Inmet to battle $5.1-billion hostile takeover bid – by Pav Jordan (Globe and Mail – January 16, 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.

Inmet Mining Corp. has a week to respond officially to a hostile takeover bid from rival First Quantum Minerals Ltd., but few expect anything short of a rejection of the $5.1-billion offer.

The owner of the coveted Cobre Panama copper project in Central America has until Jan. 24 to respond, and people familiar with the situation say it will come out swinging, recommending against the takeover and signalling progress in its search for an alternative palatable to shareholders.

Central to its defence will be a critical analysis of First Quantum’s track record on cost controls, meeting production targets and building mines in Latin America, said a source.

The company will allege First Quantum has a history of underestimating capital costs, as well as argue the Vancouver-based firm has no experience with capital projects the size of Cobre Panama, which will cost $6.2-billion to put into production.

How this plays out could prove critical to Inmet’s defence because the First Quantum bid of $72 a share is in cash and stock, which means the hostile suitor must convince investors of the value of its own shares.

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How Will Vale Do In 2013? – by Ahmed Ishtiaq (Seeking Alpha – January 15, 2013)

http://seekingalpha.com/

Vale SA (VALE) is one of the stocks that was most severely hit by the slowdown in the global economy. Over the past two years, the stock has lost almost half of its value. Vale was trading close to $40 at the start of 2011. However, at the end of 2012, the stock closed at around $20. The end of the year was encouraging for the company as the stock gained substantially due to the expected increase in demand from China.

Vale is the second largest mining company in the world, as well as the largest producer of iron ore and pellets. The company focuses on production, exploration and sale of basic metals in Brazil and internationally. Vale is also engaged in logistics, fertilizers and steel businesses.

Due to its position as the second biggest mining company in the world, the company suffered heavily from a decrease in demand. However, global economic conditions are expected to recover in 2013, which has caused some positive movement in the stock price.

Dividend Profile

Vale announced $3 billion in cash dividends at the end of the last quarter, which translates into $0.5821 per share. Increase in dividends took dividend payments to $6 billion for 2012, and per share dividend to $1.1771. The biggest iron-ore producer in the world is one of the best dividend paying stocks in the market.

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HUMAN RIGHTS WATCH NEWS RELEASE: Eritrea: Mining Investors Risk Use of Forced Labor

Canadian Firm Failed to Adequately Address Issue

JANUARY 15, 2013

Click Here For: Hear No Evil: Forced Labor and Corporate Responsibility in Eritrea’s Mining Sector

(Toronto) – International mining firms rushing to invest in Eritrea’s burgeoning minerals sector risk involvement in serious abuses unless they take strong preventive measures. The failure of the Vancouver-based company Nevsun Resources to ensure that forced labor would not be used during construction of its Eritrea mine, and its limited ability to deal with forced labor allegations when they arose, highlight the risk.

The 29-page report, “Hear No Evil: Forced Labor and Corporate Responsibility in Eritrea’s Mining Sector,” describes how mining companies working in Eritrea risk involvement with the government’s widespread exploitation of forced labor. It also documents how Nevsun – the first company to develop an operational mine in Eritrea – initially failed to take those risks seriously, and then struggled to address allegations of abuse connected to its operations. Although the company has subsequently improved its policies, it still seems unable to investigate allegations of forced labor concerning a state-owned contractor it uses.

“If mining companies are going to work in Eritrea, they need to make absolutely sure that their operations don’t rely on forced labor,” said Chris Albin-Lackey, business and human rights senior researcher at Human Rights Watch. “If they can’t prevent this, they shouldn’t move forward at all.”

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Canada-Eritrea Mine, Bisha, Used Forced Labour, According To Human Rights Report – by Mike Blanchfield (The Canadian Press/Huffington Post – January 15, 2013)

http://www.huffingtonpost.ca/

OTTAWA – A highly critical human rights report released Tuesday is shedding new light on the darker implications of the Conservative government’s ambitions for Canadian mining companies in Africa.

The report by Human Rights Watch says Vancouver-based Nevsun Resources Ltd. (TSX: NSU) failed to ensure that forced labour was not used in the construction of its mine in Eritrea, the hermit-like pariah state on the Horn of Africa.

Though the company was concerned when the problems first came to light and tried to investigate, it was blocked by its state-owned partner, says the report by the New York-based agency. Nevsun said it has since instituted rigorous screening practices at its Bisha mine project and taken steps to ensure that forced labour is no longer used.

“When Nevsun began building its Bisha mine in Eritrea in 2008, it failed to conduct human rights due diligence activity and had only limited human rights safeguards in place,” Human Rights Watch said.

The Eritrean government insisted that Segen Construction Company, a local Eritrean contractor, carry out construction of the mine in 2008. Segen — owned by the ruling People’s Front for Democracy and Justice — routinely exploits conscript workers that the government assigns to it, the report alleges.

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Ontario Mining is a high tech industry investing heavily in R&D

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.

Mining in Ontario is a high tech industry where smart people do skilled work and skilled workers do smart jobs. Mining companies in Ontario invested almost $100 million in Research and Development (R&D) in 2011, according to the University of Toronto economic impact study Mining: Dynamic and Dependable for Ontario’s Future. This R&D was carried out in the pursuit of new ideas, new discoveries, new products, new processes and improved efficiency.

“On top of the usual type of investment in R&D, the mining industry has its own unique kind of research – mineral exploration,” said the study. In Ontario in 2011, mineral exploration and deposit appraisal investments surpassed $1 billion – the most ever spent in a Canadian jurisdiction in one year. “Ontario maintained its decade-long lead of all Canadian provinces and territories in exploration and deposit appraisal expenditures in 2011, with 26% of Canadian spending in the province.”

The University of Toronto’s Institute for Competitiveness and Prosperity believes that U.S. patents are a good indicator of the innovative capacity of an industry. Patents are sought first and foremost in the U.S. because the standards of patentability are more stringent. U.S. patent data compiled the University of Toronto shows a steady increase in the number of patents obtained by companies in Ontario’s mineral industry.

In 2010, companies involved in Ontario’s mining industry gained 37 U.S. patents, up from 32 in 2009, 24 in 2008 and 21 in 2007. Companies involved in metal mining gained the bulk of these patents but also “Ontario firms in scientific and technical services, which include land geophysical surveying, assaying laboratories and geological consulting services have averaged two U.S. patents per year over the past five years.”

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Amplats offers new non-mining job for every mining job lost – by Martin Creamer (MiningWeekly.com – January 15, 2013)

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

JOHANNESBURG (miningweekly.com) – Anglo American Platinum (Amplats), which is setting out to create at least one new non-mining job for every mining job lost in its proposed downsizing, saw its own share price and the global platinum price rise after announcing the most far-reaching restructuring of its 58-year history, which proposes that two mines close, four shafts be mothballed, a mine be put up for sale and the 14 000 mining jobs earmarked for shedding be matched by the creation of at least an equal number of new non-mining jobs.

In addition to redeploying one-third of 14 000 people back into the rest Anglo American group and the mining industry as a whole, Amplats is offering a new non-mining job opportunity, on top of a retrenchment package, to each of the employees who cannot be placed in another mining job and are forced to enter the non-mining space.

The aim in reducing the employee complement to 45 000 is to be job neutral. “We’ll seek to ensure that we compensate for any necessary labour restructuring through the creation of an equivalent number of non-mining jobs,” Amplats CEO Chris Griffith said.

This saw its share price rise 1.28% on the JSE to R497.30 before 10 am and the platinum price rise to $1 691/oz, overtaking a gold price of $1 653/oz. South Africa’s Chamber of Mines CEO Bheki Sibiya applauded Amplats for setting out to create new non-mining jobs in housing, infrastructure and small business development in Rustenburg and labour-sending areas to make amends for the mining jobs lost.

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Rio Tinto produced, shipped record iron ore in 2012; aluminum drops 10 per cent – by Ross Marowits (The Canadian Press/Victoria Times Colonist (January 15, 2013)

http://www.timescolonist.com/

MONTREAL – Global mining giant Rio Tinto expects to enhance its “competitive edge” by continuing to cut costs this year after achieving record iron ore production and shipments in 2012 while suffering a 10 per cent drop in aluminum output related to its lockout of employees in Alma, Que.

“This was another year of strong operational performance across the group…as our expansion program continues on schedule, delivering industry leading returns for our shareholders,” chief executive Tom Albanese said in a statement accompanying production results for the fourth quarter and full year.

The miner shipped 247 million tonnes of iron ore in 2012 despite weather disruptions and a significant maintenance shutdown during the year. Production increased four per cent to 253 million tonnes. Rio Tinto’s share of production was 199 million tonnes, led by its operations in Australia.

Production in the fourth quarter grew two per cent to 66 million tonnes, with Rio’s share reaching 52 million tonnes. The London-based miner said thermal coal production increased 16 per cent last year, while copper output increased six per cent and bauxite and alumina production grew 11 and 12 per cent respectively.

“Markets remain volatile, but our business continues to perform well. Across the group we are taking action to roll back unsustainable cost increases. This further enhances our resilience and competitive edge as we enter 2013.”

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NEWS RELEASE: Alamos Announces 40% Premium Takeover Offer for Aurizon

January 14, 2013

Toronto, Ontario (January 14, 2013) – Alamos Gold Inc. (TSX: AGI) (“Alamos” or the “Company”) announced  today that it has commenced an offer to acquire Aurizon Mines Ltd. (“Aurizon”) for approximately C$780 million in cash and shares (the “Offer”). The Offer will remain open until 5:00 p.m. (Toronto time) on February  19, 2013 unless withdrawn or extended. Alamos has also applied to list its common shares (“Alamos Shares”) on the New York Stock Exchange (the “NYSE”) under the symbol “AGI”.

Under the terms of the Offer, Alamos proposes to acquire all of the outstanding common shares of Aurizon (“Aurizon Shares”) for consideration value of C$4.65 per Aurizon Share. Each Aurizon shareholder can elect to receive consideration per Aurizon Share of either C$4.65 in cash (the “Cash Alternative”) or 0.2801 of an Alamos Share (the “Share Alternative”), subject in each case to pro-ration based on a maximum cash consideration of C$305,000,000 and maximum number of Alamos Shares issued of 23,500,000.

The Offer reflects a premium of approximately 40% based on the closing price of C$3.33 for the Aurizon Shares on the TSX on January 9, 2013, and a premium of approximately 37% based on the volume-weighted average price of the Aurizon Shares on the TSX for the 20 trading days ended January 9, 2013.

Full details of the Offer are included in the formal Offer and take-over bid circular that will be filed today with securities regulatory authorities (together with all related documents). Alamos will formally request an Aurizon security holder list today. The take-over bid documents will be mailed to Aurizon shareholders.

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S. Africa’s Amplats to shed mines, 14,000 jobs – by Ed Stoddard (Globe and Mail – January 15, 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.

JOHANNESBURG — Reuters – Anglo American Platinum, the world’s top platinum producer, said it will mothball two South African mines, sell another and cut 14,000 jobs, risking a repeat of last year’s strikes when about 50 people died.

In a review announced on Tuesday that is seen as crucial to reviving the fortunes of Anglo American, which owns about 80 per cent of Amplats, the platinum producer said it aimed to cut output by around a fifth or 400,000 ounces.

But analysts have cautioned the cut could be overstated, as it is based on production capacity that Rustenburg mines have not matched for several years. Against forecast production, the cuts may amount to closer to 300,000 ounces.

Amplats has said it probably fell to a full-year loss because of the 2012 strikes, which were centred on Rustenburg where most of the job cuts will fall. The price of platinum rose over 2 per cent to 3-month highs, leaping past gold for the first since March last year, on concerns over supply.

Reaction was swift, with an Amplats labour leader threatening a strike across its South African operations if the indefinite closures, when they would be put on “care and maintenance”, go ahead.

“If they put any shaft on care and maintenance, all of the operations will go on strike. Nothing like this will be allowed,” said Evans Ramogka, labour leader in Rustenburg.

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Nevsun accused of turning blind eye to forced labour – by Geoffrey York (Globe and Mail – January 15, 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.

JOHANNESBURG — For the conscripts who were ordered to work at a Canadian gold mine in Eritrea, the conditions were nearly unbearable: 12-hour shifts, six days a week, with poor food and no toilets, for a salary of less than $15 a month.

When one conscript left the mine without permission to attend a grandparent’s funeral, he was captured and imprisoned for four months, and then forced back into his unit.

These are among the allegations in a hard-hitting report by Human Rights Watch, to be released Tuesday, which criticizes the Canadian mining company for failing to prevent the use of forced labour at its mine. The report is based on interviews with former workers at the mine, who later fled the country.

The Vancouver-based company, Nevsun Resources Ltd., responded to questions from The Globe and Mail by saying that it expresses “regret” for any forced labour at its mine in Eritrea. It said it doesn’t permit conscripted labour at its mine today, but doesn’t know whether its subcontractor used conscripts in the past.

The allegations highlight the ethical and moral challenges for Canadian mining companies when they operate in countries with long histories of human rights abuses. And it raises the question of whether Canadian companies can develop mines in countries such as Eritrea without becoming complicit in those abuses.

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How science is showing the oil patch the way – by Shawn McCarthy and Carrie Tait – (Globe and Mail – January 16, 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.

OTTAWA and CALGARY — Moments before Rick George, who led Suncor Energy Inc. for 20 years, was named Canadian Energy Person of the Year in October, 2011, he declared himself “mad keen about technology” in the oil sands industry.

His words were a hip twist on a mantra he, along with his peers around the globe, have long supported: that technological advancements will ease some of the most environmentally challenging issues facing the energy industry, such as eliminating tailings ponds and reducing water use.

And new engineering techniques are about more than greening the energy industry. Teams are constantly experimenting, trying to find new ways to get more oil and gas out of the ground. Hydraulic fracturing, which revived depleted oil and gas fields across North America, as well as made new ones viable, stands out as a prime example in the past five years. Fracking is now as well known as old-school jack pumps, albeit more controversial.

That’s the catch with technology. It is a slow process, and not everyone wants development in the energy sector to flourish. But until alternatives become widespread, the energy industry will continue to rethink its techniques, looking for technological breakthroughs – big and small.

Here are some technologies in use and ideas scientists, engineers, geologists, and executives are working on, in hopes the faith and enthusiasm for technology they share with Mr. George proves fruitful.

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Suncor leads attack over Kinder Morgan pipeline prices – by Nathan Vanderklippe (Globe and Mail – January 16, 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.

CALGARY — A corporate spat has erupted in the race to carry oil to the British Columbia coast, as energy producers accuse a U.S. pipeline company of trying to charge exorbitant prices to ship crude.

The attack is being led by Suncor Energy Inc., the country’s largest oil company, and is aimed at the Canadian unit of Houston-based Kinder Morgan Inc., which is seeking approval for a $5.4-billion expansion of its Trans Mountain pipeline. The Kinder project would allow for the shipment of another 890,000 barrels a day between Edmonton and Burnaby, B.C., where it connects to a dock that stands to be an important outlet for Canadian oil to find new buyers in California and Asia.

Major oil companies are eager to ship to the coast to take advantage of higher prices on world markets than they can get by shipping to refineries in the U.S. Midwest and Southeast. But some of them are balking at the price – known in the industry as tolls – which they argue would allow Kinder Morgan to earn returns on the project that are far above its historical 7 to 12 per cent.

“The average projected [return on equity] would be approximately 28.3 per cent,” wrote Greg Matwichuk, an Alberta chartered accountant who provided evidence on behalf of Suncor to the National Energy Board. That, he added, “is significantly greater than returns earned by other pipelines in Canada.”

The dispute about tolls, which is set to burst into greater view when a public hearing begins Feb. 13, is a window into the high-stakes game under way for Canadian companies fighting to get oil to Pacific Coast as quickly as possible.

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