Republic of Mining

Fine tuning Barrick – by Kip Keen (Mineweb.com – August 20, 2015)

November 5, 2015August 20, 2015

http://www.mineweb.com/

A subtle shift in analyst perspective on the gold producer.

Broadly of course, Barrick’s stock has been pummeled by the bearish gold market that relatively speaking, tends to punish, and conversely reward, miners far more than the yo-yo-ing gold price. But more specifically, Barrick has also been punished, harder than some, for its past failings in acquisitions, strategies and appetite for debt.

This has made for one of those perversions of the market, at least in very simplistic terms, where in recent years Goldcorp, more the market darling, has exceeded Barrick by market cap despite Goldcorp doing half the production and the fact Barrick has longer life assets. As it stands, it is C$16.4 billion to C$12 billion Goldcorp market cap versus Barrick.

In evening out that playing field, Barrick’s John Thornton, Executive Chairman, has some ways to go. But he may be starting to make a little headway.

With much fanfare (at least from Barrick) the company outlined its back to the future strategy earlier this year. It’s a story of cuts and tweaking of management to, it’s hoped, increase efficiencies at operations. It’s also a story of mine sales and debt reduction.

COLUMN-Glencore caution, Rio optimism over China? You decide – by Clyde Russell (Reuters U.S. – August 20, 2015)

August 20, 2015

http://www.reuters.com/

LAUNCESTON, Australia, Aug 20 (Reuters) – Take two top mining executives and ask them about China. One says he cannot fathom what’s happening in the world’s biggest commodity consumer, the other says he remains unashamedly bullish.

This isn’t an exercise to determine which executive is right and which is wrong, rather it underscores just how difficult it has become to make long-term investment decisions at the current stage of the commodity cycle. Ivan Glasenberg, the outspoken chief executive of Glencore , was candid when presenting the London-listed miner’s 29-percent slump in first half earnings on Wednesday.

“(Commodity demand is) difficult to call at the moment with what we see in China,” Glasenberg said. “That’s the one we are all struggling to read, demand in China.”

Battling to understand the dynamics of President Xi Jinping’s “new normal” isn’t confined to Glasenberg, with views on China currently ranging from the doom and gloom of an imminent hard landing to the more benign gradual, if somewhat disorderly, transition toward a more sustainable, consumer-driven economy.

Oil producers brace for more cost-cutting ‘pain’ as prices threaten to fall below $40 – by Yadullah Hussain (National Post – August 20, 2015)

August 20, 2015

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

Oil’s price plunge to $40 prices this week will force producers to contemplate more cost-cutting measures at a time of great austerity.

The decline continued Thursday with futures sliding as much as 1.4 per cent in New York, trading near US$40 a barrel, after losing 4.3 per cent on Wednesday.

West Texas Intermediate for September delivery, which expires Thursday, declined as much as 59 cents to $40.21 a barrel on the New York Mercantile Exchange, and traded at $40.30 at 11:30 a.m. London time. The contract slid $1.82 to $40.80 on Wednesday, the lowest close since March 2009. The more-active October futures lost 59 cents to $40.68.

The plunge began Wednesday after the U.S. Department of Energy slashed US$6 off its average oil price estimate this year to US$49 per barrel, citing increases in global oil inventories.

“We get down to US$40 level, companies will have a hard time just to sustain their businesses,” Kyle Preston, analyst at National Bank Financial Inc. said in an interview.

Why Ontario should look west, not east, for hydro power – by Wil Tishinski (Globe and Mail – August 20, 2015)

August 20, 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.

Will Tishinski is former vice-president of power supply planning (retired) for Manitoba Hydro.

It was recently reported that Ontario is looking to buy power from Newfoundland and Labrador. This is the wrong direction. Ontario should be looking westward to Manitoba, which is more accessible.

Manitoba currently receives 75 per cent of its electricity requirements from the Nelson River, which has an ultimate capacity of 6,000 megawatts. Only half of that potential is developed today. To meet its own needs, Manitoba will build the generating sites incrementally, with the last plant being constructed perhaps 50 years down the road.

It makes more sense to develop the unharnessed 3,000 MW now and to share at least half that with Ontario. The entire block of power could be transmitted by direct-current transmission to a converter station near Dryden, Ont.

Opinion: Put the brakes on mineral development – by Stewart Phillip and Rob Sanderson (Vancouver Sun – August 19, 2015)

August 20, 2015

http://www.vancouversun.com/

Grand Chief Stewart Phillip is president of the Union of B.C. Indian Chiefs. Rob Sanderson is second vice-president of Central Council of the Tlingit and Haida Indian Tribes of Alaska and co-chair of the United Tribal Transboundary Mining Work Group.

This month marks the one-year anniversary of the Mount Polley tailings dam failure, Canada’s worst mining disaster.

That catastrophe in central British Columbia, which unleashed 24 million cubic metres of mine contamination into nearby lakes and waters, served as a wakeup call for everyone who values clean water, wild salmon, fishing and tourism, and ways of life intrinsically tied to pristine lands.

For First Nations and Alaska Native tribes, in particular, Mount Polley was a lightning rod. The disaster brought us together as never before. Alaskans have a clear stake in what’s happening in neighbouring B.C.; at least 10 large mines in the transboundary region have the very real possibility of tainting Alaska’s downstream waters and the billion-dollar seafood and tourism industries these rivers sustain. More so, these developments have the potential to harm our shared rivers, our coastal waters, and the salmon our cultures rely on.

The real reason the copper price is being crushed – by Frik Els (Mining.com – August 19, 2015)

August 20, 2015

http://www.mining.com/

The turmoil on Chinese share and currency markets, and worries about the true extent of the country’s economic slowdown continue to rattle investors.
Given its widespread use in manufacturing and construction coupled with the fact that China consumes 45% of the world’s supply, copper has been bearing the brunt of this bearishness.

On Wednesday in New York trade December copper contracts were trending weaker again after breaching the key $5,000 level yesterday for the first time since the global financial crisis.

Bloomberg Intelligence analyst Kenneth Hoffman spoke to MINING.com after returning from a tour of China to find out the true state of copper demand in the country.

Hoffman has been visiting China for the past twenty years and in 2015 saw a sea-change in sentiment inside the world’s second largest economy:

Time to ’embrace’ Sudbury’s mining heritage – by Mary Katherine Keown (Sudbury Star – August 20, 2015)

August 20, 2015

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

Up, up and away we rose, into the clouds and swirling winds over Copper Cliff. It was my first-ever helicopter ride and an exhilarating way to spend 15 minutes on a Wednesday afternoon.

My hawk’s eye view of the Vale smelter complex was unparalleled and unforgettable. The tailings ponds were all shades of Pantone pretty and deep in the belly of the vast property, there was a gigantic hole in the ground. It looked like it may have been an old quarry or open-pit mine, long disused and perhaps one of the first spots in town to be mined.

The ride, courtesy of the Canadian Shield Consultants Agency, was part of the annual North American Mining Expo (NAME). The trade show extravaganza included more than 300 vendors and exhibitors from around the world — many with massive multi-wheeled, motorized rigs in tow — spread over the Copper Cliff curling club, McClelland Arena and Veterans Road.

Jay Cornelsen, national publicity director with Canadian Trade-Ex, suggested the Nickel City offers unparalleled strengths in terms of mining expertise and innovation.

Rehabilitation efforts bring new life to Hemlo – by Lindsay Kelly (Northern Ontario Business – August 18, 2015)

August 19, 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.

Reclamation work being done by Barrick Gold at its Hemlo property near Marathon has changed the landscape of the former mining operation. Where once there stood a headframe, access roads and outbuildings, there is now only a grassy plain, accented by native trees and inhabited by a variety of wildlife.

This is what nature after mining looks like in 2015.

“It kind of caught us off guard, because the (David Bell) mine is still beside an operating mine,” said Shane Hayes, Barrick’s mine closure co-ordinator at Hemlo. “The area has been rehabilitated so quickly, I’d be lying if I said we weren’t surprised at how quickly nature re-established itself.”

Three mines started up at the Hemlo site in the 1980s. The still-operational Williams Mine produced 206,000 ounces of gold in 2014, while David Bell closed that same year. A third mine, Golden Giant, closed in 2010. The bulk of the rehabilitation work to date has focused on David Bell.

Eldorado Gold shares slump on Greek mining halt (CBC News Business – August 19, 2015)

August 19, 2015

http://www.cbc.ca/news/business/

Relations between Vancouver-based Eldorado and the leftist Greek government have been testy

Shares of Eldorado Gold slid in Wednesday trading following reports that the Greek government is temporarily halting production at the company’s operations in northern Greece.

Reuters quoted Greek Energy Minister Panos Skourletis as saying Eldorado had “violated some terms.” He provided no elaboration.

“We are recalling the technical studies, which will result in the halting of operations at Skouries and part of operations in Olympiada,” Skourletis said, referring to two of the company’s mine sites.

According to the Associated Press, documents released by the ministry say the violations concern a project to build a copper and gold processing plant, including not carrying out certain tests on the flash smelting process proposed for use. According to the decision, the suspension will be lifted if the company resubmits the necessary documentation and meets the requirements within a year.

COLUMN-Coal’s pain from yuan devaluation may be less than feared – by Clyde Russell (Reuters U.S. – August 18, 2015)

August 19, 2015

http://www.reuters.com/

LAUNCESTON, Australia, Aug 19 (Reuters) – In theory the devaluation of the Chinese yuan should be negative for the country’s coal imports and Asian prices, but so far it’s not quite panning out that way.

There’s nothing wrong with the logic behind the view that purchases of foreign coal by the world’s largest importer may decline, given the relative advantage domestic coal has just received from the weakening of the yuan.

The Chinese currency fell about 3 percent in domestic trade last week after it was pushed lower by the People’s Bank of China, a move widely interpreted as aiming to boost the competitiveness of the struggling export sector.

It wouldn’t have been a surprise if the price of the international coal that heads to China declined in dollar terms, or that the price of domestic coal rose in yuan to reflect the new currency rates.

But Chinese domestic prices remained largely steady, with no change in the benchmark price of thermal coal at Qinhuangdao SH-QHA-TRMCOAL, which held at 410 yuan ($64) a tonne last week.

Wabush pensioners angry about prospect of reduced incomes – by Terry Roberts (CBC News Newfoundland – August 18, 2015)

August 19, 2015

http://www.cbc.ca/news/canada/newfoundland-labrador/

Former mine workers fearful of a hit if Cliffs Natural Resources winds up Canadian operations

Retired workers at the now closed Wabush Mines in Labrador West say they are facing a cut in their pension incomes as their former employer, U.S-based Cliffs Natural Resources, goes through the bankruptcy protection process for its Canadian operations.

More than 100 former workers filed into the Catholic church in Wabush Monday for an information session with pension experts from the provincial government, which oversees the Pensions Benefits Act.

The closed-door meeting lasted nearly three hours into Monday evening, and was described as a tense, emotional affairs as retirees sought answers about the fate of their pensions.

Ron Barron, who worked 27 years at the mine prior to its closure in 2014, said there’s a growing level of frustration, and people want answers.

Friedland: Mining companies ‘priced for Armageddon’ – by Lesley Stokes (Northern Miner – August 18, 2015)

August 19, 2015

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

VANCOUVER — The vanguard executive chairman of Ivanhoe Mines (TSX: IVN; US-OTC: IVPAF), Robert Friedland, took to the stage at the Sprott Natural Resource Symposium in Vancouver in late July, and delivered a relaxed speech discussing why he believes copper is set to rebound in two to three years.

“The further you push the price down, the higher it’ll bounce,” he said, predicting that higher environmental standards in China may strengthen the demand for copper, in tow with other “green” metals such as zinc, platinum and palladium.

He said that China will “try very hard” to double its growth to 6% or 7% through sustainable development, but he’s dubious whether the current world supply will match the metal needed to clean China’s air and fertilize its soils.

He describes many of the great copper mines as “little old ladies, kept on life support and waiting to die,” whereas others are so low grade “they’re practically mining air” and kept alive by favourable currency exchange rates.

When copper bites – by Kip Keen (Mineweb.com – August 19, 2015)

August 19, 2015

http://www.mineweb.com/

When does push become shove as prices of the commodity continue to fall.

HALIFAX – The spot price of copper continues to fall, dropping below $2.30/lb Tuesday and approaching levels that clearly puts pressure on smaller, higher cost and debt-laden producers. But the ongoing rout also raises red flags for larger producers who will feel the pinch on profits, if not mining operations, if the price falls much further.

To be sure, as the copper price stands, the majors and intermediates do not face an existential threat to their balance sheets, or to most operations, as many still produce with basic cash costs a fair bit lower than $2/lb. Glencore, an important copper producer, reported 2014 cash costs at $1.46/lb.

Freeport McMoRan Copper & Gold, one of the more leveraged major copper producers, last reported cash costs of $1.85/lb, for example. And like other miners with operations outside the U.S., they benefit from the strengthening of the dollar, weakening ex-U.S. currencies and, as the case may be, cheaper energy prices.

But there is no escaping the fact dramatically falling prices tarnish copper as a profit center.

Glencore Slumps to Record Low as Profit Drops 56% on Metals Rout – by Jesse Riseborough and Javier Blas (Bloomberg News – August 19, 2015)

August 19, 2015

http://www.bloomberg.com/

Glencore Plc slumped to a record in London after reporting a 56 percent drop in first-half profit on the China-led rout in commodity prices.

Glencore, the worst performer on the U.K.’s benchmark stock index this year, slid as much as 9.4 percent. The company cut its full-year earnings forecast for its trading division. It also outlined further spending reductions as billionaire Chief Executive Officer Ivan Glasenberg pares debt in an effort to maintain dividends while preserving an investment-grade credit rating.

“We’ve got a worsening situation right now,” John Meyer, a mining analyst at SP Angel Corporate Finance LLP, said in an interview with Bloomberg Television. “Glencore I think should’ve performed a little bit better through the first half. This is going to disappoint many. The metals trading didn’t do so well. China really slowed down, it totally hit a wall.”

The world’s biggest natural resources companies have seen copper and oil prices fall to six-year lows as China’s economy expands at the slowest pace in a quarter of a century. Glasenberg said in an interview that nobody can read the Chinese economy right now.

Century Iron Mines sells eggs as Australia moves from mining to dining – by Andy Hoffman (Australian Financial Review – August 19, 2015)

August 19, 2015

http://www.afr.com/

The iron-ore business is so lousy that one Canadian mining company is shelving its biggest project and starting a new venture: selling Australian eggs to China.

The abrupt shift at Century Iron Mines was prompted by a global iron-ore surplus that sent prices plunging 68 per cent in four years. Chief executive officer Sandy Chim does not expect a recovery until 2018, so he’s taken a cue from Australian mining billionaires Gina Rinehart and Andrew Forrest, who are expanding into food production as demand rises across Asia.

“Australia is going from mining to dining,” Chim said by phone from Toronto, where the company created a unit called Century Food. The plan is to distribute eggs produced by Sunny Queen, a chicken-farmer cooperative in Queensland, to consumers in Hong Kong and Macau.

With the backing of Wuhan Iron & Steel and China Minmetals, the government-owned companies that own 30 per cent of Century Iron Mines, Chim is investing $C2 million ($2.04 million) in the egg venture. He’s drawing on capital originally intended for Century’s flagship Joyce Lake mine project straddling the Canadian provinces of Quebec, and Newfoundland and Labrador.