Twitter

More disciplined M&A on tap for gold miners in 2014 – by Alisha Hiyate (Mining Markets – March 10, 2014)

http://www.miningmarkets.ca/

When the market was hot from 2010 through 2012, mid-tier Alamos Gold (TSX: AGI; NYSE: AGI) stayed on the sidelines of an otherwise active M&A scene because valuations for companies were “through the roof,” says the company’s president and CEO, John McCluskey.

“The only way you could step into that market and feel at all comfortable is if you felt gold was going to US$3,000 an oz. or something – which we did not.”

More recently, as the gold price started to cool, Alamos found valuations were at last coming down to more reasonable levels. Last year, the debt-free company, which produced 190,000 oz. of gold at its Mulatos gold mine in Mexico in 2013, was involved in three takeover bids.

However, despite the decline in valuations since 2012, McCluskey says it’s still difficult to find compelling transactions.

“Generally we’re trying to acquire public companies and there’s a sufficient amount of information in the public realm for us to do a desktop analysis,” he says.

Read more

COLUMN-Sentiment diverges from fundamentals on China commodity imports – by Clyde Russell (Reuters U.S. – March 11, 2014)

http://www.reuters.com/

LAUNCESTON, Australia, March 11 (Reuters) – The reaction of commodities to the Chinese trade data show that sentiment and fundamentals are diverging, with the fear trade winning so far.

No matter which way you try and slice and dice it, China’s imports of commodities in the first two months of the year have been surprisingly strong.

But the market has chosen rather to focus on the February slide in merchandise exports from the world’s second-biggest economy, concluding that all isn’t well and therefore commodity imports will tumble in the coming months.

Add to this the view that much of the strength in imports of copper and iron ore was related to accessing financing rather than underlying demand, and suddenly you can turn large gains in imports into something negative for future demand.

The issue is whether the market is reading it correctly and the outlook for Chinese commodity demand is weak, or whether a more modest pullback in import growth is likely in the months ahead.

Read more

Marching Into An Active Volcano With The Sulfur Miners Of Ijen, Indonesia – by Mark Johanson (International Business Times – March 11 2014)

http://www.ibtimes.com/

“You lost sir? Follow us.”

Two men emerge from the dark beside me like a mirage, puffing clove cigarettes and twirling large bamboo shoulder baskets over their heads. Their names, they say, are Addis and Sukarno, and they will show me the path into Ijen crater.

It’s a few minutes after 4 a.m., and not five minutes earlier, my “English-speaking guide,” [who didn’t speak a lick of English], had dropped me at a grassy knoll in this remote corner of East Java’s puffing interior with one less-than-illuminating instruction: “walking.” With that, he pointed along a line perpendicular to the road and drove off.

The facts about the path ahead, as I know them, are as follows: The long walk into Ijen crater will include sharp drops, slippery steps and a toxic lake that claimed the life of a French backpacker a few years ago. At 2,600 meters (8,530 feet), Ijen is also a working mine where men carry up to 100 kilos (220 pounds) of sulfur by hand out of the noxious crater and down the volcano’s outer slopes to a weigh station as many as three times a day, six days a week.

Read more

UPDATE 2-Barrick to sell part of its stake in African Barrick – by Euan Rocha (Reuters U.S. – March 10, 2014)

http://www.reuters.com/

(Reuters) – Barrick Gold Corp said on Monday it plans to sell about 13.5 percent of its holdings in its majority-owned subsidiary African Barrick Gold .

Toronto-based Barrick, which currently owns a roughly 303.25 million shares in African Barrick, is selling 41 million shares. The gold miner will still own a majority stake of just over 60 percent in the Africa-focused miner following the close of the transaction.

Barclays analyst Farooq Hamed believes the stake sale will result in proceeds of just over $200 million that will help bolster the gold miner’s balance sheet and allow it to trim its debt load.

The move is the latest attempt by the world’s largest gold miner to trim its asset base and reduce its exposure to higher cost assets. In 2012, the company attempted to sell a part, or all of its interest in African Barrick Gold to China National Gold Group, but those talks fell apart last year.

The company has since gone on to sell a number of non-core assets. In January, Barrick Gold agreed to sell its Kanowna gold mine in Western Australia to Northern Star Resources for A$75 million.

Read more

Afghanistan’s Minerals Await Vital Railroads – by Gopal Ratnam (Bloomberg News – March 6, 2014)

http://www.businessweek.com/

At the Naibabad freight terminal near the northern Afghan town of Mazar-e-Sharif, workers rush to unload wheat and construction materials from Uzbekistan that have arrived on Afghanistan’s only railroad. Trucks will have to carry the cargo through the icy Hindu Kush mountains to the rest of the country because Afghanistan, which encompasses almost 252,000 square miles, has only 47 miles of train track.

The government has grand plans to change that by constructing a 2,237-mile national rail line to transport not just food and other goods but something more vital to the struggling nation’s economy: its vast natural resources, including iron, copper, and gold.

In 2010 the Pentagon estimated Afghanistan is sitting on mineral deposits worth about $1 trillion. In 2011 the Afghan government put the value at $3 trillion. This potential wealth has remained largely untapped, because there’s no way to safely and reliably ship the minerals from the country’s mines.

Afghanistan’s 25-year economic plan calls for connecting the country to established rail lines that run through Asia, Europe, and the Middle East.

Read more

‘Dr. Copper’ sinks to eight-month low amid concerns about China – by Peter Koven (National Post – March 11, 2014)

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

Copper goes by the nickname “Dr. Copper” because history shows the red metal is a leading indicator of the global economy’s health. Unfortunately, it hasn’t been telling us anything good lately.

The red metal has recently been in a swan dive, dropping close to 10% since mid-February and falling steeply in the past couple of trading days. The key futures contract on Monday briefly sunk below US$3 a pound, its lowest level in eight months.

As is usual with commodities, China appears to be the culprit. Investors were spooked by recent Chinese trade data that showed a stunning 18.1% year-over-year drop in exports in February. That left a trade deficit of US$23-billion.

“It was a big number that probably surprised people,” said Kerry Smith, an analyst at Haywood Securities.

There was already a lot of concern in the market about the Chinese economy, particularly after its first-ever corporate bond default last week. But copper, much like China, has shown remarkable resilience in recent years.

Read more

SA continues to slide in ferrochrome stakes – by David McKay (Miningmx.com – March 11, 2014)

http://www.miningmx.com/

[miningmx.com] – SOUTH Africa’s share of the world ferrochrome market shrank further in 2013 despite efforts by the industry to have the country’s government consider protective trade measures.

Merafe Resources said in comments to its year-end results, in which comprehensive income increased more than 300% to R210.6m (2012: R48.9m), that South Africa’s share of world ferrochrome production fell to 32% from 34% in 2012.

“Chrome ore imports into China increased by 30% year-on-year to 12.1 million tonnes (mt), of which 6.7mt (2012: 4.5mt) was from a South African source,” said Merafe Resources. Global ferrochrome production was 10.2mt in 2013, 8% higher than in 2012. Ferrochrome is used in the manufacture of stainless steel and is therefore highly geared to industrial production growth.

As early as 2011, Merafe Resources raised concerns about the export of cheap supplies of chrome ore, partly by platinum producers which mine chrome as a by-product, to China. The contention was that this allowed the Chinese market to grow while the local market struggled, especially amid rising power and labour costs in South Africa.

Read more

RIP commodity supercycle, 2002-2014 – by Scott Barlow (Globe and Mail – March 11, 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.

Metals prices in China were crushed Monday as the country’s economic numbers continued to drive nails into the coffin of a global commodity supercycle that has enriched so many Canadians since 2002.

Copper prices in Shanghai fell 5 per cent Monday after the government released trade statistics showing an 18.1-per-cent year-over-year decline in exports. The copper price now stands 8.6 per cent below highs hit on Feb. 17. Commodity price carnage was also apparent in iron ore. The spot price fell 8.3 per cent Monday, and is now lower by 20 per cent year to date.

The export data was extremely disappointing to economists who had predicted a 7.5-per-cent increase. Seasonal factors were definitely in play – Chinese New Year celebrations always skew the early-year data. Even so, the number is easily soft enough to confirm the economic weakness suggested by a March 2 PMI report that showed a contraction in manufacturing activity.

Economists expect that China’s gross domestic product growth will reach the government target of 7.5 per cent this year, so at first glance the recent volatility in commodity markets makes little sense.

Read more

COMMENT: Chilean court cancels Pascua-Lama fine, retains suspension – by Marilyn Scales (Canadian Mining Journal – March 10, 2014)

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

As we are used to hearing – there is good news and bad news. This time Toronto’s Barrick Gold is on the receiving end of both, thanks to the environmental court in Chile. At issue is the future of the expensive Pascua-Lama gold project that straddles the Chile/Argentina border.

Last week, Chile’s second environmental court annulled the fines imposed by a local environmental regulator (SMA). The amount is small – $16 million compared to the projected $8.5-billion cost of the project. The higher court cited “errors and illegalities” in the SMA’s resolution, and removed the fines. The SMA will now consider each of 23 charges separately, and readers can expect that the fines will be re-imposed.

That was the good news. Now the bad. At the same time the court upheld the suspension of work order imposed on the Chilean portion of Pascua-Lama. The only project Barrick has been allowed to work on is the water management system.

The Pascua-Lama project has been one of the most difficult any mining company tried to develop.

Read more

Rejected in 2008, Kemess gold-copper mine proposal on table again – by Wendy Stueck (Globe and Mail – March 10, 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.

VANCOUVER — A mine rejected in 2008 on environmental grounds is back in play, with a different company at the helm and plans for an underground, rather than an open-pit, operation.

Toronto-based AuRico Gold filed a project description for the Kemess Underground Mine Project with the B.C. Environmental Assessment Office last month, reviving plans for a gold-copper deposit about 250 kilometres north of Smithers and about 6.5 kilometres north of former producer Kemess South Mine, which was in production from 1988 to 2011.

In the years leading up to Kemess South being depleted, former owner Northgate Minerals made plans to extend operations by developing the nearby Kemess North deposit. Plans at the time called for disposing of tailings and waste rock from expanded operations in Duncan Lake, also known as Amazay Lake.

That plan did not sit well with aboriginal groups that had historic and cultural connections to the lake. In 2007, a federal review panel concluded Kemess North as it was then designed was not in the public interest “because of significant adverse environmental, social and cultural effects, some of which may not emerge until many years after mining operations cease.”

Read more

NASA is offering $35,000 in awards to asteroid hunters – by Cecilia Jamasmie (Mining.com – March 10, 2014)

http://www.mining.com/

The US space agency, in partnership with asteroid-mining firm Planetary Resources, said Monday it will give away $35,000 in awards over the next six months to citizen scientists who can develop improved algorithms to find space rocks that could pose a threat to our planet — or at least be of interest to scientists and cosmic mineral prospectors.

The first contest in the series will kick off on March 17. Prior to the kick off, competitors can create an account on the contest series website and learn more about the rules and different phases of the competition.

Managed by the NASA Tournament Lab, the entire contest series runs through August and is the first contest series contributing to the agency’s Asteroid Grand Challenge.

“For the past three years, NASA has been learning and advancing the ability to leverage distributed algorithm and coding skills through the NASA Tournament Lab to solve tough problems,” said in a statement Jason Crusan, NASA Tournament Lab director. “We are now applying our experience with algorithm contests to helping protect the planet from asteroid threats through image analysis.”

Read more

REFILE-Lower iron ore prices here to stay – Citi – by James Regan (Reuters U.S. – March 11, 2014)

http://www.reuters.com/

(Reuters) – Iron ore prices are set to remain at lower levels given increased supplies of the steel-making ingredient, although the speed of their recent slump has taken the market by surprise, Citigroup said on Tuesday.

Spot iron ore prices posted their biggest one-day fall in more than four years on Monday after China’s trade balance swung into deficit and amplified fears of a slowdown in the world’s second-biggest economy.

“The broad move lower is here to stay,” Ivan Szpakowski, commodities strategist at Citi Research, said at an iron and steel conference in Perth.

“Prices are moving on a cyclical basis due to the increase in supply. The question had been the timing of it, and the rapidity of the fall, that’s something that had not been expected,” Szpakowski said. Iron ore for immediate delivery to China .IO62-CNI=SI fell 8.3 percent, its largest one-day percentage fall in 4-1/2 years, to $104.70 a tonne, its weakest since October 2012, according to data compiled by The Steel Index.

Read more

First Nation takes proactive approach with mining companies – by Jonathan Migneault (Northern Ontario Business – March 10, 2014)

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.

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 coordinator, 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 low of groundwater, plumes of air pollution, and provide information on the First Nation’s territory, species at risk, and traditional hunting territory.

Read more

Andrew ‘Twiggy’ Forrest takes billion-dollar hit as iron ore tumbles – by James Thomson (Sydney Morning Herald – March 10, 2014)

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

Andrew ‘Twiggy’ Forrest knows better than most how movements in commodity prices can cause havoc with your bank balance. With iron ore prices falling to its lowest in close to a year, shares in Fortescue Metals Group tumbled 8.38 per cent to $4.98 in initial trade on Monday morning, wiping around $500 million off the value of Forrest’s stake.

Since February 21, when FMG’s shares broke through $6 for the first time since early 2012, the stock has dropped by almost 15 per cent, broadly in line with the fall in the iron ore price. That drop has wiped around $1.3 billion off the value of Forrest’s stake in a matter of 11 trading days. His stake is now worth $5.1 billion.

Calculating the impact of the iron ore price movement on other iron ore moguls such as Gina Rinehart and Angela Bennett isn’t as transparent, although given they both rely on royalties paid by Rio Tinto – which mines tenements owned by their fathers, Lang Hancock and Peter Wright – the share price of that company can be seen as a very rough proxy.

In morning trade, Rio shares dipped 4.23 per cent to $62.19. Since February 21, Rio’s stock is down 11.4 per cent. BHP Billiton shares lost 3.15 per cent this morning, to $36.53. The stock is down 6.7 per cent since February 21.

Read more

Expert Mining Panel Discusses Possibility Of Reaching ‘Peak Discovery’ – by Alex Létourneau (Kitco News – March 10, 2014)

http://www.kitco.com/

(Kitco News) – During the 82nd Prospectors and Developers Association of Canada convention in Toronto last week, Exploration Insights founder Brent Cook rounded up some mining heavyweights to look into the possibility of having reached peak discovery in the mining industry.

Kitco News’ informal panel included Catherine McLeod-Seltzer, chairman of Bear Creek, Alex Davidson, director with Yamana Gold, Miles Thompson, CEO of Lara Exploration.

While the guests covered a range of topics linked to where the mining industry is at, and where it could be heading, the idea that the mining industry will be a low-grade driven sector moving forward triggered a discussion.

“There’s always a change going on in the mining industry,” Davidson said. “We get smarter about where we explore, we can look from further away, we can look in different countries, our risk tolerance is a gazillion times more than it was 20 or 30 years ago.

“So I think we are going to find more deposits, they may be deeper which would require higher grade, or we’ll refine the mining methods to get cheaper mining methods, but I think there’s as much potential, in certain areas, as there ever has been.”

Read more