Republic of Mining

Ontario continues to be a global mining leader and expects great things from the ‘Ring of Fire’ – by John Chadwick (International Mining – December 2012)

November 13, 2012

International Mining is a global technical magazine written for miners by miners. John Chadwick is the publisher. john@im-mining.com

In November I wrote about one of America’s greatest mining states, Minnesota. This month I and my attention wander across the border to perhaps an even more important region in the global mining industry, Ontario.

In its far north is the Ring of Fire mining camp. At this early stage, Cliffs Natural Resources is looking at an operation there to treat 4.4 Mt/y of crude ore, expected to produce up to 2.3 Mt/y of chromite concentrate. Noront Resources is more into nickel-copper-PGMs – 1 Mt/y throughput producing approximately 150,000 t/y of high grade nickel-copper concentrate containing significant platinum and palladium.

KWG Resources, one of the first players in the area, has earned a 30% interest in the Big Daddy chromite deposit, which, at a 15% cutoff, has a Measured resource of 29.5 Mt, grading 29% Cr2O3. The Indicated resource is 7.9 Mt grading 26.7% Cr2O3, and there are 4.8 Mt Inferred, grading 25.0% Cr2O3. By comparison, Outokumpu’s Kemi mine in Finland has ore reserves of 41.1 Mt averaging 24.5% Cr2O3. The much higher grades of the Big Daddy compare favourably with those deposits whose ore is shipped directly to foundries with minimal processing. This potential is being investigated.

Ontario has 42 operating mines today and is the largest producer of non-fuel minerals in Canada (21% of the nation’s total non-fuel production, worth over C$10.7billion in 2011).

Osisko buying Queenston Mining in all-stock deal – by Craig Wong (National Post – November 13, 2012)

November 13, 2012

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

Canadian Press – Osisko Mining Corp. signed an all-stock deal Monday valued at $550-million to buy Queenston Mining Inc. and its flagship Upper Beaver project in Ontario’s Kirkland Lake region.

Osisko president and chief executive Sean Roosen said work on the Upper Beaver project is coming to a critical stage in its development. “We feel this is the perfect time for us to bring our mine permitting and development teams into the project to back the plan and to make Upper Beaver a successful mine,” Mr. Roosen said on a call with analysts.

“We also have the ability to fund Upper Beaver development from internal cash flow so we don’t anticipate any further dilution as we evolve these projects.”

Queenston also owns several other gold properties in the Kirkland Lake gold camp area as well as interests in projects in Quebec, Manitoba and elsewhere in Ontario.

Queenston president and CEO Charles Page said the Upper Beaver project has the potential for four million ounces of gold. “Osisko’s proven development team can certainly maximize the potential of the Upper Beaver project,” he said.

Correction: Given platinum’s problems, can Xstrata really justify a Lonmin takeover? – by Lawrence Williams (Mineweb.com – November 12, 2012)

November 13, 2012

http://www.mineweb.com/

Speculation that Xstrata will make another attempt to oust the Lonmin Board and take the company over remains rife in London, despite Lonmin’s rebuff of the Xstrata overtures. (Correction on Lonmin rights issue status)

LONDON (MINEWEB) – Despite an official rebuff by the Lonmin Board, Xstrata looks as though it may well be about to make a serious play to take over Lonmin and its South African platinum mines – although the timing could be better for the diversified miner with the Glencore merger vote coming up in just over a week’s time – just a day after Lonmin’s own proposed fundraising plan is due to be voted on.

Xstrata is a logical saviour for Lonmin, although the latter doesn’t seem to think so. It owns 24.6% of Lonmin already, has platinum, chrome and ferrochrome operations in the Bushveld Complex area – where 90% of the world’s platinum reserves are thought to lie and which accounts for 70% of annual global production – but is not a major platinum miner and could view picking up the remainder of Lonmin at a relatively cheap price as an attractive long term play.

It is sitting on a huge loss on its existing holding, but nevertheless probably sees Lonmin’s platinum reserves, resources and operations as a great long term asset, particularly at Lonmin’s current hugely depressed share price. But, perhaps importantly if it doesn’t take up its rights, a large proportion of the the Lonmin fundraising could remain with the underwriters – even though the rights issue price has been set at a substantial discount to make it more attractive to existing shareholders.

Perhaps golfers should be thanking miners

November 13, 2012

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

As the last leaves fall from the trees and we head into winter, all golfers should perhaps take a little time to thank mining. Yes, before heading to the first tee, or when you are lining up your next putt, or storing your clubs for the winter think about what enables you to play this game. Without mining, there are no pars, birdies or bogeys.

We know mining provides us with the building blocks essential to society in the 21st century. Our modern communications, transportation, electrical, business, health care and educational systems could not exist without products from mining. But mining is also vital to recreation — fun.

Canada, on a per capita basis, has more golfers than any other country in the world. In Canada, approximately six million people play, or attempt to play, golf on a regular basis. In Ontario, there are 2.3 million golfers, more than any other province. Canadians will play 90 million rounds of golf this year and spend more than $1 billion in green fees alone. Add in clothing, equipment, carts, lessons and refreshments for rehydration and it is multi-billion dollar activity.

Golf is big business in Canada. There are about 2,500 golf courses in the country. Each facility has an average of 31 employees – at least on a seasonal basis. Average annual capital expenditures per course can be in the $250,000 range and operating budgets can be more than $500,000 at each course.

[Timmins] Council approves [Goldcorp] pit plan – by Benjamin Aubé (Timmins Daily Press – November 12, 2012)

November 13, 2012

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – City council unanimously approved the site plan agreement for the Hollinger Project on Monday, giving Goldcorp formal permission to proceed with the open pit mining operation that was first proposed back in 2007.

The decision did come after Bill Hughes, owner of the Senator Place apartments, and Rick Dubeau of the Hollinger Project Community Advisory Committee (HPCAC) expressed concerns they said are still being raised by the public.

Hughes, representing reportedly close to 250 people living at the Senator apartments and other locations within 300 metres of the pit, said that there are still many questions left unanswered about the project, despite the many reports and committees that have raised concerns.

“The plan of action should be to step back, consider what (HPCAC) has said, what I have said, what engineers have said, what environment lawyers have said,” expressed Hughes, when asked what he thought the proper course should be.

He asked, “Are we there or are we not there?”, expressing confusion as to whether any action was being taken despite the city’s comments that the public was being fully engaged in the process.

Canada sees risk in U.S. oil boom – by Shawn McCarthy and Nathan Vanderklippe – (Globe and Mail – November 13, 2012)

November 13, 2012

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.

OTTAWA, CALGARY – The United States is on track to become the world’s biggest oil producer by the end of the decade, a stunning turn of fortune that threatens to stifle the growth prospects of Canada’s oil exporters.

America’s rising oil output is “nothing short of spectacular” and will exceed that of Saudi Arabia or Russia by 2020, the International Energy Agency said in a report that starkly illustrates why the Canadian industry – and the federal and Alberta governments – are determined to build pipelines that would serve Asian markets.

The U.S. currently imports about 10 million barrels per day of crude, and Canada accounts for nearly 30 per cent of that total. But oil companies are using new technologies to extract vast amounts of crude from the U.S. Midwest. The IEA forecasts the Americans will be producing 11.1 million barrels per day by 2020, up from 8.1 million last year.

At the same time, the IEA expects American demand for petroleum products to decline significantly. The double-edged forecast has the potential to cause upheaval in the oil patch in Western Canada, which drew $40-billion in investment last year and is a major driver of economic growth and jobs in the country.

Canada must get its oil to emerging markets – by John Ibbitson (Globe and Mail – November 13, 2012)

November 13, 2012

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.

OTTAWA – Canada may be unique among nations: It possesses a scarce and valuable resource hugely in demand that it’s unable or unwilling to sell, putting the country’s economic future at risk.

This conclusion arises out of World Energy Outlook 2012, published Monday by the Paris-based International Energy Agency. The report projects a radically different energy future from the conventional assumptions that many Canadians still embrace.

“Energy developments in the United States are profound,” the report observes. Hydraulic fracturing and other unconventional forms of extraction, coupled with improving energy efficiency, will make the world’s largest economy also the world’s biggest oil producer by the end of the decade.

Within two decades, the U.S. will be virtually energy self-sufficient and a net oil exporter. The most reliable market for Canadian oil could soon become much less reliable. Even if President Barack Obama does approve the revised Keystone XL pipeline proposal next year, a continued American market for oil sands bitumen is uncertain.

NEWS RELEASE: OSISKO ANNOUNCES FRIENDLY ACQUISITION OF QUEENSTON

November 13, 2012November 12, 2012

November 12, 2012

MONTREAL, QC and TORONTO, ON – November 12, 2012. Osisko Mining Corporation (“Osisko”) (TSX:OSK) (FRANKFURT:EWX) and Queenston Mining Inc. (“Queenston”) (TSX:QMI) (OTCQX:QNMNF) are pleased to announce that they have entered into a definitive agreement (the “Agreement”) pursuant to which Osisko will acquire, by way of a court-approved plan of arrangement, all of the issued and outstanding common shares of Queenston. Queenston is a Canadian mineral exploration and development company with a primary focus on its holdings in the historic Kirkland Lake gold camp comprising 230km2 of prime exploration lands on trend with Osisko’s flagship Canadian Malartic mine.

Pursuant to the terms of the Agreement, Queenston shareholders will receive 0.611 of an Osisko share for each common share of Queenston held, implying an offer of C$6.00 per share based on Osisko’s closing price on the Toronto Stock Exchange (“TSX”) on November 9, 2012. The offer represents a 45% premium to Queenston’s 30-day volume-weighted average price (“VWAP”) for the period ending November 9, 2012.

The transaction values Queenston’s equity at approximately C$550 million on a fully diluted in-the-money basis and implies an enterprise value of approximately C$400 million. Pro forma the transaction, Queenston shareholders will own approximately 12% of Osisko (based on fully diluted in-the-money shares outstanding).

Canada’s future is bright, to lead G7 in growth in next 50 years: OECD – by Julian Beltrame (Winnipeg Free Press – November 9, 2012)

November 12, 2012

http://www.winnipegfreepress.com/

“For Canada, it’s a fairly young population, fairly well-educated workforce
and you have all these natural resources that give you higher growth than
other countries,” said Matthias Rumpf, a spokesman with the organization.

The Canadian Press – OTTAWA – The 21st century may not exactly belong to Canada, but according to a major world economic body the country is going to do pretty well. In fact, the Paris-based Organization for Economic Co-operation and Development sees Canada among the world’s leading economic lights over the next 50 years.

In issuing its long-term view of how it expects world economies to unfold, the OECD says Canada will continue to lead the Group of Seven industrialized economies in average annual growth over the next half century.

And it will also be near the top on a per-capita basis — possibly a truer measure of success — with only Japan sneaking ahead.

The economic research organization, which represents most of the world’s biggest industrialized economies, predicts Canada’s real gross domestic product will average 2.2 per cent growth in the next half century.

First Nations hold veto over resource development – by Barbara Yaffe (Vancouver Sun – November 12, 2012)

November 12, 2012

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

Governments and corporate Canada remain in denial about a new reality: aboriginal groups hold veto power over resource development.

In his just-published book, Resource Rulers; Fortune and Folly on Canada’s Road to Resources, Bill Gallagher reviews the legal victories natives have toted up since the 1980s, and draws an intriguing conclusion.

He says it’s no longer enough for companies to merely consult on resource projects, they need to invite aboriginals to become partners and co-managers in proposed developments.

Gallagher, a Kitchener resident who has worked as an oil-patch lawyer and treaty negotiator, calls the situation “the biggest under-reported business story of the last decade.” He personally has counted up “well over” 150 legal wins for native groups, all based on provisions outlined in Canada’s Constitution.

“The native legal winning streak now simply has to be fundamentally and constructively addressed, both nationally and regionally .”

That message was reinforced last week by Assembly of First Nations chief Shawn Atleo, speaking at a gathering north of Thunder Bay. Atleo said aboriginals are prepared to take care of themselves financially, using revenue from resources they believe they own.

Troubled Pascua Lama gold project experiences yet another setback – by Dorothy Kosich (November 12, 2012)

November 12, 2012

http://www.mineweb.com/

Chile’s mine health and safety regulator has requested a number of studies be presented for its consideration before it will allow the resumption of pre-stripping activities at Barrick’s Pascua Lama.

RENO (MINEWEB) – The costs and delays at the troubled Pascua Lama project–which already contributed to the dismissal of former Barrick CEO Aaron Regent–continue to mount as Chilean authorities halted construction work at portions of the project due to concerns about the health of workers at the site.

However, in a statement issued Sunday, Barrick said the order “only affects activities related to pre-stripping in Chile.” “Major construction activities on the Chilean side of the project, including work on the ore tunnel, the crusher and the camp will continue uninterrupted,” Barrick said in a news release. “Construction activities in Argentina are not impacted.”

“At this time, pre-stripping is not a critical path item in the construction schedule and a temporary halt is not anticipated to impact the overall project schedule or cost estimates,” the company said.

The Chilean newspaper La Tercera reported that safety inspectors from Chile’s National Geology and Mining Service (Sernageomin) visited Pascua Lama on October 24 and found there was an excess of fine particulates in suspension in the air.

Black clouds over Plan Nord – by Alain Castonguay (CIM Magazine – November 2012)

November 10, 2012

http://www.cim.org/en.aspx

PQ calls for revision of mining royalty regime

When Quebec’s Legislative Assembly was dissolved on August 1, the Charest government was unable to pass two significant legislative acts regarding resources, namely Bill-14 that would create a foundation for an innovative mining development model, and Bill 27, a bill to establish the corporation La Société du Plan Nord. Even the budget bill, which notably sought to modify the royalty regime for land-based oil extraction, failed to pass.

This year’s election saw Martine Ouellet, current minister of natural resources, re-elected on the Parti Québecois (PQ) ticket in Vachon. Ouellet actively worked to block Bills 14 and 27. PQ candidates Lorraine Richard (René-Lévesque) and Luc Ferland (Ungava) were also re-elected. These two members of the national assembly used the time allotted to them to delay the detailed study of bills in a parliamentary committee. Richard and Ferland, who have been very critical of Plan Nord, beat out the incumbent Quebec Liberal Party (PLQ) candidates in Fermont and Lebel-sur-Quévillon.

On August 23, in Montreal, the Fédération des chambres de commerce du Québec used the election campaign as a chance to hold a debate on natural resources. Participants included Martine Ouellet, Raymond Bachand (PLQ, re-elected in Outremont) and Gérard Deltell (Coalition Avenir Québec, re-elected in Chauveau). On this occasion, Ouellet emphasized her party’s platform, which she had been hawking on the campaign trail:

A cash-rich crowd hungry for base metal acquisitions – by Kip Keen (Mineweb.com – November 9, 2012)

November 10, 2012

http://www.mineweb.com/

Increasingly base metal miners have cash that needs be spent beyond their own capital projects. Time for acquisitions.

HALIFAX, NS (MINEWEB) – Basically, some junior to intermediate base metal miners have a bunch of cash sitting around they don’t need to spend on their own projects that can only really go to one thing: new acquisitions. All miners almost always talk of being on the lookout for new assets that are, as it is so often put, “accretive to shareholders.”

Yet such talk is not always matched with means by either cash, equity financing or debt. Increasingly, though, there are a number of juniors and intermediates – a couple new ones especially – that can back up their talk with cold, hard cash. Of particular note from recent quarterlies: Capstone Mining reported C$509 million in cash (and access to C$200 million in possible debt) while Nevsun Resources said it had C$379 million on hand.

More importantly, these two mountains of moola are now largely unspoken for; Nevsun and Capstone are relatively unencumbered by near term capital spends. While Nevsun is in the midst of building a copper plant as it transitions from gold production to copper production at its Bisha copper-zinc-gold mine in Eritrea, this copper plant is now mostly paid for, meaning Nevsun won’t have to cannibalize its cash to fund existing capital projects.

[Thunder Bay] Gas plant delay needs explaining – Thunder Bay Chronicle-Journal Editorial (November 9, 2012)

November 10, 2012

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

EVERY once in a while an issue arises with such profound implications that virtually everyone involved pays attention. These things can even cause politicians to go against their own governing party line, though that is all too rare. Both events have occurred in Thunder Bay after the Ontario Power Authority called off conversion of the city’s coal-fired power plant to natural gas.

The conversion, part of the Liberal government’s abandonment of coal-burning generating stations in the interest of cleaner air, was already delayed once, reportedly incurring a penalty of $5 million. Put back on track by the province, this second suspension comes despite the need for a secure local power source for an imminent mining boom that is poised to rescue the region’s flagging economy, create as many as 13,000 area jobs and produce an estimated $16 billion in tax revenue for all three levels government.

The suspension also comes despite personal assurances by Energy Minister Chris Bentley, as recently as August, that the conversion would proceed. Bentley says he wants to allow the OPA time to prove its claim to be able to save up to $400 million by mothballing the plant (a number that astonishes local officials) and make up the lost power from other sources. It’s a plan the region needs to hear, and soon.

Decentralizing the old Ontario Hydro was supposed to produce a leaner, more accountable electricity regimen in Ontario. But soaring costs for power, and for delivering it, have soured many Ontarians on the process which, by this second suspension of work at Thunder Bay, appears even more confused.