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John (Jack) F. McOuat (1933-2013) – 2014 Canadian Mining Hall of Fame Inductee

The Canadian Mining Hall of Fame was conceived by the late Maurice R. Brown, former editor and publisher of The Northern Miner, as a way to recognize and honour the legendary mine finders and builders of a great Canadian industry. The Hall was established in 1988. For more information about the extraordinary individuals who have been inducted into the Hall of Fame, please go to their home website: http://mininghalloffame.ca/

John (Jack) McOuat helped advance many mines and mineral projects around the world as a founding partner of Watts, Griffis and McOuat (WGM), Canada’s longest-runningindependent firm of geological and mining consultants. The trailblazing geological engineerrose to prominence for overcoming challenges at remote and foreign projects, notably construction of a copper-zinc mine in Saudi Arabia in less than 11 months. He supported development of several major mines in Canada’s Far North, including Nanisivik and Raglan, and was renowned for his ability to review and select favorable projects and geological districts worldwide.

http://www.pendaproductions.com/ This video was produced by PENDA Productions, a full service production company specializing in Corporate Communications with a focus on Corporate Responsibility.

For 20 years, McOuat was the lead negotiator on behalf of mining groups in creating joint ventures to explore prospective land packages held by various Alaskan native corporations for mutual benefit. He provided sage counsel to companies pursuing growth and investment opportunities, best exemplified by the prescient participation of Teck Resources in the emerging Voisey’s Bay nickel project. He elevated the status of the industry that had sustained his career for more than 50 years, and helped introduce and promote its greatest accomplishments to the world.

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COLUMN-Indonesia bauxite ban slow-burn issue for aluminium – by Clyde Russell (Reuters U.S. – January 14, 2014)

http://www.reuters.com/

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

LAUNCESTON, Australia, Jan 15 (Reuters) – The immediate impact of Indonesia’s ban on exporting unprocessed mineral ores has been felt in nickel markets, but the slow burn, and potentially larger, may be in aluminium.

London Metal Exchange three-month nickel jumped 7.4 percent between the close on Jan. 9 and Jan. 14, when it ended at $14,340 a tonne. In contrast, London aluminium futures barely nudged up 0.6 percent over the same three-day trading period, and the benchmark contract in Shanghai weakened by 0.6 percent.

It may well be that the market is accurately reflecting more immediate concern over the supply of nickel, since Indonesia supplies about 13 percent of the world’s mined nickel.

But the likelihood is that any loss of Indonesian cargoes will act merely to lower the available surplus of nickel, suggesting that the current rally may not be sustained. However, the story with aluminium may be slightly different, at least over the medium to long term.

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Shrugging off China risks, Australia miners dig deep for more iron ore – by James Regan (Reuters India – January 15, 2014)

http://in.reuters.com/

SYDNEY, Jan 15 (Reuters) – Australian miners shoveled record tonnages of iron ore in the December quarter, supported by billions of dollars worth of expansion plans coming on stream and despite signs of weakening demand from top consumer China.

Iron ore continues to generate big returns even as prices fall, and miners in Australia – the world’s biggest supplier – are counting on economies of scale to maintain profits for the steel making material.

Production data from Rio Tinto, BHP Billiton and Fortescue Metals Group will be released over the next two weeks, but port data already shows record tonnages were shipped in the last quarter even as Chinese demand lost steam.

Chinese iron ore purchases fell 5.6 percent to 73.4 million tonnes in December, down from a record 77.8 million in November and ore prices have dipped to a six-month low.

And weaker steel prices have prompted some mills to reduce production, putting China’s average daily crude steel output at 1.961 million tonnes in late December, the first time the pace fell below 2 million tonnes since last February.

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Goldman’s Currie still looking for $1050 gold, bearish on all commodities – by Lawrence Williams (Mineweb.com – January 15, 2014)

http://www.mineweb.com/

Goldman Sachs’ Jeffrey Currie remains bearish on virtually all commodities, but particularly so on gold reiterating his prediction of last year that gold will fall to $1050 by end 2014.

LONDON (MINEWEB) – In a new interview with CNBC, Goldman Sachs Head of Commodities Research, Jeffrey Currie, was nothing but consistent in his 2014 gold price forecast and is sticking to his $1050 target for gold by end 2014 – a figure he first came up with in the first half of last year. Thus he feels that gold’s relatively strong start to the current year is likely to be shortlived and, as in 2013, gold will likely shed value throughout 2014.

Now, the principal problem for gold bulls with Currie’s forecasts is that they can tend to be self-fulfilling prophecies given the God-like status of Goldman Sachs in financial markets. Currie famously told clients to sell gold short in April last year – just two days before many big gold investors seem to have followed this advice and the gold price plunged.

Later in the year, in October, Currie told a conference panel in London that gold had to be a ‘slam dunk sell’ with the U.S. Fed likely to begin its tapering programme and reduce its $85 billion a month bond buying programme once the then prevalent budget impasse ended. This too generated gold price weakness, although perhaps not to the extent of his earlier ‘short gold’ call.

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Goldcorp launched hostile bid for Osisko after repeated rejections – by Rachelle Younglai (Globe and Mail – January 15, 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.

Five years of thwarted efforts to negotiate a friendly deal with Osisko Mining Corp. pushed Vancouver-based Goldcorp Inc. to launch a hostile $2.6-billion bid for its smaller rival this week.

According to Goldcorp’s formal bid filings on Tuesday, the miner describes how Montreal-based Osisko repeatedly rejected offers to merge and refused to provide key information after the companies signed a confidentiality agreement in the summer of 2008.

Calls to Osisko requesting comment were not returned. Goldcorp chief executive Chuck Jeannes has wanted to get his hands on Osisko’s giant Canadian Malartic mine in Quebec since 2008, when he was in charge of finding new projects as Goldcorp’s executive vice-president of corporate development.

In September of 2008, both Goldcorp and Osisko’s shares were volatile amid fallout from the U.S. housing crisis. Osisko, whose stock dropped as low as $1.86 a share, asked Goldcorp whether it would buy a small stake in the miner.

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Osisko bid leaves Quebec with much to lose – by Sophie Coustineau (Globe and Mail – January 15, 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.

MONTREAL — Like a big rock that fell in a puddle of grimy slush, Goldcorp Inc.’s takeover offer for Osisko Mining Corp. has splashed Quebec Inc. in the face.

With the prospective loss of head office jobs and consultant work, hostile takeovers are never greeted like a cup of warm cocoa. But there is even more unease this time around.

Osisko is more than your regular mid-tier producer. It is Quebec’s biggest gold producer and the province’s best-known mining company – for some good and not so good reasons.

Its main gig is the Canadian Malartic gold mine, the country’s biggest open-pit mine that was dug smack in the middle of a small town in the northwestern Quebec region of Abitibi. The designing of this mine gave a new meaning to the “not in my backyard” knee-jerk reaction.

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Celebrity activism often oily (Winnipeg Free Press – January 15, 2014)

http://www.winnipegfreepress.com/

Alberta’s oilsands are an ugly blight, a scar on the land and the single biggest emitter of greenhouse gases in Canada. The mining operations to extract the thick bitumen that is converted into crude oil has also been linked to the exploitation of aboriginals, environmental hazards, the death of wildlife and even cancer.

That’s one side of the story, although many of the facts are disputed. On the flip side, Alberta’s oil lands contain the third-largest reserves of oil in the world, after Saudi Arabia and Venezuela, some 170 billion barrels buried in the sand. More than 10 per cent of Alberta’s workforce, including nearly 2,000 aboriginals, are directly employed in the oil and gas extraction sector.

Royalties from the oilsands alone were worth $3.56 billion last year. The benefits are spread across Canada, particularly Ontario, where some 500 firms have provided services, technologies and products worth billions of dollars, supporting thousands of jobs.

Aboriginal companies earned more than $6 billion supporting the oil industry from 2002 to 2011.

These are just a few of the good-news stories, which, like the negative narratives, are also subject to debate and interpretation. Opponents of the oilsands, for example, point to the cyclical nature of the oil industry and say Alberta’s race to riches could drag down all of Canada when the boom collapses, as it always does.

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Gold mining: Squandered opportunity – by James Wilson (Financial Times – January 14, 2014)

http://www.ft.com/home/us

In the vast open pit at Goldstrike, electric shovels 20 metres tall crunch easily through the rock of northern Nevada. Three scoops fill a truck that hauls off 300 tonnes of gold-bearing ore, while underground teams nearby bore richer deposits at 25 metres a day.

The site, excavated over almost three decades, set Barrick Gold on its way to becoming the world’s largest gold miner. Yet more than 9,000km to the south, at a mine the company hopes will one day be as successful, things are very different.

Pascua Lama, 5,000 metres up in the Andes straddling Chile and Argentina, has been blighted by cost overruns and environmental disputes. Barrick has written off more than $5bn on the incomplete project: engineers are now putting it into what might be a long hibernation until the gold price – and the Canadian company’s balance sheet – recover.

The tale of two mines epitomises the profound change in fortunes for the gold mining industry. Barrick and its peers once enjoyed premium valuations as eager investors anticipated outsized returns from a climbing gold price. Profits flowed easily from the likes of Goldstrike’s 2m ounces of annual production in pro-mining and accessible jurisdictions such as Nevada. Now, mishandled investments and bloated projects have taken the shine off gold miners, which in recent years have generally underperformed the metal itself.

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New hoist, shaft hoped to push palladium miner toward profitability – by Ian Ross (Northern Ontario Business – January 13, 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. Ian Ross is the editor of Northern Ontario Business ianross@nob.on.ca.

North American Palladium (NAP) is taking a breather before taking another deep dive at its Lac des Iles (LDI) mine in northwestern Ontario. The Toronto-based miner has chosen to take a sideways approach to extend the longevity and curb spending at its flagship property, northwest of Thunder Bay.

At the same time it was commissioning a new shaft and hoist last October, NAP announced it was deferring a second phase of mine expansion in the belief there’s more mineable and cheaper cost ore closer to surface.

“We had some encouraging exploration results and it shows some potential near-surface opportunities that we are looking at closely and investigating,” said NAP president-CEO Phil du Toit, “because closer to surface helps operating costs.” The company reported a $5.2-million loss in its third quarter, an improvement over the $8 million lost during the same period in 2012.

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INTERVIEW-Gold miners should consider investors in reserves math-BlackRock – by Silvia Antonioli and Clara Denina (Reuters India – January 13, 2014)

http://in.reuters.com/

LONDON, Jan 13 (Reuters) – To attract shareholders in a climate of weaker bullion prices gold miners need to use more conservative price forecasts to determine how much ore is economical to extract, focusing on a return for investors rather than flat out production.

BlackRock fund manager Evy Hambro says miners have to shrug off habits formed when bullion prices were racing ahead in the last 12 years and to add a rate of return for shareholders when estimating production costs. Ideally that should be 20 percent.

At the beginning of each year gold miners calculate their reserves, or how much gold it is worth their while to produce, depending on their costs of production and based on average gold price assumptions.

This shift to refocus on shareholder return could mean reducing the amount of gold miners produce, but making profits on that output, rather producing gold that could end up being sold at a loss. Less focused miners could find themselves running short of investors.

Some investors have complained that miners’ price assumptions have been too optimistic in the last few years, while cost estimates have not included a rate of return for shareholders.

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Goldcorp bid as good as it gets for Osisko: analysts – by Liezel Hill and Andy Hoffman (Bloomberg News/Montreal Gazette – January 14, 2014)

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

TORONTO — Osisko Mining Corp. investors wagering on a higher bid than Goldcorp Inc.’s $2.6-billion offer have few places to look other than Goldcorp itself.

Osisko closed yesterday 5.5 per cent above the C$5.92 a share value of Goldcorp’s unsolicited cash-and-stock offer. Based on closing prices before the deal was announced, the premium was 15 per cent, which could be viewed as low compared with historical gold-sector standards and might need to be raised to win over Montreal-based Osisko’s shareholders, said Michael Parkin, an analyst at Desjardins Group.

“There is room for Goldcorp to raise the bid, if needed,” Parkin said yesterday in a note. “With our view of a low potential for an emergence of a white knight, we view Goldcorp’s initial bid as a smart starting point.”

Gold-mining companies are reassessing their businesses following the biggest annual drop in the gold price in more than three decades.  The companies are close to their cheapest relative to book value in at least two decades, according to data compiled by Bloomberg, providing opportunities for producers looking to replenish their reserves and acquire more profitable mines.

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Indonesia to China: Stop Buying Our Stuff – by Bruce Einhorn, Yoga Rusmana, and Eko Listiyorini (Bloomberg News – January 13, 2014)

http://www.businessweek.com/

Indonesian mines account for about 20 percent of the world’s nickel supply and a hefty chunk of the bauxite (used to make aluminum). China has been importing ever-larger amounts of these and other minerals from its Asian neighbor. Ironically, the more the Chinese buy, the angrier Indonesians become: Rather than purchasing refined minerals from Indonesia, China imports the raw rocks and does the processing itself, thus depriving Indonesians of jobs and tax revenue.

Miners took more than 250,000 tons of nickel out of Indonesian mines last year but processed only about 16,000 tons in-country, exporting the rest. Meanwhile, China refined more than half a million tons.

To make matters worse, through much of last year, China stockpiled Indonesian ore to hedge against any action the government in Jakarta might take to encourage more of the value-added work to stay home. The stockpiling makes Indonesian officials even more irritated. “I just returned from China, and I saw with my own eyes there are 3 million tons of bauxite and 20 million tons of nickel over there,” Industry Minister M.S. Hidayat told reporters on Jan. 8. “That’s what we want to stop.”

Indonesian President Susilo Bambang Yudhoyono is taking action do just that.

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Goldcorp seizes opportunity with hostile bid for Osisko – by Peter Koven (National Post – January 14, 2014)

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

TORONTO – By bidding $2.6-billion for Osisko Mining Corp., Goldcorp Inc.’s chief executive Chuck Jeannes is taking advantage of poor gold market conditions and going after a mine he has craved for years.

Goldcorp has held on-and-off negotiations with Osisko Mining Corp. for several years, and owned more than 10% of the stock between 2009 and 2011 before selling it. Osisko became a rising star in that period as it brought the giant Canadian Malartic mine in Quebec into production.

Back then, a takeover of Montreal-based Osisko was a strong possibility. Both Goldcorp and Kinross Gold Corp. owned large blocks of Osisko shares, and with gold prices rising and consolidation happening across the sector, the stock soared above $16. But no takeover bid materialized, and as gold prices plunged and Osisko struggled to ramp up production at Canadian Malartic, its shares fell back to earth.

That brought Mr. Jeannes and Goldcorp back into the picture. On Monday, the Vancouver-based miner launched a hostile bid for Osisko valued at just $5.95 a share. While Goldcorp would almost certainly raise its cash-and-stock offer to get a friendly deal, it is still a relative bargain.

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Hypocrite Neil [Oil sands] – by Ezra Levant (Toronto Sun – January 13, 2014)

http://www.torontosun.com/home

Neil Young, the ’60s-era folk singer and drug lifestyle icon, has come to Canada to lecture us about the oilsands.

Young was born in Canada, but left us to make it big in Los Angeles. Environmentalists know that’s North America’s smoggiest city, a city that runs on conflict oil imported from Saudi Arabia.

Young jetted here to wag his finger at us. And to have a series of Blame Canada concerts attacking the oilsands and all those who work in it.

Like any concert, Young’s requires an enormous number of staff and equipment. They drive a diesel-powered bus from town to town. Young is a multi-millionaire telling us that we can’t have well-paying oil and gas jobs.

His net worth is estimated to be $65 million. He’s not a one-percenter. He’s a one percenter of the one-percenters. So he can waste enormous sums of money on goofy schemes, like his custommade “Lincvolt,” a remade antique Lincoln with two motors in it: A regular combustion engine, plus an electric engine.

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Intel’s Ban on Conflict Minerals Wows National Geographic Photographer – by Tom O’Neill (National Geographic – January 9, 2014)

http://news.nationalgeographic.com/news/

Marcus Bleasdale has spent a decade documenting brutal conditions in eastern Congo’s mines. He calls the Intel announcement “huge.”

Intel’s announcement that every microprocessor that it ships will be made without conflict minerals from Africa hit both a personal and professional nerve for photographer Marcus Bleasdale.

Bleasdale has spent the past decade photographing in the Democratic Republic of the Congo (DRC) to bring the issue to the world’s eyes: workers, including children, toiling in brutal conditions in mines overseen by militias in eastern Congo. In October National Geographic magazine published “The Price of Precious,” which featured Bleasdale’s powerful photos dramatizing the suffering of people caught in the middle of the violent, illegal grab for minerals like tin, tungsten, and gold. They’re referred to as “conflict minerals” because of the ongoing strife between army commanders and militia chiefs over control of the mines.

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