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NEWS RELEASE: KGHM International Enters Into Agreement With Vale, Becoming Sole Operator of the Victoria Project

2013-08-02

VANCOUVER, BRITISH COLUMBIA–(Marketwired – Aug. 2, 2013) –KGHM International Ltd., formerly Quadra FNX Mining Ltd. (the “Company” or “KGHM International”), is pleased to announce that an agreement between KGHM International and Vale Canada Limited, a wholly-owned subsidiary of Vale S.A. (“Vale”), the global mining company, has been reached regarding the development of the Victoria project as well as the ore off-take to Vale’s processing facilities in Sudbury, Canada.

The Victoria project, located in Sudbury, Ontario, Canada, is a great discovery and world-class project in the Sudbury Basin. The deposit containing ore rich in copper, nickel and precious metals will be extracted as an underground mine.

Under the new arrangement with Vale, KGHM International will build and operate Victoria as the sole owner of the project and Vale will receive a royalty and off-take on all future production from the project.

KGHM International and Vale also re-negotiated the off-take arrangement for all of KGHM International’s production from its mines in the Sudbury Basin in Ontario, Canada. Vale will purchase polymetallic ore from KGHM International and process it at Vale’s Clarabelle mill in Sudbury. The contract is valid for the full life of all KGHM International’s Sudbury mines, including future production from Victoria.

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Long view: Lundin Mining plans to be around for a while – by John Pepin (Marquette Mining Journal – July 31, 2013)

http://www.miningjournal.net/

HUMBOLDT – Lundin Mining Corp. President and CEO Paul Conibear said the company is looking to be a long-term success and pledged that high standards will be maintained for the Eagle Mine.

“Eagle Mine being successful – not just in the construction ahead of schedule or under budget – but to be able to look back in five, seven, eight, 10, 15 years and know this is an outstanding mine and being recognized in the international community that this is an outstanding mine and still being very welcomed by the community, those are our goals, factors for success,” Conibear said.

Conibear made the comments recently to a crowd of about 200 employees, government and business officials and residents who have supported the Eagle Mine. Those listeners were guests invited to a ceremony at the Humboldt Mill commemorating the transfer of the Eagle Mine project to Lundin.

In June, Lundin purchased the Eagle project from Rio Tinto for $325 million and the Toronto-based company will spend another $400 million through 2014 to get the mine and its Humboldt Mill into production by late 2014, earlier if possible. Full production is targeted for mid-2015 and is expected to last until 2022. Additional minerals to be extracted from the mine will include gold, cobalt, platinum and palladium by-products.

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Twin Metals Minnesota: Building the state’s Mining Future – by Bob McFarin (Mesabi Daily News – July 31, 2013)

http://www.virginiamn.com/

Bob McFarin is vice president of public and government affairs of Twin Metals Minnesota.

Just over 150 years ago, people came to northern Minnesota in search of gold. Instead, they found a more enduring, but no less valuable resource — iron ore. The rest, of course, is history — Minnesota history shaped by generations of entrepreneurial, daring and hard-working “Iron Rangers.”

Good paying jobs, the ability to raise a family, vibrant communities, quality education and stewardship of the wilderness and environment — these are the past and present values and aspirations that define more than a century of mining throughout Minnesota’s Iron Range.

Twin Metals Minnesota (TMM) is excited to be joining Minnesota’s proud mining heritage. Working in partnership with local communities and state and federal regulators, TMM is pursuing the development and operation of an underground mining project that will be one of the world’s largest sources of copper, nickel, platinum, palladium and gold.

These critical metals are necessary components of myriad products, from simple to complex, that support a modern quality of life —

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Rio Tinto-Lundin mark Eagle Mine purchase – by John Pepin (The Mining Journal – July 26, 2013)

http://www.miningjournal.net/

Ceremony at Humboldt Mill finalizes transfer

HUMBOLDT – With the sounds of heavy construction equipment rumbling and beeping in the background, about 200 invited guests attended a ceremony in Humboldt Township Thursday commemorating Rio Tinto’s “handing over” the Eagle Mine and Humboldt Mill to new Toronto-based owner Lundin Mining Corp.

The ceremony was held under a tent at the mill, in a parking lot outside the local administrative offices for the Eagle Mine project. The crowd included employees and local officials and residents who have supported the Eagle Mine project.

Past Eagle Mine President Adam Burley – who is leaving Marquette County for a new Rio Tinto post in Salt Lake City – presented Lundin officials with a piece of polished ore from the mine, symbolizing the ownership transfer.

“The main message I want to get across is one of thanks and appreciation for the (Eagle) team support and the community support over these years and I also want to get across a message of pride,” Burley said. “Rio Tinto is proud of what we’ve achieved at Eagle. We do think we’ve raised the benchmark on industry standards and urge the community to share in that pride because they are the ones that have shaped the direction to a very large extent.”

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Vale sweetens pot in push to finish Long Harbour (CBC News Newfoundland – July 24, 2013)

http://www.cbc.ca/nl/

Vale is putting on a big push to finish the nickel processing facility in Long Harbour, pledging more cash to workers if they meet revised targets. The company says the project is 90 per cent completed, but finishing the job has been a challenge.

The processing facility is behind schedule. It was supposed to be commissioned by the end of June. The new target is Oct. 31.

Vale spokesman Bob Carter says the project has been plagued by shortages of skilled workers and absenteeism. “Resources that were here, and scheduled to be here, are now moving on to other projects,” Carter said.

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Vale may hire foreign workers to solve Long Harbour crunch (CBC News Newfoundland – July 23, 2013)

http://www.cbc.ca/nl/

Mining giant Vale admits it may have to look outside the country to hire specialized workers to finish its massive nickel processing facility in Newfoundland’s Placentia Bay.

However, Vale says it wants to explore other options first to find such skilled workers as welders and pipefitters for its site at Long Harbour, where the company ultimately intends to process nickel mined at Voisey’s Bay in northern Labrador.

To accomplish that, the company is moving skilled workers from its port site to its main construction site, which the company calls the upper tier. “Because we are short some of those resources, we thought it was best to redirect those resources to the upper tier,” Bob Carter, Vale’s director of corporate affairs, told CBC News.

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Vale may hire foreign workers to solve Long Harbour crunch (CBC News Newfoundland – July 23, 2013)

http://www.cbc.ca/nl/

Mining giant Vale admits it may have to look outside the country to hire specialized workers to finish its massive nickel processing facility in Newfoundland’s Placentia Bay.

However, Vale says it wants to explore other options first to find such skilled workers as welders and pipefitters for its site at Long Harbour, where the company ultimately intends to process nickel mined at Voisey’s Bay in northern Labrador.

To accomplish that, the company is moving skilled workers from its port site to its main construction site, which the company calls the upper tier. “Because we are short some of those resources, we thought it was best to redirect those resources to the upper tier,” Bob Carter, Vale’s director of corporate affairs, told CBC News.

On Friday, layoff notices were handed out to more than 250 workers with skills that are currently not needed at the main site. Vale, which now plans to finish the port site later, admits it is concerned that it will not be able to find all the workers it needs within Canada.

The company is applying to the federal government for permission to bring in foreign workers.

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NEWS RELEASE: Duluth Metals Provides Metallurgical Update on Twin Metals Minnesota Project

July 18, 2013

  • Positive results from various metallurgical options considered for the Twin Metals Minnesota Project
  • Good metal recoveries to both a bulk concentrate and to separate copper (~25% Cu, <1% Ni) and nickel (~10% Ni, <5% Cu) concentrates were achieved during recent pilot plant programs;
  • Good metal extraction from bulk concentrate using the CESLTM process;
  • Good recoveries of gold and platinum group elements from CESLTM residues by sulfur flotation.

TORONTO, Ontario, July 18, 2013 – Duluth Metals Limited (“Duluth Metals”) (TSX: DM) (TSX: DM.U) is pleased to announce significant progress on various metallurgical options being considered during pre-feasibility on the Twin Metals Minnesota Project (“Twin Metals”). Some of the most recent test results from an ongoing comprehensive metallurgical testwork program aimed at defining the optimal process flowsheet for the recovery of copper, nickel, gold, platinum, and palladium to payable products are summarized below. This metallurgical testwork program involved mineralogical assessments, laboratory bench scale testing, and pilot plant testing with independent laboratories.

The metallurgical testwork included flotation programs to develop and prove two separate flotation options: the first being the option to produce a bulk copper-nickel concentrate; and the second option being to produce a marketable copper concentrate and a marketable nickel concentrate.

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Sulfide mining’s jobs are temporary, but its pollution will stay in our waterways – by JT Haines, Lee Markell, Dylan Nau and Ijaz Osman (Minn Post – July 18, 2013)

http://www.minnpost.com/

Like many Minnesotans, we’ve been camping in the Boundary Waters Canoe Area Wilderness (BWCA) every summer for years, several of us for a quarter century or more. Some of us used to live in the Arrowhead, but all of us share a certain unspoken feeling heading north, when deciduous turns to boreal. We appreciate that our great state can still offer us a place where you can catch a fish, and drink the water – right out of the side of a canoe! (A lotta guys don’t favor the exclamation point. Or sarcasm. But it hasn’t escaped our attention that we can no longer do either of these things in the Twin Cities, which we think merits an exception.)

Without exaggeration, we feel that the Boundary Waters enhances our humanness. The question that challenges us today is: How many places like it do we need? How many are left?

In their excellent July 7 letter to the International Joint Commission regarding sulfide mines, the Minnesota Backcountry Hunters and Anglers express their opposition to proposed sulfide mine projects in Northern Minnesota, which would leach sulfuric acid into waterways, the lifeblood of Northern Minnesota’s economy, for up to 2,000 years. The group points out, correctly, that the jobs are temporary, the bulk of the profits will flow elsewhere, and the “toxic legacy of damaged waterways” will remain with us here, in Minnesota.

We thank the Hunters and Anglers for their letter, and couldn’t agree more. It passes our understanding that we would threaten this environment at all – let alone at the demand and benefit of foreign companies and mostly non-local investors.

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Global nickel supplies to remain in large surplus in 2013-2014–Macquarie – by Dorothy Kosich (Mineweb.com – July 18, 2013)

http://www.mineweb.com/

“Nickel remains the worst performer among the base metals this year,” say Macquarie Research commodities analysts.

RENO (MINEWEB) – The nickel market has been in large surplus this year and without significant production cuts will remain in alarge surplus this year, Macquarie Commodities Research advised Wednesday.

“The market is looking to China for further cuts in nickel pig iron production but this is not enough to rebalance the market and cuts outside China may well be a catalyst for a short-covering rally,” said Macquarie.

In their analysis, Macquarie observed, “Nickel remains the worst performer among the base metals this year. A large surplus between supply and demand has opened up and prices have collapsed.

“At current prices more than 40% of the industry is losing cash. Many nickel sellers are struggling to achieve the LME price,” said Macquarie commodities analysts. “In China, nickel pig iron has been selling at large discounts to LME prices this year (up to $2,500/t at one stage although this has been narrowed to under $1,000/t in recent weeks as NPI producers have cut production).” The analysts noted Ferronickel producers outside China have been forced to discount by $500-$700/t off LME.

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Nickel Leads Drop in Industrial Metals for 2013 as Supplies Grow – by Agnieszka Troszkiewicz (Bloomberg News – July 10, 2013)

http://www.bloomberg.com/

Nickel is leading declines of the main industrial metals on the London Metal Exchange this year, with surpluses dragging down copper to aluminum and zinc.

Nickel production will exceed demand by 68,000 metric tons this year, and copper will have its first surplus since 2009, according to Standard Bank Group Ltd. Inventories of nickel in warehouses monitored by the LME rose 85 percent in the past year to a record, according to bourse data today. Aluminum and nickel are near four-year lows and copper last month was the cheapest in three years.

“2013 has been a tough year for global commodity markets,” UBS AG in London said in a report dated yesterday. “While demand growth for key markets such as iron ore, the coals and copper is actually positive and robust, they continue to be overwhelmed by even stronger supply growth.”

Industrial metals have slumped this year amid signs of economic slowdown in top user China and on speculation the U.S. Federal Reserve will taper bond purchases. Nickel, along with aluminum, zinc and copper, will be in surplus this year, according to Barclays Plc. Aluminum will have a seventh consecutive surplus, Morgan Stanley estimates show.

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The History of KGHM International Ltd.

 

This historical overview is from the 2013 KGHM International Corporate Social Responsibility Report, click here: http://www.kghm.com/files/doc_downloads/WEB_KGHM%20CSR%202013%20English.pdf

KGHM International Ltd. is a wholly owned subsidiary of KGHM Polska Miedź S.A., the 7th largest copper producer and the largest silver producer in the world based in Lubin, Poland. The KGHM International story is one of rapid growth, from a junior mining company to a global industry player.

The Early Years

KGHM International, formerly known as Quadra FNX Mining Ltd. (“Quadra FNX”), was formed as the result of a merger between two equals: Quadra Mining Ltd. (“Quadra”) and FNX Mining Company Inc. (“FNX”). Both were incorporated in 2002, and later listed on the Toronto Stock Exchange, with the goal of becoming mid-tier base-metal producers.

The Quadra strategy: to grow through acquisitions

Quadra acquired its first asset, the Robinson Mine located near Ely, Nevada, in April 2004 and restarted production in December 2004. Quadra continued to grow through a series of acquisitions; in 2004, the company acquired the Sierra Gorda property in Chile through option agreements, and in 2005, added the Carlota Project near Globe, Arizona to its portfolio of assets.

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Nickel price slide hurting local miners – by Heidi Ulrichsen (Sudbury Northern Life – July 11, 2013)

http://www.northernlife.ca/

Slowing Chinese economy partly to blame

While nickel prices are as low as they’ve been since the recession, the founding executive director of Laurentian University’s Goodman School of Mines said he expects mining to “chug along” in this area.

But Bruce Jago expects smaller operators with high production costs may close mines, while larger companies such as Xstrata Nickel or Vale will begin to curtail production. Nickel prices have been something of a rollercoaster ride in recent years.

They’re currently hovering at around $6.10 to $6.20 a pound. That’s down from $8 a pound just six months ago, and $12 a pound two years ago. In 2008, during the recession, nickel prices dipped to as low as $4 a pound, plummeting from historic highs of $24 a pound a year before.

Laurentian University economics professor David Robinson agrees with Jago larger mining companies won’t be as affected by the lower prices. With large, integrated operations, it’s difficult to close mines, because the smelter depends on the ore coming from the mines, he said. “That’s one of the reasons I worry a little less than I would,” Robinson said.

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Wave of sackings at nickel mine swamps Forrest’s Poseidon adventure – by Andrew Burrell (The Australian – July 11, 2013)

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

POSEIDON Nickel chairman Andrew Forrest’s bid to revive the historic Windarra project in the face of worsening nickel prices appears to have suffered a blow after more than 40 contractors were sacked amid speculation the company is attempting to preserve cash.

The suspension of drilling at the Windarra nickel site this week comes after Mr Forrest, the 32 per cent owner of Poseidon, and chief executive David Singleton returned empty-handed from New York last month following a bid to secure about $200 million in debt financing for the project. The job losses at Poseidon follow a wave of redundancies at other mining companies and contractors in the wake of weaker commodity prices.

Sources close to contracting firms at the Windarra site in Western Australia’s Goldfields told The Australian yesterday that about 45 workers were “completely shocked” to be told they had been sacked on Tuesday. They said the move was sudden and contracting firms working at the site had not been previously advised of any shutdown. “They even woke up people who were on night shift to tell them they’d been sacked,” said one worker.

Those made redundant include geologists, geotechnicians, drillers, field assistants, shift bosses, cleaners and caterers. At the meeting on Tuesday, the workers were told that technical problems involving dewatering at the site had forced the shutdown, but that Poseidon Nickel would work to fix the issue.

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Mine Mill, First Nickel settle on 4-yr. deal – by Star Staff (Sudbury Star – July 10, 2013)

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

First Nickel Inc. and the union representing about 105 production and maintenance workers at the company’s Lockerby Mine have settled a new four-year contract.

Members of Mine Mill Local 598/CAW voted 94% Tuesday to accept a collective agreement, which their bargaining committee recommended they accept.

Mark Isto, vice-president of operations with First Nickel, said ratifying a four-year contract is an important milestone for the mine, which reached full production earlier this year.

“The operation faces considerable economic pressures from low nickel prices and we feel the agreement strikes a balance between the needs of both parties,” said Isto. Nickel has been selling for about $6.10 a pound.

Lockerby Mine manager Cliff Lafleur said negotiations with the union were “constructive and progressed well, leading to a fair deal for both sides.”

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