Republic of Mining

NEWS RELEASE: Turkey: new report highlights gold’s role in supporting the economy and modern society

January 22, 2015

http://www.gold.org/

22nd January 2015 – Turkey is a microcosm of the global gold market – a country which is home to the entire gold value chain from mining and refining, to jewellery design and investment. Its long tradition of gold demand, underpinned by a deep cultural heritage, strong fabrication capacity and a substantial coin market has resulted in households accumulating an estimated 3,500 tonnes (t) (US$145.3bn) of gold tucked “under-the-pillow”, a term used in Turkey to refer to physical gold stored by the general population.

Turkey: gold in action assesses the role that gold plays in consumers’ lives, examines the economic contribution of the entire supply chain and explores how the metal has been monetised to support the national economy. In 2012 alone, gold fabrication, consumption and recycling added at least US$3.8bn to Turkey’s economy. An innovative central bank policy introduced in 2011 incentivised commercial banks to create a range of gold-backed banking products to mobilise Turkey’s stock of gold. This improved the health of the banking sector by reducing costs and improving liquidity, as well as ensuring commercial banks boost their gold reserves. Policymakers have now successfully seen around 250t of gold (US$10.4bn) drawn into the financial system and put to work supporting Turkey’s economy.

Alistair Hewitt, Head of Market Intelligence at the World Gold Council said: Amid a challenging global economic climate, Turkey faces ongoing political and social pressures to ensure that it steers a steady economic course. Gold represents many things in this society – from employment for over a quarter of a million people in the gold industry, to an investment protecting people’s wealth against the ravages of inflation and currency weakness. It is also a unique example to the rest of the world of how gold can successfully be put to work at the core of a nation’s financial architecture.

Some of the key findings from the research include the following:

Canadian gold miners raising nearly $800 million as financing window opens – by Peter Koven (National Post – January 22, 2015)

January 22, 2015

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

The financing window is open for Canadian gold miners, and they are rushing through it at a frantic pace before it shuts.

Six companies have announced bought deal offerings since Tuesday evening: Romarco Minerals Inc., Detour Gold Corp., Osisko Gold Royalties Ltd., Primero Mining Corp., Asanko Gold Inc., and Richmont Mines Corp. Between them, they are raising a whopping $789.8 milllion. Last week, Yamana Gold Inc. unveiled a $260.2-million equity deal of its own, and Lydian International Ltd. tapped the market for $16.5 million.

The flood of financings coincides with a significant jump in the gold price that has reignited investor enthusiasm for the sector. Bullion is up almost 10% this month and topped US$1,300 an ounce on Wednesday for the first time since August.

Gold has been out of favour with investors for most of the past two years, so the opportunities for most miners to raise capital have been few and far between. Not surprisingly, they are keen to push these deals through quickly while sentiment remains positive and gold equities are performing very well.

“We see it over and over again. These windows open so quickly and might be so short,” said Jay Kellerman, managing partner at Stikeman Elliott LLP. “Who would have imagined this [financing wave] a week ago?”

Gold breaches $1,300 – but beware potential headwinds – by Lawrence Williams (Mineweb.com – January 21, 2015)

January 21, 2015

http://www.mineweb.com/

There could also be some adverse factors ahead which could bring it back down again sharply.

While gold breached the $1,300 level in overnight trading last night it is obviously way too early to call this the start of a consistent gold price uptrend. However for gold bulls it is obviously a very encouraging start to the year with the recent price boost initially stimulated by the Swiss National Bank’s decision to drop the Swiss Franc’s peg to the Euro.

The question now facing us is whether or not a sustained breakthrough can be achieved. At the time of writing the price had fallen back into the high $1,290s but was again testing the $1,300 level.

The European Central Bank (ECB) is widely anticipated to announce that it is to implement a Quantitative Easing (QE) programme and buy government bonds to try and help stabilise the Eurozone economy at its meeting tomorrow.

But apart from some kind of knee-jerk reaction when the decision to do so, or kick the can further down the road, is announced, we don’t see this having any serious price impact given many of these factors have already been taken into account in the recent gold price advance anyway. Either way the Eurozone continues to have significant problems.

Robinson says he has a comprehensive plan for Ring of Fire – by Staff (Sudbury Northern Life – January 21, 2015)

January 21, 2015

http://www.northernlife.ca/

David Robinson says he has a comprehensive plan that would move the Ring of Fire development plan forward.

The Ring of Fire is a rich ore deposit in a remote section of northwestern Ontario, which no land transportation access, but a promise of billions of dollars worth of chromite and other metals. The province has taken heat for not producing a plan to allow development to move forward, and work in the area has effectively stalled.

Robinson, the Green Party candidate in the Sudbury riding byelection, said his plan includes developing a regional governance structure for those areas of Northern Ontario without functioning local governments. Regional government for the Far North will greatly strengthen the voice of people living in the area – and those expected to reside in the North when the Ring of Fire is developed.

“Sustainability begins at the local level,” says Robinson. “The people who live in the Far North will be hosting what will assuredly be one of the largest economic enterprises this province has ever seen. What we don’t need are politicians and bureaucrats sitting in a Toronto boardroom calling the shots for the Far North.

“Right now, that appears to be the plan that the Liberals, PCs and NDP have for the region.”

The Idiot’s Guide to Being a resource minister – by David Robinson (Northern Ontario Business – January 2015)

January 21, 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.

Dave Robinson is an economist with the Institute for Northern Ontario Research and Development at Laurentian University.drobinson@laurentian.ca

Here is some bedtime reading for Claude Gravelle, Greg Rickford and Kyle Fawcett. The Three Amigos are the most influential resource ministers in Canada.

Mr. Gravelle and Mr. Rickford are familiar to Northerners. Fawcett is Alberta’s new minister of Environment and Sustainable Resource Development. They are in charge of much of Canada’s natural resource wealth and they have access to the three most powerful politicians in the country. They are responsible for getting Canada’s resource policy right. This modest column should help them do their jobs.

The Idiot’s Guide to Being a Resource Minister is actually called Guidelines for Exploiting Natural Resource Wealth, by economist Rick van der Ploeg from the Oxford Centre for the Analysis of Resource Rich Economies. [http://www.economics.ox.ac.uk/materials/papers/13249/paper128.pdf] The guidelines were written for resource ministers in resource-rich countries like Canada.

GUIDELINES FOR EXPLOITING NATURAL RESOURCE WEALTH – by Rick van der Ploeg (University of Oxford – December 2013)

January 21, 2015

http://www.oxcarre.ox.ac.uk/

I. Introduction

What is the wealth of a nation? One way of looking at it is that it consists of the total assets owned by citizens, businesses and government of a particular country minus all the liabilities of these parties. The net financial claims such as shares, bonds, commodities owned by the nation are certainly part of a nation’s net wealth, provided one is careful to net out government bonds owned by own citizens. From an
accounting point of view, the year-to-year change in net financial claims must correspond to the current account of the nation.

Hence, if the nation produces more than it consumes or exports more than it imports and earns interest income from abroad, its current account will be positive and the nation will be getting richer in terms of the net financial claims held on the rest of the world. We will refer to this as the net financial wealth held overseas.

But this is not all what determines the wealth of the nation. The wealth of the nation also consists of physical capital, natural capital, human capital, and its creative wealth. Physical capital consists of factories including machineries and transport vehicles, but also the physical infrastructure (irrespective of whether it is provided publically or privately) of a country. Human capital is defined as the earning power of the working population of a nation and corresponds to the present discounted value of all future wageincome that can be earned in future years by the working population (Hamilton and Liu, this issue).

NOACC NORTHWESTERN ONTARIO ASSOCIATED CHAMBERS OF COMMERCE (NOACC) SUBMISSION TO STANDING COMMITTEE ON FINANCE & ECONOMIC AFFAIRS PRE-BUDGET CONSULTATION (January 20, 2015)

January 21, 2015

http://www.noacc.ca/

The Northwestern Ontario Associated Chambers of Commerce (NOACC) is the “voice of business” representing the interests of nearly 2,000 members from Kenora and Rainy River in the West to Marathon and Greenstone in the East. We appreciate this opportunity to outline our concerns on a number of topics.

Skills Gap

The Province needs to address the skills gap. Two major trends are creating skills shortages. The first is the aging of the population and the departure of baby boomers from the workforce. The Conference Board of Canada’s long-term economic outlook projects that by 2025, one in five Canadians will be 65 or older. The second trend is that jobs are becoming increasingly specialized, which in turn demands more educated and skilled workers. The evidence is clear that the rising shortfall of skilled workers and the growing mismatch between the skills required and those available has evolved into a skills crisis affecting both the Ontario and the Canadian economy. Funding is vitally important to address the training and skills needs of Ontarians in all sectors.

One area that needs further attention is the apprenticeship system – the Ontario system uncompetitive with other resource-based Provinces. Many skilled trades require 4 journeypersons to train 2 apprentices, which leaves both small companies and rural communities at a disadvantage and does little to address the growing shortage of skilled trades. We believe that the current ratios are too high and should instead be comparative to Alberta and Saskatchewan levels of 1 journeyman to 3 apprentices.

Unearthing Mining Water Technology Innovation – by Paul O’Callaghan (Water World – January 2015)

January 21, 2015

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

http://www.bluetechresearch.com/

Paul O’Callaghan is CEO of Bluetech Research. The article is based on the report: Wastewater Treatment in Mining Metals.

Water access challenges and new mining discharge regulations are creating opportunities for the application of new water technologies. Yet the size and complexity of operations and cost of treating mining wastewater has slowed innovation. Which technologies/companies are emerging as successful?

As with many industrial sectors, the treatment of wastewater in mining applications is a secondary consideration tied to environmental policy and regulation, rather than a core operating practice.

As a result, many operators focus on well understood processes that require significant civil work, such as lime softening, tailings storage and chemical precipitation to be used as the primary system applied for heavy metals removal. However, in some instances novel and innovative technologies have been adopted with beneficial results.

There are several drivers leading to adoption of more advanced treatment technology, including:

COLUMN-BHP, Rio production show scale of commodity price challenge – by Clyde Russell (Reuters India – January 21, 2015)

January 21, 2015

http://in.reuters.com/

LAUNCESTON, Australia, Jan 21 (Reuters) – The latest production reports from mining giants BHP Billiton and Rio Tinto hammer home an uncomfortable truth: No matter how much output increases and costs are cut, falling commodity prices triumph.

Both BHP and Rio Tinto released reports this week that met market expectations and re-affirmed production guidance for the world’s top two mining companies.

While it’s no doubt positive for the Anglo-Australian miners that they are successfully executing plans to boost output while containing costs, the numbers make for some sobering reading.

Rio Tinto, the world’s second-largest iron ore producer after Brazil’s Vale, said it expected to mine 330 million tonnes of the steel-making ingredient at its Western Australia mines in 2015 on a 100 percent basis, up from 280.6 million tonnes last year. (www.riotinto.com)

The average price achieved in 2014 was $84.30 a tonne, Rio Tinto said, which would yield revenue of about $23.65 billion, on a 100 percent basis from the Pilbarra region. Rio Tinto’s actual share of that would be about $18.95 billion, as some of its mined output accrues to partners.

And given the structural oversupply in the market and muted demand growth from top importer China, it seems unlikely that the price will rally significantly in 2015.

Palladium Is Rarer Than Gold and, Thanks to Cheap Oil, Now Rarer Still – by Laura Clarke (Bloomberg News – January 20, 2015)

January 21, 2015

http://www.bloomberg.com/

America’s renewed love affair with the automobile is tightening global supplies of palladium, a metal rarer than gold.

While each car requires only a few grams of palladium, demand in 2015 will probably exceed supply for a fourth consecutive year, according to Johnson Matthey Plc, a maker of catalytic converters for automobiles that use the metal to reduce harmful tailpipe emissions. Global car sales rose 3.4 percent last year to a record 81.6 million vehicles, Macquarie Group Ltd. said in a report last week.

The lowest oil prices in five years and cheap bank loans are helping to extend a rebound in automobile sales that began in 2009, boosting demand for everything from catalytic converters to Alcoa Inc. (AA)’s aluminum sheets and Goodyear Tire & Rubber Co.’s wheels. Even after palladium prices soared to a 13-year high in September, Morgan Stanley and Deutsche Bank AG remain bullish because car parts account for 70 percent of the metal’s use.

“Palladium is an exciting place to be because of its exposure to gasoline,” Scott Winship, a fund manager at Investec Asset Management, which oversees about $112 billion, said by telephone from London. “U.S. auto demand is incredibly strong and might even surpass previous peaks that we saw before the financial crisis.”

Palladium, used mostly in gasoline-fueled vehicles that dominate markets in North America and China, is approaching a bear market after falling 3.3 percent this month to $770.75 an ounce in London.

Ring of Fire bogged down in bickering – by Len Gillis (Timmins Daily Press – January 21, 2015)

January 21, 2015January 21, 2015

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – The much vaunted Ring Of Fire mining development is bogged down in bureaucratic studies along with bickering over where to build a new road, or rail link, to what is clearly the newest, richest and most promising mining development in Ontario so far this century.

That was part of the assessment offered in Timmins this week at an impromptu news scrum with federal Natural Resources Minister Greg Rickford, the MP for Kenora and the minister for FedNor. But Rickford also said he is still hopeful the project will blossom.

The Ring Of Fire refers to a massive deposit of chromite and other precious minerals located in the McFauld’s Lake and Webequie area, about 600 kilometres northwest of Timmins. Chromite is an important element in manufacturing stainless steel. The Ring of Fire area could become the largest chromite mining site in North America, a venture measured in the tens of billions of dollars.

The project involves KWG Resources Inc., which has about 30% of the Big Daddy property, and Noront Resources, which has the Eagle’s Nest project. They are the two major players involved. Both are Canadian. Another large company, Cliff’s Natural Resources, an American company, was supposed to be the big player in the development, but it pulled out last year, saying it could not get rights to build a transportation link, nor could it get infrastructure concessions from Queen’s Park.

Canadian ore carrier makes historic journey to China via Northwest Passage – by Richard Desgagnes and Andrew Godfrey (Canadian Mining Journal – January 2015)

January 21, 2015

http://www.canadianminingjournal.com/

Richard Desgagnes is a Senior Partner and Andrew Godfrey is an Associate with Norton Rose Fulbright.

Shipping history was recently made in Canada when Fednav’s MV Nunavik sailed from Deception Bay, Quebec to Bayuquan, China via Canada’s Northwest Passage.

The ship carried 24,000 tons of nickel concentrate and became the first commercial vessel to transit the Northwest Passage westward, unescorted, with an Arctic cargo and with Canadian expertise. In doing so the transit time was reduced by about 18 days (or about 5,800 miles) than had it been routed through the Panama Canal.

This and other developments are opening new frontiers of coastal mining transportation in Canada. Wherever a mining project is located, however, there are some key issues that have to be addressed when looking at maritime transportation.

FLAG CONSIDERATION: If the transportation needs are purely domestic (from one point in Canada to another), due to coasting trade restrictions, the vessel must be Canadian flagged and manned by Canadian seafarers. As such, manning costs are much higher compared to some other foreign flag operations. For carriage to a destination outside of Canada however, there is no restriction on the nationality of the vessel or the crew used on-board. All vessels are regulated by the standards of the IMO (International Maritime Organization).

Resource takeovers no cause for national angst – by Howard Green (Globe and Mail – January 21, 2015)

January 21, 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.

What a difference a few years makes. Recall the bygone days when there was a fuss about foreigners wanting to buy our miners and oil companies. Sure, Spain’s Repsol played vulture when it scooped up Talisman last month, but it was welcomed rather than turned into a federal case.

The national harrumphing that went on back in 2006 and 2007 when Inco, Falconbridge and Alcan were sold to outsiders is amazing in retrospect. But who would want to be stuck with a fistful of those shares in their portfolios right now, given where commodities are?

Back then, not only commentators, but also Bay Streeters and big shot executives were critical of the CEOs of those companies, railing about how they were selling out Canada’s birthright to rapacious buyers from abroad. Or worse, that they were not willing to step up and pay up to be acquirers rather than sellers.

If only the country had such problems today. The truth is, Inco’s CEO at the time, Scott Hand, and Dick Evans, the CEO of Alcan, got absolutely brilliant prices for their shareholders when they sold their respective companies. Wouldn’t it be something to hear complaints today about selling resource companies at the top of the market?

Oil slide to shave billions off federal and provincial government revenue – by Bill Curry and Shawn McCarthy (Globe and Mail – January 21, 2015)

January 21, 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.

Ottawa and the provinces will lose a combined $14-billion in government revenue this year as a result of falling oil prices, according to new analysis that comes as the federal Conservatives shift their economic message ahead of Parliament’s return next week.

The federal government alone is set to lose $4.3-billion this year, the Conference Board of Canada said in a report Tuesday. The board is among the organizations that provide forecasts to the finance department and its findings add to the growing private sector opinion that Ottawa’s return to budget surplus is in jeopardy.

The International Monetary Fund lowered its forecast for global economic growth, helping trigger a 4.7 per cent drop Tuesday in the price of North American crude, which closed at $46.49 (U.S.) a barrel Tuesday. The IMF also cut its forecast for Canada. The Bank of Canada is expected to comment in detail Wednesday on the impact of low oil prices in its quarterly Monetary Policy Report. Analysts suggest the Canadian dollar could sink below 82 cents U.S. depending on what the bank has to say.

The rapidly changing economic picture is also leading to some mixed messages from the Conservative government.

Nickel miners shrug off sluggish prices – by Paul Garvey (The Australian – January 22, 2015)

January 21, 2015

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

NICKEL miners Western Areas and Panoramic Resources have shrugged off the sluggish nickel price with respective pieces of good news, with Western Areas flagging a big improvement in its guidance for 2015 and Panoramic surging on the back of a new discovery.

Western Areas said production costs at its high-grade Flying Fox and Spotted Quoll mines in Western Australia had fallen to their lowest in four years, clearing the way for the company to upgrade its guidance at its half-year result.

Each pound of nickel produced by Western Areas cost the company $2.23, compared with its guidance for the full year of between $2.70 and $2.80 a pound.

The lower production costs reflected higher nickel grades, a renegotiated contract with mining contractor Barminco, and optimisation efforts by the operations team.

Net cash at the company increased from $44.7 million to $53.7m, despite the falling nickel price and the payment of a dividend during the quarter. Western Areas executive director David Southam said the miner had outperformed during the December quarter.