Republic of Mining

PwC Global Mining Deals: 2013 Mid-year report: Deals in the dumps

September 6, 2013

http://www.pwc.com/ca/en/index.jhtml

Click here for the full report: http://www.pwc.com/ca/en/mining/publications/pwc-m-a-industry-briefing-2013-09-en.pdf

Despite a recent prolonged stretch of growth, the mining industry is fundamentally a cyclical business. It is especially during the downturns that companies are forced to remember this reality, and adjust to the risks.

So far in 2013, there have been a number of reminders — from falling commodity and equity prices to multibillion-dollar write downs across the sector. Neither gold’s reputation as a haven nor China’s steady hunger for commodities have been able to hold back the bears, as the global economy continues to try to find a solid footing.

NEWS RELEASE: Miners switch M&A roles & decrease traditional takeovers so far in 2013: PwC

September 6, 2013

http://www.pwc.com/ca/en/index.jhtml

Click here for the full report: http://www.pwc.com/ca/en/mining/publications/pwc-m-a-industry-briefing-2013-09-en.pdf

TORONTO, September 5, 2013 — A loss of confidence due to write-downs, market uncertainty, and falling commodity and equity prices across the mining sector dampened M&A activity in the first half of 2013 with deal volume dropping 31% from the same period in 2012, and deal values down 74% from January –June 2013, according to PwC’s Mining Deals Report.

“Even with the industry facing a confidence crisis and large mining companies delivering little profitability, limited deals are still getting done,” says John Gravelle, Global and Canadian Mining Leader, PwC. “Traditional takeovers of entire companies are taking a back seat to joint ventures and spinoffs. Expect more of these non-traditional and creative deals to round out M&A activity during the second half of 2013.”

As well, the mining industry’s major public companies have taken on different M&A roles in recent months — switching from buyers to sellers. Rio Tinto plc’s unloading its 80% stake in the Northparkes copper mine in Australia to a Chinese buyer is an example of this, according to the deals report.

REFILE-UPDATE 5-S.African gold miners’ union offers some compromise as strike bites – by Xola Potelwa (Reuters India – September 5, 2013)

September 5, 2013

http://in.reuters.com/

WESTONARIA, South Africa, Sept 4 (Reuters) – A strike for higher pay hit production at most of South Africa’s gold mines on Wednesday, but the main union behind the stoppage said it was willing to relax some of its demands.

The stoppage, called by the National Union of Mineworkers (NUM), began at the evening shift on Tuesday, with many miners refusing to go underground.

Producers grouped in the Chamber of Mines said output at 16 of the 23 mines currently involved in talks was partially or severely affected on Wednesday morning. The operators of the mines include South Africa’s main producers AngloGold Ashanti, Gold Fields, Harmony Gold and Sibanye Gold.

“The majority of Harmony’s operations have been severely affected, although all essential services personnel are at work,” the company said in a statement.

However, the NUM, which represents two thirds of the country’s gold mine workers, has already opened the prospect of a compromise, saying it was prepared to lower its pay increase demands for some specific employee categories.

Gas export control half-baked idea – by William Watson (National Post – September 5, 2013)

September 5, 2013

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

A report in this paper Wednesday told of a new lobbying effort by the country’s big energy users to get the National Energy Board to pull back on Canada’s exports of liquefied natural gas. They evidently don’t want to pay the world price for energy they’d prefer to have privileged access to.

That’s great news for this country’s newspaper industry. Having vanquished Verizon, our Big Three telecom companies have no further need of two-page ads for their over-the-top nationalist crusade and can instead go back to the business of encrypting their various service plans in ways not even consumers with super-computers can decipher. If big natural gas users start an anti-export campaign of the sort recently organized by Dow Chemicals in the U.S., that can only help your revenue-challenged factitioners.

In its story on Dow’s campaign, The New York Times summarizes the company’s position as “the government needs to plan an energy policy that carefully balances the interests of the oil and gas companies that want to freely export natural gas with those of industries like Dow Chemical that fear that an export boom could outpace domestic gas supplies and bring higher energy prices.” Lord help us when governments get into “careful balancing.”

Anyone who considers them capable of such a thing just hasn’t been paying attention. It’s no credit to this nation’s economists that a “Keep our gas in Canada” campaign will find lots of sympathizers, even beyond gas-users who profit personally when domestic gas prices are held below the world price.

U.S. hedge fund demands breakup of Barrick, additions to its board – by Canadian Press (Vancouver Sun – September 5, 2013)

September 5, 2013

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

A U.S. hedge fund is making a renewed call for changes at Barrick Gold, calling for the breakup of the company and the addition of a mining engineer and geologist to its board.

Mike Morris, principal and founder of Two Fish Management, said Wednesday that there is no compelling reason for Barrick to own a worldwide conglomerate of gold mines. “The market is essentially assigning a massive conglomerate discount to the company,” he said Wednesday.

Since Two Fish first wrote to Barrick demanding changes in April, the gold miner has agreed to sell off its Barrick Energy subsidiary in a series of deals worth a total of $455 million and three high-cost mines in Western Australia to South Africa-based miner Gold Fields Ltd. for $300 million.

But Morris and Two Fish wants more and to that end, the fund has produced a new 78-page presentation detailing the changes it thinks are needed. “This is Canada’s company and this is the world’s largest gold-mining concern and it doesn’t have a geologist or an engineer on its board,” he said.

Ontario’s new mineral exploration landscape [Aboriginal and treaty rights] – by Bryan Phelan (Onotassiniik – Fall 2013)

September 5, 2013

Onotassiniik is Wawatay’s new mining quarterly.

Mining Act rules now require consultation on Aboriginal and treaty rights

A bear somehow found itself dangling beneath a bridge, desperately holding on with its paws. At this point, we don’t know how it got there or what will happen next.

Bernie Hughes, a director of Aboriginal relations for the Ministry of Northern Development and Mines (MNDM), uses the image to introduce his presentation on new Ontario Mining Act rules.

“We needed to play some catch up with respect to all of the law that has changed in the last 20 years … in how resource development works in relation to Aboriginal and treaty rights,” Hughes says. “The industry has done something in a certain way for perhaps over a hundred years. We’re now in a state of transition and a state of change.” Along with change comes difficulty, he adds, looking at the picture of the vulnerable bear.

The new rules, which took full effect April 1, apply to early mineral exploration activities that until then weren’t regulated. Proponents must now file exploration plans with the province, and Aboriginal communities that could be affected by proposed work will be given 30 days to review a copy and provide comment. But MNDM encourages consultation with Aboriginal communities even before a plan is submitted, so the document can reflect those conversations.

COLUMN-Fed tapering may boost coal, crimp oil in Asia – by Clyde Russell (Reuters India – September 5, 2013)

September 5, 2013

http://in.reuters.com/

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

(Reuters) – The turmoil in some Asian currencies created by the likely tapering of monetary stimulus in the United States is likely to spill over into commodity markets. While it’s obvious that as a currency depreciates, the local cost of commodities, which are normally priced in U.S. dollars, increases.

But what is less obvious is what the impact will be on the supply-demand balance for various commodities. Take crude oil and coal for instance. Both are major sources of energy, priced in U.S. dollars and easily traded.

But for many Asian countries, the price of oil has risen dramatically this year, while that for coal has remained steady, or even declined. The focus has been on India in recent weeks, given the South Asian nation’s efforts to stem the slide of the rupee, which has lost some 23 percent of its value against the U.S. dollar this year.

Brent crude is now at record highs in rupee terms, and is 26 percent above the level that prevailed at the start of the year. Given that crude is India’s biggest import in value terms, it’s clear that the government will want to spend less on oil in order to lower the current account deficit.

BC First Nation blocks road to proposed coal mine – by Henry Lazenby (MiningWeekly.com – September 5, 2013)

September 5, 2013

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

TORONTO (miningweekly.com) – Members of the Tahltan First Nation, in British Columbia (BC), on Tuesday began blockading a road leading to project developer Fortune Minerals’ proposed openpit coal mine and which is also used to travel to traditional hunting camps, as Tahltan Central Council (TCC) leaders prepared for talks with government on Wednesday.

Tahltan community members said they were concerned that Fortune started using the access road after the Iskut First Nation, in preparation for the hunting season earlier in the summer, repaired it.

The First Nation said in a statement that its leaders would meet with provincial Ministers to discuss the impact of the proposed mine and to develop a long-term plan to protect the area surrounding Mount Klappan in the north-west of the province.

“Building an openpit coal mine on the Sacred Headwaters, which supports three salmon-bearing rivers and has been vital for hunting for thousands of years, is a step too far. It is time to be proactive about protecting our own interests and those of everyone in the region,” TCC president Annita McPhee said.

Chief Marie Quock of the Iskut First Nation explained that some of the community’s people asked Fortune to leave so that they could camp on Mount Klappan as usual, without being interrupted by traffic and helicopters.

Indonesia plans to soften foreign miners’ divestment rule (Reuters U.S. – September 5, 2013)

September 5, 2013

http://www.reuters.com/

JAKARTA – (Reuters) – Indonesia plans to relax a rule forcing foreign miners to sell majority stakes and allow those who make downstream investments to keep bigger holdings, a spokesman at the Energy and Mineral Resources Ministry said on Thursday.

Last year, the Indonesian government said foreign companies must reduce their stake in a mine to 49 percent or less within 10 years of production starting, though it has been unclear how the rules will be applied.

The rule was part of a push by Indonesia, which is the world’s top nickel ore, refined tin and thermal coal exporter, to generate more profits and influence in commodities markets.

“For those companies that integrate the upstream and downstream mining activities, they may have that divestment relaxation policy. Instead of divesting 51 percent to be achieved on year 10 of its activity,” ministry spokesman Saleh Abdurrahman said in an email.

“They may divest less than that, depends on the negotiation,” he said, adding there would be a revision to the current government regulation. He gave no timeframe for the change, but new regulations and rules can often get delayed in the lengthy Indonesian legislature system.

Gabriel Resources’ Rosia Montana gold mine rests in Romanian parliament’s hands – by Peter Koven (National Post – September 5, 2013)

September 5, 2013

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

After years of delays and political turbulence, Gabriel Resources Ltd. may finally be on the cusp of building Europe’s biggest gold mine.

Gabriel’s saga has been one of the longest and most disappointing in Canada’s gold sector. The Whitehorse-based company has been trying to develop the Rosia Montana gold project in Romania since the 1990s, but has faced vicious opposition from anti-mining activists, which spread rhetoric against the project. Successive governments were reluctant to give Gabriel the go-ahead amid such a heated environment.

Things have changed. Current Prime Minister Victor Ponta won a convincing victory in last year’s election, and has majority control over parliament. That has allowed him to be far more aggressive than his predecessors in approving large capital projects that can boost the economy.

One of his priorities is Rosia Montana. Last week, his government approved a draft law that sets out a course for development of the mine. It now needs to be approved by parliament.

UPDATE 1-Australia ships more iron ore to China as demand stays strong – by Wayne Cole (Reuters U.K. – September 5, 2013)

September 5, 2013

http://uk.reuters.com/

SYDNEY, Sept 5 (Reuters) – Australian shipments of iron ore to China looked to have stayed strong in August, a month after Australia boasted its second-highest exports ever to the Asian giant and a sign of healthy demand for resources.

Iron ore exports to China from Port Hedland, which handles about a fifth of the global seaborne market for the steel-making raw material, rose 9 percent in August from July.

Ore shipments of 22.3 million tonnes were up a hefty 33 percent on August last year and not far from all-time highs hit in May. Since the figures are released just a few days after the end of the month, they offer a timely leading indicator of demand in China.

Australia is the single largest supplier of the ore to China, ahead of Brazil. Iron ore is Australia’s single biggest export earner, bringing in around A$60 billion ($54.9 billion) in a good year. The strength of shipments increases the chance that Australia will report a trade surplus for August, and also add to economic growth.

New high grade zone drilled on Duluth base and precious metals complex – by Lawrence Williams (Mineweb.com – September 5, 2013)

September 5, 2013

http://www.mineweb.com/

New drill holes on the Twin Metals Minnesota Maturi deposit on the massive Duluth metallurgical complex indicate the presence of yet another high grade nickel-copper zone.

LONDON (MINEWEB) – In what Duluth Metals CEO, Chris Dundas, described in an email to Mineweb as yet another ‘exciting’ piece of news, the company has reported that a new high grade zone of nickel-copper mineralisation has been intersected on the southern edge of its Maturi deposit within the Duluth/Antofagasta Twin Metals Minnesota (TMM) project in north eastern Minnesota, USA.

The Duluth Complex possibly contains the world’s largest undeveloped polymetallic resource containing nickel, copper, cobalt, platinum, palladium, gold and more. It is somewhat comparable in size to the Sudbury nickel complex in Canada, Norilsk in Russia and the Bushveld Compex in South Africa as massive bodies containing huge amounts of strategic metals, but these others are already being worked extensively. The Duluth Complex is believed to contain the world’s third largest nickel resource and the second largest concentration of copper and platinum group metals.

Duluth Metals with TMM is one of the biggest concession holders in the area, if not the biggest, having acquired Franconia in 2011, although PolyMet is perhaps more advanced towards production with the smaller, but still significant-sized, NorthMet project on another part of the Complex, while Teck is among other companies which are looking at other areas there.

A red-letter day for Lakehead – Thunder Bay Chronicle-Journal – September 5, 2013)

September 5, 2013

Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario.

It was so refreshing to stand in a room filled with hope, pride and a sense of achievement. It was the opening of Lakehead University’s faculty of law, the first new law school in Ontario in more than 40 years.

You could almost hear buttons popping and chests filled with pride. The little gymnasium at the former Port Arthur Collegiate Institute was filled with a collection of local legal community members, university VIPs, community leaders and provincial visitors, not the least of which, Ontario Premier Kathleen Wynne, Minister Michael Gravelle and MPP Bill Mauro and Mayor Keith Hobbs. Provincial, regional and local representatives who are ever-present at university functions were at the opening in full force.

“What a great day,” seemed to be the first words out of the mouths of every speaker, and there were many — but the refrain never grew old. Everyone in the room was there to cheer a great day for Thunder Bay, Ontario and the country.
The new faculty will be somewhat unique as it offers a focus on aboriginal and environmental law.

The faculty of law, which received a slim $1.5 million from the province, is a huge investment for Lakehead University. Along with the medical school, Lakehead University has risen in the ranks of the Canadian university community by becoming truly comprehensive.

Local ghost tale subject of book – by Kyle Gennings (Timmins Daily Press – September 5, 2013)

September 5, 2013

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – Timmins is a community built on harrowing tales. There are many stories of men and women who overcame everything under the sun to build a life for themselves in the wild and unforgiving North.

But for a local educator, it was one story that inspired him. It is a story that has stayed with him and moved him to share it with the world.

That story is Popchuck’s Ghost. “Let me tell you a little bit of the history of the book,” said author and educator Paul Toffanello. “Back in the mid ’80s when I was teaching at Schumacher Public, I had a bunch of boys who were pretty reluctant readers and I had to find some way to engage them.

“And it just so happened that the Joe Cameron from Camp Bickell asked me to be the director at Camp Bickell and I found out there was a ghost called Arnold Popchuck. “I just took all of the little stories that the kids at the camp had about him and put it all together into a story that I hand wrote.

Drones help Yukon prospectors find new gold deposits – by CBC News North (September 4, 2013)

September 5, 2013

http://www.cbc.ca/north/

A gold prospector from Yukon is using unmanned aerial drones and other technologies to survey huge stretches of land for mineral deposits, and leaving less of an environmental footprint in the process.

Shawn Ryan says the technology is greatly reducing the cost of doing business in the initial stages of mineral exploration.

The drones he uses look a bit like a medium-sized kite, and carry a relatively simple 16-megapixel camera on board. It flies over a target area, snapping photos of the ground.

He and his team also do geophysical surveys of the area — they string out a 420-metre cable over an area that soil sampling has already indicated may have potential. The cable has electrodes spaced out every five metres that send electrical currents about 90 metres down into the ground and can show faults or cracks that may contain gold.