Republic of Mining

UPDATE 2-Hedge fund plans proxy fight with Cliffs to install new CEO – by Allison Martell (Reuters U.S. – February 12, 2014)

February 12, 2014

http://www.reuters.com/

Feb 12 (Reuters) – The activist investor squaring off with Cliffs Natural Resources Inc named its preferred candidate for chief executive officer on Wednesday and said it plans to nominate enough new directors to form a majority of the iron ore miner’s board.

Hedge fund Casablanca Capital, which owns about 5.2 percent of Cliffs, said it is backing Lourenco Goncalves, former CEO of Metals USA, to take the top job at hard-hit Cliffs.

Last month Casablanca publicly urged Cliffs to spin off its international operations and form a master limited partnership from its U.S. assets, but the fund declined to say what its next steps would be if Cliffs refused.

Cliffs, a relatively high-cost producer, has been battered by weak iron ore prices. Operational issues and worse-than-expected costs have plagued its Bloom Lake Mine in Quebec, once seen by analysts as a key growth project.

After months of uncertainty, the company said on Tuesday it has decided to indefinitely suspend a planned expansion at Bloom Lake, and idle Wabush, another Canadian mine, slashing capital spending and cutting some 500 jobs.

Numsa head calls for nationalisation of mines – by Kim Cloete (MiningWeekly.com – February 11, 2014)

February 12, 2014

http://www.miningweekly.com/page/americas-home

JOHANNESBURG (miningweekly.com) – The National Union of Metalworkers (Numsa), which is in the midst of a battle against the union federation it ostensibly falls under, the Congress of South African Trade Unions (Cosatu), has called for the nationalisation of mines and the financial sector in South Africa.

Numsa general secretary Irvin Jim told the Cape Town Press Club that nationalisation was not “some dogma from the past” but an immediate and urgent requirement to “save our nation”.

“I want to say this very clearly and very straightforwardly. There is only one way to create the number of jobs that are needed in South Africa – the number the National Development Plan dreams about. That is to harness the profits of the mining and financial sectors and use them to build a manufacturing industry.”

Jim said deindustrialisation had caused a massive loss of jobs in the manufacturing sector. “This will not stop until we fundamentally change direction.”

Jim, who represents around 340 000 workers in the metal sector, called for an end to liberalised trade, which he said caused huge dumping of products from China and elsewhere and had shut South Africans out of jobs.

HudBay Low Bid for Arizona Copper Invites Rival Offer: Real M&A – by Tara Lachapelle (Bloomberg News – February 11, 2014)

February 12, 2014

http://www.businessweek.com/

The prospect of mining copper in Arizona has traders lining up bets that Augusta Resource Corp. (AZC), the target of an unsolicited bid by HudBay Minerals Inc. (HBM), will win a higher offer.

Shares of Vancouver-based Augusta rose 15 percent above HudBay’s all-stock bid, which was valued yesterday at C$2.78 a share, or about C$440 million ($400 million) including net debt. The gap, one of the widest among pending North American deals in which traders expect bidding wars, indicates investors are anticipating a boost from HudBay or another suitor.

Augusta’s Arizona copper project is in the last stages of attaining necessary permits. Laurentian Bank of Canada said it’s large enough to attract other producers including OZ Minerals Ltd. (OZL) and Teck Resources Ltd. (TCK/B) and estimates the company’s value is at least C$3.89 a share based on similar deals. Freeport-McMoRan (FCX:US) Copper & Gold Inc., based in Arizona, is another possible suitor with the financial (FCX:US) strength to outbid HudBay, according to National Bank Financial.

“The market expects that this may be the initial offer and Augusta could negotiate better terms,” Shane Nagle, a Toronto-based analyst at National Bank, said in a phone interview. “It’s a high-quality asset. There is room certainly to sweeten the offer.”

CA miners applaud exploration tax credit extension, skills training – by Dorothy Kosich (Mineweb.com – February 12, 2014)

February 12, 2014

http://www.mineweb.com/

As Canada’s Minister of Finance Jim Flaherty Tuesday tabled his Economic Action Plan of 2014, he committed to a balanced federal budget in 2015.

RENO (MINEWEB) – Two prominent Canadian mining organizations Tuesday hailed Minister of Finance Jim Flaherty’s Economic Action Plan 2014, which extends a mining exploration tax credit. Economic Action Plan 2014 proposes no new taxes on Canadian businesses and projects the country’s deficit will decline to C$2.9 billion in 2014-15. A C$6.4 billion budget surplus is anticipated in 2015-16.

The Association for Mineral Exploration BC (AME BC) said it welcomed the extension of the Mineral Exploration Tax Credit contained within the federal budget. David McLelland, chair of AME BC, said, “Many of our members are having difficulty raising capital in these financially challenging times, and the renewal is much appreciated.”

The Mineral Exploration Tax Credit increases exploration financing through providing individuals who invest in companies that are exploring for minerals in Canada with a 15% tax credit on eligible expenditures.

NEWS RELEASE: Casablanca Capital Backs Lourenco Goncalves To Become CEO of Cliffs Natural Resources And Notifies Company Of Intention To Nominate Majority Slate Of Directors For Election To Board

February 12, 2014

Says It Believes Yesterday’s Bloom Lake Announcement Does Not Go Far Enough to Address Fundamental Strategic and Structural Changes Needed to Create Value for Shareholders

February 12, 2014 08:30 AM Eastern Standard Time

NEW YORK–(BUSINESS WIRE)–Casablanca Capital LP (“Casablanca”), one of the largest shareholders of Cliffs Natural Resources Inc. (“Cliffs” or “the Company”) (NYSE: CLF), with beneficial ownership of approximately 5.2%, today announced that it is backing Lourenco Goncalves, former CEO of Metals USA, to fill the currently open position of Chief Executive Officer of Cliffs. Casablanca has also delivered a letter to the Company declaring its intention to nominate a majority of directors for election to Cliffs’ Board of Directors at the Company’s 2014 annual meeting of shareholders.

“In spite of its public statements, Cliffs hasn’t engaged us in any meaningful dialogue on the issues we’ve raised or provided a timetable for doing so.”

Goncalves, a 30-year veteran of the metals and mining industry, is standing as CEO candidate, has agreed to be a Casablanca director nominee, and recently made a personal investment of approximately $1 million in Cliffs shares. Goncalves was most recently Chairman, President and CEO of Metals USA.

Despite good data, headwinds await Indonesia’s economic growth – by Randy Fabi and Rieka Rahadiana (Reuters U.S. – February 11, 2014)

February 12, 2014

http://www.reuters.com/

JAKARTA, Feb 12 (Reuters) – Ibris Nickel Pte Ltd has not made a shipment from its remote mine in Indonesia’s Southeast Sulawesi for six weeks and is bleeding $12 million a month, one of hundreds of small miners squeezed by a controversial mineral export ban imposed last month.

The problems at privately owned Ibris illustrate one of several headwinds facing Indonesia, Southeast Asia’s biggest economy, despite a spate of surprisingly strong economic data.

Indonesia is not only confronting a mining crisis, but also the delayed effects of the central bank’s aggressive monetary tightening, political uncertainty in an election year, a slowdown in China, and the tapering of U.S. monetary stimulus.

“We very much doubt the economy has bottomed and expect the downturn to resume form in the current quarter,” said Robert Prior-Wandesforde, an economist at Credit Suisse. Recent data has looked good: December’s trade surplus, at $1.52 billion was double the market consensus, the largest in two years and the third straight monthly surplus, the government said last week.

Ontario defends lawsuit filed by junior explorer – by Bryan Phelan (Wawatay News – February 11, 2014)

February 12, 2014

http://wawataynews.ca/

The Ontario government in January filed its statement of defence for a $125-million lawsuit brought against it by a junior exploration company with mining claims near Sachigo Lake First Nation. Northern Superior Resources (NSR), based in Sudbury, had for several years explored for gold in Sachigo’s traditional territory with the First Nation’s consent. However, the company stopped exploration in 2012 when its relations with Sachigo soured.

Later, on Oct. 24, 2013, NSR filed a lawsuit against Ontario, claiming that the province “failed to consult with First Nations as required by law” regarding the company’s exploration. NSR asked for compensation of $110 million for damages it said resulted, including: lost opportunities to finance, develop and/or sell the properties; loss of opportunity to profit from “potentially world-class mineral deposits”; and reduced value of NSR’s stock.

NSR also claimed it should be reimbursed $15 million by Ontario for monies spent acquiring and developing the properties.

“Having obtained all the necessary authorizations for mineral exploration under the Mining Act, and taken every reasonable measure to engage any First Nation … to be affected from its work,” the company stated, “NSR had a reasonable expectation that it would able to explore and develop the claims free of interference and with a view to profit.”

India rejects call to ban iron ore exports from top producing state – by Krishna N Das and Jatindra Dash (Reuters India – February 12, 2014)

February 12, 2014

http://in.reuters.com/

NEW DELHI/BHUBANESWAR, India, Feb 12 (Reuters) – India’s mines ministry has rejected suggestions by a powerful government panel to ban exports of iron ore and limit output from the eastern state of Odisha, dispelling fears the country’s top producer faced curbs similar to those imposed elsewhere.

The bans in two other producing states, Karnataka and Goa, have helped spur sales by miners from Australia, Brazil and South Africa, pushing India to ninth place last year among world exporters of the steelmaking raw material to top market China.

The panel, led by Justice M.B. Shah, asked the ministry to consider the restrictions to ensure that future generations are “not required to import iron ore” and to crack down on illegal mining, after recommending the same steps for Karnataka and Goa.

Bans in these two southern states, following the findings of the Shah Commission set up in 2010, have already slashed India’s exports of iron ore by about 85 percent, or 100 million tonnes, in the past two years, pushing the country from its 2011 ranking of No. 3 among world exporters to China.

UPDATE 2-Miner Cliffs to slash 2014 capital spending, cut 500 jobs – by Nicole Mordant (Reuters U.S. – February 11, 2014)

February 12, 2014

http://www.reuters.com/

Feb 11 (Reuters) – Under pressure from an activist shareholder, Cliffs Natural Resources Inc said on Tuesday it will slash capital spending, forego a planned expansion at a key Canadian mine and shut another mine in Canada, cutting about 500 jobs.

Cliffs, a Cleveland-headquartered iron ore and coal producer, said it plans to reduce its capital spending in 2014 by more than 50 percent to between $375 million and $425 million as it cuts back its Bloom Lake Mine expansion and idles production at its Wabush Mine.

The miner has recently been targeted by an activist shareholder who wants the company to be broken up and Cliffs to spin out its “riskier” international operations, including the Bloom Lake and Wabush mines, into a separate business from its strong cash-generating U.S. operations.

Cliffs acquired Bloom Lake as part of its takeover of Consolidated Thompson Iron Mines Ltd in 2010 but higher-than-expected costs at the mine have weighed on Cliffs’ earnings. Cliffs delayed a planned expansion in 2012, and a year ago took a $1 billion goodwill writedown related to the Consolidated Thompson deal.

Royal Nickel Corp: Indonesian Ore Export Ban Opens Door to the Next Generation of Nickel Mines (The Gold Report – February 11, 2014)

February 12, 2014

http://www.theaureport.com/

DISCLOSURE: Royal Nickel Corp. paid The Mining Report to conduct, produce and distribute the following interview.

Nickel prices have been weak, but the recent Indonesian government announcement banning ore shipments outside the country may be the shock that reverses the trend. In this interview with The Mining Report, Mark Selby, senior vice president of business development for Royal Nickel Corp., walks through his analysis that indicates nickel price increases and inventory reductions are imminent, while demand continues to grow and over a quarter of global mine supply is shut in.

He considers nickel in 2014 one of the best commodity trades in a generation. To capitalize on this unique set of circumstances, Royal Nickel’s Dumont Nickel Project follows the path of other large-reserve, large-scale mines in the copper and gold sectors that have changed the mining industry and made early investors fortunes.

The Mining Report: The nickel industry has been through tectonic changes in the last 10 years, including large corporate takeovers and fundamental changes in supply available to the market. Can you summarize where the nickel industry has been and where it is going?

Mark Selby: Over the past five years, we’ve seen continued robust growth in nickel demand. Over that period, global nickel demand grew in the high single-digits, while Chinese nickel demand grew at double-digit rates.

First blast at [Timmins Goldcorp] open pit – by Jeff Labine (Timmins Daily Press – February 12, 2014)

February 12, 2014

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – Goldcorp literally started its operations at the Hollinger Mine with a bang. Residents were given advanced warning that the mining company would be blasting at Hollinger on Tuesday. The first blast was expected to take place around 11:30 a.m. but the window of opportunity was missed when it took too long to place the blast mats down.

The city made an agreement with Goldcorp/Porcupine Gold Mines to only blast during the destination windows. That placed the first blast at the second time slot – between 1:30 p.m. and 2 p.m.

Paul Miller, superintendent of surface operations for the Hollinger project, watched the blast from the top floor of Goldcorp’s office building, near the Shoppers Drug Mart along Algonquin Boulevard. Called a pioneering blast, the explosion is intended to level out the area for the company to work in.

“Its been a long time coming,” he said. “We look at it as the start. In terms of the community it is a significant event because it is our first blast.

First Nation takes proactive approach with mining companies – by Jonathan Migneault (Sudbury Northern Life – February 11, 2014)

February 11, 2014

http://www.northernlife.ca/

Wahnapitae First Nation has taken a proactive approach to promote environmental sustainability in its dealings with mining companies like Vale, Glencore and KGHM. Since the early 1990s, the First Nation, located northeast of Sudbury, has worked to develop relationships with mining industry partners.

Cheryl Recollet, Wahnapitae First Nation’s environmental co-ordinator, said her department has developed in-house capacity over the past 15 years to conduct environmental assessments for mining companies who work near their reserve boundaries.

In 2012, Wahnapitae First Nation’s sustainable development department founded Tahgaiwinini Technical and Environmental Services Group. The company has four technicians and two advisers on staff, who provide mining companies with a variety of environmental management services.

The technicians are trained to use geographical information systems to map the flow of groundwater, plumes of air pollution, and provide information on the First Nation’s territory, species at risk, and traditional hunting territory.

Barrick Gold Production Seen Hitting Nine-Year Low – by Liezel Hill (Bloomberg News – February 11, 2014)

February 11, 2014

http://www.bloomberg.com/

Barrick Gold Corp. (ABX) is poised to cut output to a nine-year low, a sign the world’s largest gold miner is making headway on its plan to put profits before growth.

Barrick may produce 6.3 million ounces of gold this year, based on the average of four analysts’ estimates compiled by Bloomberg. That would be as much as 15 percent less than last year and the lowest since the company became the gold industry leader in 2006.

The Toronto-based miner, which is expected to issue 2014 forecasts when it reports fourth-quarter earnings Feb. 13, isn’t alone in its strategy. Gold producers have cut budgets, sold mines and curtailed operations after the metal plunged last year by the most in more than three decades.

“Barrick represents a turnaround situation,” Robert Gill, who helps manage C$3.3 billion ($3 billion) including Barrick shares at Lincluden Investment Management, said yesterday by phone. “It’s a different company now than what it was for much of its existence.”

The miner led an industrywide pursuit of expansion over the past decade as gold producers sought to capitalize on prices that rose for 12 straight years.

Quebec mining investment took deeper plunge than forecast last year – by Ross Marowits (Montreal Gazette – February 11, 2014)

February 11, 2014

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

THE CANADIAN PRESS – MONTREAL – Investments in Quebec’s mining sector plunged deeper than expected last year, declining nearly 37 per cent from a record year in 2012 and marking the first annual drop in a decade, Quebec’s statistics agency said Tuesday.

Preliminary numbers suggest investments in the sector fell to $3.25 billion from $5.13 billion a year earlier, due largely to lower gold prices and softer demand in China and emerging markets.

In October, the agency forecast a drop of at least 10 per cent in 2013 based on surveys of mining companies completed during the summer. However, Raymond Beullac, an official with the statistics institute says he had a “gut feeling” that the numbers were optimistic and warned of a possible decrease based on comments expressed by executives.

“Between last summer up until January the situation has greatly degraded and the numbers have come down so the companies who at that time expected to be spending more money exploration-wise in Quebec were not able to raise the capital to do the work,” he said in an interview.

Why the world’s biggest miners may get some more attention from investors (National Post/Reuters – January 11, 2014)

February 11, 2014

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

Aggressive cost cutting, volume growth and stable commodity prices will drive a rise in half-year profits for the world’s biggest miners, paving the way for healthy dividend hikes now and anticipated capital returns in 2015.

The latest round of results could tempt investors back into the sector, analysts say, after steering clear amid fears of cooling growth in China and a yet-to-occur slump in iron ore prices. Top miners BHP Billiton , Rio Tinto and Brazil’s Vale are expected to book solid growth in cash flows, having slammed the brakes on building new mines 18 months ago and embarked instead on massive cost cuts and debt repayments.

“Cash flows have been negative because they’ve been spending on projects and developments. You want to start to see a sign that that’s starting to reverse,” said Darko Kuzmanovic, a portfolio manager at Caledonia Investments in Sydney.

“Hopefully that’s the catalyst for people to be more comfortable with these names and start thinking about investing in them, because they don’t look particularly expensive.”