Republic of Mining

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.”

HudBay’s $428-million hostile bid for Augusta provides jolt to Canadian mining sector – by Peter Koven (National Post – February 11, 2014)

February 11, 2014

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

TORONTO – For the second time this year, a large hostile bid has breathed much-needed life into the Canadian mining sector.

HudBay Minerals Inc.’s $428-million offer for Augusta Resource Corp. has prompted strong speculation of a rival bid from analysts and investors. It has been months since the sector had a major takeover battle with multiple bidders, and the bid is seen as a potential catalyst for further M&A activity. “All of a sudden it lights a fire under everyone in this space,” said John Stephenson, senior vice-president at First Asset Investment Management.

The HudBay offer comes a few weeks after Goldcorp Inc. launched a $2.6-billion hostile bid for Osisko Mining Corp. The two moves have brought energy back into the mining space, which has suffered over the past 18 months because of lacklustre commodity prices, writedowns and investor disinterest.

Both the Augusta and Osisko bids reflect current realities in the sector: while they are priced well above the recent trading ranges of the stocks, they are worth fractions of what these companies traded at a few years ago.

If Barack Obama doesn’t approve the Keystone pipeline, another president will, says Stephen Harper – by Theophilos Argitis (National Post/Bloomberg News – February 11, 2014)

February 11, 2014

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

As far as Stephen Harper is concerned, history and economics carry far more weight in Canada-U.S. relations than whoever happens to occupy the White House at a given moment. That’s why Canada’s prime minister remains relatively unperturbed about the drawn-out Keystone XL pipeline review, maintaining its approval is “inevitable.”

In a wide-ranging interview on energy policy in his Ottawa office last month, Harper described how historical and economic forces and broad-based support for resource development determine whether projects like Keystone get built, rather than short-term political calculations. If Barack Obama doesn’t approve the pipeline, another president will.

“It is, in my judgment, a necessary and inevitable victory,” Harper said in a Jan. 16 interview as he awaited a State Department environmental assessment of the project. “I absolutely believe that. I can’t see how it will be otherwise.”

“It takes a lot of energy to repress and to block a decision that is clearly and overwhelmingly in the national interest of the country,” he said.

‘Mine-to-Close’ method best for managing mine-closure risks – Beale – by Dorothy Kosich (Mineweb.com – February 11, 2014)

February 11, 2014

http://www.mineweb.com/

Heavy data gathering, lab testing instead of field tests, and standards-based regulation may not be the best approach to sustainable mine closure, says mining hydrologist Geoff Beale.

RENO (MINEWEB) – Mining hydrologist Geoff Beale of Schlumberger Water Services is urging mining companies to “take careful consideration of closure when planning their initial and expanded site layoffs” to reduce the chance of being saddled with mine pollution liability issues in perpetuity.

In a presentation to the Northern Nevada Section of the Society for Mining, Metallurgy and Exploration Monday night, Beale noted that mine operators increasingly adopt a “mine to close” approach when planning their initial and expanded site layouts.

Beale reminded his audience that the controlled mine closure has only occurred within the past two decades, and that many of the mines entering the closure stage now were developed before closure regulations existed.

On Bay Street, a battered mining industry turns hostile – by Boyd Erman (Globe and Mail – February 11, 2014)

February 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.

There was a time when nothing was better than getting a hostile bid for your mining company shares. This is not that time. Hostile acquisitions are creatures of the extremes of the mining cycle. There are now two big ones outstanding in Canada, and there are likely going to be more. And it’s not going to be very much fun to be the target.

In better times, getting put into play is like winning a lottery. The hostile acquirer invariably starts a bidding war that ends in a top-dollar sale. Exuberant chief executives decide they have to have something and can’t stop raising their offers. Shareholders of Alcan Inc., Inco and Falconbridge Ltd. probably still haven’t spent their winnings, years after the last round of such sales.

Most of the CEOs who overpaid for those companies ended up pulling the ripcord on their golden parachutes.Now, at the bottom of the cycle, hostile offers usually result from a disconnect about value. Mining shares have plunged, and target boards don’t want to think about selling at such low prices. Frustrated acquirers give up on negotiations and send their bid directly to shareholders.

NEWS RELEASE: Royal Nickel Announces Management Changes

February 11, 2014

Tyler Mitchelson Resigns as CEO, Remains as a Director

TORONTO, Feb. 11, 2014 /CNW/ – Royal Nickel Corporation (“RNC”) (TSX: RNX) today announced Tyler Mitchelson, President & CEO of RNC, has decided to leave RNC in order to take a position with Anglo American Corporation. Mr. Mitchelson will remain as a Director of RNC.

“We thank Tyler for the four years he has led RNC and the significant work he has done to advance the Dumont Nickel Project. We wish him well in his new position,” said Scott Hand, Executive Chairman of RNC.

Effective today, Mark Selby, SVP Business Development at RNC since 2010, has been appointed Interim CEO. Mr. Selby possesses more than 20 years’ experience in finance and corporate development at resource companies, including Inco Limited and Quadra Mining. Mr. Selby will be able to call on Executive Chairman, Scott Hand as well as Directors Peter Goudie and Peter Jones. Mr. Hand is the former Chairman & CEO of Inco which was a major participant in the nickel industry before it was acquired by Vale in 2007. Mr. Jones was President & COO of Inco and Mr. Goudie was Executive Vice-President for Sales and Marketing for Inco with extensive experience in Asia. Mr. Hand, Mr. Goudie and Mr. Jones have been Directors of RNC since 2008.

“The Dumont Nickel Project is a world-class project that will be needed to meet the growing global demand for nickel,” said Mr. Hand.