, 2013)

Business Excellence is a global on-line publication portal for businesses who have stories of excellence to tell:  http://www.bus-ex.com/

Simply ore-inspiring

The most widely used of all minerals, iron accounts for approximately 95 percent of the world’s metal production in terms of weight. As the world’s third largest iron ore producer and exporter, Brazil has long reaped the financial benefits provided by one of its largest export products.

The Carajás region of the country boasts some of the richest reserves and concentrations of iron ore anywhere on the planet, with the Carajás Mine, located in the state of Pará in Northern Brazil, holding the distinction of being the world’s largest iron ore mine. Fully owned by Vale, the mine holds up to 7.2 billion metric tonnes of iron ore in proven and probable reserves.

The Carajás Mineral Province was originally discovered entirely by accident when a US Steel helicopter was forced to land on a hill in the area to refuel in 1967, with the first iron ore mine called N4E Mine coming into operation in 1985. In the mine’s first year output reached one million metric tonnes of iron ore, which was processed at a semi-industrial plant. During the second year an industrial-scale processing plant was brought online and this resulted in production rising to 13.5 million metric tonnes of final product.

Mining operations in Carajás are open-pit, with 15-meter-high benches. The off-highway trucks that Vale uses, each capable of carrying loads of over 240 metric tonnes, unload ore at crushing facilities located inside the mines. After this, the material is transported on conveyor belts for further processing.

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UPDATE 3-Anglo American’s $4 bln hit clears decks for new CEO – by Sarah Young and Brenda Goh (Reuters.com – January 29, 2013)

http://www.reuters.com/

LONDON, Jan 29 (Reuters) – Anglo American took a $4 billion hit to its Minas Rio project on Tuesday, clearing the decks for new boss Mark Cutifani and indicating that the delayed Brazilian operation will eventually get off the ground.

Minas Rio, which is now costing Anglo more than three times its original estimates, has been seen as Anglo’s most significant failure of recent years and is partly responsible for costing outgoing chief executive Cynthia Carroll her job.

The writedown to the valuation of the huge iron ore project and a jump in the bill for its development to $8.8 billion, alongside a planned overhaul for the company’s troubled platinum business, are as near to a clean slate as new CEO Cutifani is going to get.

Shares in Anglo American gained 2.2 percent to 19.14 pounds ($30.06), topping Britain’s blue-chip leader board in midday trading after the announcement of the impairment charge. “The Minas Rio impairments give the incoming CEO a clean slate, creating a degree of positive sentiment,” Bernstein analyst Paul Gait said.

“The greater detail and clarity on the progress of Minas Rio can only increase the confidence around the executability and delivery of the project.”

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Armed clash at Canadian-owned copper mine in Peru injures at least 4 – by Franklin Briceno (Vancouver Sun – January 25, 2013)

http://www.vancouversun.com/index.html

The Associated Press – LIMA, Peru – At least four people were wounded Friday when police turned back several hundred peasants who were trying to enter a Canadian-owned copper mine where drilling began last month.

A local doctor told The Associated Press by phone that at least a dozen were wounded in the clash in the temperate Quechua-speaking highlands of Peru’s northern state of Lambayeque.

The doctor said one protester, 57, was shot in the back. The doctor spoke on condition of anonymity out of fear for his safety. Hermogenes Tantarico, the wounded man’s son, said his father “received a bullet in the back and a lot of shotgun pellets in the legs and elsewhere that left him unconscious.”

Regional police commander Col. Jorge Linares denied live ammunition was used. He said police only used tear gas and rubber bullets. One of the protesters, Florentino Barrios, said 27 were hurt, a lot from shotgun pellets.

International human rights groups criticized Peru’s government last year for so readily using live ammunition against protesters after five were killed in anti-mining protests in July.

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Inmet digs in its heels on Cobre Panama’s value – by Pav Jordan (Globe and Mail – January 23, 2013)

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.

A $5.1-billion takeover bid for Inmet Mining Corp. does not begin to capture the value of its star copper asset in Panama, said chief executive officer Jochen Tilk, and the project may be even bigger than currently proposed.

“[The bid amount] is simply too low,” Mr. Tilk said in an interview after the Toronto mining company filed a circular on Tuesday that recommended shareholders vote against a hostile, $72-a-share bid from rival First Quantum Minerals Ltd.

Citing the conclusions of a special committee of independent directors as well as input from financial and legal advisers, the Inmet board also said it is talking to a number of third parties regarding strategic alternatives to the hostile bid, and has signed confidentiality and standstill agreements with “a number” of those.

Cobre Panama is due to come on stream in 2016, which would add, under the current design, 300,000 tonnes of copper to global production at a time when demand is expected to rise and there will be scant new supply.

The $6.2-billion project will be the largest mining development in Central America and Mr. Tilk said that by adding another one or two milling lines on top of what is already contemplated, there is the potential for a mine with annual output of as much as 500,000 tonnes.

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Inmet urges shareholders to reject First Quantum bid – by Pav Jordan (Globe and Mail – January 22, 2013)

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.

Inmet Mining Corp. has recommended that shareholders reject a hostile takeover bid from First Quantum Minerals, saying the $5.1-billion cash-and-stock offer fails to reflect the value of its massive Cobre Panama project.

Citing the conclusions of a special committee of independent directors as well as input from financial and legal advisers, the Inmet board says the offer is below precedent for recent deals in the mining sector. It says it has approached a number of third parties who have expressed interest in considering strategic alternatives to the First Quantum bid, going so far as to sign confidentiality and standstill agreements with “a number” of those.

Cobre Panama will be one of the world’s largest new copper mines when construction is complete in 2016. The mine will cost some $6.2-billion to build and will produce about 300,000 tonnes of the vital industrial metal annually and is a bet that copper prices will continue to rise as demand strengthens further in China and the economies of Europe and the United States recover.

“The Inmet Board has concluded that the First Quantum Offer fails to adequately compensate shareholders for Inmet’s low risk asset base and its strong prospects for growth and value creation at Cobre Panama, which has the potential to become one of the world’s largest copper mines,” Inmet board chairman David Beatty said in a statement that marks Inmet’s first official response to the First Quantum bid since it was made in mid-December.

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Franco-Nevada confident in Inmet despite First Quantum’s $5.1B takeover bid – by Peter Koven (National Post – January 22, 2013)

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

TORONTO – Inmet Mining Corp. has received a vote of confidence from royalty firm Franco-Nevada Corp., which is not convinced that First Quantum Minerals Ltd. is the best company to build the Cobre Panama project.

Franco-Nevada has committed US$1-billion to Inmet for the development of Cobre Panama, so it has a unique interest in First Quantum’s $5.1-billion hostile bid for the company. Franco chief executive David Harquail said he has been very impressed with Inmet’s handling of the project so far, and has some ongoing questions about First Quantum’s proposal to build the mine for significantly less money. First Quantum has not approached him yet, he said.

“Our worry is what messages [First Quantum] is sending to Panama and the community when they say they have a different plan or scenario going forward and they expect to spend that much less money. Our preference is to have a more steady-state approach,” Mr. Harquail said in an interview.

“Right now, we’re supporting the folks who have brought us to the table and we have to reserve judgment on the new plans.”

That has to be music to Inmet’s ears. The Toronto-based miner is about to formally reject First Quantum’s bid, and will try to argue that it is the better caretaker of the US$6.2-billion mega-project. First Quantum has talked about reducing capital costs at Cobre Panama, but has not offered up firm numbers.

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Excerpt from “The History of Mining: The events, technology and people involved in the industry that forged the modern world” – by Michael Coulson


To order a copy of The History of Mining please click here: http://www.harriman-house.com/products/books/23161/business/Michael-Coulson/The-History-of-Mining/

JOHN NORTH (1842-1896) Chile’s Nitrates King

John Thomas North was known as the nitrates king as a result of his dominance of Chile’s nitrates industry in the latter part of the 19th century and his web of listed nitrates companies in London. He was also an active promoter and owner of coal mines in Chile and the UK and gold mines in Australia.

The son of a prosperous coal merchant, North was born in Holbeck, near Leeds in Yorkshire, in the north of England, in 1842. He served an apprenticeship in a local engineering firm, Fowler & Co, and then went out to southern Peru in 1869 where he installed machinery to treat nitrates. At the time nitrates – nitrogen rich salts – were beginning to be the fertiliser of choice for farmers, and Peru and Bolivia had the largest reserves of the mineral.

In 1879 the War of the Pacific broke out between Chile and Peru and Bolivia and as a result there was concern for the nitrate fields in southern Peru. One of the main problems was that the Peruvian government had issued government nitrate bonds in 1875 in an attempt to nationalise the largely British and Chilean owned nitrate deposits in Peru. With the outbreak of war the value of the bonds plunged and North, who had by then established his own nitrate works and invested in a water company which supplied the desert-located nitrate fields, began to purchase these nitrate bonds at less than 15% of face value.

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Company Returns Assured by Government in [Brazil] Rail Expansion – by Christiana Sciaudone – (Bloomberg.com – January 11, 2013)

http://www.bloomberg.com/

Brazil’s $45 billion railroad expansion is targeting ALL America Latina Logistica SA (ALLL3) and Vale SA (VALE)’s duopoly by guaranteeing returns for companies that create train lines and transport cargo.

Highway operator TPI-Triunfo Participacoes & Investimentos (TPIS3) SA and logistics group JSL SA (JSLG3) have said they may take part in the April auction for the rights to operate lines or handle cargo on 10,000 kilometers (6,200 miles) of new railways. The government says the nation’s biggest rail expansion since the 1930s will lure 91 billion reais ($45 billion) of investments.

President Dilma Rousseff, seeking to stimulate the economy and upgrade infrastructure after a decade without investment, will auction off ports, airports and roads to ease bottlenecks in Brazil, the world’s largest exporter of iron ore, orange juice and sugar. The government ran the 28,000 kilometers of railways until it privatized the lines in 2007. ALL and Vale now control 84 percent of the network.

“There is a lot of space for this sector to grow,” Roger Oey, an analyst at Bes Securities, said by telephone from Sao Paulo. “If there is any uncertainty, the government will try to diminish this for the projects to be successful, especially in the beginning.”

As part of the plan announced Aug. 15, the government vowed to sign contracts for all of the new capacity, Transportation Minister Paulo Sergio Passos said. Companies will either operate the rail lines or transport cargo, but not both. Additional terms will be released in March.

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Hundreds in Peru Balk at Relocation From Site of Mine – by William Neuman (New York Times – January 6, 2013)

http://www.nytimes.com/

MOROCOCHA, Peru — High among barren peaks, a Chinese mining company has built the Levittown of the Andes. Long rows of identical attached houses face each other across wide, straight streets, one-third of them still waiting for people to walk through their varnished pine doors and make homes under their slanted red roofs.

The company, Chinalco, which is owned by the Chinese government, built the new town to relocate more than 5,000 people living in nearby Morococha, a century-old mining village. The company plans to demolish Morococha to make way for an enormous open-pit copper mine.

Chinalco has moved close to 700 families since September. But several hundred residents have resisted, staging marches and other protests even as their neighbors load their belongings into moving trucks for the trip to the new town, which has not been named yet; it may ultimately be called Nueva Morococha.

The two towns are only six miles apart — a 15-minute drive — and are at similarly lofty altitudes. Morococha is at about 14,760 feet, and the new settlement is just 650 feet lower, at a spot now called Carhuacoto. But for many, the move is like traveling between two worlds.

Morococha is old, decaying, squalid: a broken window into raw poverty and neglect.

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Inmet to battle $5.1-billion hostile takeover bid – by Pav Jordan (Globe and Mail – January 16, 2013)

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.

Inmet Mining Corp. has a week to respond officially to a hostile takeover bid from rival First Quantum Minerals Ltd., but few expect anything short of a rejection of the $5.1-billion offer.

The owner of the coveted Cobre Panama copper project in Central America has until Jan. 24 to respond, and people familiar with the situation say it will come out swinging, recommending against the takeover and signalling progress in its search for an alternative palatable to shareholders.

Central to its defence will be a critical analysis of First Quantum’s track record on cost controls, meeting production targets and building mines in Latin America, said a source.

The company will allege First Quantum has a history of underestimating capital costs, as well as argue the Vancouver-based firm has no experience with capital projects the size of Cobre Panama, which will cost $6.2-billion to put into production.

How this plays out could prove critical to Inmet’s defence because the First Quantum bid of $72 a share is in cash and stock, which means the hostile suitor must convince investors of the value of its own shares.

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