Republic of Mining

A.M. Kitco Metals Roundup: Gold Sells Off Sharply on Stronger U.S. Jobs Data, Soaring U.S. Dollar Index – by Jim Wyckoff (Kitco News – July 5, 2013)

July 5, 2013

http://www.kitco.com/

(Kitco News) – Gold prices dropped sharply in the immediate aftermath of a U.S. employment report for June that showed better-than-expected jobs growth, including upward revisions for jobs in April and May. The U.S. dollar index pushed to a three-year high on the jobs data, which also helped sink the gold and silver markets.

August gold was last down $32.10 at $1,219.80 an ounce. Spot gold was last quoted down $31.60 at $1,221.40. September Comex silver last traded down $0.679 at $19.01 an ounce.

The U.S. Labor Department reported non-farm payrolls increased by 195,000 in June, which was significantly better than the 160,000 rise expected by the market place. The overall unemployment rate was unchanged from May, at 7.6%. The upward non-farm job revisions in April and May totaled around 70,000 for both.

The improving U.S. labor market lent additional weight to the hawkish camp of Fed watchers who think the Federal Reserve will start to back off on its quantitative easing of monetary policy (so-called “tapering”) as soon as later this year. That is seen as at least initially commodity-market bearish, including the precious metals. The very easy money policies of the major central banks of the world have boosted raw commodity prices in recent years.

Gold producers wrestle with dividend dilemma – by Peter Koven (National Post – July 5, 2013)

July 5, 2013

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

Gold miners have never been known for paying generous dividends. But thanks to free-falling stock prices across the sector, they carry some unprecedented yields.

Barrick Gold Corp. has a dividend yield of 5.3%, which puts it in the same league as BCE Inc. (5.4%) and ahead of all the Canadian banks. Other gold miners with outsized yields include Iamgold Corp. (6.2%), Newmont Mining Corp. (4.8%) and Centerra Gold Inc. (4.5%).

The situation is not likely to last very long. Experts said at least some gold miners would consider slashing their dividends if the gold market does not turn around soon. The cuts could begin later this month, when they report second quarter earnings and detail their responses to plunging prices.

Traditionally, gold miners paid little to no dividends. That changed over the last several years as they began to generate record profits and investors urged them to return more cash. Every significant gold producer has either introduced or increased its dividend (or both) in recent years.

Now that gold prices are falling, the downside of that strategy is becoming apparent. Margins are getting squeezed and many companies are struggling to generate any free cash flow at today’s price of US$1,250 an ounce.

Court order allows mining company to continue working at Red Sucker Lake – by Staff (Winnipeg Free Press – July 4, 2013)

July 5, 2013

http://www.winnipegfreepress.com/

An eviction notice and stop-work order issued by a northern Manitoba First Nation against a mineral exploration company has been countered by a court-ordered temporary injunction on behalf of the company allowing it to continue to operate.
The spat between Red Sucker Lake First Nation and Mega Precious Metals Inc. broke out suddenly this week after more than two years of apparent cooperation between the two.

However frustration from the First Nation at what some say was the lack of jobs or training opportunities and growing environmental concerns prompted the chief and council to terminate a memorandum of understanding (MOU) with Mega, one of only three such agreements that have ever been negotiated in the province.

In its first public statement since it received the eviction notice on Monday, company CEO, Glen Kuntz said, “Mega believes the company has, and continues to, demonstrate our respect for Red Sucker Lake First Nations’ treaty rights. Mega plans to continue to meet with community members and provide project updates on a regular basis in an effort to maintain our social license to operate.”

Mega Precious Metals is in the process of proving up a gold reserve called Monument Bay in a location about 60 kilometres north of Red Sucker Lake which is within the band’s traditional area.

Canadian potash deal shows trend among Chinese – by Eddy Lok (China Daily U.S.A. – July 5, 2013)

July 5, 2013

sa.chinadaily.com.cn/index.

Chinese investment in a potash project in the Canadian province of Saskatchewan bodes well for junior mining companies in search of international financing, analysts say.

Vancouver-based Western Potash Corp, recently closed what it called was a strategic equity investment in the company by China BlueChemical Ltd and Guoxin International Investment Corporation.

Under the joint-venture deal, CBC (Canada) Holding Corp will make a strategic equity investment of $32 million in Western Potash at a price of 71 cents a share, according to a company news release.

As a result of this transaction CBC (Canada) Holding will hold a 19.9 percent ownership stake in the company on a non-diluted basis.

CBC (Canada) Holding is jointly owned by China BlueChemical Ltd and Benewood Holdings Corp Ltd. China BlueChemical is a majority-owned subsidiary of China National Offshore Oil Corporation, while Benewood is a wholly-owned subsidiary of Hong Kong registered Guoxin International Investment Corporation Limited.

Pepin County: A ready template for sand mine regulation – by Minnessota Star Tribune Editorial (July 4, 2013)

July 5, 2013

http://www.startribune.com/

The refrain heard over and over again in Minnesota’s pitched political battle over frac sand mining this year was: “We don’t want to be Wisconsin.”

Just across the border lie leveled bluffs, groundwater-draining processing facilities and communities choked by truck congestion — the result of Wisconsin’s mine-first, ask-questions-later regulatory approach to sand mining. But because of the farsighted work done by a courageous county on that state’s western edge — declaring a 12-mile strip of bluffland a frac-free zone — Minnesotans who want to ensure that sand mining is done responsibly should now look east for examples of what to do, instead of only what not to do.

“Other folks can do this,’’ said Bill Mavity, a retired Twin Cities attorney who now lives in Pepin County, serves on the County Board and played a critical role in crafting the frac-free zoning ordinance, thought to be the first of its kind. Protections like this “are increasingly important because of how large the industry is that is coming and the clout and the power that they have.’’

A legislative session in which Minnesota lawmakers steadily whittled down new state-level safeguards to the bare minimum should especially prompt southeast Minnesotans to give serious scrutiny to Pepin County’s proactive measure.

Manitoba sulphur dioxide emissions will soon be drastically reduced – by Ian Graham (Thompson Citizen – June 14, 2013)

July 5, 2013

The Thompson Citizen, which was established in June 1960, covers the City of Thompson and Nickel Belt Region of Northern Manitoba. The city has a population of about 13,500 residents while the regional population is more than 40,000. editor@thompsoncitizen.net

There was good news and bad news about Manitoba’s environment in the Canadian Council of Ministers of the Environment’s 2010-2011 progress report on the Canada-Wide Acid Rain Strategy for Post-200 that was released earlier this spring.

The bad news was that Manitoba was the third-largest emitter of sulphur dioxide (SO2) in Canada in 2010, accounting for 14 per cent of the total, behind only Alberta t 27 per cent and Ontario at 20 per cent.

The good news was that SO2 emissions from Manitoba in 2010 were down 44 per cent from their 2008 level, to 197,000 tonnes from 350,000 tonnes, thanks in part to the closure that year of Hudbay’s copper smelter in Flin Flon, which was expected to reduce total emissions of SO2 by 185,000 tonnes per year. That was the largest relative decrease in S02 emissions in any province over the same two-year period.

And while it will not be good for the local economy, the scheduled closure of Vale’s smelter in Thompson in 2015 is expected to reduce the amount of sulphur dioxide emitted in Manitoba by another 185,000 tonnes.

Birchtree: Vale sheaths the Sword of Damocles – Editorial (Thompson Citizen – May 15, 2013)

July 5, 2013

It was one of the rare good news announcements to come from Vale, still Thompson’s most important employer, in the last 2½ years: Birchtree Mine, which opened in 1968, is “no longer scheduled to be placed on care and maintenance in August,” Lovro Paulic, vice-president for Vale’s Manitoba Operations, told employees in an internal Manitoba Operations update circulated May 6.

Still, it must be seen in perspective for what it is: good news by virtue of not being bad news. The status quo hasn’t changed and there is no net gain here. The good news is that for the time being at least there is no loss either. Still, it must be seen in perspective for what it is: good news by virtue of not being bad news. The status quo hasn’t changed and there is no net gain here. The good news is that for the time being at least there is no loss either. About 185 Vale employees work at Birchtree Mine, along with approximately 25 non-Vale contractors.

Kelly Strong, Vale’s vice-president of Ontario and UK operations since last November, told a packed luncheon last month in Sudbury that nickel prices of a little more than $7 a pound are comparable to $2.50 a pound a decade ago, and are creating huge challenges for Vale. Nickel prices were under $7 last week. Strong said several factors have substantially increased mining costs, including oil prices that have increased by 350 per cent, and the Canadian dollar, which has increased in value by 60 per cent compared to the U.S. dollar.

Chiefs stand together to demand development on their own terms – by Ian Graham (Thompson Citizen – May 3, 2013)

July 5, 2013

ian@thompsoncitizen.net

Representatives of the Assembly of Manitoba Chiefs (AMC), Manitoba Keewatinowi Okimakanak (MKO) and the Southern Chiefs’ Organization (SCO) held a press conference outside the provincial governments Mines Branch and Mineral Resources Division office in Winnipeg on April 26 to announce that Manitoba First Nations are declaring moratoriums on resource development in their traditional territories and that stop work orders on mine development are being posted and will be enforced.

“We’re no longer going to be sitting back watching corporations and governments come into our traditional territories and ancestral lands and exploit our resources, leaving us nothing at the end of the day,” said AMC Grand Chief Derek Nepinak. “We’re not going to accept that. The status quo is done. For far too many generations now, provincial governments, federal governments have worked in collusion with the corporate industries to come into our territories and to take the vast wealth of our ancestral lands. Meanwhile they come back to us with contribution agreements that are wholly inadequate to provide for the basic needs of our communities and our citizens. Those days are over, those days are done and what’s happening here I think is an emergence of a new unified position. Once again our people are leading the way.”

This accountant is mining her potential – by Virginia Galt (Globe and Mail – July 5, 2013)

July 5, 2013

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.

Ikram Al Mouaswas’s career as a chartered accountant has taken her – in hard hat and steel-toed boots – to remote mining projects in India, Sri Lanka, Pakistan, the Northwest Territories, and Northern Ontario’s Ring of Fire region.

A manager in Deloitte Canada’s assurance and advisory group, Ms. Al Mouaswas specializes in commodity mining – diamonds, gold, nickel, copper. “I love the mining industry. It’s changing every day. There’s always a complex or interesting transaction going on.” It’s rewarding work with a demanding schedule.

Still, every fall, Ms. Al Mouaswas and her colleagues at Deloitte engage in some prospecting of their own – blanketing Canadian university campuses in search of the next generation of accounting professionals. “Recruiting season” starts in September, and wraps up by Thanksgiving. And the war for talent is fierce, Ms. Al Mouaswas says.

“The big [professional accounting] companies and some of the mid-sized ones, as well, heavily recruit. They go out there and have events, rent banquet halls and bring out as many of their representatives as they can to tell the students about their firms, about the advantages, about their own experiences.”

Chavez’s 70% Gold Bet Unravels as Reserves Plunge: Andes Credit – by Charlie Devereux & Corina Pons (Bloomberg News – July 4, 2013)

July 5, 2013

http://www.bloomberg.com/

The bet on gold that former Venezuelan President Hugo Chavez made in the final years of his life is collapsing at the wrong time for his country.

Chavez, who argued that Venezuela should move away from the “dictatorship of the dollar,” stockpiled more than 70 percent of Venezuela’s foreign reserves in gold by 2012, the highest percentage among all emerging-market countries and more than 50 times that held by neighbors Colombia and Brazil, according to the World Gold Council.

After rewarding Venezuela with a rally of almost 400 percent in the past decade, gold has tumbled 25 percent this year, helping drive the central bank’s reserves to an eight-month low and compromising the government’s ability to repay foreign debt. The yield on Venezuela’s dollar-denominated bonds has risen 62 basis points, or 0.62 percentage point, to 11.84 percent in the past month, compared with an average increase of 57 basis points for other countries in Latin America.

“Venezuela’s reserves have taken a big hit,” Francisco Rodriguez, an economist at Bank of America Corp., said by phone from New York. If current gold price levels continue, “then you will see an increase in perception that Venezuela’s capacity to pay is weakening.”

Tailings Dump at the Red Chris Mine: Will It Hold Water? – by Christopher Pollon (The Tyee.ca – July 4, 2013)

July 5, 2013

http://thetyee.ca/

More work needed to understand potential impacts of waste storage, industry-funded review finds. More work is required before anyone knows how an estimated 300-million tonnes of tailings from the proposed Red Chris mine will eventually affect water in the upper Stikine watershed of northwest B.C., concludes a confidential industry-funded review acquired by The Tyee.

The report, paid for by mine owner Imperial Metals at the urging of the Tahltan Nation, recommends a comprehensive field investigation including additional drilling, groundwater collection and monitoring wells be undertaken as a way of addressing existing information gaps.

“…Studies completed to date are not sufficiently detailed to fully assess/monitor potential environmental impacts due to seepage from the tailings storage facility on the downstream aquatic environment,” concludes the study presented early this year to a panel of First Nations, government and industry overseeing the permitting of the proposed mine, which is scheduled to begin operations by May 2014.

The report comes years after Red Chris received environmental approval from B.C. and the federal government — the latter the subject of a drawn-out legal battle with environmentalists that went all the way to the Supreme Court of Canada.

China’s exploration spend is world’s largest – by Natalie Greve (MiningWeekly.com – July 4, 2013)

July 5, 2013

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

Amid a global trend of increasing exploration expenditure, China has emerged as the country that spends more on exploration activities than any other country in the world, MinEx Consulting MD Richard Schodde said on Wednesday.

“To be fair, however, around half of this is for bulk minerals,” he said during an address at the Geological Society of South Africa’s 2013 GeoForum conference.

This came as Canada, Australia and the US’s market shares had halved in the last 20 years, despite global exploration expenditure hitting an all-time high of $29.4-billion in 2012 alone. China’s spend accounted for around 14% of this amount.

While gold remained the primary target, Schodde had observed a major increase in spending associated with bulk minerals, which had accompanied a shift from exploration in developed countries to developing ones.

He added that growing exploration spend was driven by commodity prices, emphasising that there was a strong correlation between the gold price and exploration spend.

Mining revival offers hope in crisis-hit Europe – by Susan Thomas (Reuters U.K. – July 4, 2013)

July 5, 2013

http://uk.reuters.com/

LONDON, July 4 (Reuters) – A gradual shift in European attitudes and policy toward mining in the past four years, spurred by the need to create jobs and to ensure supply of critical materials, has led to investment and a nascent revival of the industry.

New or resurrected mining and smelting projects in some areas of Europe are providing some prospects for growth in the region as countries struggle with recession and crippling unemployment.

A handful of countries, including hard-hit Spain and Portugal, are attracting investment with good grades of ore, a large labour pool, revamped mining regulations and low political risk.

“Spain has gone from being shy of mining to being welcoming of mining. The political landscape has turned 180 degrees,” said EMED Mining Chief Executive Harry Anagnostaras-Adams, whose London-listed company plans to reopen a former Rio Tinto copper mine near Seville.

“There has been a marked transformation between when we arrived six years ago, when mining was not conventionally regarded as a favourite industry, to today when it overshadows most other initiatives in the area.”

Eviction notice adds to gloom in mining sector – by Martin Cash (Winnipeg Free Press – July 4, 2013)

July 4, 2013

http://www.winnipegfreepress.com/

These are not the best days to be in the mineral-exploration business in Manitoba.

Metal prices are low — gold prices are at their lowest level in 36 months; nickel, lowest in 48 months; copper, lowest in 30 months; and zinc, lowest in 18 months — investors’ appetite for risky (albeit tax-deductible) exploration plays is just about non-existent and starting this week in Manitoba, there is an additional one percentage point of sales tax on expensive equipment.

On top of that there is the potentially deal-breaking uncertainty over treaty land claims. One exploration company — Mega Precious Metals — that has been diligently working on a Manitoba gold property called Monument Bay for many years was surprised this week with an eviction notice from nearby Red Sucker Lake First Nation in northeast Manitoba.

In a news release, the band referred to the operation as “a mineral-exploration company operating illegally in Red Sucker Lake First Nation traditional territory.” But that same mineral-exploration company has been co-operating with the band for years and signed a memorandum of understanding (MOU) with Red Sucker Lake in 2010.

Manitoba First Nation evicts mineral-exploration company – by Staff (Winnipeg Free Press – July 2, 2013)

July 4, 2013

http://www.winnipegfreepress.com/

The Red Sucker Lake First Nation presented a stop-work order and eviction notice over the weekend to a mineral-exploration company that reserve officials say is operating illegally in its traditional territory.

Mega Precious Metals, a mineral-exploration company based in Thunder Bay, has been drilling and developing a potential gold mine for a few years at Monument Bay, about 60 kilometres northeast of Red Sucker Lake First Nation.

Red Sucker Lake is about 700 kilometres northeast of Winnipeg. A spokesman for the band said action was taken now because new permits were issued recently without appropriate consultation with the band.

“The permits and licences granted to Mega Precious Metals Inc. are unlawful due to the absence of adequate consultation and accommodation,” says a statement from the band.

A spokesman for the band said there has been no violence or aggressive action related to the eviction notice.