REVIEW: Bre-X – Dead Man’s Story – by Marilyn Scales (Canadian Mining Journal – April 1, 2014)

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.

You don’t have to be an industry insider to remember the story of Bre-X – the 200 million oz of gold in the jungles of Borneo that disappeared overnight. The story of the company’s rollercoaster ride – propelled by enormous greed – made headlines all over the world and severely damaging the reputation of Canada’s stock exchanges and mining community.

The facts should be familiar. A junior explorer sets out in a remote part of Indonesia to make a gold mine. They drilled, and released promising results. Investors invested, driving up the Bre-X stock price, and the company suddenly had no shortage of investors. More drilling was done, and even better results were released. The analysts loved the project. Bre-X management made higher and higher contained gold estimates – 20 million, 30 million, 100 million, and finally 200 million oz of gold just waiting to make everyone rich.

Of course, promises of huge riches attracts huge appetites. Bigger companies considered buying out Bre-X and gaining control of the Busang gold. The head of the Indonesian government, Suharto, wanted the pot of gold enough to usurp Bre-X’s claim to the property and asked an American miner to develop the project.

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Glencore Xstrata blocking progress at Donkin coal mine – by Roger Taylor (Halifax Chronicle Herald – March 31, 2014)

http://thechronicleherald.ca/

In hindsight it may have been a mistake for the Nova Scotia government to allow mining giant Xstrata plc to win control of the mothballed Donkin coal mine.

It seemed like a good idea at the time to have a company of the stature of Xstrata, with the know-how and financial backing to get the job done, to take over management of the underground mine.

But now, after several years of waiting, the market for coal has changed and so has the makeup of Xstrata, which was acquired by a major competitor, Glencore, in 2012. It didn’t take long for the new company, Glencore Xstrata plc, to realize the Donkin mine was too small for a corporation of its scale and that the return on investment couldn’t possibly meet its expectations.

So Glencore Xstrata announced it would instead sell its 75 per cent stake. But until a buyer could be found it would lay off the few workers looking after the site and would allow the mine to flood.

Although Glencore considers the Cape Breton project small, its 25 per cent minority partner in the Donkin mine, Morien Resources Corp. of Dartmouth, believes the development of the mine is still a winning proposition.

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The Resurrection of Copper Mountain – by Christopher Pollon (TheTyee.ca – March 24 2014)

http://thetyee.ca/

Click here for the entire series about copper: http://thetyee.ca/News/2014/03/24/Travels-with-Copper/

PRINCETON B.C. — The “cradle” of this copper story lies here, about 300 kilometres east of Vancouver near Princeton, B.C., a boom-and-bust mining and logging town that by the late 20th century seemed used up and ready to die.

Between 1927 and 1996, some US$6-billion worth of copper had been dug from the mountains south of town, extracted by at least five corporations, now all long gone. What was left, most traditional assays concluded, wasn’t worth the cost of pulling out of the ground.

But by 2011, change was on the horizon, driven by both new technologies and distant market forces 9,000 km to the east (see sidebar). Under new management, Copper Mountain again began producing raw copper for export, putting 380 people to work full time, and supporting about 1,500 other jobs indirectly.

“I’ve died and gone to mining heaven,” Princeton town councillor Frank Armitage gushed at the mine’s official re-opening. A 40-year veteran of the industry, Armitage is now both Princeton’s mayor and Copper Mountain’s human resources manager.

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Travels with Copper (with INTERACTIVE MAP) – by Christopher Pollon (TheTyee.ca – March 24 2014)

http://thetyee.ca/

Click here for the entire series about copper: http://thetyee.ca/News/2014/03/24/Travels-with-Copper/

Tyee contributing editor Christopher Pollon criss-crossed the Pacific on the trail of BC copper. Here’s why.

I’m standing on top of five billion pounds of copper on a sunny August afternoon in southwest British Columbia near Princeton, trying to figure out where it all goes.

Dust and smoke rise, as explosives shatter seams of rock into moveable chunks 350 metres below me. Bungalow-sized Komatsu trucks (the tires alone cost $40,000 each) wind downward around the terraced edges of the pit toward North America’s biggest hydraulic shovel which can scoop up 80 tons of rock in a single bite. Deceptively toy-like from a distance, the moving parts of the mine perform their ritual 24 hours a day, seven days a week. “Mining on this scale is what makes it economical,” Don Strickland, Copper Mountain’s VP of Operations, tells me.

By last century’s standards, there’s not enough high-grade ore here to warrant mining it. But ever-bigger equipment and new processing methods have made it possible to move — and mine — mountains. With historically high copper prices over the last five years, and most of the world’s best deposits already tapped, Copper Mountain can afford to break and crush 150,000 tonnes of rock a day that will produce just 90 tonnes of refined copper down the road — and still make a profit.

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COLUMN-China PMI not that strong, but may be good for commodities – by Clyde Russell (Reuters India – April 1, 2014)

http://in.reuters.com/

Clyde Russell is a Reuters market analyst. The views expressed are his own.

LAUNCESTON, Australia, April 1 (Reuters) – China’s official Purchasing Managers’ Index for March probably isn’t as strong as it looks, but that’s likely not a bad thing for commodity demand in the next few months.

The National Bureau of Statistics (NBS) PMI rose to 50.3 in March from 50.2 in February, matching the consensus expectation and indicating that the factory sector expanded slightly in the month.

The official measure, which focuses more on large, state-owned enterprises, is somewhat at odds with the HSBC PMI, which fell to an 8-month low of 48 in March, its third straight month below the 50 level that separates expansion from contraction.

It’s likely that the HSBC survey is painting a more accurate picture of current conditions in China, given the NBS measure tends to be seasonally strong in March, as this is the first month after the Lunar New Year holidays, which this year straddled January and February.

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Why are platinum and palladium not meeting analyst expectations? – by Lawrence Williams (Mineweb.com – April 1, 2014)

http://www.mineweb.com/

The impact of the 10 week old strike which has halted production at a number of South Africa’s platinum mines so far seems to have had little impact on pgm prices. Why?

LONDON (MINEWEB) – While every now and again some analyst or other comments that perhaps palladium is outperforming gold, or platinum is, on the year to date both the pgms have moved up pretty well pari passu with gold overall. All three metals are around 7-8% up since the beginning of the year. Indeed gold moved up substantially further during the height of the Ukraine crisis and while the pgms followed they did not quite do so to the same extent. As gold has fallen back though, the pgms have caught up again.

Many analysts have been preaching the investment merits of the pgms in the light of the long running platinum strike in South Africa which has seen a number of mines effectively shut down so far for some ten weeks – with no end in sight to the strikes yet.

The more aggressive AMCU which has become the dominant player among the platinum mine unions, has been demanding an effective doubling of the workers’ wages which the mining companies have concertedly said they cannot afford – and with many of the deep narrow reef platinum producers finding it tough to make any kind of profit even at current platinum prices they do have a point.

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CFMEU slams Rio Tinto’s warning on robots replacing Aussie workers – by Ben Hagemann (Ferret.com – March 31, 2014)

http://www.ferret.com.au/

The Construction, Forestry, Mining and Energy Union (CFMEU) has struck back after Rio Tinto’s warned that Australian mining labour forces could be replaced by robots.

Rio Tinto CEO Sam Walsh has cautioned Australia against allowing resource projects to shut because of local cost pressures, and warned that Australian society and Australian workers had to ensure they didn’t price themselves out of the market.

He said that the carbon and mining taxes were an issue, and that Rio Tinto is banking on the repeal of both the mining and carbon taxes. “It’s awfully important Australia maintains its competitiveness,” Walsh said.

He said Rio Tinto’s push into the “robotisation” of mining was partly due to the massive wages the company has been forced to pay in Australia. Walsh first introduced automated workshops when he headed Nissan’s manufacturing operations, and said that was done because Australians didn’t want to do the hard, dirty work.

“Some people have expressed concern about automation but quite frankly it’s getting harder and harder to attract young people to remote areas,” he said.

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Inside ‘big coal country’ as coal-fired energy demand returns – by Brad Quick (CNBC – April 1, 2014)

http://www.cnbc.com/

More U.S. power plants have been burning coal to meet rising energy demand. CNBC’s Brad Quick offers an inside look from the Powder River Basin in Montana and Wyoming, one of America’s largest coal regions. Montana often is known as “big sky country.” But ask any local, and they’ll tell you the phrase “big coal country” is just as fitting.

Along with Wyoming, Montana is home to the Powder River Basin—a region that boasts some of the biggest coal mines in the world. The two states account for 40 percent of all the coal produced in the U.S. So if you thought coal was a fading fuel—upstaged by natural gas and solar panels to power homes and businesses—guess again.

Reports of coal’s demise are greatly exaggerated

The frigid winter that froze much of the country also caused a surge in electricity demand. Natural gas prices soared to their highest level in years. So U.S. power plants trying to balance higher energy demand with rising fuel costs fired up more coal burners to keep consumer energy costs at bay.

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Barrick Gold slashed chairman’s pay to US$9.5M last year after investor outrage – by John Shmuel (National Post – April 1, 2014)

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

TORONTO — Barrick Gold Corp. unveiled a new compensation package for executives Monday, a year after management faced heavy blowback for a generous signing bonus that made incoming chairman John Thornton one of the highest paid executives in Canada.

The world’s largest gold miner said it had scaled back Mr. Thornton’s pay for 2013 to US$9.5-million, compared with US$17-million the prior year. Mr. Thornton’s original pay package, which included a US$11.9-million signing bonus, caused a rare rejection last year by shareholders of the company’s executive compensation plan.

“We heard shareholders loud and clear,” said Brett Harvey, Barrick’s lead director, adding that he saw the new compensation model as one that others in the industry are “going to follow.”

The new “scorecard” system will see Barrick pay a large chunk of compensation in stock that executives will have to hold until they retire or leave the company. It will also base salary on a number of performance metrics, including delivering planned cash flow, achieving cost targets and meeting earnings expectations. As chairman, Mr. Thornton will not fall under the new scheme.

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NEWS RELEASE: Wabassi Joint Venture Partner Comments on the Agreement between the Province of Ontario and Matawa First Nations

/NOT FOR DISSEMINATION IN THE UNITED STATES OR OVER THE UNITED STATES NEWSWIRE SERVICES./

VANCOUVER, April 1, 2014 /CNW/ – Discovery Harbour Resources Corp (51% owner & Operator of the Wabassi Project, Northwestern Ontario) (“DHR” or the “Company”) (TSX-V:DHR) is pleased that a framework agreement was entered on March 26, 2014, between the nine Matawa-member First Nations and the Province of Ontario to move forward with a negotiation process on a community-based regional approach to development in the Ring of Fire mineral province. This will include development of an access corridor which is planned to pass through the Wabassi Joint Venture’s claim group located between Eabametoong and Marten Falls settlements.

“We are encouraged that the initial step has been taken between the two groups. We understand that numerous logistical and political challenges lie ahead, but that the infrastructure development to serve the northwestern Ontario First Nations communities and the Ring of Fire will stand as a monumental benefit to all of Ontario, once completed,” said Frank Hegner, President and CEO of the Company. “We believe that perseverance and fairness in these negotiations with all concerned will ultimately result in a very positive outcome.”

Discovery Harbour and its joint venture partners, Northern Shield Resources (TSX-V: NRN) and Great Lakes Resources, a private company, completed their fall, 2013 exploration program in December 2013.To-date, the group has discovered two polymetallic VMS (volcanogenic massive sulfide) systems and two shear zone-hosted gold systems with 32 exploration drill holes.

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Bob Rae, John Nash and innovation in the Ring of Fire – by David Robinson (Northern Ontario Business – April 2014)

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.  Dave Robinson is an economist with the Institute for Northern Ontario Research and Development at Laurentian University.drobinson@laurentian.ca 

My students should have paid me for giving them the chance to see Bob Rae in action. Not just because Rae is a professional negotiator and the class deals with Nash Bargaining theory. Rae himself is an historic figure and he is dealing with historic treaty issues in the face of an historic mineral development. I brought history into the classroom. Of course, hardly any students knew what they were getting.

Rae’s visit offered students a glimpse of something like the Canada-Sweden Olympic rematch in hockey. Back in the 1840s, a report by Douglass Houghton, Michigan’s first state geologist, set off a copper boom in upper Michigan and Isle Royale in Lake Superior.

The Family Compact of Upper Canada began selling mining properties to promoters on the north shore of Superior and Huron. When chiefs like Shingwaukonse of Garden River objected to southerners selling lands they occupied, the leader
of the Family Compact sent his brother, William Benjamin Robinson, to get the 3,000 Northerners to give up their rights.

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UPDATE 1-BHP Billiton weighs spin-off of unloved assets – by Sonali Paul (Reuters U.K. – April 1, 2014)

http://uk.reuters.com/

MELBOURNE, April 1 (Reuters) – BHP Billiton is weighing a range of options to simplify its portfolio of assets, including a possible spin-off of unwanted businesses such as aluminium and nickel into a separate company, the top global miner said on Tuesday.

“We continue to actively study the next phase of simplification, including structural options, but will only pursue options that maximise value for BHP Billiton shareholders,” the company said in a statement.

Chief Executive Andrew Mackenzie has said over the past year that the company plans to focus on its large iron ore, copper, coal and petroleum businesses, while selling off smaller, less profitable operations.

The company’s statement on Tuesday came shortly after The Australian Financial Review newspaper reported that BHP was considering spinning off non-core assets into a separate company, offering shares to existing shareholders.

BHP shares rose as much as 2.2 percent to a three-week high after the report. They last traded up 1.7 percent at A$37.10 in a weaker broader market. Spinning off a company with non-core assets would allow BHP to pare down at a time when it may be difficult to find buyers willing to pay a good price. It could also help flush out a buyer.

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Kinross announces lower capital costs for Tasiast in Mauritania – by Henry Lazenby (MiningWeekly.com – April 1, 2014)

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

TORONTO (miningweekly.com) – Canadian miner Kinross Gold on Monday announced the results of a feasibility study that examined the viability of significantly expanding output at its Tasiast mine, in Mauritania, saying that the expected capital cost would be less than what a prefeasibility study (PFS) estimated last year.

The TSX- and NYSE-listed miner said that the initial capital cost to expand the mine would be $1.6-billion, compared with its PFS estimate of $2.7-billion. A thorough review of project design, execution and scope produced about 230 cost-saving initiatives worth about $493-million.

Examples of the cost savings included pre-assembled plant modules, concrete precasting and greater reliance on in-house technical expertise for mine planning, engineering, geological modelling and overall project oversight.

The company also expected a decrease in Tasiast’s expected water demand owing to a planned reduction in dump-leach processing, more accurate mill modelling and greater-than-expected water availability from current sources, which had resulted in the company being able to defer the need to begin building a sea water pipeline from the coast to the mine until 2018.

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Is An Agreement Between Ontario Government And First Nations Good News For Cliffs Natural? – by Trefis Team (Trefis.com – April 1, 2014)

http://www.trefis.com/

The Ontario government and Matawa First Nations have reached a negotiation framework agreement to discuss how to develop the world-class Ring of Fire mineral belt in Northern Ontario where Cliffs Natural Resources (NYSE:CLF) owns huge deposits of chromite.

The company has been unable to develop its assets here owing to lack of agreement among stakeholders on key issues related to environment, revenue sharing, community infrastructure, etc. Also, the region is totally isolated from the rest of the country and needs massive investment to develop connecting transportation infrastructure. This itself has been the subject of an acrimonious court battle between Cliffs and KWG Resources, which controls the land where the key transportation route lies. [1]

Therefore, while an agreement on a common framework is definitely a good first step, it is still going to take a lot of time to negotiate and agree to specific terms and conditions. This means that Cliffs’ investors will do good not to get their hopes up for now. The Black Thor project, right now in the suspended state, is unlikely to be revived any time soon.

Potential Of The Chromite Mines

The Ring of Fire region is thought to hold up to $50 billion worth of minerals and is going to be North America’s first major source of chromite.

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Tesla to Use North American Material Amid Pollution Worry – by Asher Berube (Investor Intel – March 31 2014)

http://investorintel.com/

March 31, 2014 (Source: Bloomberg) — Tesla Motors Inc. (TSLA), the electric vehicle maker co-founded by Elon Musk, plans to use only raw materials sourced in North America for its proposed $5 billion U.S. battery factory.

The Silicon Valley company won’t look overseas for the graphite, cobalt and other materials needed for its so-called Gigafactory, said Liz Jarvis-Shean, a spokeswoman.

“It will enable us to establish a supply chain that is local and focused on minimizing environmental impact while significantly reducing battery cost,” she said in an e-mail.

The move comes amid heightened interest in curbing graphite pollution and a widespread corporate sensitivity about avoiding the use of industrial minerals from global trouble spots such as central Africa. China’s government, for example, has begun to shutter mines producing graphite, a major ingredient in lithium-ion batteries, over air-quality issues, Bloomberg News reported March 14.

Tesla “is a high-profile company that is entering an age of supply-chain transparency,” said Simon Moores, an analyst at Industrial Minerals Data in London.

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