UPDATE 2-Canada regulators to propose extended poison pills – by Alastair Sharp and Euan Rocha (Reuters.com – February 26, 2013)

http://www.reuters.com/

TORONTO, Feb 26 (Reuters) – Canadian securities regulators want to change the rules on takeover defenses to make it more difficult for hostile bidders to buy Canadian companies, according to officials and lawyers briefed on the matter.

The plan, due to be published in draft form on March 14, is designed to bring more coherence to Canada’s regulatory regime after conflicting provincial rulings on so-called “poison pill” defenses to fend off unwanted suitors, the sources said.

“There has been some criticism over the years that Canada is too bidder-friendly and that companies should have more tools at their disposal to fight hostile bids,” said Ralph Shay who heads the securities law group at Fraser Milner Casgrain in Toronto.

Poison pills effectively raise the price of a hostile bid by giving all existing shareholders, excluding the hostile bidder, the right to buy additional stock in the target company at a discount.

In Canada, boards of companies that are targets of a hostile bid typically have limited time in which to bring an alternate proposal before shareholders, as provincial regulators usually quash poison pills 45 to 60 days after a bid is launched.

In recent years, regulators allowed poison pills to stay in place indefinitely in certain cases, since a majority of the shareholders of the target companies had ratified them.

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NEWS RELEASE: The Fraser Institute: Quebec’s Mining Edge Dying Fast, Miners Rank Alberta and New Brunswick Top Provinces for Investment

February 28, 2013 06:32 ET

Click Here for the 2012/2013 Survey: http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/mining-survey-2012-2013.pdf

MONTREAL, QUEBEC–(Marketwire – Feb. 28, 2013) – Quebec, once considered the best place on Earth for mining investment, has lost the confidence of the international mining community and fallen out of the world’s top 10 mining jurisdictions, according to the annual global survey of mining executives released today by the Fraser Institute.

La belle province ranked 11th out of 96 jurisdictions this year, down from fifth in 2012. Quebec was the world’s No. 1 mining jurisdiction from 2007 to 2010.

By comparison, Finland and Sweden, two countries often held up as paragons of environmental protection, are ranked first and second globally.

“Falling from No. 1 to 11th in just three years tells us that the mining policies of the Quebec government, particularly uncertainty around changes to the provincial mining act and proposed royalty hikes, are a serious concern to the global mining community,” said Kenneth Green, Fraser Institute senior director of energy and natural resources and director of the Survey of Mining Companies: 2012/2013.

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Mining industry veteran decries Canada’s corporate governance practices – by Barry Critchley (National Post – February 28, 2013)

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

Grant Sawiak is a partner at Fogler Rubinoff and a former staffer at the TSX who recently successfully advised a group of dissidents at Continental Precious Minerals Inc., a small mining company with an operation in Sweden.

Sawiak’s involvement in Continental’s proxy battle – which now has a new team of directors that doesn’t include the chief executive – gave him a first-hand look at corporate governance in the junior mining sector, a sector that’s home to thousands of companies which, in market cap terms, is typical of much of corporate Canada.

But despite that victory, Sawiak, who was personally sued during the battle, was not impressed with how corporate governance played out at Continental, a company where shareholders have had no say in the election of directors for about 15 years because of a by-law that requires half the outstanding shares to be present at a shareholder meeting.

In his view, corporate governance, which he defines as “the assortment of law, policies, suggestions and practices that directors of public companies are supposed to follow in order for them to act in the best interests of all stakeholders,” is, in practice, only available to those who can afford it.

“For the most part, Canada has theoretical rather than functional or executable corporate governance,” he said, arguing it’s alive and well at the large-cap companies (which are held accountable by well-funded critics and stakeholders) but not so elsewhere where at the first problem a stakeholder sells the securities and moves on.

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Ground-breaking [First Nation] partnership – by Kyle Gennings (Timmins Daily Press – February 28, 2013)

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – Local entrepreneurs had the opportunity to explore First Nations partnerships on Wednesday.

As part of the Timmins Chamber of Commerce’s Inisde Their Business series, guests were treated to a unique perspective on an emerging market by the man who has led the way in First Nations partnerships, Compass Carriers president Chris McKay.

Compass Carriers is a transportation company whose creation was made possible through a ground-breaking partnership between Mattagami First Nations and BazCorp Inc. and as a consultant, McKay helped to forge the already successful business venture.

“When the forestry industry took a downturn, our First Nation had no other choice but to look for an alternative to employ our skilled workforce,” he said. “This opportunity, which we created, took several years to come to fruition. It wasn’t something that we had to scramble to accommodate, it was something that took time and effort to build.”

In building this business venture, one of many that McKay has helped to create, the First Nation entered into some unfamiliar territory as it took its first step into modern business. “We had a skilled workforce trained to operate heavy equipment, which had been scattered all over the place in their search for work,” he said.

“We wanted to bring as much of that skilled work force back home as we laid the foundations that this company was built upon.”

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Rail cheaper than road for Ring of Fire: study – by Shawn Bell (Wawatay News – February 27, 2013)

http://wawataynews.ca/

A new study of transportation options for the Ring of Fire has determined that building a railway would be cheaper option over the long term than shipping ore on an all-weather road.

KWG Resources, a mining company that has long promoted the railway option for the region, commissioned the study. According to the study, the cost of building a rail line over the 330 kilometers between the Ring of Fire and Nakina is nearly $1.5 billion, while the cost of building a highway comes to just over $1 billion.

However the operating costs of a railway line were significantly lower than those of highway shipping, due to the high cost of equipment, maintenance and labour associated with shipping ore by road.

The study estimated that the extra cost of building a railway line would be covered by the savings in operating costs in six years, at the base case for mining production.

“This analysis brings out the features that the rail option is more robust, low maintenance, cost-reflective and demand-responsive to operational and market conditions than the road option,” the study stated.

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What happens when America doesn’t need Canada’s oil? – by Michael McCullough (Canadian Business Magazine – February 27, 2013)

http://www.canadianbusiness.com/

Time to find a new buyer.

When Alison Redford was forced to admit last month that her province was running short of cash due to low oil prices, it was frightening for Alberta and worrisome for the entire nation.

For the past decade, Canada has thrived on the good fortunes of the oil and gas industry, but those times, Redford made clear, are coming to an end. “Because of the rapidly growing levels of oil production in the United States and the fact that we’ve virtually nowhere else to sell our oil than the U.S. market, Alberta is getting just over $50 a barrel for our oil,” Redford said. “This bitumen bubble means that the Alberta government will collect about $6 billion less in revenue this year alone. To put that in context, that’s equivalent to all of our government spending on education each year.”

Redford’s fireside chat was intended to prepare citizens of her province for service cuts and possible tax increases expected on budget day, March 7. But the bitumen bubble’s effect will reach far beyond the borders of the Wild Rose Province. Two weeks after Redford’s remarks, federal Finance Minister Jim Flaherty told reporters lower government revenues follow from lower commodity prices like “night follows the day,” meaning a hard line of spending as he approaches his own coming budget.

The price drop is an unexpected turn of events for an industry that for decades has operated under the assumption of Peak Oil—geophysicist M. King Hubbert’s theory, first proposed in 1956, that the United States’ then soaring oil production would peak and begin to decline around 1970. Hubbert was proven right within the century in which he lived.

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Wisconsin Clears Way for Mines – by Mark Peters and John W. Miller (Wall Street Journal – February 27, 2013)

http://online.wsj.com/home-page

Wisconsin lawmakers voted to ease restrictions on iron-ore production Wednesday, as the state looks to join a resurgent mining industry in the upper Midwest.

Mining legislation championed by Gov. Scott Walker, a Republican, won approval in the state Senate, and passage is all but assured in the House. It passed the Senate by one vote, splitting mostly along party lines.

It will streamline the permitting process and ease protections on wetlands, ending a lengthy fight over reopening Wisconsin to mining after decades of little activity.

But the proposal comes as analysts warn of a glut in iron-ore supplies, and some mining companies in the region are looking to other metals, such as copper and nickel.

Wisconsin hasn’t had iron-ore mining since the early 1980s and has had tight restrictions on new mines since the late 1990s. Mr. Walker and GOP legislators failed to pass a similar bill last year in the Senate in a close vote, but Republicans have a larger majority this time, which helped clear the way for passage.

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Vale Has Record Quarterly Loss on $5.66 Billion Writedowns – by Juan Pablo Spinetto (Bloomberg.com – February 27, 2013)

http://www.bloomberg.com/

Vale SA (VALE3), the world’s largest iron- ore producer, posted a record quarterly loss after writing down the value of some of its assets. Profit missed analysts’ estimates on an adjusted basis.

Vale posted a fourth-quarter net loss of $2.65 billion, or 51 cents a share, compared with a profit of $4.67 billion, or 91 cents, a year earlier, the Rio de Janeiro-based company said today in a regulatory filing. Earnings before interest, taxes, depreciation and amortization, or adjusted Ebitda, declined to $4.39 billion, missing a $4.79 billion average estimate by 14 analysts compiled by Bloomberg.

Last year brought “big challenges” for the company, Chief Executive Officer Murilo Ferreira said on a conference call with reporters tonight after the report was released.

Ferreira is selling assets, cutting investments and writing down unprofitable projects as falling metal and mineral prices led last year to its lowest annual profit since 2009. The company failed to boost iron-ore output in 2012, ceding its title as the world’s second-largest miner by market value to Rio Tinto Group in October and losing market share to its Australian rivals.

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NEWS RELEASE: Canada’s Northern Iron Corp. Releases Part 2 of “The New Iron Age” Video Series

 

www.northernironcorp.com

Vancouver, British Columbia, Canada – February 27, 2013. Northern Iron Corp. (“Northern” or the “Company”) (TSX-V: NFE) (OTCQX- NHRIF) (FRANKFURT: N8I), today announced the re-doubling of efforts to educate the investment community about Canadian hot briquetted iron (HBI), and the role it can play in addressing the forecast global scrap steel shortage. To that end, the Company has released its animated video ‘Hot Briquetted Iron (HBI) – balancing global metallics supply and demand’, part two of a three-part educational series entitled ‘The New Iron Age’. Northern Iron will be airing ‘The New Iron Age’ in its entirety at its booth #2501 at the upcoming PDAC in Toronto at the Metro Convention Centre, South Building, from Sunday March 3rd to Wednesday March 6th, 2013.

“Northern Iron has a compelling story in working toward putting the past producing Griffith Mine back into production. The fact that the Griffith mine produced sponge iron, a form of direct reduced iron referred to as DRI, and pellets from 1968 to 1986 left us with infrastructure to access markets in the United States via Thunder Bay and the ability to ship to Asia via Prince Rupert. Essentially, we have a past producing mine with a history of producing a value-added ore based metallic product and I might add once again, the ability to move product and access markets, unlike the majority of potential iron ore producers who are located in remote locations and have no access to rail lines,” says Company CEO Basil Botha. “Canadians are familiar with iron ore but less so with ore based metallics.”

“The Griffith Mine was a producer of both DRI and pellets for 18 years and we believe the metallurgy on the mine will work for the production of HBI (hot briquetted iron) a value-added engineered metallic and a briquetted form of direct reduced iron (DRI). Metallurgical testing is part of our redevelopment plan for the Griffith mine and is subject to validation. Part two of this animated series explains HBI and its role in steel making.”

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Big change needed to save [Australian] nickel producers – by Sarah-Jane Tasker (The Australian – February 25, 2013)

http://www.couriermail.com.au/

THE majority of Australia’s nickel producers continue to struggle to turn a healthy profit, and analysts say there is little relief in sight unless there is a fundamental change, such as BHP Billiton closing its West Australian operations.

While BHP has no plans to close its Kambalda nickel west operations, market observers say it would take that level of industry event to provide any relief to the sector this year.

“BHP doesn’t have to run loss-making operations,” one respected mining analyst said. “They are a 100,000-tonne producer, so it’s a big change for the nickel market if its operations are put on care and maintenance. That would materially change the outlook for the nickel market and could aid the juniors.”

BHP reported last week that underlying earnings before interest and taxes for its aluminium and nickel division had fallen $US219 million ($213m) to a loss of $US285m for the first half.

Western Areas, Australia’s lowest cost producer, reported on Friday a sharp fall in its first-half profit on the weaker nickel price and on the back of a non-cash impairment charge.

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EDITORIAL: Short-sighted blockades may have negative impact – by Ron Grech (Timmins Daily Press – February 27, 2013)

The Daily Press is the city of Timmins broadsheet newspaper.

“The illegal blockade of the ice road to the Victor diamond mine drew
international attention, tarring the region with a sense of lawlessness
and economic risk for investors.” (Ron Grech – Timmins Daily Press)

TIMMINS – After being stalled for nearly three weeks because of blockades, De Beers says it may not be able to deliver a year’s worth of supplies required by the Victor diamond mine before the ice road begins to melt.

If that happens, the mine may be looking at temporary shutdowns and layoffs at some point during their normal operating season. That may pose a short-term problem that has long-term implications on the future of the mine.

The challenge is convincing De Beers’ decision-makers in South Africa the prospects in Attawapiskat are worth the trouble of investing in exploration to extend the life of the mine beyond 2018.

The illegal blockade of the ice road to the Victor diamond mine drew international attention, tarring the region with a sense of lawlessness and economic risk for investors.

Companies are never keen to invest millions of dollars in regions where vital business operations are interrupted, court orders are defied and community leaders regularly seek to re-negotiate terms of previously signed agreements.

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First Quantum bid down to wire as Inmet calls for rejection – by Pav Jordan (Globe and Mail – February 27, 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. made a final attempt to persuade shareholders to turn down a $5.1-billion hostile takeover bid from First Quantum Minerals Ltd. after failing to secure a better offer from its suitor.

Inmet, which has been fighting the hostile bid for months, opened the doors to First Quantum executives last week to examine its prize asset, the Cobre Panama copper mine that is the largest mining project ever in Central America.

“Despite its communication to Inmet shareholders stressing the link between due diligence and its ability to increase the offer, First Quantum has not increased its offer to date,” Inmet said, as the deadline loomed for a shareholder vote Wednesday on the hostile bid.

The high-stakes battle for Inmet comes amid a wave of embarrassing writedowns taken over the past few months on acquisitions made by some of the world’s biggest miners in recent years.

Many large companies have lost their appetite for deal-making, cowed by industry-wide cost overruns and multibillion-dollar writedowns on assets bought in headier times. Several analysts speculated last week that First Quantum might be hard-pressed to justify a higher bid to its shareholders.

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Province to help clean up arsenic in [Sudbury’s] Long Lake – by Laura Stricker (Sudbury Star – February 27, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Two years after tests by the Long Lake Stewardship Committee showed high levels of arsenic were entering the lake, the Ministry of Northern Development and Mines announced it is starting a three-year cleanup project.

“The stewardship began a program more than two years ago to have the arsenic problem addressed when Stewardship testing showed high arsenic levels was entering the lake from Luke Creek at the most westerly end of the lake,” the committee said in a release.

“Luke Creek leads directly from the old tailings of the Long Lake Gold Mine. The Ministry of Environment, at the request of the Stewardship, conducted independent tests in the fall of 2012 and confirmed that the arsenic levels in the last bay of the lake were a danger to humans.”

Last July, The Star first reported on the issue of arsenic showing up in the lake. At the time, Kate Jordan, a spokesperson with the Ministry of the Environment, stressed that the ministry had no concerns about the safety of Long Lake’s water.

According the release, a study conducted sometime this year by a contractor will determine the extent of the problem, and a plan of action to clean up the arsenic will be developed. The ministry will present the options to the committee and area residents to determine which plan best suits address the concerns.

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COLUMN-Glencore’s Glasenberg, live and unplugged – by John Kemp (Reuters.com – February 26, 2013)

http://www.reuters.com/

Feb 26 (Reuters) – “What we’ve got to do, when the markets do get stronger, no need to keep building a new asset and let’s keep the market tight for a while,” Glencore Chief Executive Ivan Glasenberg said in remarks about overinvestment in the mining industry.

Glasenberg’s comments underlined the case for vigilant antitrust enforcement in the mining sector.

“Not that we’re here to create an anti-competitive nature, but we’ve got to get returns. You the investors want to get returns on our assets and it’s easily done if we just use our brains,” the Glencore chief told investors at the BMO Capital Markets conference in Florida, reported by Bloomberg.

“We’ve always been wanting to keep building and keep putting the cash which we generate into new assets. That’s what we’ve got to stop doing as a mining industry. We’ve got to learn about demand and supply,” he said.

Glasenberg was criticising departing chief executives at BHP Billiton, Rio Tinto and Anglo American for reacting to higher prices by investing in too much new capacity (“Glencore’s CEO says rival mining chiefs really screwed up” Feb 26).

But his frank observations about the nature of mining profitability confirm the need for heightened scrutiny of asset purchases and mergers and acquisitions activity in the industry.

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Cyclone intensifies, Australia’s iron ore mines brace – by Rebekah Kebede and James Regan (Reuters.com – February 26, 2013)

http://www.reuters.com/

(Reuters) – A powerful cyclone headed for Australia’s Port Hedland, that has brought half the world’s seaborne-traded iron ore to a halt, has intensified and is set to make landfall late on Wednesday, threatening to flood inland mine operations and rail links.

Weather warnings extend as far as 500 kms (310 miles) inland to the massive mining camps and towns of Tom Price, Mt Newman and Nullagine, operated by Rio Tinto, BHP Billiton and Fortescue Metals Group.

Hardest-hit areas could receive up to 600 millimeters, or 2 feet, of rain in 24 hours, said the Bureau of Meteorology. Such extensive flooding threatens to submerge hundreds of kilometers (miles) of rail lines owned by the miners and used to transport ore to the ports.

“Extreme weather preparations continue across our mining operations in anticipation of the cyclone moving further inland,” BHP said in a statement emailed to Reuters. “Additional operations will be suspended if necessary.”

The Pilbara, a sparsely populated and inhospitable outback part of Australia, is the world’s largest source of iron ore. Australia’s three main iron ore ports, Port Hedland, Dampier and Cape Lambert, were closed on Monday. Offshore oil and gas fields have also been shut down.

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