Republic of Mining

An Ebola Armageddon Could Trigger a Rebirth in Gold and Silver Prices: Eric Sprott Interview (The Gold Report – October 20, 2014)

October 24, 2014

http://www.theaureport.com/

Could an infectious disease kill the monster that has been choking gold and silver prices for more than a year? On the heels of a lively Sprott Precious Metals Roundtable discussion, The Gold Report caught up with investor Eric Sprott to ask how a tragedy in Africa could impact the price of precious metals and mining stocks. We also spoke to his Executive Vice President of Corporate Development John Ciampaglia about a new way to gain exposure to gold.

The Gold Report: Deutsche Bank warned in a recent note that the Ebola virus could impact commodity markets, including gold and cocoa, as it spreads to producing countries in West Africa, particularly Ghana and Mali. In a recent article titled “Ebola, The Tipping Point,” you mourned the unnecessary loss of life and predicted 5% less global production next year than this year. Could a lack of supply due to Ebola-related closures really cause the price of gold to rise?

Eric Sprott: There is already a shortage of gold and silver in the markets without a corresponding increase in the price. I wrote an open letter to the World Gold Council questioning its data on China. If you believe the Shanghai Gold Exchange data, China consumes more than 2,000 tons (2 Kt). In 2011, it consumed only about 1 Kt. In the last two years, China has bought an extra 1 Kt gold—25% of a 4 Kt market. If any country came in and bought 25% of the oil market, the wheat market or the orange juice market, the commodity price would not go down. Obviously, the physical gold market is not manifesting itself in the price changes.

Vale Coming of Age as Nickel Heavyweight as Prices Sink – by Juan Pablo Spinetto (Bloomberg News – October 23, 2014)

October 24, 2014

http://www.bloomberg.com/

Vale SA (VALE5), whose $18 billion base-metal incursion was beset by a slew of delays and stoppages, is growing nickel output at the fastest pace in six years at a time of tumbling prices for the stainless steel ingredient.

The Rio de Janeiro-based company beat analysts’ estimates to post a 16 percent jump in nickel production in the third quarter, taking total output of the metal this year to 201,400 metric tons. That puts Vale, which plans to produce 289,000 tons of nickel in 2014, on track to challenge top producer OAO GMK Norilsk Nickel, which targets as much as 230,000 tons.

After winning a battle to take over Inco Ltd. in 2006, Vale is leaving behind a series of setbacks including strikes in Canada, plant faults in Brazil and an acid spill in New Caledonia. While its earnings outlook was boosted by nickel’s first-half rally, prices have plunged 24 percent from a Sept. 8 peak and are down about 50 percent since the Inco deal.

“It’s not the best timing in the world,” Marcel Kussaba, an equity analyst at Quantitas, which oversees 16.6 billion reais ($6.6 billion) including Vale shares, said from Porto Alegre, Brazil. “There is the feeling that Vale is starting to deliver when the environment is bad.”

Vale said in its third-quarter production report yesterday that nickel climbed to 72,100 tons, beating a 68,800-ton average forecast by nine analysts surveyed by Bloomberg, the unit’s best performance for a third quarter since 2008, despite a planned maintenance at its Thompson project in Canada.

AFRICA INVESTMENT-S.Africa platinum town, wider economy still hurting from strike – by Zandi Shabalala (Reuters India – October 24, 2014)

October 24, 2014

http://in.reuters.com/

MARIKANA, South Africa, Oct 24 (Reuters) – Mamsi Ngobeni sat alongside the main road of the South African platinum belt town of Marikana, hunched over a table with a pile of onions, apples, loose cigarettes and tomatoes.

By just after noon she had sold about 20 rand ($1.8245) worth of goods, well down from what she said was her usual 1,000 rand take before a five-month strike against the world’s top platinum producers drained this gritty town of cash.

Although miners here have been back at work since June with higher wages and the strike-hit operations of Anglo American Platinum and Lonmin are back at full production, money is not gushing back into local businesses.

Africa’s most advanced economy is also struggling to shake off the shock of the strike, the longest in its history, and will only manage growth of 1.4 percent this year, down from the 2.7 percent predicted in February. Finance Minister Nhlanhla Nene cited “labour market disruptions” as a key reason for the revision.

In Marikana, where 34 striking miners were shot dead by police during a wildcat strike against Lonmin in 2012, the length of this year’s stoppage has left many miners cash-strapped despite wage hikes of up to 20 percent as they have to repay debt that piled up when they didn’t have a pay cheque.

The limits of Ecuador’s shakedown statism – by Peter Foster (National Post – October 24, 2014)

October 24, 2014

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

Ecuador is run by the left-wing caudillo windbag Rafael Correa, whose hero was Hugo Chavez

The great eighteenth century lexicographer and wit Samuel Johnson described second marriage as the “triumph of hope over experience.” How then might one characterize the tendency of Canadian mining companies to return again and again to the altar of commerce with foreign government partners who recall Glenn Close in Fatal Attraction?

This week, Vancouver-based Lundin Group confirmed that a subsidiary would take over the Fruta del Norte prospect in Ecuador from Toronto-based Kinross Gold Corporation for US$240 million. Ecuador is run by the left-wing caudillo windbag Rafael Correa, whose hero was Hugo Chavez, the man who turned oil-rich Venezuela into a basket case.

Mr. Correa’s preferred mode of money-raising is the shakedown. The two most spectacular examples in recent years have been an attempt, via the “Yasuni Initiative,” to blackmail the rest of the world into putting up US$3.6 billion in return for Mr. Correa (italics) not (close italics) drilling for oil in an Amazonian nature reserve; then there is a beyond-fiction trumped-up court case against California-based Chevron Corp. seeking (at last count) US$9.5 billion for alleged damage to the rainforest.

Kinross took a massive flier by buying Fruta del Norte in 2008 for $1.2 billion when Ecuador had no clear mining policy. The company’s attempt to develop FDN turned out to be the proverbial marriage from hell.

Zinc bull Michelmore puts the case – by Lawrence Williams (Mineweb.com – October 24, 2014)

October 24, 2014

http://www.mineweb.com/

MMG CEO Andrew Michelmore is very bullish on zinc, in part resulting from the impending closure of his company’s Century mine next year with nothing of comparable size to replace it.

LONDON (MINEWEB) – At the tail end of a very interesting East meets West seminar put together by Bloomberg in London during LME Week, Andrew Michelmore, the CEO of MMG (the Australian-based subsidiary of China’s Minmetals), talked about his company and in particular about the massive Las Bambas copper property it is building in the Peruvian Andes.

But perhaps his most interesting comments came in a Q&A session at the end with his remarks on the global zinc market.

Michelmore is bullish on copper, but VERY bullish on zinc, and he is in a good position to understand the market as MMG is the operator of the massive Century zinc mine in Australia which is due to cease production next year. Century will produces some 400 000 tonnes of zinc this year, around 7% of global mined supply and is reckoned to be the world’s second largest zinc mine after Hindustan Zinc’s Rampura Agucha in Rajasthan, India.

Century is due to run out of open pittable ore by the end of the current year, but can probably continue processing material until Q3 2015. Beyond that production will cease said Michelmore in an answer to a direct question on the Century closure schedule.

How the Fruta del Norte project is another high-risk, high-reward gamble for Lundin Group – by Peter Koven (National Post – October 23, 2014)

October 24, 2014

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

If anyone was going to tackle the Fruta del Norte project, it would naturally be Lukas Lundin.

The Vancouver-based mining entrepreneur has never shied away from investing in the most politically challenging parts of the world. And by getting into countries including Argentina and the Democratic Republic of Congo ahead of the pack, the Lundin Group has taken hold of many world-class projects at low cost and made a fortune for its shareholders.

Fruta del Norte (FDN) fits the bill for Mr. Lundin perfectly. It is arguably the world’s best undeveloped gold deposit, with 6.8 million ounces of very high-grade reserves. It is also in Ecuador, a country that has been inhospitable for mining investment and has scared away the rest of the gold sector. As a result, the asset was available at a bargain-basement price.

“One of those things the Lundin family has done so well over so many years is [obtaining] great assets,” Ron Hochstein, chairman of Lundin shell company Fortress Minerals Corp., said in an interview. “And also having the ability to work with governments and with the population to see them through.”

Fortress announced late Tuesday it will buy FDN from Kinross Gold Corp. for US$240-million in cash and stock. Fortress will be renamed Lundin Gold Inc. and plans to use FDN as the foundation to build a significant gold producer.

Glencore digging deeper for new Sudbury mines – by Jonathan Migneault (Sudbury Northern Life – Oct 23, 2014)

October 24, 2014

http://www.northernlife.ca/

If approved, Onaping Mine will go as deep as 2,700 metres (8,858 feet)

The future of Glencore’s nickel operations in Sudbury will require deeper mines to access previously untapped deposits, said Marc Boissonneault, the company’s vice-president of Sudbury nickel operations.

Boisonneault, who addressed the Greater Sudbury Chamber of Commerce Tuesday, said the mining giant is eyeing two potential Sudbury developments that would require mine shafts as deep as 2,700 metres.

The first project is Onaping Mine, a site that was discovered years ago, but contains ultra-deep deposits that could not be safely accessed until recently.

Glencore estimates the mine contains 15.7 million tonnes of nickel deposits at higher grades than average for the Sudbury Basin, and would require a capital expenditure of $547 million to develop.

The company is expected to complete a pre-feasibility study for the project later in the year, and will decide by the first or second quarter next year whether it would be worthwhile to mine the deep deposits. “Given our life of mine situation, we would like to get started on it soon,” Boissonneault said.

The problem with America’s abandoned mines – by Rachael Bale (Centre for Investigative Reporting – October 21, 2014)

October 24, 2014

http://cironline.org/

A mine plans its death before its birth. The leftover waste from mines is so hazardous that mining companies must figure out what to do with it decades in advance, even before they start digging.

That’s how it works today, at least. But in 1981, when the United States government began requiring mines to have rehabilitation plans, many operators simply up and left instead. The government has identified about 46,000 abandoned mines on public lands alone. Some of them are top-priority Superfund sites.

But most haven’t even been mapped. By some estimates, there are as many as half a million abandoned mines in the U.S. These sites have the potential to contaminate water, pollute soil, kill wildlife and sicken humans, to say nothing of the risks of falling down a hidden mine shaft. (This is a legitimate concern in some areas – in California, the state employs teams that scour the state looking for abandoned mines and plugging them up. There was even a “Dirty Jobs” episode about these folks.)

Last month, heavy rains from Hurricane Odile caused two abandoned mines in Arizona to leak orange and brown sludge, threatening a waterway that runs into Patagonia Lake State Park. With thousands of abandoned mines dotting the American landscape, particularly in the West and Southwest, just how worried should we be?

News Release: Goldeye Explorations Limited’s Weebigee Project: A High-Grade Gold Discovery in Ontario’s Sandy Lake Greenstone Belt – by Robin Luke Webster (The Ontario Prospector – Winter 2015)

October 24, 2014

http://www.ontarioprospectors.com/home/

Robin Luke Webster is the Vice President, Corporate Affairs and Community Relations, Goldeye Explorations Limited

In 1986, a former Inco Geophysicist, Blaine Webster, founded a private company to stake mineral exploration claims near Sandy Lake, 225km north of Red Lake, Ontario. At the time, he could hardly have imagined that it would take nearly 30 years to launch a comprehensive exploration and drilling program on the property. In the ensuing years, the company, Goldeye Explorations Limited, obtained a public listing, explored a number of other mineral properties, and made an exciting discovery at its Tyrrell project near Shining Tree, Ontario.

While Goldeye carried out limited exploration after initially staking its claims at Sandy Lake, the project was put on indefinite hold soon after due to opposition from nearby Sandy Lake First Nation (SLFN). Knowing the significant mineral potential of the Sandy Lake area, however, and the benefits that a discovery could bring for both Goldeye shareholders and the local community, Blaine maintained Goldeye’s interest in the claims and focused on building a positive and mutually beneficial relationship with the members of SLFN. When Goldeye sold the Tyrrell project to Temex Resources Corp. in 2012, its focus returned to Sandy Lake.

Guided by Ontario’s new mining act, Goldeye ramped up its ongoing efforts to advance the project and in 2013, after a process of extensive consultations and discussions, SLFN agreed to the terms of a comprehensive Exploration Agreement that made it possible for the long envisioned work program to commence.

Iron ore giants win first round in global battle but knockout unlikely – by Clyde Russell (Reuters U.S. – October 23, 2014)

October 23, 2014

http://www.reuters.com/

LAUNCESTON, Australia – Oct 23 (Reuters) – There is now no doubt that the big three global iron ore miners are producing record amounts in their bid to dominate the industry. The question remains, what will happen if they succeed?

Anglo-Australian giants Rio Tinto and BHP Billiton both reported record output in their latest quarterly reports, and affirmed they were on track to boost production even further.

Top producer, Brazil’s Vale is also increasing output, with Brazilian trade figures showing iron ore exports rose 16.7 percent in September from August to 33 million tonnes.

These figures show that the output side of the plan to dominate global seaborne iron ore trade is going quite well for the big three.

In the case of BHP and Rio Tinto, they are well-placed to continue to put pressure on competitors based in their home turf of Western Australia state, as well as those in other parts of the world.

With the lowest cash costs, in the region between $20 to $30 a tonne, and plans to strip out even more costs, they can survive and prosper even if iron ore prices remain weak.

BCL’s Norilsk deal the first step in its hunt for nickel – by Allan Seccombe (Business Day Live – October 23, 2014)

October 23, 2014

http://www.bdlive.co.za/

BOTSWANA’S state-owned BCL, a nickel mining and smelting company, is embarking on a strategy to secure extra sources of metal, and its first step is the $337m purchase of Norilsk Nickel’s African assets.

The transaction, which secures a 50% stake in African Rainbow Minerals’ Nkomati mine in SA and 85% of Tati in Botswana, will be funded out of cash and debt, said BCL’s divisional manager of corporate strategy, Mack William.

BCL has a 1-million-tonne capacity at is smelter and it is currently using about 65%. Taking the Nkomati concentrate will lift the plant to full capacity, Mr William said in an interview.

The Botswana firm used to treat Nkomati’s concentrate, but a few years ago it diverted its concentrate to another smelter, he said.

BCL is undertaking a study at its metallurgical complex to grow capacity at the smelter and better utilise its concentrator, which has capacity for 3-million tonnes of ore a year. “It will position the smelter as the ultimate destination for all nickel concentrate in Southern Africa,” Mr William said.

UPDATE 2-African Barrick tightens full-year costs target – by Roshni Menon (Reuters India – October 23, 2014)

October 23, 2014

http://in.reuters.com/

Oct 23 (Reuters) – African Barrick Gold Plc tightened its costs target for the full year as it increased output while also cutting jobs to beat the sharp drop in gold prices.

The miner reported a fall in overall expenses for an eighth successive quarter after it cut more than 500 jobs at its flagship Bulyanhulu mine in Tanzania in the third quarter ended Sept. 30.

African Barrick’s stock was among the top percentage gainers on the FTSE-250 Midcap Index on Thursday, rising as much as 4.8 percent in early trading.

To beat shrinking gold prices, African Barrick has been accelerating production at Bulyanhulu, the largest of its three operating mines in Tanzania, by increasing its use of technology.

Many gold and silver miners were forced to shelve new projects and slash costs last year after prices of precious metals fell to their lowest in a decade. Gold fell 28 percent and silver plunged 36 percent in 2013. “By the end of next year we expect Bulyanhulu to produce 350,000 ounces at $900 per ounce,” Chief Executive Bradley Gordon told Reuters.

BHP Billiton to pursue demerger with no share listing in Canada – by Barry Critchley (National Post – October 22, 2014)

October 23, 2014

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

For the second time in four years, BHP Billiton Ltd., the world’s largest mining company — which holds its annual meeting in London Thursday — has announced plans that don’t include a Canadian share listing.

In the summer of 2010, BHP Billiton – the result of the 2001 merger between BHP and Billiton – launched a hostile bid for Potash Corporation of Saskatchewan Inc. It offered US$130 cash a share — a potential US$40-billion transaction.

At the time, BHP Billiton noted it had business interests in Canada dating back almost 40 years.

The most significant interest was EKATI, a diamond mine in which it had invested about US$5-billion since production began in 1998. BHP, which sold the EKATI mine in 2012, had also acquired exploration rights in potash, notably the Jansen mine.

But, perhaps as a reflection of the takeover consideration, BHP Billiton, which at the time had a market cap of US$188-billion, made no plans to list its shares on the TSX. However, late in the game when opposition to its takeover was mounting, it offered a secondary listing on the TSX to complement listings Australia, London, Johannesburg and New York. But its TSX-listing plans were shelved when the takeover was withdrawn after Ottawa nixed the deal after applying the net benefit test.

All Female E-Mail at BHP Shows Mine Shift From Boys’ Club – by David Stringer (Bloomberg News – October 22, 2014)

October 23, 2014

http://www.bloomberg.com/

The e-mail Jacqui McGill received from one of her teams at a BHP Billiton Ltd. (BHP) coal mine in northern Australia contained great news: output delays were down 75 percent in a year.

That wasn’t the only reason she let out a whoop of excitement. “I did my little yeehaw, because every single person on the e-mail was a woman in a production role,” said McGill, asset president for two of the world’s biggest mining company’s operations in Queensland’s Bowen Basin.

“That’s the first time that’s happened in my career,” McGill, an industry veteran of more than 20 years, said of the July e-mail. “I have plenty of men in my business in senior roles, but I thought, that’s critical mass.”

Mining remains the most male-dominated business, with men holding more than 90 percent of executive positions. That’s starting to change, as retiring employees help open the $1 trillion industry’s door to female successors.

“It lags behind, it’s historically been male,” U.S. Labor Secretary Tom Perez said Sept. 10 in an interview in Melbourne. “They are missing out on great talent. They are missing out on recruiting some of the best and the brightest.”

Define ‘consultation’ and ‘social licence’ – by Jeffrey Simpson (Globe and Mail – October 22, 2014)

October 23, 2014

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 does it mean to be “consulted?” Does it mean to give an opinion and to be heard? To have your views prevail? To exercise a veto? We don’t know, and as a result of this, much confusion surrounds public decisions, especially for projects that require this amorphous idea of “consultation” or “social licence” to proceed.

Who defines “social licence?” Interest groups such as NGOs or businesses? Courts? Public opinion, but as measured by what? Polls? Write-in campaigns? Social media comments? Street demonstrations? Elections?

The confusion about “consultation” and “social licence” deepens when it comes to Canada’s First Nations. Courtesy of court rulings and depending on their title or land claim or treaty, aboriginals have to be “consulted,” their interests “accommodated,” and, if title is demonstrated, give their assent – except in the face of a “pressing and substantial” public interest.

What might that be, the “public interest?” Take the Northern Gateway pipeline to pump Alberta bitumen oil through northwestern British Columbia to Asia-Pacific markets.

The three-person National Energy Board panel that exhaustively studied the pipeline proposal – and supported it, with 209 conditions – declared that “the public interest is the interest of all Canadians.”