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A nugget of wisdom for gold miners: Think small – by Eric Reguly (Globe and Mail – May 11, 2013)

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.

ROME — I think I have figured out Canadian gold mining executives. They assume that gold is not a mineral; it is a perishable commodity that will rot in the ground, like a potato, unless it is dug up immediately.

And not just immediately but in vast quantities. Canadian gold mining executives are obsessed with the concept of bigness. They want projects they can label “game changers,” ones capable of vaulting medium-sized firms into the big leagues, or thrust the biggies to the very top of the global heap. Bigness permeates their lives. They drive big cars, live in big houses. Some, like Barrick Gold Corp. boss Peter Munk, bob around the planet in the biggest of yachts.

The problem with bigness is that it translates into trouble when it’s extended to corporate development. Big projects are big gambles. They invariably come in far over budget, sometimes billions over budget, which gets shareholders rather annoyed. Big projects also attract lots of attention from environmental activists, politicians and aboriginal peoples. The result is expensive delays and bad publicity.

Canada’s gold mining sector is a mess, with share prices down by about half even though the gold price is down by only 20 per cent from its high of almost $1,800 (U.S.) an ounce last October. Executives are being tossed into the garbage like the remains of a steak lunch. Returns on equity are sinking into single-digit territory or, in Barrick’s case, turning negative. Problems at flagship projects are not going away – in some cases they’re intensifying – after years of fix-it efforts.

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B.C. vote a ‘plebiscite on prosperity’ – by Diane Francis (National Post – May 11, 2013)

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

VANCOUVER — On May 14, British Columbians face Hobson’s choice in their provincial election: Liberal leader Christy Clark is in trouble in her own riding and the NDP’s Adrian Dix is wobbly in polls and should be.

But voters must hold their noses and re-elect the Liberals (who are actually Conservatives) because it’s the only pro-development party on the ballot. The NDP, everywhere, is a coalition of vested interests, posing as a party with broad appeal, and without free enterprise smarts. Anywhere this party runs, voters must reject it out of hand.

This is no time to get even for the B.C. Liberal sales tax fiasco or to send a message to Ottawa. This is an unusually important vote for this province and for all Canadians. In fact, this is an “existential” moment for Canada.

If the NDP wins power in such a strategically important and rich jurisdiction such as this one — a keystone within the Canadian resource economy — B.C. voters will have chosen economic decline. This is as important as was Quebec’s referendums and yet this has not been acknowledged in the lead up.

British Columbia and Vancouver (and Canada) would find itself, if anti-development attitudes become its governance model, bypassed in terms of future growth.

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South Americans Face Upheaval in Deadly Water Battles [Mining conflicts] – by Michael Smith (Bloomberg Markets Magazine – February 13, 2013)

http://www.bloomberg.com/markets-magazine/

People streamed into the central square in Celendin, a small city in the Peruvian Andes, the morning of July 3, 2012. They were protesting the government’s support for Newmont Mining Corp. (NEM)’s plan to take control of four lakes to make way for a new gold and copper mine. By midday, there were 3,000.

Some hurled rocks at police and brandished clubs. Then assailants shot two officers and an Army soldier in the leg.

Blocks away, construction worker Paulino Garcia left home on foot to buy groceries. As he approached the central square, he encountered chaos. People ran for cover as federal troops fired their weapons, Bloomberg Markets magazine will report in its March issue.

One bullet struck Garcia as he watched the mayhem. It ripped open his chest and exited through his back. The 43-year-old father of two fell to the ground and died. Another three people were shot and killed, and more than 20 were wounded.

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Xstrata Kidd Operations wins the 2013 Timmins District Mine Rescue competition – by Len Gillis (Timmins Times – May 10, 2013)

http://www.timminstimes.com/

The Mine Rescue Team from Xstrata Copper Kidd Operations has won the Timmins District Ontario Mine Rescue competition.

The winning team beat out a roster of four teams that included defending 2012 champions Goldcorp Porcupine Gold Mines, Lake Shore Gold and Dumas mining contractors in the competition that was held this week at the Whitney Arena. The Kirkland Lake district contest was also held in Timmins and it produced a separate winning team.

The winning Xstrata team was captained by Jason Leger and included team members Shawn Rideout, Danny Morin, Ted Hanley, Guy Champagne, Marc Villars and Stewart Labine.

This is the fourth time Xstrata has won the honours since 2007. Xstrata and Goldcorp have been seesawing back and forth with the top honours in recent years.

The annual event is held to let the mine rescuers from local mining companies pit their skills against each other for local bragging rights, and also for the right to represent Timmins at the all Ontario mine rescue competition, which will be held in June in Windsor, Ontario. This will include the district winners from Red Lake, Sudbury, Thunder Bay, Marathon, Goderich and Kirkland Lake.

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Ontario Mine Rescue district competition on in Timmins – by Len Gillis (Timmins Times – May 7, 2013)

http://www.timminstimes.com/

The annual mine rescue competitions for the Timmins District and also the Kirkland Lake District, are taking place this week in Timmins at the Whitney Arena. The Timmins event will feature a local mine contracting company fielding a competition team for the first time.

The events are held each year in mining districts across the province to let mine rescue teams hone their skills, to ensure a high level of standardized training and to give winning teams the bragging rights for another year.

Goldcorp Porcupine Gold Mines is the current winning team in Timmins, having won the honours in the 2012 competition. Kirkland Lake Gold won the honours for its district, also at the 2012 competition.

The 2013 event began Monday morning with the technicians competition. Each mine rescue team has a technician who is expected to troubleshoot any problems that arise with the specialized equipment the teams use when they carry out their work in hostile underground situations.

The current defending champ for that role is Erik Barr of Goldcorp who last spring won the Timmins District technician’s trophy for the third year in a row. Barr also won the all-Ontario title for best technician.

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Gravelle: divestment not the only option – by Gord Young (North Bay Nugget- May 11, 2013)

http://www.nugget.ca/

Divestment should not be the only option for the Ontario Northland Transportation Commission, says Northern Development Minister Michael Gravelle.

Reflecting a major change in the province’s approach to the ONTC, Gravelle told municipal politicians Friday during a Federation of Northern Ontario Municipalities (FONOM) conference in Parry Sound that he’s come to the conclusion other avenues need to be explored when it comes to the future of the Crown agency.

“We need to be open to options other than divestment,” said Gravelle, noting the shift is a result of feedback he’s received since taking on the Northern Development and Mines portfolio earlier this year.

Gravelle said that includes feedback from an ONTC advisory committee he established consisting of Northern stakeholders, including North Bay Mayor Al McDonald. He said the committee is slated to meet in Toronto on Thursday and will discuss what some of those other possible options for the ONTC may include.

“It will be an important meeting,” said Gravelle. While in North Bay in March for the advisory committee’s inaugural meeting, Gravelle told the media that clearly the decision has been made and that province is moving forward with divestment.

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Gravelle signals possible shift in direction – by Bruce Cowan (North Bay Nugget- May 11, 2013)

http://www.nugget.ca/

What a difference two months can make, especially if the Liberal government of Kathleen Wynne is prepared to do everything it can to retain power now and following the next provincial election.

In February, newly minted Northern Development and Mines Minister Michael Gravelle told The Nugget that divestment of the Ontario Northland Transportation Commission would continue and there would be no dramatic shift in direction.

He did leave the door open to “significant community input into that process” and formed a minister’s advisory committee, which included Mayor Al McDonald and other northern mayors who have a stake in the divestment outcome. Gravelle even came to North Bay to sit down with the committee and hear their concerns.

Today, there has indeed been a shift in direction, or at least in what’s said publicly. At the Federation of Northern Ontario Muncipalities’ conference in Parry Sound, Gravelle hinted that divestment may not be the only option. That was not lost on McDonald, who tweeted the news immediately.

Premier Wynne, speaking at the same conference, went further. She said ONTC and Metrolinx need to work together, echoing talk prior to the divestment announcement that a strategic alliance between the two agencies might make sense and provide ongoing refurbishment work for Ontario Northland shops.

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MEDIA RELEASE: MATAWA CHIEFS COUNCIL MAKE IT OFFICIAL BOB RAE TO BE FIRST NATIONS’ NEGOTIATOR FOR RING OF FIRE NEGOTIATIONS WITH ONTARIO

Thunder Bay, May 10, 2013 – The Matawa Chiefs Council announced today that the Honourable Bob Rae, former federal leader of the Liberal Party and former Premier of Ontario, will be Chief Negotiator for Matawa First Nations during regional strategy negotiations with the Province of Ontario.

The Chiefs met with Mr. Rae this week to talk about regional and local issues, and to discuss the next steps in regards to proposed negotiations with the Province. Mr. Rae will tour all of the Matawa First Nations over the next few months and meet with the community members.

Although there has been no official response to the Chiefs’ proposal for a regional strategy negotiation framework, which was presented to the Premier on March 6, 2013, the Chiefs are moving ahead to prepare for the negotiations. The Chiefs reiterate their call for both levels of government to ensure that EA processes in their traditional territories provide for full participation by First Nations in a culturally appropriate manner and in their native languages.

For more information contact:

Chief Sonny Gagnon, Aroland First Nations – Cell: (807) 620-7195 Band Office: (807) 329-5970
Chief Roger Wesely, Constance Lake First Nation– Cell: (705) 373-0419 Band Office: (705) 463-2222
Chief Harry Papah, Eabametoong First Nation– Cell: (807) 630-7096 Band Office: (807) 242-7221

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New era of austerity at BHP -by Barry Fitzgerald (The Australian – May 10, 2013)

http://www.theaustralian.com.au/business

BHP Billiton’s new chief executive Andrew Mackenzie has launched the world’s biggest resources group on a relentless productivity drive, aimed at improving shareholder returns against a backdrop of fading commodity prices.

Mr Mackenzie formally takes the reins at BHP today, with the Scottish polyglot and sometime saxophone player spending the day at BHP’s iron ore operations in the Pilbara.

He replaces the man who hand-picked him as a likely successor more than five years ago, the vegetarian Afrikaner Marius Kloppers, known as much for his safe hands during the global financial crisis as his idiosyncratic tendencies.

Speaking to The Australian before his first day as chief executive, Mr Mackenzie said there would be no big-bang change in BHP’s strategy. It would evolve over time under his leadership, but securing productivity improvements was the immediate focus, replacing the previous focus on production growth.

“Ultimately, we won’t be changing much of it at all. We will probably just be even more clear that our future prosperity is going to be based on a small number of world-class tier-one orebodies,” Mr Mackenzie said. “We are likely to invest less, and therefore the principal way we intend to grow the returns from our businesses is by driving productivity.”

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Lake Shore Gold readies for growth – by Liz Cowan (Northern Ontario Business – May 10, 2013)

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.

Lake Shore Gold in Timmins is expecting 2013 to be a breakout year. “We are on track now to really transition from junior exploration company to a producer,” said president and CEO Tony Makuch at a presentation in April. He was addressing an audience of more than 150 at a luncheon put on by the Canadian Institute of Mining’s (CIM) Northern Gateway Branch in North Bay.

“We built everything from scratch, starting with greenfield discoveries. We have raised and invested close to $650 million since 2008. And, we are building a mine. We have had a lot of challenges but some big successes,” he said.

With 525 employees, and about 200 contractors, the company operates the Timmins West Mine, which is about 20 kilometres west of Timmins; the Bell Creek Mine, about 20 kilometres northeast of the city; and the Bell Creek mill. The Fenn-Gibb Project, 60 kilometres east of Timmins, has the potential to become an open-pit operation.

“Since 2008 we have discovered seven million ounces. Our challenge is not just to discover, but to show we are profitable. We know there is still a lot of gold there and we can find it, but we have to demonstrate how to turn it into a profitable business,” he said.

Last year, the company met its guidance, achieved a lot of development success, mined and processed 720,000 tons of ore, developed more than 2,000 metres of mine ramps and produced 86,000 ounces of gold.

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UPDATE 2-POSCO moves closer to iron ore access for $12 bln India steel plant – by Suchitra Mohanty and Krishna N Das (Reuters India – May 10, 2013)

http://in.reuters.com/

NEW DELHI, May 10 (Reuters) – POSCO’s planned $12 billion steel project in India moved a step forward on Friday after a court handed a decision on a mining licence to the federal government, raising the South Korean firm’s chances of getting preferential access to iron ore.

The world’s fourth-largest steel producer has waited eight years to get necessary clearances, land and an iron ore mining licence to start work on the project, billed as India’s largest foreign direct investment.

While the project planned in eastern Odisha state may still face hurdles from protesters and over issues such as land ownership, a supportive federal government is expected to clear the path for POSCO’s top concern – a captive mine that will give it steelmaking raw material iron ore.

“This is positive for the company because the central government has been supporting this project,” said Rakesh Arora, a metals expert and head of research at Macquarie Capital Securities (India). “There’s no doubt that without iron ore, this project was not starting at all.”

India was concerned about the delays and Prime Minister Manmohan Singh himself is monitoring the project’s progress, Trade Minister Anand Sharma had said in January.

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Enbridge, TransCanada on front lines of war between producers and anti-oil groups – by Claudia Cattaneo (National Post – May 10, 2013)

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

Imagine this corporate nightmare: activists dominating your annual shareholders’ meeting, sullying your brand over the Internet, discrediting you with politicians and agitating communities against you.

It used to be known as character assassination. Today it’s the environment in which Canada’s largest pipeline companies, TransCanada Corp. and Enbridge Inc., find themselves. They are on the front lines of the war between oil producers looking for new markets and opponents of oil extraction pushing to speed up the transition to renewable energy.

With pipeline rage that started with TransCanada’s Keystone XL and Enbridge’s Northern Gateway projects spreading like wildfire to other proposals, the two companies are transforming the way they grow their business.

It involves a change in attitude, communicating with more people, paying more attention to what can go wrong, and facing higher costs amid more competition from rail companies that are expanding without restrictions.

“There is a new reality in terms of permitting and constructing pipelines that wasn’t there before,” said TransCanada CEO Russ Girling, adding that the new model will be more time consuming, require more work, and in the end, cost more.

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Barrick/Goldcorp remove overhang in Pueblo Viejo deal, but at a cost – by Peter Koven (National Post – May 9, 2013)

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

When the Pueblo Viejo mine entered commercial production early this year, it took about 20 seconds for politicians in the Dominican Republic to demand a bigger piece of the pie from the two Canadian owners (Barrick Gold Corp. owns 60% and Goldcorp Inc. owns 40%). Negotiations ensued and a revised agreement was announced Wednesday night.

After taking some time to chew it over, analysts weighted in on Thursday morning. Their views are decidedly mixed: the deal is positive in that it removes the political overhang, but negative in that it takes substantial benefits away from shareholders and hands them to the government. Also, payments to the government will be brought forward.

A number of changes were made to the Pueblo Viejo agreement, including the elimination of a 10% return embedded in the initial capital investment before a 28.75% tax kicks in, an extension to the period in which the miners recover their capital investment, a delay in the application of tax deductions, and a reduction in depreciation rates.

Barrick calculated that the total economic benefit to the government will rise by US$1.5-billion in this agreement, assuming a US$1,600 gold price. The Dominican was already expected to receive more than US$10-billion from the mine.

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This week in junior gold quarterlies – lower gold price weighs – by Kip Keen (Mineweb.com – May 10, 2013)

http://www.mineweb.com/

Adding pain to the the junior gold miner balance sheet: lower gold prices this year than last.

HALIFAX, NS (MINEWEB) – The lower price of gold in the first three months of the year, as compared to same in 2012, started to weigh on junior gold producers quarterlies. It wasn’t the only factor in dropping net incomes, to be sure, as operating costs remained flat or worsened. But this just made the lower gold price all the harder to bear.

A year ago spot gold prices over the January to March period averaged a bit higher, around $1,690 an ounce, while in the first three months in 2013, they averaged around $1,630. That difference, around four percent, took its toll, adding to pressure on balance sheets as junior gold producers contend with the cost of mine expansions and longer term projects.

The lower spot price this year in January to March might be viewed as a small difference, yes, and one confounded by such idiosyncracies as when a miner sold its loot. However, it’s not looking like a one-quarter blip. Rather, the effect is set to worsen for gold miners in the coming quarter.

Last year the spot price of gold averaged about $1,650 and 1,585 per ounce in April and May, respectively. This year it was $1,485 and $1,462 in the same months, to date, setting up junior gold producers for an even tighter squeeze in the coming round of quarterlies. It could only be reversed if the price of gold makes a strong U-turn over the next month and a half.

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African states should own half of new mining ventures, says Mohohlo – by Paul Vecchiatto (South Africa Business Day Live – May 10, 2013)

http://www.bdlive.co.za/

AFRICAN governments should own at least a 50% stake in any new mining venture in order to ensure the country receives more of the revenue that flows from a project than the mining company receives.

This is a recommendation of Linah Mohohlo, governor of Botswana’s central bank and a member of the Africa Progress Panel.

Speaking at Friday’s launch of the panel’s Africa Progress Report 2013, Ms Mohohlo pushed the point that only if there were transparency in monetary flows could there be real transparency on how mining companies operate on the continent.

However, Ms Mohohlo stressed that her recommendation was not a call for nationalisation in any way.

“What it is, it is a recommendation. As a former central banker I believe that only central banks can and should handle the revenue flows that stem from mining.

“The country, or the government, must receive more of the revenue flows out of a project than the company does,” she said. Ms Mohohlo said governments had to use the minimum shareholding of 50%, plus a sound tax regime that included clear guidelines on collection and definite dates for the end of the tax holidays often granted for a project to start.

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