Tag Archives | Canadian Mining Journal

Gold Resources and McEwen’s Junior Index – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

It is difficult to overstate the importance of gold. It has been prized as decoration as long as humankind has been around. It makes a solid foundation for world banking. It has been fought over. It is the stuff of which legends are made. And gold is undeniably beautiful.

Most of the general public and the mineral industry snap to attention when gold is in the news. Reports of new gold finds are especially welcome. But they may be fewer and farther apart if the findings of Halifax’s Metals Economics Group (MEG) are accurate. (www.MetalsEconomics.com

MEG examined the costs of finding and acquiring gold reserves and found that overall the industry is not discovering new deposits fast enough to meet future production demand.

The report looked closely at major gold producers, those with an output of 450,000 oz or more in 2008. They overcame “… rising costs, equipment and labour shortages, electrical outages, wars, permitting hurdles, typhoons, political opposition, and other obstacles,” the report noted to replace reserves at twice the rate they are mining them. Most of these gains were made through acquisitions or upgrading existing resources due to the high gold price, not through grassroots discoveries.

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Funding Furor Erupts in Ontario Over Mining Research – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Residents of northern Ontario, and Sudbury in particular, are furious with the funding of a new mining innovation centre in Toronto rather than where the industry operates. The $20-million centre will be built at the University of Toronto and named after Pierre Lassonde, president of Newmont Mining. The federal and provincial governments are each putting up $5.5 million. The balance will come from private donations, and Lassonde is said to be the largest donor.

What makes the deal such a bitter pill for northern residents to swallow is that it sets up a new mining innovation centre in direct competition with the Centre for Excellence in Mining Innovation (CEMI) already established in Sudbury. The new institute’s mandate is reported to be the same as CEMI, its name is so close as to be confusing, and its technology will duplicate what is already available.

“The decision by the federal government to deny funding to CEMI is a deliberate, calculated snub to the city of Sudbury, its provincial member [Rick] Bartolucci … and, most assuredly, [FedNor executive director Louise] Paquette,” Michael Atkins, president of Northern Life, wrote in that newspaper last week. “The willingness to quickly invest in a competing institution in Toronto just adds incredulity to the inside story.

“Either Sudbury sees its future as an international mining cluster, or it doesn’t. There will be no help from the province unless you demand it. There is a choice. Cower in the corner praying for the next grant or demanding the respect that is due a cluster that is more respected in Argentina, South Africa and Australia than it is in its own province,” he concluded.

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Australia Prepares to Overtake Canadian Uranium Production – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Australia will quadruple uranium production pushing itself ahead of Canada as the world’s largest producer. Australian state premier Mike Rann made this boast to a group of Indian journalists at the Citi Australia and new Zealand Investment conference earlier this month, according to a report in The Hindu of March 8, 2009.

The single project that would rocket Australian uranium production ahead of Canadian is the expansion of BHP Billiton’s Olympic Dam mine. The company is looking at the feasibility of expanding output from 4,300 t/y to 19,000 t/y. That would create a single mine that could produce 35% of the world’s current uranium needs.

The newspaper account did not specify whether all those tonnes per year were elemental uranium or uranium oxide. A quick peek at the BHP Billiton website confirmed that the annual output is tonnes of U3O8.

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Falconbridge’s Nickel Laterite Koniambo Project in New Caledonia – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.This article was originally published – April/2006

Another major Canadian player in New Caledonian nickel is Toronto’s Falconbridge Ltd. (soon to be swallowed by Inco Ltd.). Falconbridge and its 51% joint venture partner Société Minière du Sud Pacifique S.A. (SMSP), are developing the Koniambo Project in the northern part of the island for start up, perhaps as early as 2009.

Last month, Falconbridge and SMSP (which is owned primarily by the North Province) created an operating company, Koniambo Nickel S.A.S. under the leadership of president Brian Kenny. Koniambo Nickel will hold title to the Koniambo deposit. On March 1, the French minister of overseas territories François Baroin laid the ceremonial first stone for the Koniambo project.

The following day the Koniambo Nickel board met to approve this year’s work program. Preparing the earthworks and advancing the project engineering are the top priorities for 2006. Dredging of a port will begin early in 2007, and the main construction period will be 2008-09. Production will begin very late in 2009 or early in 2010.

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Better Returns Expected From Revised Goro Nickel Laterite Project in New Caledonia – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.This article was originally published – April/2006

New Caledonia, a French island territory 1,600 km off the northeast coast of Australia, is home to an estimated 25% of the world’s known nickel reserves. With rich laterite and saprolite deposits, it is no wonder this island nation is the scene of increased mining activity. A subsidiary of Paris-based Eramet currently owns five mines and a smelter scattered across the island. The other producer is Société Minière du Sud Pacifique S.A. It, too, has several mines supplying an Australian smelter.

The Goro Nickel Deposit, tucked away on the southern tip of New Caledonia, is one of the world’s largest undeveloped laterite deposits. But not for long. Construction of the mine, mineral processing plant, and extensive infrastructure is moving ahead quickly toward a start-up date of late 2007.

As of the end of February 2006, engineering is over 70% done, with about 1,600 workers on the site. Earthworks for the process plant were completed in March 2006, and will continue at the residue storage facility and on road realignment. The test mine extends to the saprolite horizon and exposed bedrock. The first of almost 2,000 skilled Filipino workers will soon arrive to start on construction.

The first berth of the port will be completed in time to receive the first module of the processing plant in May. The next milestone will be completion of the first half of the coal-fired power plant in September. The second berth of the port and the raw water pipeline will be finished in time for that event.

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Money Flowing Again for Best Mining Projects – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

There is light at the end of the ramp. There have been several financings in the hundreds-of-million-dollar range since the beginning of the year, and that leaves me hoping the worst is over for the mining community.

In early February, Osisko Mining of Montreal closed a bought deal worth C$350 million. That money is earmarked for completion of the Malartic gold project in Quebec.

Then Kinross Gold of Toronto completed a US$415-million public equity offering. The money will be used to pay down debt incurred with recent acquisitions.

Uranium producer Cameco of Saskatoon completed a bought deal that raised C$460 million. The money will strengthen the company treasury as Cameco looks for opportunities in today’s economic environment.

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Hidden Opportunity in Mining Sector Hard Times – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Unless you are recently returned from a remote, primitive tropical island, you are inundated daily by doom and gloom reports, not only for the mining industry but for a broad range of banking, retail, real estate, automobile and more sectors.

“Dismal” is what the latest PricewaterhouseCoopers study calls last year for juniors.

The numbers tell a “sobering tale”, Ernst & Young said of the toll the global credit crisis is taking on the market capitalization of TSX-listed companies.

The Fraser Institute called the outlook “gloomy”, expecting at least 30% of exploration companies to fail.

“The mining industry, generally, is gripped by panic and the vast majority of firms are in lock-down mode,” says Jon Wylie, managing director of Proudfoot Consulting in Canada. “They have reacted to sharply lower commodity prices by scaling back and closing older, higher-cost mines.”

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HudBay, Lundin Bucked off Merger-Go-Round – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Big and small companies are still jockeying for position on the merger-go-round. Unfortunately, not everyone is completing the ride; some are being bucked off. It appears, however, that even in times of scarce financing, there are deals to be done for enterprising executives.

One of the highest profile mergers, that of HudBay Minerals and Lundin Mining, has been derailed. The two companies agreed to terminate their arrangement agreement on Feb. 23. The deal was stridently opposed by HudBay corporate investors who demanded the deal go to a shareholder vote. The Ontario Securities Commission agreed and overturned a previous approval without a vote made by the Toronto Stock Exchange. Although Lundin shareholders had already voted in favour of the merger, HudBay determined that it was unlikely its shareholders would approve the deal. HudBay currently holds a 19.9% interest in Lundin.

The deal between IamGold Corp. and Orezone Resources was complete on Feb 25, and Orezone Gold Corp began trading on the TSX. The acquisition gives IamGold a 16.6% interest in Orezone, including the four-million-ounce Essakane gold project in Burkina Faso. The project could reach full production at over 300,000 oz/year in late 2010. The deal give Orezone a C$20-million equity injection toward the US$350 million needed to develop the Essakane deposit.

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Bucko Lake Canada’s Newest Nickel Producer – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Canada’s newest nickel producer is the Bucko Lake mine near Wabowden, MB. The mine, which belongs to Toronto’s Crowflight Minerals, shipped its first concentrate on Feb. 12, 2008, to Xstrata’s smelter Sudbury, ON.

The initial concentrate shipment weighed of 90.0 tonnes and contained 11.5 tonnes of nickel. Full commercial production is expected early in Q2 2009.

The Bucko Lake deposit was first investigated by Falconbridge, and a 340.0-metre-deep shaft was sunk in 1971-72. The mine is designed for longhole open stoping with sublevel access on 30.5-metres intervals. The intervals are connected via an internal decline. Backfill consists of cemented hydraulic material and development waste.

Underground mining began late last year in the first high-grade stope area on the 1,000 level (305 metres). Lower grade stopes on the 1,000 level are also being mined, and the high grade stope area on the 900 level (275 metres) is now being developed. The main ramp has been driven approximately 115 metres vertically from surface. Some ore development and crown pillar support activities will occur from the 450 level (135 metres), which should be reached late in the first quarter.

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Canadian Women In Mining Townships Project Offers Choice of Three Mining Moguls – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

What do Eric Sprott, Rob McEwen and Frank Guistra have in common? They have volunteered to be the prizes in a draw of people who donate to The Townships Project, a cause supported by the Women in Mining (WIM) networks in Vancouver and Toronto. Three winners whose names are drawn will have a one-on-one meeting with a mogul.

The Townships Project is a Canadian-based registered charity that supports microloans for South Africans (mainly women) to start up or expand their own sustainable business. A $50 loan can change a life by breaking the cycle of poverty. And because loan repayment is better than 95% the money keeps on working over and over again.

WIM aims to raise $250,000 for the Townships Project. The campaign got off to a great start when its Bedrock sponsor, Homeland Energy, donated $50,000. Corporate sponsors and individuals will be recognized for donations of $25,000 (gold), $10,000 (silver) and $2,500 (patron). Every donation brings the project closer to its goal, and small donations add up quickly. But hurry. The contest ends on March 1, and the winners will be announced at the Prospectors and Developers Association of Canada convention in Toronto on March 3, 2009.

Canada’s WIM network is 600 strong, half in Toronto and half in Vancouver. This is the group that raised $239,000 for breast cancer research in 2007. Support WIM. Go to www.Women-In-Mining.com to donate today.

Diamond Industry Grinds to a Halt – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

The global diamond industry is suffering the same economic downturn as the rest of the world. Consumers who may be out of work or watching their investments shrink are in no mood to buy luxury goods. The result is falling diamond prices as demand shrinks.

Diamond prices have been under pressure for over a year. One Canadian producer has already bit the dust. Tahera Diamond Corp. closed its Jericho mine in Nunavut and filed for protection under the Companies’ Creditors Arrangement Act in January 2008. Its assets are for sale.

Even the largest diamond producer is feeling the pinch. Word has reached us from Diamond World Magazine of Mumbai, India, that De Beers Canada plans to suspend operations at its Snap Lake mine in the Northwest Territories for a total of 10 weeks this year. This is on top of the 105 contract workers that were laid off in November 2008. Remaining employees will be asked to take vacations or accept salary adjustments to cover a six-week closure this summer and a further four-week closure at the end of this year.

De Beers January sales of rough diamonds to selected customers was at a 25-year low. The January 2008 sales garnered $650 million, but this year’s offering drew only an estimated $80 million to $150 million. The drop is a reflection of the depth of economic woes in the United States, where consumers purchase 50% of the world’s diamonds.

I’ll do my part to support the diamond industry. I’m saving towards the purchase of a Canadian diamond. Too bad the federal budget didn’t offer a tax credit for buying Canadian luxury goods.

Canadian Federal Budget Extends Exploration Tax Credit – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Canadians listened hopefully as federal Minister of Finance Jim Flaherty stood in his new, steel-toed shoes to deliver the Conservative’s budget on Jan. 27. It contained a wide range of spending proposals designed to kick-start the economy and tax breaks for lower income Canadians. But getting our economic engine back in high gear comes at a cost: a federal deficit that will be $34 billion this year and as much as $542 billion in fiscal 2012-13.

The chances of delivering a plan that would please everyone were slim. Both the NDP and Bloc Quebecois said they would not support the Conservative budget. Liberal leader Michael Ignatieff gave conditional approval if the Conservatives report quarterly on the budget’s implementation and cost.

Indirectly there is a glimmer of hope for the mineral industry. The Canadian government has set aside $200 billion for the financial markets in the hope of improving access to credit. That might benefit junior companies. The government also has plans to spend on infrastructure, retraining workers, and to simplify the approval process for new construction.

The budget contained one measure specifically aimed at the mineral industry. The most beneficial proposal is a one-year extension of the temporary 15% mineral exploration tax credit. This supports the flow-through share program to encourage individual investment in exploration. It has proven most helpful to junior companies that need to raise sums for property work. Moreover, funds raised through this program in 2010 may be spent until the end of 2011.

The federal government also announced last week that it is providing a $2.2 million non-repayable contribution toward building a northern mining transit centre in Val d’Or, Que. The project involves constructing a new $6.7-million building at the airport and creation of four full-time jobs. The aim is to meet the needs of mining companies that must airlift personnel and supplies to remote sites.

No matter how much the Canadian government spends, it cannot change the global metals markets in favour of our producers. The best corporate managers will use what budget provisions are available and hunker down into survival mode.

Rating Mining for Ethical Performance – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Last week a Geneva-based group called Covalence SA released its ethical rankings of multinational corporations. The methodology used is convoluted, and the results could be questioned. Points were added and subtracted for working conditions, impact of production, impact of product and institutional impact. For what it is worth, here is how some mining companies ranked.

Three Canadian companies made the list. Kinross Gold of Toronto, Teck Cominco of Vancouver and Barrick Gold of Toronto were ranked 212, 396 and 443, respectively. (Interestingly, these companies ranked higher than Charles Schwab, Chevron, Yahoo, Fannie Mae, Shell and Porsche, among others.)

Other integrated mineral producers fared better than the Canadians: Rio Tinto (7), Anglo American (122), Vale (201), and Xstrata (209). Some fared worse: BHP Billiton (292), Newmont (501) and Freeport-McMoRan (535).

Covalence tracks 550 large companies in 18 separate sectors. Its client roster includes many mining companies as well as Barclays, BMW, Coca-Bola, the Gap, Médecins sans Frontières, Hewlett-Packard and GlaxoSmithKline among others. Besides ethical rankings, the company offers research and reputation management services.

The thought occurred to me that the world is getting complex indeed when we rely on European think-tank to tell us if we are operating ethically.

Good News From Canadian Gold Miners – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Look to the gold sector for good news from Canadian miners. While base metal, coal and potash producers continue to trim output, companies such as Vancouver’s Goldcorp have recorded record quarterly production. Gold output at all of the company’s operations was 692,000 oz during the last quarter, bringing the 2008 total to 2.3 million oz.

Nor is that the only good news from Goldcorp. Although the calculation of operating costs for 2008 has not yet been completed, the company expects total cash costs will be $300/oz of gold on a byproduct basis.

The company is also predicting it will produce another 2.3 million oz of gold in 2009 at a total cash cost of $365/oz on a byproduct basis. Increases will be achieved at most mines, but production at the Alumbrera mine in Argentina and El Sauzal mine in Mexico will be significantly lower than previous years. The 2009 forecast for Goldcorp’s Canadian operations include 620,000 oz from Red Lake mines, 290,000 oz from the Porcupine division, and 235,000 oz from Musselwhite mine.

Nor is Goldcorp the only bright spot.

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No IPO on TSX for Last Half of 2008 – by Marilyn Scales

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

There was not a single initial public offering (IPO) made on the Toronto Stock Exchange (TSX) during the last six months of 2008 making it the worst year for IPOs in the last 10 years. The dearth of opportunity is highlighted in PricewaterhouseCoopers’ (PwC) annual look at activity on the exchange.

A meagre 57 new issues struggled to reach Canada’s equity markets in 2008, according to PwC, with a mere 10 registered on the TSX in the year ended Dec. 31, 2008. There were no new IPOs on the TSX in the final six months of the year. By comparison, there were 100 IPOs on all of Canada’s exchanges in 2007, with 36 new issues on the TSX.

The value of all issues on Canadian markets in 2008 was $682 million, down 80% from the $3.4 billion in 2007, the survey showed. The value of all issues on the TSX in 2008 was $547 million, off from $3.0 billion in 2007.

A quick look at the TSX numbers reveals that the mining industry successfully floated 13 IPOs on the senior exchange and 47 IPOs on the venture exchange in 2007. Activity included the largest IPO in North American history ($1.26 billion by Franco-Nevada Corp.) and B2 Gold’s $100-million issue on the venture exchange.

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