Republic of Mining

Gold miners set to report Q2 earnings, but investors zero in on other issues – by Peter Koven (National Post – July 29, 2015)

July 29, 2015

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

Investors usually care about basic things such as how much revenue and income companies earned when they report quarterly results. After all, these are essential building blocks to valuing a stock.

But in the case of Canada’s gold industry, they have become largely irrelevant.

The second-quarter earnings season for the gold miners begins Wednesday afternoon, and experts said there will be little-to-no interest in the actual profits. Instead, all the focus will be on liquidity and the overall health of balance sheets.

“It’s going to be about who is most aggressive in trying to defend their balance sheets,” said Greg Taylor, portfolio manager at Aurion Capital. This is a direct result of the recent chaos in the gold market.

Gold averaged just under US$1,200 an ounce in the second quarter, which ended June 30.

Canadian miner Sherritt posts wider loss as nickel prices drop (Reuters Canada – July 28, 2015)

July 29, 2015

http://ca.reuters.com/

(Reuters) – Canadian miner Sherritt International Corp S.TO reported a bigger loss for the second quarter, hurt by lower nickel prices.

The Toronto-based company said on Tuesday its adjusted net loss from continuing operations widened to C$75.2 million ($58.2 million), or 25 Canadian cents per share, in the three months ended June 30 from C$56.2 million, or 19 Canadian cents per share, a year earlier.

Sherritt operates nickel mines in Madagascar and Cuba. Average realized prices for nickel fell about 19 percent to $7.13 per pound in the quarter, the company said.

Sherritt, which also produces oil and gas, said its combined revenue fell about 12 percent to C$268.4 million.

Sherritt said it expected total production of 78,000-82,000 tonnes of nickel in 2015, down from a previous estimate of 80,000-86,000. The company cut the estimate for the Ambatovy mine in Madagascar to 45,000-48,000 tonnes from 47,000-52,000.

Pollution spill at Yellow Giant gold mine sparks investigation by Environment Canada -by Gordon Hoekstra (Vancouver Sun – July 28, 2015)

July 29, 2015

http://www.vancouversun.com/

Federal agency determining possible violations of the Fisheries Act at remote island in northwest B.C.

Environment Canada has launched an investigation into a pollution spill at Banks Island Gold’s Yellow Giant mine in northwestern B.C. over potential violations of the Fisheries Act.

The B.C. government has said Environment Canada will lead the investigation, supported by the B.C. Conservation Officer Service. Environment Canada would not provide an official for an interview.

“Environment Canada’s enforcement branch is currently investigating to determine whether there have been any violations of the pollution prevention provisions of the Fisheries Act,” Environment Canada spokeswoman Barbara Harvey said in a written response. “As the investigation is ongoing, it would be inappropriate to provide further information at this time.”

The gold mine operation 110 kilometres south of Prince Rupert was shut down earlier this month by the B.C. Energy and Mining Ministry following an order by the B.C. Ministry of Environment to stop polluting.In an interview on Tuesday, B.C.’s chief inspector of mines, Al Hoffman, said his office is co-operating with other agencies on the investigation.

Mining: Province looks to feds for Ring money – by Carol Mulligan (Sudbury Star – July 29, 2015)

July 29, 2015

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

Ontario has formally asked the federal government to match the $1 billion it has committed to infrastructure for the Ring of Fire with $1 billion from its Building Canada Fund.

Brad Duguid, Ontario’s minister of Economic Development, Employment and Infrastructure, nominated the Ring of Fire project under the national infrastructure component (NIC) of the fund.

The $4-billion NIC supports projects of national significance that have broad public benefits and contribute to Canada’s long-term economic growth and prosperity.

Ontario’s Northern Development and Mines Minister, Michael Gravelle, said the Ring of Fire offers tremendous opportunity. By developing a transportation corridor and building hydroelectric systems, many First Nations will be able to “get off diesel,” said Gravelle.

“We can open up all kinds of economic development opportunities and that’s where the contribution from the federal government is so important.”

UPDATE 1-Zambia power cuts hit Canada’s First Quantum, Barrick – by Chris Mfula (Reuters U.S. – July 28, 2015)

July 28, 2015

http://www.reuters.com/

(Reuters) – Power cuts in north-western Zambia, Africa’s second-biggest copper producer, have affected production at mines run by Canada’s First Quantum Minerals and Barrick Gold, an industry body said on Tuesday.

Zambian power utility Zesco Ltd is limiting power it supplies to customers, including mining companies, after water levels at its hydro-electric plants dropped due to drought.

“Power was reduced to both First Quantum Minerals and Lumwana over the weekend,” Jackson Sikamo, President of the Zambian Chamber of Mines said.

Lumwana is Barrick’s open-pit copper mine.

First Quantum said in a statement its Kansanshi mine, smelter and its greenfield Sentinel project were running at reduced capacities.

Jobs ‘Bloodbath’ Hits South Africa – by Rene Vollgraaff and Paul Vecchiatto (Bloomberg News – July 28, 2015)

July 28, 2015

http://www.bloomberg.com/

South Africa is bleeding jobs as falling commodity prices and increasing wage demands force mining companies to cut back on staff.

In the past two months, at least seven listed mining companies announced plans to cut as many as 10,000 jobs in Africa’s most-industrialized economy. As the world’s biggest producer of platinum and manganese, mining accounts for more than half of the nation’s exports and employs about 440,000 people.

Weak economic growth because of power shortages, labor strikes and high wage demands are putting the government’s target of creating six million new jobs by 2019 out of reach.

A state report on Wednesday will probably show the unemployment rate rose to 26.5 percent in the second quarter from 26.4 percent, according to the median estimate of seven economists. That would be the highest level among 65 countries tracked by Bloomberg.

“We are heading for a jobs bloodbath,” Mike Schussler, chief economist at Johannesburg-based research group Economists.co.za, said by phone on July 24.

Victoria shuts down Yellow Giant gold mine in northwestern B.C. over pollution spills – by Gordon Hoekstra (Vancouver Sun – July 27, 2015)

July 28, 2015

http://www.vancouversun.com/

Gitxaala First Nation plans legal action against small operation, but environment ministry says risk to animals, humans minimal

The province has shut down the small Yellow Giant underground gold mine on Banks Island in northwest B.C. for spilling pollution on land and into creeks, lakes, and a wetland.

The B.C. environment ministry said the discharge reached the ocean through a creek, several beaver-dam-created wetlands and Banks Lake before entering the ocean at Surrey Bay, but it is not believed it will harm humans or animals.

The Yellow Giant incident is the latest of several mine waste spills — although much smaller in magnitude — since the catastrophic dam failure at Imperial Metals’ Mount Polley gold and copper mine in August 2014. There have been small spills at the Myra Falls and Copper Mountain mines in the past year.

First Nations and conservationists are concerned about the effect of this latest spill on animals and aquatic life, including salmon, at the island located about 100 kilometres south of Prince Rupert.

Fresh bloodletting among gold mining stocks – by Frik Els (Mining.com – July 27, 2015)

July 28, 2015

http://www.mining.com/

Hedge funds bet record 340 tonnes the gold price will continue to fall as bears rip into majors – Barrick falls to 1989 level, Goldcorp at 11-year low

Renewed fears about Chinese equity markets after the worst points loss in Shanghai for eight years gave the gold price a lift on Monday.

But the metal continues to trade close to five-year lows after settling at $1,093, up only $7.40 from Friday’s close. An earlier move above the psychologically important $1,100 level turned out to be brief. A return to its recent dip below $1,180 would represent a 50% retracement of the metals 12-year bull run.

The gold market has turned overwhelmingly bearish with so-called managed money investors such as hedge funds going short – placing bets that the gold price will decline – to the tune of 12.1m ounces or 340 tonnes, a new record high.

According to the Commodity Futures Trading Commission’s Commitment of Traders data for the week to July 21, large speculators now hold a net short position for the first time since at least 2006, when the data was first being tracked.

China air quality crackdown set to hurt iron ore demand – by Michael Roddan (The Australian – July 28, 2015)

July 28, 2015

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

The troubles for the iron ore price are set to continue, with a Beijing crackdown on air pollution in September expected to reduce demand from the region’s steel mills.

Meanwhile, Australian exports of the commodity are set to rebound from a sluggish July, positioning the price of Australia’s biggest export for a renewed plunge, after only recently bouncing from a decade-low.

The Chinese government is likely to limit steel production in Hebei province, which surrounds Beijing and major iron ore port Tianjin, in a bid to ensure higher air quality during World War II commemorations in September, Macquarie Wealth Management says in a research note.

The clear-sky days will be similar to the “APEC Blue” of last November, when the government clamped down on emissions during the 26th annual gathering of Asia Pacific leaders in Beijing.

“Steel mills near Beijing, particularly those in Hebei province, will probably be forced to shut down production again,” Macquarie said in a research note. “This clearly spells trouble for iron ore prices.”

My Turn: One year after disaster, mining threats remain – by Aaron Angerman (Juneau Empire – July 28, 2015)

July 28, 2015

http://juneauempire.com/

As a member of the Shtax’heen Kwaan (Stikine Tribe) in Wrangell, I am frightened to think that what happened at Mount Polley could happen here in our back yard now that the Red Chris Mine is operational. That the fish we’ve relied on traditionally for thousands of years could be contaminated or disappear, that the local commercial fishing industry could be decimated, and that we could see the local businesses that rely on the industry close doors.

Neither the community of Wrangell or the Stikine Tribe were consulted in the years of planning and construction upstream. Tahltan Nation is receiving financial benefits, but the waste flows immediately out of their waters and into ours. If the tailings dams were to give way at Red Chris Mine, an entire community will be left to pick up the pieces of a puzzle that will never again be whole.

The Red Chris Mine is located on the Iskut River, the largest tributary in the Stikine headwaters. Red Chris is owned by Imperial Metals, the same company responsible for Mount Polley. Red Chris is a larger operation than its sister mine, and it has tailings that are much more toxic.

Canadian investors have to take China’s growth seriously – by Scott Barlow (Globe and Mail – July 28, 2015)

July 28, 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.

The stomach-churning plunge in Chinese stocks is taking a heavy toll on Canadian markets, and Beijing’s failure to stanch the bleeding threatens further volatility in the weeks ahead.

China’s Shanghai composite tumbled 8.5 per cent Monday – that’s the equivalent of a 1,200-point drop in Toronto – as government support of equity markets could not stop the majority of stocks from falling by the maximum 10 per cent limit.

The Chinese benchmark has now declined by 28 per cent since its mid-June high.

The market collapse underscores a significant slowdown in China that is rippling through the global economy. Trade activity in Asia is declining rapidly. For example, the CPB merchandise: Asia import volume index (the CPB Netherlands Bureau for Economic Policy compiles the most widely used trade benchmarks) has slid 12 per cent so far in 2015. Sluggish trade activity strongly suggests China’s gross domestic product growth is slowing, and lends support to those questioning the validity of government reports on the economy.

NEWS RELEASE: Ned Goodman Rejoins Excellon Board of Directors

July 28, 2015

TORONTO, ON–(Marketwired – July 28, 2015) – Excellon Resources Inc. (TSX: EXN)(OTC: EXLLF) (“Excellon” or the “Company”), Mexico’s highest grade silver producer, is pleased to announce that Mr. Ned Goodman has rejoined the Company’s Board of Directors, effective immediately. Mr. Goodman served as a board member of Excellon from April 2013 to February 2014 and Special Advisor to the board until recently.

“We are delighted to welcome Ned back on the Board,” stated Brendan Cahill, President and Chief Executive Officer. “His experience as an industry leader and company builder is invaluable. He returns to the Board at a vital time, as we upgrade Platosa into one of the lowest cost silver mines in the industry and position the Company to take full advantage of the opportunities afforded by current market conditions.”

Mr. Goodman has made transformative and enduring contributions to Canada’s minerals industry and capital markets as a company-builder, merchant banker and investment advisor during a dynamic career spanning almost half a century. He applied his geological training and business acumen to help build several successful mining companies — notably International Corona and Kinross Gold — and nurtured many other mineral producing companies through astute and timely investments.

He is considered one of the leading architects of Canada’s investment management industry.

Quebec’s Plan Nord project snubs uranium mining in the province – by Bertrand Marotte (Globe and Mail – July 27, 2015)

July 27, 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.

MONTREAL — Quebec is moving steadfastly ahead on its Plan Nord project to open up the vast resource-rich northern reaches of the province. But there is one activity notably absent from the to-do list in the 20-year mining-forestry-energy action plan: uranium mining.

Despite progress made in recent years polishing Quebec’s image as an unwelcoming place for investment in mining ventures, uranium exploration and development continue to be blocked by the government over environmental, health and social concerns.

Quebec uranium mining company Strateco Resources Inc. – once promoted as a high-profile player in a previous, more ambitious incarnation of the Plan Nord – is caught in the middle of a seemingly endless conflict over the right to mine the yellow mineral.

The latest blow to Strateco’s nearly decade-long effort to launch the province’s first uranium mine – in Northern Quebec – is a recommendation from the Bureau d’audiences publiques sur l’environnement (BAPE) agency that it would be premature at this time to authorize development of a uranium industry.

Commodities in free fall: miners bracing for $192bn in asset pain – by Barry FitzGerald (The Australian – July 27, 2015)

July 27, 2015

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

Persistent weakness in already clapped out commodity prices is triggering a new round of asset value writedowns on top of the $US140 billion ($192bn) notched up by the global mining industry since 2011.

The new round is not expected to match the $US58bn impairment hit the global industry took in 2013 when it became clear that the decade-long China-led boom in prices and demand was over.

But fears that renewed commodity price weakness as 2015 has unfolded is structural, and will persist for the foreseeable future, has again put asset values under the pump.

Aluminium, coal, nickel and iron ore have retreated sharply from 2014’s already battered levels, prompting a new hard-nosed assessment of whether long-term commodity price assumptions across the industry are still valid.

Aluminium has been hit particularly hard. It is down 30 per cent on its 2014 December half average of $US2378 a tonne at $US1642.

After Quick 8.5% Crash, Confusion Reigns in China’s Stock Market – by Kyoungwha Kim and Kana Nishizawa (Bloomberg News – July 27, 2015)

July 27, 2015

http://www.bloomberg.com/

It’s days like Monday that reassure Tony Hann he was right to avoid stocks in mainland China.

The severity of an 8.5 percent drop in the Shanghai Composite Index is bad enough, but what irks him the most is not knowing why it tumbled so much. In a market where unprecedented intervention has made government money one of the biggest drivers of share prices, authorities aren’t transparent enough for investors to make informed decisions, said Hann, the head of emerging markets at Blackfriars Asset Management Ltd.

Monday’s plunge was all the more surprising because it followed a government rescue package that had helped drive a 16 percent rally since July 8. That support appeared to vanish without warning, leaving analysts guessing whether authorities shifted their policy stance or just got overwhelmed by a flood of sell orders. Whatever the answer, foreign money managers didn’t stick around to find out: they sold holdings of Shanghai shares for the 13th time in 16 days.

Investors “are concerned and lost,” said Alex Wong, a Hong Kong-based asset-management director at Ample Capital Ltd., which oversees about $155 million. “China’s market is distorted, so you can’t sell short very confidently and you can’t buy up very confidently either.”