Republic of Mining

Harper Promises To Boost Mineral Exploration Tax Credit (Canadian Press/Huffington Post – September 2, 2015)

September 2, 2015

http://www.huffingtonpost.ca/

NORTH BAY, Ont. — Yan Roberts was among the dozens of people who filed into a mining products factory Wednesday to hear Stephen Harper announced expanded and enhanced mineral exploration tax credits.

Like all of them, he’d signed up in advance, stood in line to get his name crossed off a list, received a yellow wrist band and was ushered onto the factory floor, where the fans had been turned off so people could hear Harper’s latest pitch to voters in Nipissing-Timiskaming.

Roberts watched as the prime minister said a re-elected Conservative government would extended the existing 15 per cent mineral exploration tax credit, which was introduced in 2006.

He also had something for remote projects, like Ontario’s Ring of Fire or Plan Nord in Quebec; a 25 per cent mineral exploration tax credit for any project in the territories or that is more than 50 kilometres from an all-weather road or service centre.

Taken together, the two tax credits would cost $60 million a year beginning in 2016-17

Australian economy slows amid China ripples – by Jamie Smyth (Financial Times – September 2, 2015)

September 2, 2015

http://www.ft.com/

Sydney – Australia’s economy decelerated sharply as the slowdown in China, its biggest trading partner, dented exports and mining construction.

Economic output grew by a less than expected 0.2 per cent in the three months to the end of June. This follows even worse readings from fellow resource economies Canada and Brazil, which this week slipped into recession amid a slump in commodity prices.

Australia’s gross domestic product growth, published on Wednesday, was below consensus estimates of 0.4 per cent and sharply lower than the frst quarter’s 0.9 per cent.

“The major inhibitor to growth is the ongoing fall in mining investment,” said Michael Workman, economist at Commonwealth Bank of Australia. “Other growth detractors are falling mineral and energy commodity prices, thanks to a combination of oversupply by producers and weaker demand from the world’s major buyer, China.”

Cameroon involved in Central Africa ‘blood diamond’ trade: U.N. experts – by Louis Charbanneau (Reuters U.S. – September 1, 2015)

September 2, 2015

http://www.reuters.com/

UNITED NATIONS – Illicit trafficking of diamonds from Central African Republic into neighboring Cameroon is helping finance the continuation of a nearly three-year conflict, an expert panel that monitors U.N. sanctions said in a confidential report.

Central African Republic (CAR) descended into chaos in March 2013 when predominantly Muslim Seleka rebels seized power, triggering reprisals by “anti-balaka” Christian militias who drove tens of thousands of Muslims from the south in a de facto partition of the landlocked country.

Although rival armed groups agreed to a peace accord in May, the conflict has continued at a lower intensity, and a transitional government has been unable to assert its authority over all of the vast, mineral-rich territory.

The export of diamonds from CAR was banned in May 2013 by the Kimberley Process, which represents 81 countries, including the United States, the European Union, Russia, China and all major diamond-producing nations. The group was formed to prevent so-called blood diamonds from funding conflicts.

Africa’s Deadwood: The Gold Rush Is On in Uganda (Associated Press/New York Times – September 2, 2015)

September 2, 2015

http://www.nytimes.com/

MUBENDE, Uganda — The hunt for gold takes the men 100 meters (yards) underground, past contraptions of wood and rope rigged to function like pulleys, past hard rock that they attack day and night with demolition hammers. When they emerge at the end of a shift, the miners carry stone samples that will be examined for the dark veins that suggest presence of gold.

The gold rush is on in a big way in this central Ugandan district of Mubende. So big that tens of thousands of people make their livelihood from it. Makeshift tents of blue tarps dot the green hills that are pockmarked by pools of muddy water where ore is washed, separating the gold. Four mining camps have sprung up in recent years, featuring brothels and restaurants.

Now, Ugandan government officials are considering evicting the miners, saying they are not licensed. The government would evict them under eminent domain, compensate them and then open the area to bidders with development plans.

“These people are scratching across the surface, like rats,” Edwards Kagimba, the director of geological surveys and mines at Uganda’s Ministry of Energy, said in a phone interview with The Associated Press.

Risk-adverse investment dollar shy of African mining – by Tess Ingram (Sydney Morning Herald – September 2, 2015)

September 2, 2015

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

African countries are at risk of being some of the worst hit by the mining downturn as the shrinking pool of increasingly risk-adverse capital is invested elsewhere, industry experts warn.

Plummeting commodity prices coupled with rapid political and economic changes in many African countries have made it increasingly challenging for many African jurisdictions to attract miners, explorers and the prospective financiers that help drive their economies.

At the Africa Down Under mining conference in Perth on Tuesday, industry experts urged African delegates and government ministers to better partner with mining companies during the downturn and offer innovative solutions to help operators generate profits and attract investment.

Gilbert + Tobin lawyer Michael Blakiston told the conference African countries risked deterring investment as investors “who do have capital, have choices of where to take it”.

Collapsing Fanya Metal Exchange in China raises concerns about minor metals – by Peter Koven (National Post – September 2, 2015)

September 2, 2015

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

The potential collapse of a Chinese commodity exchange could put more pressure on prices for rare earths and other minor metals in which investors have already suffered tremendous losses over the past several years.

Last week, furious investors kidnapped Shan Jiulang, head of the Fanya Metal Exchange, at a Shanghai hotel and turned him over to police, according to the Financial Times. It capped a debacle in which the Fanya exchange ran into liquidity problems and stopped paying out money on its investment products. Roughly US$6.4 billion of investor funds were frozen, according to estimates.

Now the risk is that Fanya will liquidate its vast holdings of minor metals, a move that could crush the highly illiquid markets for these products and harm Canadian companies in the space.

Of course, that assumes Fanya’s reported holdings are accurate. Investors treat everything this exchange says with skepticism after its rapid flameout.

REFILE-Illegal mines a slavery hotspot in Colombia, Peru-experts – by Anastasia Moloney (Reuters U.S. – September 1, 2015)

September 2, 2015

http://www.reuters.com/

BOGOTA, Sept 1 (Thomson Reuters Foundation) – A boom in illegal gold mining in Colombia and Peru is fuelling human trafficking and forced labor in and around mines but there have been few convictions for the crime, researchers say.

In Peru, the world’s fifth biggest gold producer and exporter, sexual exploitation and forced labour in some mining areas is a growing concern, the International Organisation for Migration (IOM) says.

“Human trafficking in both illegal mining areas and small-scale mining is an increasing problem in Peru,” said Jeremy MacGillivray, IOM’s project development officer in Peru.

Poor, uneducated and unemployed women and girls are vulnerable to recruiters’ false promises of work as cooks, cleaners and waitresses in mining towns but are often forced into commercial sex work.

“Around mines, small towns sprout up providing services for miners, including restaurants, bars and brothels, where many of the victims of sexual exploitation are.

Canada in recession a field day for opposition – by David Olive (Toronto Star – September 2, 2015)

September 2, 2015

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.

In the middle of an election campaign, the opposition parties will try to have a field day with the news that Canada is officially in recession.

Wise stewardship of the economy being Stephen Harper’s high card in the Oct. 19th election, the opposition parties will try to have a field day with the Sept. 1 confirmation by Statscan that Canada is officially in recession.

In fact, Canada is the only G7 country in recession.

Obviously, the bad news will be hammered away at for the duration of the campaign by Tom Mulcair, Justin Trudeau and their 674 fellow NDP and Liberal candidates for Parliament.

It could get worse for the governing Tories. Worrisome jobless figures will be released later this week. And Harper’s ballyhooed federal budgetary surplus for the current fiscal year is looking more like magical thinking with each passing week.

Fresh wave of layoffs hits oilpatch, as Penn West, ConocoPhillips cut 900 jobs: ‘Good luck to all of us’ – by Claudia Cattaneo (National Post – September 2, 2015)

September 2, 2015

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

As Canada’s oil industry resizes itself to fit a sub-US$50 oil world, Penn West Petroleum Ltd. and ConocoPhillips’ Canadian unit announced 900 combined layoffs Tuesday, kicking off what is expected to be another wave of belt-tightening.

Also Tuesday, Pengrowth Energy Corp. joined Penn West in cutting its dividend.

In the early days of the oil price collapse last winter, the downsizing came reluctantly after years of labour shortages and largely did away with excesses.

As hopes for a quick price recovery evolved to consensus that OPEC’s price war to recapture market share from North American producers could mean low oil prices for years, the axe kept swinging and aimed at more targets — dividends, non-core assets, office space, perks.

Nine months into the oil price collapse, after a summer of still-worsening conditions, downsizing announcements have the feel of desperation. Canada’s oil and gas industry, powerless to influence global oil prices, is dismantling by a thousand cuts what took decades to build.

Investors ready wallets for Russia’s Norilsk Nickel – by Michael Turner (Reuters U.S. – September 1, 2015)

September 2, 2015

http://www.reuters.com/

LONDON, Sept 1 (IFR) – Norilsk Nickel is set to receive a warm reception from investors this month as it begins meetings ahead of potentially the first benchmark-sized deal from Russia in nearly a year.

The Russian mining company, rated BBB- by Standard & Poor’s and Fitch, is due to go on a roadshow in early September to update investors on its recent performance and strategy.

The company does not have any immediate funding needs, but “continues to see international capital markets as an important part of its funding mix and will remain opportunistic”, according to a statement released on Friday.

One source said last week that the firm could seek to raise about US$500m from a new deal, if interest is big and markets supportive. That would be the biggest deal from a Russian issuer since Gazprom sold a US$700m one-year bond last November.

While Norilsk Nickel has plenty of cash on its balance sheet, Sberbank analysts said the company has US$1.3bn in short term debt and expected high payments to equity holders. “It may look to refinance via capital markets,” said the Russian bank in the research note.

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

September 2, 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.”

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

September 2, 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.

Clive Palmer launches $10 billion lawsuit against estranged Chinese partner – by Amy Remeikis and Peter Ker (Sydney Morning Post – August 31, 2015)

September 2, 2015

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

The legal war between Fairfax MP Clive Palmer and his estranged business partner Citic Limited has gone to another level, with Mr Palmer’s company Mineralogy seeking $10 billion in damages from the Chinese giant.

In the latest of many lawsuits between the two companies over the past three years, Mineralogy is suing Citic over what it claims to be a lack of royalty payments from Citic’s Sino Iron magnetite project in WA, which was built on Mr Palmer’s leases.

The two companies have previously argued over the royalty issue, which has been complicated by the agreement signed between the two companies in May 2006 which relies on the annual benchmark iron ore prices struck by BHP Billiton and Brazilian miner Vale to calculate one of the royalties owing to Mineralogy, known as “Royalty B”.

With iron ore now traded on daily market terms rather than on annual contracts, there is no way to calculate Royalty B. The two companies have since fought over numerous things, including access to the port used by the loss-making Sino Iron project and the shifting of millions of dollars out of certain accounts, but they now appear set to return to the original issue of royalties.

COLUMN – Weak China PMIs won’t automatically lower commodity imports – by Clyde Russell (Reuters India – September 1, 2015)

September 1, 2015

http://in.reuters.com/

China’s various purchasing managers’ indexes gather significant attention as indicators of the health of the world’s second-biggest economy, but they are less useful as a predictor of commodity imports.

The official Purchasing Managers’ Index (PMI) fell to a 3-year low of 49.7 in August, in line with market expectations and down from a reading of 50 in July.

The drop below the 50-level that separates expansion from contraction will be viewed as another sign that China is struggling for growth momentum, and raises further questions over whether 2015’s official target of a 7-percent increase in gross domestic product can be realised.

The Caixin/Markit PMI dropped to 47.3 in August, the weakest since 2009 and down from 47.8 in July.

The official PMI focuses on large, state-controlled companies, while the Caixin/Markit measure encompasses more small- and medium-sized enterprises.

Glencore sinks on equity issuance fears – by Bryce Elder (Financial Times – September 1, 2015)

September 1, 2015

http://www.ft.com/

Glencore hit another record low on Tuesday on growing concerns that it may be forced into an equity issue.

Miners slumped on data showing China’s factory activity contracted at its fastest pace in three years, which put further pressure on copper and coal prices.

Glencore closed down 10 per cent to 133.5p, which took its loss since flotation in 2011 to 75 per cent. With the major miners needing to raise as much as $60bn to recapitalise their balance sheets, companies should act quickly, argued Merrill Lynch.

“Early recappers could be rewarded with less dilution, premium market ratings and possibly a licence to undertake M&A,” it told clients.

Merrill estimated that, if current spot commodity prices stretch into perpetuity, Glencore has a $9.3bn capital shortfall against the debt target needed to safeguard its credit rating and would need to raise more than $16bn to cut net debt to 2 times earnings before interest, tax, depreciation and amortisation.