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Day: April 3, 2014

Despite Slowdown in China, Rio Tinto Stays Committed to Mining Plans – by Stanley Reed (New York Times – April 3, 2014)

http://www.nytimes.com/

LONDON — Rio Tinto, one of the world’s largest mining companies, has big plans for pulling even more iron ore from the earth.

It is spending billions of dollars to expand its existing operations in the Pilbara region of Western Australia, where driverless trucks the size of three-story buildings haul iron ore out of 15 mines. The trouble is, the buildup comes just as Rio Tinto’s single biggest customer, China, is losing economic steam and global demand for raw materials like iron ore and copper has been cooling.

On a single day in early March, the spot market price of iron ore — the main ingredient in steel — fell by more than 8 percent, and it is down 12 percent for the year. The price of copper, another essential raw material for industry, has recently hovered near four-year lows.

Though mining executives tend to take the long view of their markets, where price cycles are part of the game, some analysts say that this time the industry may be staring at a deeper set of problems from which miners like Rio Tinto could have trouble extracting themselves. Even as China’s decades-old appetite for steel may be abating, there is a potential iron-ore glut coming because so many mining companies increased production to chase prices that for years were alluringly high.

The stock fell by 13 percent from mid-February to mid-March and since then has regained only about half that ground, even as broader indexes have been on the rise.

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Copper price soars on Chile – by Dow Jones Newswires (The Australian – April 3, 2014)

http://www.theaustralian.com.au/

Copper prices soared before paring early gains to end only slightly higher Wednesday on news of a powerful earthquake off the coast of Chile, as most mining operations appeared to be unaffected.

Copper prices had a roller-coaster reaction to the news over the course of the global day. The 8.2-magnitude quake near Chile, the world’s largest producer of the metal, initially pushed up the three-month copper contract on the London Metal Exchange by more than 1 per cent to $6,728.75 a metric tonne.

The price quickly reversed before spiking again later in the day, as US traders began work, to $US6,734 a tonne, the highest since March 10. LME three-month copper closed the day at $6,680 a tonne, up 0.3 per cent from the previous day’s closing price.

In the US, the most actively traded contract, copper for May delivery, rose as high as $3.0740 a pound before closing up 1.1 cents, or 0.4 per cent, at $3.0455 a pound on the Comex division of the New York Mercantile Exchange. Aluminium prices tracked copper, rising 1.5 per cent on the day to $1,823 a tonne.

“Concerns about China’s economic outlook overwhelmed short-lived fears of supply disruptions following the earthquake,” said analysts at RBC Capital Markets in a note to clients.

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NEWS RELEASE: The Fraser Institute: Providing First Nations With Mineral Rights May Help Ease Uncertainty Over Canadian Mining Development

Click here for copy of: Divergent Mineral Rights Regimes

CALGARY, ALBERTA–(Marketwired – April 3, 2014) – Canada could improve its attractiveness for mining investment by allowing private ownership of mineral rights, particularly if mineral rights were given to First Nations, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“Mining development in Canada is fraught with uncertainty related to First Nations land claims and requirements that miners consult with First Nations. The result is often endless rounds of negotiations with no end in sight,” said Kenneth Green, senior director with the Centre for Natural Resources at the Fraser Institute.

“Providing First Nations with private ownership of mineral rights will create a framework grounded in property rights and common law that would bring clarity to negotiations between First Nations and miners over project development.”

The study, Divergent Mineral Rights Regimes, compares mineral law and policies in Canada and the United States. Mineral rights in Canada belong to individual provinces (the Crown) but can be leased to miners, allowing them to develop the resource. But miners must negotiate within this Crown-based ownership system, making development of mining opportunities in First Nations jurisdictions particularly challenging. By comparison, in the United States mineral rights are privately owned.

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Russia Seen Diverting Nickel Sales to China in Case of Sanctions – by Alex Davis and Jae Hur (Bloomberg News – April 03, 2014)

http://www.businessweek.com/

Nickel from Russia, the world’s second-largest producer of the refined metal, would be shipped to China in the event of U.S. and European Union trade sanctions, according to a survey by Bloomberg News.

Russian companies selling to Europe and the U.S. would switch to buyers in China, the largest consumer of nickel, said eight out of 12 nickel producers, traders and analysts in the Asia-Pacific region. Punitive measures would increase global prices at least in the short-term, said eight respondents.

Russia took over Ukraine’s Crimea Peninsula last month, sparking the worst tensions since the Cold War. The EU and U.S. have warned of tougher sanctions as pro-Kremlin troops gather at Ukraine’s borders. OAO GMK Norilsk Nickel, the world’s biggest producer of the metal, accounts for 17 percent of global refined output, according to Morgan Stanley. About 46 percent of China’s refined nickel imports come from Russia, making it the country’s biggest supplier, according to Chinese customs data.

“Norilsk will be able to sell their metal to China if the U.S and EU impose strong trade sanctions on Russia,” Xu Aidong, an analyst at Beijing Antaike Information Development Co., said in Beijing on April 1. Xu has studied the metals industry for two decades.

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Editorial: Barrick rejigs exec pay – by John Cumming (Northern Miner – April 2, 2014)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry. Editor John Cumming MSc (Geol) is one of the country’s most well respected mining journalists.  jcumming@northernminer.com

Businessman and Bay Street veteran Peter Crossgrove, the one-time Placer Dome CEO and long-time Barrick Gold director, published his memoirs last year, and it makes for some lively and insightful reading, especially in light of Barrick’s newly revamped executive compensation program.

In his book titled “Boardroom games: You’re fired! When core values, respect and meaningful business practices are compromised for money and prestige,” Crossgrove is blunt in his criticism of the Barrick board, from which he was booted a couple of years ago to make way for Goldman Sachs’ John Thornton, who will become full Barrick chairman at the April 30 annual meeting, as founder Peter Munk retires.

“What do I think Barrick has to do to recover?” writes Crossgrove in 2013. “First of all, I would say they should find at least three directors who know the operating side of the business and form a technical committee . . . I suggest the chair, vice-chair and board members’ salaries be cut by 70%. They should only allow the chief operating officer the use of the corporate jet and get rid of the advisory board, which is a large expense and should be deleted . . . in 22 years I can only recall one meeting with the advisory board, whom I believe meet one day a year and are paid $100,000 per year.”

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Input from United Steelworkers dominates mine safety review – by Jonathan Migneault (Sudbury Northern Life – April 03, 2014)

http://www.northernlife.ca/

Fear of reprisals stifles health and safety progress: Steelworkers

To improve health and safety standards in Ontario’s mines, workers must not face reprisals if they bring issues forward to management, said Nick Larochelle, mines co-chair with United Steelworkers Local 6500.

Larochelle made his case Wednesday afternoon at the first public consultation in Sudbury as part of the Ministry of Labour’s year-long review of health and safety in the mining sector. Under section 50 of the Occupational Health and Safety Act employers cannot discipline their employees for refusing to do unsafe work or bringing their health and safety concerns forward.

But Larochelle said some of his members have been fired for complaining to their supervisors about health and safety issues.
He said employers use the guise of insubordination when they discipline workers for pointing out holes in their occupational health and safety practices.

The fear of reprisals, he said, has created an environment where mining companies’ internal responsibility systems are not as effective as they should be.

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NEWS RELEASE: KWG Testing Indicates New Ferrochrome Refining Method

Toronto, Canada, April 2, 2014 – KWG Resources Inc. (TSX-V: KWG) (“KWG”) is pleased to report that further laboratory tests on the reduction of the Black Horse chromite using natural gas have been completed. The results of these tests provide substantial encouragement that the newly developed method may be utilized to convert the Black Horse chromite into a metallised chrome and iron alloy. During these tests by XPS Consulting & Testwork Services – a Glencore Company, this chromite, blended with suitable solid carbon as reductant, was reduced in the solid state at atmospheric pressure in the presence of reformed natural gas to produce the alloy.

Reactions commenced at 900°C when a suitable accelerant was used to enhance the reactions – substantially lower than is usual for chromite ores. In addition, the time required for the reductants to convert the oxide ore to alloy was substantially less than one hour – much faster than established direct reduction methods have produced.

Based on these tests only, preliminary estimates provided in a report indicate that very substantial energy savings result. The study suggests that overall direct energy costs to process one tonne of concentrate into metallized ferrochrome alloy are less than half those required for conventional technology. In addition, the process has a considerably lower greenhouse gas emission footprint and greatly reduced impact on the environment. Capital costs are estimated to be significantly lower than those for conventional processes utilizing electrical energy. As previously reported, an international patent of the method is being pursued.

About KWG: KWG has a 30% interest in the Big Daddy chromite deposit and the right to earn 80% of the Black Horse chromite occurrence where resources are being defined.

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Miners in lock-down in Guinea as Ebola death toll hits 84 – by Saliou Samb and Stephanie Nebehay (Reuters India – April 3, 2014)

http://in.reuters.com/

CONAKRY/GENEVA – (Reuters) – Foreign mining firms have locked down operations in Guinea and pulled out some international staff, executives said on Wednesday, as the death toll from suspected cases of Ebola there hit 84.

The West African nation’s government said four new suspected cases of one of the world’s most lethal infectious diseases had been reported in the last 24 hours, bringing the total to 134.

Medical charity Medecins Sans Frontieres (MSF) has warned Guinea was facing an unprecedented epidemic of Ebola that would test weak health systems across West Africa.

Suspected cases of the disease – which has a fatality rate of up to 90 percent – have also been reported in neighboring Liberia and Sierra Leone, while Gambia said two people had been quarantined after arriving from southeastern Guinea.

The epicentre of Guinea’s two-month old outbreak has been in the southeast, close to its main iron ore reserves. The country is also the world’s top exporter of bauxite, the raw material used in aluminum production, and has rich deposits of gold.

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Osisko finds white knight in Yamana Gold deal aimed at fending off Goldcorp – by Nicolas Van Praet (National Post – April 3, 2014)

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

MONTREAL – Osisko Mining Corp. chief executive Sean Roosen had to come back to his shareholders with an attractive alternative to Goldcorp Inc.’s bid or risk embarrassment. What he’s given them instead is a tricky transaction with Yamana Gold Inc. and two pension funds that the market is still struggling to digest.

Now, with its bid set to expire Friday, Goldcorp has to decide whether to raise its offer or walk away in a politically charged battle for Canada’s largest gold mine.

In a surprise agreement that values Osisko at about $3.4-billion, Toronto-based Yamana said Wednesday it will buy a 50% interest in Montreal-based Osisko’s mining and exploration assets. The two companies would be equal partners in Osisko’s operations and Osisko would maintain its head office in Montreal. Osisko’s flagship Malartic gold mine in Quebec would be run through a joint operating committee.

“This allows our Osisko shareholders to maintain their ownership in Canadian Malartic [while monetizing] shareholders who want to receive liquidity,” said Mr. Roosen, who owns 5% of Osisko.

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On Canada’s upstart exchange: A rose by any other name… – by Christopher Ecclestone (Mineweb.com – April 2, 2014)

http://www.mineweb.com/

Here Christopher Ecclestone of Hallgarten and Company weighs in the chances the TSX Venture’s chief Canadian competitor gains appeal.

LONDON – Circumstances brought us, over the last month, to ponder the Canadian Securities Exchange (CSE) for a number of reasons. Not having focused before on the alphabet soup of alternative markets in that country, it came as a bit of a surprise to see that the entity that was known until recently as the CNSX had not started to lift its game and seriously challenge the dominance of the now bank-owned TMX combine.

The main motor for this change was the acquisition of 50% of the equity of the CNSX by Ned Goodman, one of the doyens of the Canadian mining investment scene and owner of the mighty Dundee group.

There was much bewailing in 2013 that the old spirit of the Vancouver Stock Exchange had been desexed by the merger with the TSX (though no-one bewailed the demise of the Montreal Exchange). From what we can gather Goodman wants to harvest some of this dissatisfaction and is targeting companies fed up with the TSXV and encouraging them to move the way of the CSE.

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Osisko finds white knight in Yamana – by Rachelle Younglai (Globe and Mail – April 3, 2014)

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.

In an effort to block Goldcorp Inc.’s hostile bid, Osisko Mining Corp. cut a complicated deal with Yamana Gold Inc. and two Canadian pension funds that will allow Osisko to operate its large gold mine in Quebec.

Toronto-based Yamana will use cash and its stock to buy a 50-per-cent interest in Osisko’s mining and exploration assets for $1.37-billion. Osisko will keep the rest of its company. That will give Osisko shareholders cash, a stake in Yamana, and a new common share of Osisko that’s worth $3.35 apiece, according to the companies.

Combining the new Osisko and the Yamana offer, the total per-share value is $7.60 for every Osisko share, the companies said. That is 10 per cent higher than Osisko’s closing price on Tuesday and 20 per cent more than Goldcorp’s current cash-and-stock offer of $6.33 a share.

As part of the friendly arrangement, Osisko will keep its head office in Montreal and continue to operate its flagship Canadian Malartic gold mine. The Quebec connection has become a key talking point for Osisko, whose chief executive officer Sean Roosen has been playing up the company’s ties to the province ahead of a provincial election next Monday.

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Inquest recommendations should be law: Widow – by Carol Mulligan (Sudbury Star – April 3, 2014)

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

Legislation must be enacted to compel companies to implement recommendations from coroners’ inquests, otherwise there is no point in holding them, says a woman whose husband was killed on the job in 2006.

Faye Campeau shared how her husband, Raymond, 47, was killed May 25, just hours after they had spoken on the phone and said they loved each other, with a group whose mandate is to make Ontario mines safer.

Campeau spoke Wednesday evening to a second session of public consultations being heard by the advisory group of the Mining Health, Safety and Prevention Review. Campeau’s was one of about 10 presentations made to the group, most of them on the internal responsibility system, employee training and the merits of the review itself.

Campeau represented the lobby group MINES (Mining Inquiry Needs Everyone’s Support), which campaigned for a full-blown inquiry into mining practices in Ontario after the June 2011 deaths of two men at Vale’s Stobie Mine. Campeau’s husband was a contractor working for Dynatec who was killed after the jumbo drill he was operating came loose.

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Flash Boys’ rigged tale ignores high frequency trading’s revolutionary effect on markets – by Terence Corcoran (National Post – April 3, 2014)

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

Michael Lewis’ Flash Boys is a rigged market fairy tale of little significance

This is the story of how Michael Lewis, veteran producer of Wall Street pot boilers, rigged media coverage for his new book, Flash Boys: A Wall Street Revolt, and conned just about everybody. And I mean rigged. First Mr. Lewis appeared on CBS’ 60 Minutes Sunday night for a little front-running on the Monday launch of Flash Boys. Then he strung together a couple of words so as to manipulate public attention paid to the book and trigger an artificial jump in sales and line his own pockets with fat royalties — maybe 15% — on the spread between the C$32.95 retail price of the book and the cost of producing it.

The words he used on 60 Minutes were: “The stock market is rigged.” In a New York Times Sunday Magazine adaptation of the book, Mr. Lewis says “The stock market really was rigged.” That’s a pretty good sales pitch if you’re trying to sell a book about the stock market. The odd thing is that Mr. Lewis never actually says those words in the book. The words Flash Boys also fail to make an appearance, leaving readers guessing as to who they are.

Possibly the Flash Boys are the group surrounding Brad Katsuyama, the Canadian employee at Royal Bank of Canada in New York who is credited with having uncovered market manipulation by unscrupulous traders in the big-game business of computer-driven high frequency trading (HFT).

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Canadian says ‘moral compass’ led him to solve unfair gaming of stock markets by high-frequency traders – by Armina Ligaya (National Post – April 1, 2014)

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

Even though Canadian trader Brad Katsuyama had found the elusive answers to a question that baffled even the most powerful Wall Street investors, he had a tough time, at first, even getting a meeting in the executive offices of one of the top financial firms in the United States.

The Markham, Ont.-native worked in the Manhattan offices of the Royal Bank of Canada, a bit player in Wall Street eyes, and was armed with a degree from Wilfrid Laurier University, not an ivy-league pedigree school.

But after a few minutes with Mr. Katsuyama, it was clear he had cracked the code of the next frontier of finance: how some high-frequency trading firms game the stock-market system to skim profits in a fraction of the time it would take to blink an eye, and how his software could get around this.

“I think at first, when I walk into the office, I’m not impressing anyone, right?” said Mr. Katsuyama, in a phone interview from New York. “But after five minutes of talking, I think I had their attention. It is kind of nice that it had more to do with what I was saying and not what I looked like.”

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