Twitter

PDAC 2015: John Kaiser on retail investors, systematic flaws (Northern Miner – March 19, 2015)

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

Retail investors, historically the “life blood” of the junior sector, are largely gone from the picture, but need to return for the sector to survive the current downturn, says John Kaiser.

The editor of Kaiser Research Online notes in the 1980s, retail investors depended largely on brokers to access information to invest in juniors. “To a large degree, it was a momentum driven market, and the focus in the ’80s was largely on gold exploration,” he said in early March at the Prospectors & Developers Association of Canada (PDAC) conference.

In 1990s, the sector uncovered several large discoveries, including the Voisey’s Bay nickel deposit and the Ekati diamond deposit, attracting institutional investors through private placements, Kaiser said. “That period was all about discovery exploration.” It also coincided with the deregulation of brokerage industry and the emergence of the Internet, which minimized the role of brokers as intermediaries between juniors and investors.

That discovery exploration phase came to a halt in 1997 following the Bre-X betrayal, “when the greatest gold deposit ever turned out to be a fraud,” Kaiser says. Consequently, the sector sank into a five-year bear market. But on a positive note, that scandal led to the introduction of the National Instrument 43-101 that required companies to backup their findings with technical reports, identifying project risks.

Read more

The Flin Flon copper deposit – by Correy Baldwin (CIM Magazine – June/July 2011)

Canada Vignettes: Flin Flon by Tina Horne, National Film Board of Canada

http://www.cim.org/en.aspx

In 1915, prospector Tom Creighton brought his prospecting team to the shores of Ross Lake, Manitoba, where he had found a promising ore deposit. The deposit would eventually come to support one of Canada’s most important and prosperous copper mines. However, when it came time to naming the property, Creighton’s mind was not on copper, but on the more glamorous gold – and adventure novels.

The site reminded him of a paperback adventure novel that he had come across earlier while on a portage – The Sunless City by British writer J. E. Preston Muddock. In the novel, a prospector named Josiah Flintabbatey Flonatin pilots a submarine through a bottomless lake to a magical land where gold is so plentiful that it is used to pave the streets. Creighton named the site Flin Flon’s mine, shortening the name of the main character, and thereby sparing the future city of Flin Flon from having a more unusual title.

It was not copper but gold that originally brought people to the area. Two years earlier, Creighton was part of the team that discovered gold in the quartz veins of nearby Amisk Lake, also known as Beaver Lake. The resulting gold rush brought over a thousand men to the remote area, and the town of Beaver City sprung up.

Read more

Quebec Is Back, Ready for Renaissance: Eric Lemieux – Interview by Brian Sylvester (The Gold Report – March 18., 2015)

http://www.streetwisereports.com/

During the period when Parti Québécois controlled Québec, the province’s attractiveness as a mining jurisdiction fell from #1 to #21 in the Frasier Institute’s Annual Survey of Mining Companies. But when Philippe Couillard’s Liberal government won a majority in April 2014, the market got the message. Eric Lemieux, consulting technical adviser to Toronto-based Peartree Securities, says that the Osisko Mining bidding war showed that companies were willing to pay a premium for Québec-based assets. Since then other takeovers have happened. In this interview with The Gold Report, Lemieux discusses some promising projects in Québec and other stable jurisdictions.

The Gold Report: The Canadian Mining Association reports that mineral exploration and deposit appraisal spending in Québec dropped from about $621 million ($621M) in 2012 to about $328M in 2013. That number is expected to rise again once the 2014 numbers are added up. What are some other signs that mining equity investors are regaining confidence in Québec?

Eric Lemieux: The political climate for mineral exploration and mining is somewhat more friendly under the Philippe Couillard Liberal government. If you recall, Martine Ouellet of the previous Parti Québécois government made headlines by ostracizing the Québec mining industry. The higher royalties and aggressive amendments to the Mining Act that she helped impose put a lot of pressure on the Québec mineral exploration industry. Québec was one of the first jurisdictions to passer sous le tordeur—gone through the wringer, as we say in French. Now things look more favorable. For example, in the Frasier Institute’s Annual Survey of Mining Companies, Québec went from #21 on the Investment Attractiveness Index in 2013 to #6 in 2014. That’s a positive sign.

Read more

Finnish community in Thunder Bay struggles to save landmark restaurant – by Allan Maki (Globe and Mail – Marc 19, 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.

It has stood for 105 years as a measure of Thunder Bay’s history, a three-storey building with a restaurant that has fed generations of locals, many of them of Finnish descent. Others too, passing through or staying on the north shore of Lake Superior, have found comfort at the hallowed Hoito.

But now that building, once home to political activists, and its restaurant, the Hoito, are on the brink of financial ruin. With a debt load of more than $700,000, those working to keep the Hoito going are facing a hard fight. They understand what they’re up against and they know what could be lost.

“It’s filled with history,” said Kelly Saxberg, a member of the city’s Finlandia Association which oversees what was once the Finnish Labour Temple and is now a national historic site. “It’s a living museum.”

If you mention Thunder Bay to Canadians who live elsewhere, it won’t take long for them to mention the Hoito. The restaurant draws them all – workers, locals, tourists, even celebrities. Comedian Rick Mercer tried his hands at pancake making. Hockey legend Gordie Howe and his wife Colleen ate there. In 2009, Jordan Staal, then with the Pittsburgh Penguins, ate there and brought the Stanley Cup with him.

Read more

Ontario’s Power Trip: No windfall in selling off part of Hydro One – by Mike Hilson and Tom Adams (National Post – March 19, 2015)

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

A proposal leaked out from Ontario Premier Kathleen Wynne’s government to privatize a portion of Hydro One, the Crown-owned electricity transmission and distribution company. Although the Premier stressed that the decision wasn’t final and that it will remain regulated to protect ratepayers, she has been clear about her motivation.

Referring to the ongoing Advisory Council on Government Assets headed by former TD Bank CEO Ed Clark, she stated that the reason for the asset review is to leverage dollars to invest in transit and transportation infrastructure across the province.

The prospect of an IPO for Hydro One had commentators, opponents and supporters debating whether to cash in on the “windfall” and how much the haul might be. Generally agreed is the proposition that a sale would, as one columnist wrote, “generate a one-time cash haul for the government.”

The government’s proposal and the discussion around it has so far almost completely ignored the basic facts of financial life underpinning Ontario’s electricity system.

Hydro One’s numbers seem impressive – it claims $22.55 billion total assets and net equity of $7.93 billion – but there is a catch. Hydro One’s entire value is already spoken for.

Read more

Outland (Mining Themed Movie – 1981)

This information is from Wikipedia, the Free Encyclopedia: http://en.wikipedia.org/wiki/Main_Page

Outland is a 1981 British science fiction thriller film written and directed by Peter Hyams. The film stars Sean Connery, Peter Boyle, and Frances Sternhagen. Set on Jupiter’s moon Io, it has been described as a space Western,[3] and bears thematic resemblances to the 1952 film High Noon.[4][5]

Plot
In the future, Federal Marshal William O’Niel (Sean Connery) is assigned to a tour of duty at the titanium ore mining outpost ‘Con-Am 27’ operated by the company Conglomerates Amalgamated, on the Jovian moon of Io. Conditions on Io are difficult: gravity is 1/6 that of Earth’s with no breathable atmosphere, spacesuits are cumbersome, and miners carry their own air supply. Shifts are long, but significant bonuses are paid. Con-Amalgamated mining franchise general manager Mark Sheppard (Peter Boyle) boasts that since he took over the running of Io, productivity has broken all previous records.

Carol O’Niel (Kika Markham) feels she cannot raise their son Paul to live inside a sterile environment far from Earth and with little to do. She takes Paul and flees to the space station serving Io, awaiting a shuttle back to Earth.

Read more

REFILE-UPDATE 2-Saskatchewan sees slim 2015-16 surplus, hikes potash taxes – by Rod Nickel (Reuters India – March 19, 2015)

http://in.reuters.com/

(Reuters) – The Western Canadian province of Saskatchewan expects to post a slim budget surplus in the 2015-16 fiscal year, helped by changes in how it taxes potash mining companies, the government said on Wednesday.

Premier Brad Wall’s right-leaning Saskatchewan Party government raised spending 1.2 percent to C$14.17 billion ($11.10 billion) for the year starting April 1, leaving a forecast C$107 million surplus in Canada’s biggest wheat-producing province.

Saskatchewan has remained in the black for two decades, even as most provinces ran deficits when their economies slowed in recent years. In the year ahead, however, the province expects to receive C$661 million less revenue from the crude oil industry than budgeted last year due to plunging prices.

Saskatchewan estimates the price of West Texas Intermediate oil to average $57.15 per barrel in 2015-16, while oil production slips nearly 5 percent to 178.7 million barrels.

Read more

Budget upsets potash producers – by Bruce Johnstone (Regina Leader-Post – March 19, 2015)

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

Sask. to gain, industry to lose

A change in the province’s potash royalty regime in the 2015-16 budget will net the Sask. Party government $150 million this year, Finance Minister Ken Krawetz announced Wednesday. The government also promised to revamp the province’s complex potash royalty scheme in consultation with the industry over the next year or two.

But the province’s biggest potash producer indicated the royalty change will negatively affect earnings and amounts to “changing the rules midstream.’ The budget said changes will be made to the Potash Production Tax “to defer the timing of capital deductions in order to prove an immediate and temporary increase in revenue from potash companies. The total amount of deductions producers received from their capital spending will now be utilized over a longer period of time.

“This is an interim step that will be followed by a review of the entire potash royalty and taxation regime.’ Krawetz told reporters that the government has held “ongoing consultations with the potash industry’ about the impact of the changes.

“After these smaller changes that we’ve been working on for a number of months, there will be a broader review over the next year or two. We want to ensure that the people of Saskatchewan who own the resource are rewarded at an appreciative rate,’ Krawetz said.

Read more

Russell walks out on media amid questions about Inuit land claims – by James McLeod (St. John Telegram – March 18, 2015)

http://www.thetelegram.com/

“We should have increased dialogue. We should be sitting and talking as opposed to discussing litigation,” Russell said in the House of Assembly Tuesday, responding to a question from Liberal House Leader Andrew Parsons.

Russell reportedly told a Nunatsiavut Government minister, “Go ahead and take us to court, we’re going to win anyway.” In the House of Assembly, Parsons wanted to know whether Russell talked to a lawyer before issuing the challenge.

“You asked them to sue us. Was that based on an opinion, and if not, why would you make that comment?” Parsons asked. Russell said he didn’t talk to anybody in the Department of Justice or the Attorney General, but he said some officials in his department looked at it.

“I would assume that our officials went through all the proper channels,” he said. The crux of the issue is an agreement the government signed dealing with the Voisey’s Bay nickel mine, and the Long Harbour processing plant which is behind schedule.

The government amended the agreement to allow Vale, the mine operator, to ship more nickel ore out of the province in the next few years while the Long Harbour plant is getting up and running.

Read more

Gold price set to soar in ‘Asian century’ – by Tess Ingram (Sydney Morning Herald – March 18, 2015)

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

The liberalisation of Asia’s financial system and the growing wealth of its populations are expected to boost demand for gold and push the price of the key commodity over $US2400 an ounce by 2030, ANZ predicts.

In a report titled East to El Dorado: Asia and the future of gold, released on Wednesday, ANZ said Asian gold demand would develop steadily as the emerging region’s consumption patterns began to more closely resemble those of developed nations.

The bank estimated annual retail and investor demand for the precious metal in the 10 largest economies in Asia, which it dubbed “the A10” – China, India, Indonesia, Japan, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam – could double to 5000 tonnes within 15 years.

ANZ chief economist Warren Hogan told Fairfax Media several fundamental economic arguments detailed in the report strongly refuted claims the gold price was on a downward trajectory.

Mr Hogan said increasingly higher incomes in the A10 would mean more gold jewellery would be purchased, noting that China would form the backbone of gold demand going forward. Despite total demand having risen significantly in recent years, on a per capita basis, China remained well behind most developed markets.

Read more

NEWS RELEASE: What Does South32 Mean for the Nickel and Manganese Markets?

LONDON, March 19, 2015 /PRNewswire/ — In August 2014, BHP Billiton (BHPB) announced that it intended to demerge its aluminium, coal, manganese, nickel and silver assets into a new, independent global mining and metals company. In December, it was announced that the proposed company will be branded “South32”, to reflect the fact that its major operations will be in the southern hemisphere, in Australia and South Africa. This week saw the publication of a demerger prospectus which provided more detail about the spin-off:

  • South32 will be a top-10 global mining company headquartered in Perth, Western Australia, and will produce 10 commodities across five countries
  • After the demerger, which will cost an estimated US$738M, the company will have a gross asset value of US$26.7Bn
  • South32’s portfolio of assets made a pre-tax profit of US$422M in 2014 on revenues of US$10.4Bn
  • The company will begin life with a US$1.5Bn credit facility provided by a syndicate of banks to ensure that it has adequate liquidity
  • BHPB has loaded South32 with less debt than expected, US$674M
  • Shareholders will vote on the demerger in May

The creation of South32 has the potential to significantly impact the manganese and nickel markets:

Read more

New Urbanist: Off-world colonies of the Canadian Arctic – by Geoff Manaugh (New scientist – March 18, 2015)

http://www.newscientist.com/

Speaking at a symposium on Arctic urbanism, held at the end of January in Tromsø, Norway, architectural historian Alessandra Ponte introduced her audience to some of Canada’s most remote mining towns. Ponte had recently taken a group of students on a bus tour through the boreal landscape, hoping to understand the types of settlements now popping up with increasing frequency there. This included a visit to the thriving mining village of Fermont, Quebec.

Designed by architects Norbert Schoenauer and Maurice Desnoyers, Fermont comes complete with streets, a hotel, a hospital, a small Metro supermarket and even a tourism bureau. For all that, however, it is still run by the firm ArcelorMittal, which also owns the nearby iron mine. This means there are no police, who would be funded by the state; instead, Fermont is patrolled by its own private security force.

The town is also home to an extraordinary architectural feature: a residential megastructure whose explicit purpose is to redirect the local weather. Known as the Mur-écran or “windscreen”, this structure is an astonishing 1.3 kilometres in length, shaped roughly like a horizontal V or chevron. Think of it as a climatological Maginot Line, built to resist the howling, near-constant northern winds.

Extreme environments such as those found in the far north are laboratories of architectural innovation, genuinely requiring the invention of new building types. In any other context, a weather-controlling super-wall would sound like pure science fiction. But, in Fermont, urban climate control is built into the very fabric of the city – and has been since the 1970s.

Read more

Bearish Bets on Vale Surge to Record High as Iron Ore Retreats – by Julia Leite and Juan Pablo Spinetto (Bloomberg News – March 18, 2015)

http://www.bloomberg.com/

(Bloomberg) — Traders are increasing bets that Vale SA is poised for further declines after its shares hit a 10-year low.

Short interest in American depositary receipts from the world’s largest iron-ore producer jumped to a record 27.4 percent of shares outstanding Monday, according to data compiled by London-based Markit and Bloomberg. The ADRs added 0.2 percent to $6.12 at the close of trading in New York, paring losses in 2015 to 25 percent. They dropped 46 percent in 2014.

Prices for iron-ore, a key ingredient in steelmaking, have plunged 71 percent since peaking in 2011, helping send Vale shares to the lowest since November 2004 last week. Demand for the material hasn’t kept up with increased production by Vale and rivals Rio Tinto Group and BHP Billiton Plc amid a slowdown in economic growth in China, the biggest consumer.

“People are concerned, with some investors betting there’s too much iron ore and not enough Chinese demand,” said Ari Santos, an equity trading manager at H. Commcor in Sao Paulo. “And if ore falls, Vale suffers.”

China, which accounts for about half of Vale’s shipments and for more than two-thirds of global iron-ore imports, has set a 2015 economic expansion goal of about 7 percent, the lowest in more than 15 years.

Read more

Kiggavik uranium hearing ends with no plebisicite in Baker Lake – by Sarah Rogers (Nunatsiaq News – March 18, 2015)

http://www.nunatsiaqonline.ca/

“Inuit are like caribou — they stay away from danger and conflict”

A public hearing into Areva Resources Canada’s proposed Kiggavik uranium in Nunavut project has wrapped up, but the Nunavut Impact Review Board might never know how the people of the community closest to the proposed mine — Baker Lake — actually feel about it.

On March 14, the final day of the hearing, Baker Lake’s deputy mayor, Silas Arngna’naaq, made a motion to keep the hearing’s record open until the hamlet holds a plebiscite to gauge local opinion on the project, which proposes to sink $2 billion into an open pit and underground uranium mine 80 kilometres outside the Kivalliq community.

The motion didn’t pass and that record is now closed — the NIRB said that the hamlet had plenty of time to host a plebiscite beforehand.

“I don’t know how much sway it would have,” Arngna’naaq said. “But I know they wanted to get the view of the closest community to the project. And they never got the full community’s perspective on this.”

A number of residents had tried to launch a local referendum which, under territorial legislation, requires a certain number of residents in a community to sign a petition.

Read more

‘Terrible timing’: Gina Rinehart bets on iron ore rebound with $13b mine (Sydney Morning Herald – March 18, 2015)

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

Gina Rinehart is digging what will likely be the world’s last big iron ore mine for years to come in the Australian outback. The timing couldn’t be worse for the billionaire mining heiress given tumbling prices and oversupply, but the message for other iron ore miners is clear – the fight for survival is going to get more difficult.

Since construction of the $13 billion Roy Hill mine began four years ago in partnership with South Korean steelmaker POSCO , Japan’s Marubeni Corp and Taiwan’s China Steel Corp, iron ore prices have slumped 70 per cent and forecasters see worse to come.

Blueprints for new mines are being abandoned from Australia to Guinea, with a West Africa mine shelved this month after Ivan Glasenberg’s commodities group Glencore conceded there was no prospect for a “profitable development”.

“If someone was to walk up today and say ‘I want to develop an iron ore mine,’ you’d think they were crazy or know something others don’t,” said James Wilson, an analyst for Morgans Financial in Perth.

Analysts blame a massive rise in production on overestimates of China’s appetite for imported ore by sector titans Vale of Brazil, Rio Tinto and BHP Billiton .

Read more