Republic of Mining

Augusta shareholders at risk in ‘essentially insolvent’ company: HudBay – by Peter Koven (National Post – February 28, 2014)

February 28, 2014

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

TORONTO – Augusta Resource Corp. is “essentially insolvent” and facing severe financial risks in the coming months, according to the company that wants to take it over.

David Garofalo, the chief executive of HudBay Minerals Inc., tore into Augusta’s management in an interview on Thursday as the $428-million hostile takeover battle continues to heat up. His key message was that Augusta shareholders could be in deep trouble if the company does not wrap up permitting for its Arizona-based Rosemont copper project in short order.

The permitting question is at the heart of this takeover battle. This week, Augusta said it expects to receive its final required permit in the first half of this year. After that, it is set to begin construction. HudBay claims the permitting process is likely to be much more prolonged than that. If it is, that means Augusta could face serious liquidity concerns.

Augusta had just US$749,000 in cash at the end of September, leaving it with negative working capital of US$87-million. That is not a problem if the company locks up its permitting soon, because that event would trigger US$336-million of payments to the company from Silver Wheaton Corp. and a joint venture partner.

UPDATE 3-Vale vows spending austerity as metals price outlook improves – by Jeb Blount and Guillermo Parra-Bernal (Reuters U.S. – February 28, 2014)

February 28, 2014

http://www.reuters.com/

RIO DE JANEIRO/SAO PAULO Feb 27 (Reuters) – Vale SA , the world’s largest iron ore producer, will continue reining in costs this year even as the outlook for prices and sales volumes is improving, its chief executive officer said on Thursday.

“We plan to continue with austerity,” Murilo Ferreira, the company’s CEO told investors at a conference call to discuss fourth-quarter earnings.

The company will also continue efforts to sell underperforming units and control investments as it sharpens its business focus on iron ore, responsible for about three-quarters of revenue and nearly all of its profit.

His remarks come as Vale reported a net loss of $6.45 billion in the quarter, its largest since Brazil’s government sold control to investors in 1997 and more than twice the shortfall of the year-earlier period. The loss was due to non-recurring events such as a one-time income tax settlement and the write-off of an abandoned potash project in Argentina.

Bob Rae on progress in the development of the Ring of Fire – interviewed by Markus Schwabe (CBC Sudbury Morning North – February 27, 2014)

February 28, 2014

http://www.cbc.ca/sudbury/ Are we moving closer to mining in the Ring of Fire mineral deposit in the far north? We asked Bob Rae for his opinion on the matter. The former politician represents First Nations interests in the region. Click here for interview: http://www.cbc.ca/morningnorth/past-episodes/2014/02/27/bob-rae-on-progress-in-the-development-of-the-ring-of-fire/

Frustration boils over at meeting in Sudbury – by Carol Mulligan (Sudbury Star – February 28, 2014)

February 28, 2014

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

Executives with two companies with the largest stakes in the Ring of Fire say they would rather live with decisions by the Government of Ontario they disagree with than have the province make no decisions at all about transportation and other key issues.

Frustration over the slow pace of developing the Ring of Fire boiled over at a meeting Thursday at Dynamic Earth at which a report was unveiled highlighting the economic benefits of mining the chromite deposits in the James Bay Lowlands.

The report, Beneath the Surface: Uncovering the Economic Potential of Ontario’s Ring of Fire, was presented to an invitation-only crowd at an event sponsored by the Greater Sudbury Chamber of Commerce.

The report by the Ontario Chamber of Commerce shows the Ring of Fire would generate up to $9.4 billion of gross domestic product in the first 10 years, create up to 5,500 jobs annually and generate $2 billion in government revenue. The executive director of the Sudbury Area Mining Supply and Service Association, Dick de Stefano, asked a panel of five people, including executives from Cliffs Natural Resources and Noront Resources, if they were ready for the province to decide what type of transportation system should be built.

Residents anxious for redeveloped mine property – by Ron Grech (Timmins Daily Press – February 28, 2014)

February 28, 2014

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – As a neighbouring property owner, Luc Murray has a vested interest in the long-term plans for the Hollinger mine pit site.

“This is a piece of land that nobody can use right now,” said Murray, whose business, OK Tire and Auto Service, sits directly adjacent to the mine pit property. “It’s land that is right in the middle of the city. It’s a big blank spot there.”

For Goldcorp Porcupine Gold Mines, the open-pit project represents an opportunity to profit from some of the residual lower grade ore that is still buried there. Murray sees a longer-term benefit with some old hazards being removed and the land being converted into a greenspace the whole community could enjoy.

“The way they are doing it right now, it’s going to be beneficial for everybody,” said Murray, who was among the members of the public who attended an open house hosted by Goldcorp at the McIntyre Ballroom Thursday.

Trish Buttineau, co-ordinator of communications and corporate social responsibility, explained, “Even though we’ve just started mining, we’re already starting the planning for closure and the hope is the community will get together and give us their ideas and tell us what they’d like to see.

U.S. Navy eyes greater presence in Arctic – by Andrea Shalal (Reuters India – February 28, 2014)

February 28, 2014

http://in.reuters.com/

WASHINGTON – (Reuters) – The U.S. Navy is mapping out how to expand its presence in the Arctic beginning about 2020, given signs that the region’s once permanent ice cover is melting faster than expected, which is likely to trigger more traffic, fishing and resource mining.

“The Arctic is all about operating forward and being ready. We don’t think we’re going to have to do war-fighting up there, but we have to be ready,” said Rear Admiral Jonathan White, the Navy’s top oceanographer and navigator, and director of the Navy’s climate change task force.

“We don’t want to have a demand for the Navy to operate up there, and have to say, ‘Sorry, we can’t go,'” he said.

The Navy this week released an “aggressive” update to its 2009 Arctic plan after a detailed analysis of data from a variety of sources showed that seasonal ice is disappearing faster than had been expected even three years ago.

The document said the Bering Strait was expected to see open water conditions about 160 days a year by 2020, with the deep ocean routes of the Transpolar transit route forecast to be open for up to 45 days annually by 2025.

Vale Rallies as Chinese-Led Iron Ore Demand Boosts Earnings – by Juan Pablo Spinetto (Bloomberg News – February 27, 2014)

February 27, 2014

http://www.bloomberg.com/

Vale SA (VALE), the world’s largest iron-ore producer, rallied the most in three weeks after fourth-quarter earnings before taxes and other items beat estimates on rising prices for the steel-making material.

Vale rose as much as 2.7 percent to 29.81 reais in Sao Paulo today, the most intraday since Feb. 6, before closing at 29.31 reais. The gain pared its loss this year to 10 percent. The benchmark Ibovespa index of Brazilian shares rose 2.2 percent.

The world’s third-largest mining company is increasing cash generation after Asian-led demand pushed up average iron-ore prices 12 percent in the fourth quarter. While iron ore declined this quarter because of rising supplies and monetary constraints in China, it will remain at profitable levels for Vale for a sustained period of time, Executive Director for Ferrous and Strategy Jose Carlos Martins said.

“The price will continue to be very favorable and very profitable for Vale,” Martins told analysts on an earnings conference call today. “There is a very strong resistance in price in the range of local Chinese iron-ore costs.”

Asian steel giants flexing muscle in Canada’s Labrador Trough – by Mariaan Webb (MiningWeekly.com – February 28, 2014)

February 27, 2014

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

The booming commodity prices of the last decade have sparked considerable interest in the Labrador Trough – Canada’s main iron-ore district which extends through northern Quebec and Labrador – and while dozens of the junior developers that have flocked to the region are now struggling to finance their projects, international steel giants continue to flex their muscle in the region.

Steelmakers are increasingly investing in iron-ore mining assets and the resource of Canada’s main iron-ore production centre is a favourite among steel producers, which are seeking to reduce their reliance on the traditional centres, such as Brazil and Australia.

“Whereas many of the mining companies are struggling, we are seeing steelmakers from around the world, particularly Asia, investing in the Labrador Trough,” says Toronto-based analyst Adam Low, of Raymond James. The Canadian iron-ore district has attracted investment from all the major Asian steel-producing countries.

“You have one of India’s largest steelmakers, China’s first- and third-largest steelmakers, the world’s largest steelmaker, one of Japan’s biggest trading companies, Korea’s largest steelmaker and Taiwan’s largest steelmaker all investing in the Labrador Trough.

Dream of U.S. Oil Independence Slams Against Shale Costs – by Asjylyn Loder (Bloomberg News – February 26, 2014)

February 27, 2014

http://www.bloomberg.com/

The path toward U.S. energy independence, made possible by a boom in shale oil, will be much harder than it seems.

Just a few of the roadblocks: Independent producers will spend $1.50 drilling this year for every dollar they get back. Shale output drops faster than production from conventional methods. It will take 2,500 new wells a year just to sustain output of 1 million barrels a day in North Dakota’s Bakken shale, according to the Paris-based International Energy Agency. Iraq could do the same with 60.

Consider Sanchez Energy Corp. The Houston-based company plans to spend as much as $600 million this year, almost double its estimated 2013 revenue, on the Eagle Ford shale formation in south Texas, which along with North Dakota is one of the hotbeds of a drilling frenzy that’s pushed U.S. crude output to the highest in almost 26 years. Its Sante North 1H oil well pumped five times more water than crude, Sanchez Energy said in a Feb. 17 regulatory filing. Shares sank 7 percent.

“We are beginning to live in a different world where getting more oil takes more energy, more effort and will be more expensive,” said Tad Patzek, chairman of the Department of Petroleum and Geosystems Engineering at the University of Texas at Austin.

Canada’s biggest deal makers getting their swagger back – by Boyd Erman (Globe and Mail – February 27, 2014)

February 27, 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.

Confidence is the most precious commodity for deal makers, and without more of it 2014 could be a quiet year in the business of mergers and finance. Investment banking activity is tied to economic growth. When chief executives are positive about the outlook, and their companies are growing, they push to make transactions happen. At the moment, there’s not much push.

“In the M&A [mergers and acquisitions] space, there’s a lot of dialogue going on, but there doesn’t seem to be any kind of urgency to get transactions done,” said Jack Curtin, who heads Goldman Sachs Group Inc.’s Canadian operations. “People are going to be judicious.”

There are signs of increased optimism about global economic growth, manifested in a long bull run in U.S. stocks. But there are still questions, chiefly around commodity prices and economic growth in markets such as China.

Those questions are especially crucial in a resource-driven market like Canada.

The untold story of Keystone: How one Nebraska farmer killed the pipeline – by by Luiza Ch. Savage (Maclean’s Magazine – January 27, 2014)

February 27, 2014

http://www2.macleans.ca/

Two thousand miles west of Washington, D.C., on the vast Nebraska prairie, you can drive for hours on roads that were once wagon trails, and rarely pass another car or truck. When one finally comes by, the driver will usually give you a little wave, like a lone hiker saluting another on a backcountry trail. And if you pull over to the side of that road, shouldered with wild sunflowers in late summer, a perfect stranger will worry enough about your stopped vehicle to circle back half an hour later to make sure that you are okay.

It was here, among the soft-spoken corn farmers and the tight-lipped cattle ranchers, and the billboards proclaiming, “Nebraska . . . the good life,” that troubles for the Keystone XL pipeline began.

The case for TransCanada’s proposed pipeline from the Alberta oil sands, through America’s heartland, to refineries on the Gulf Coast of Texas was simple: the Texas refineries depended on declining supplies of “heavy” crude oil from Mexico and Venezuela. The landlocked oil sands had growing, cheap supplies of the kind of crude in which the refineries specialized. All that was lacking was the pipeline to get it there.

Because the pipeline crossed the border, it required a permit from the president. George W. Bush had approved TransCanada’s first Keystone pipeline, from Alberta to the U.S. Midwest, in less than two years. Obama quietly okayed another oil sands pipeline to the Midwest, the Alberta Clipper, in 2009.

Miners prospect for acquisitions – by Rachelle Younglai – (Globe and Mail – February 27, 2014)

February 27, 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.

It’s shaping up to be a buyer’s market in the Canadian mining industry. After last year’s rout – when miners had to put acquisition activity on hold to focus on cost cutting – interest in potential takeovers is starting to pick up as companies’ shares hover at multiyear lows.

“The pendulum is starting to swing,” said Egizio Bianchini, co-head of BMO Nesbitt Burns’ mining franchise. “Generally, buyers believe that we are in a bit of a buyer’s market.”

Miners spent last year improving their financial position and are now more comfortable operating in an environment of lower commodity prices. And with plunging metal prices hammering the market capitalization of mining companies, many players are on the hunt for deals.

Even companies under pressure to improve their balance sheets are looking at possible purchases. “You never get to choose the timing of an acquisition opportunity as perfectly as you may like,” said David Pathe, chief executive of Sherritt International Corp., a nickel and energy company which has made paying down debt a priority but is also scouring the landscape for a nickel asset.

COLUMN-Asia utilities in dicey bet on cheap, low-rank Indonesia coal – by Clyde Russell (Reuters India – February 27, 2014)

February 27, 2014

http://in.reuters.com/

Clyde Russell is a Reuters market analyst. The views expressed are his own.

SINGAPORE, Feb 27 (Reuters) – Many power utilities in Asia appear to be making what seems like an increasingly risky bet: that poorer quality coal from Indonesia will remain cheap and plentiful.

Generators from India to Southeast Asia and China are building or planning new coal-fired units designed to run on low-rank, sub-bituminous coal from Indonesia. Such coal has been growing in supply and currently trades at a discount of 24 percent to higher quality bituminous coal from rival supplier Australia.

But two factors are calling into the question the wisdom of building long-term projects reliant on low-rank Indonesian coal.

The first is that the Indonesian government is planning new rules and taxes designed to increase its revenue from coal mining, and the authorities appear not to mind if the result of these policies is a sharp reduction in exports.

Taseko New Prosperity Mine Rejected By Federal Government – by Canadian Press (Huffington Post – February 27, 2014)

February 27, 2014

http://www.huffingtonpost.ca/

Canadian Press – VANCOUVER – The federal government has again rejected a proposed $1.5-billion, open-pit, gold-copper mine in British Columbia’s Interior over environmental concerns, a decision critics are celebrating but one the company vows to fight.

Environment Minister Leona Aglukkaq said Wednesday evening that her ministry has rejected the New Prosperity Gold Copper Mine for a second time because it will cause significant adverse environmental effects that can’t be mitigated.

Just four years ago, the ministry rejected the project because Taseko Mines Ltd. (TSX:TKO) planned to drain a lake to use as a tailings pond. “The Government of Canada will make decisions based on the best available scientific evidence while balancing economic and environmental considerations,” said Aglukkaq in a news release.

“The government will continue to make responsible resource development a priority and invites the submission of another proposal that addresses the government’s concerns.”

Gold diggers: Yukon adventurers pull money from the ground in hit docu-series – by Ruth Myles (Vancouver Sun – February 25, 2014)

February 27, 2014

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

Popcorn bowls, Tupperware containers, cereal bowls — you name it, the miners on Yukon Gold use it to store the riches they pull out of the ground.

Janine Johnson is particular to an empty Kraft peanut-butter jar, the plastic kind with the green twist-off lid. On the second episode of the series, she and her husband Cam use it to tote their latest findings into Dawson City to have it weighed. The gold — which takes up about a quarter of the jar — comes in at just a hair under 70 oz (almost 2 kg), netting them a cool $90,000.

“We use everything to hold our gold, as long as we feel safe. We have it in old tobacco cans, in snuff cans, whatever works,” Cam Johnson says. “You’ll go see the banker in the Dawson and he’ll say, ‘Only you gold miners would walk down the street with $150,000 worth of gold but not even think about it.’”