July 11, 2014 – Republic of Mining

Lundin Mining emerges as front-runner for Chile copper mine – by Rachelle Younglai (Globe and Mail – July 11, 2014)

July 11, 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.

Canada’s Lundin Mining Corp. is emerging as the front-runner to buy a major Freeport-McMoRan Copper & Gold Inc. copper mine in Chile, sources familiar with the matter said.

Toronto-headquartered Lundin would pay more than $2-billion for the Candelaria mine, according to people familiar with the current proposal. It would partner with Franco-Nevada Corp., which would pay up to $1-billion for a stream of the mine’s future gold production, the sources said.

The base-metals miner has been hunting for a copper acquisition for more than two years. Its chief executive officer Paul Conibear told The Globe and Mail in April, 2013, that assets with at least a 10-year mine life and capable of producing some 50,000 tonnes of copper per year would be ideal.

At the time, Mr. Conibear said the company had a strong balance sheet, no debt and has been on the lookout for the right deals for the last year and a half. If Lundin’s proposal succeeds, the Chilean mine would boost Lundin’s copper production significantly.

The interest in copper assets comes after a tumultuous few months for the red metal, used in construction and power generation. It dropped below $3 (U.S.) a pound on fears that China’s slowing economy would weaken demand, though has since rebounded and is trading around $3.25.

Renewed Plan Nord’s betting on diamonds -by Nicolas Van Praet (Montreal Gazette – July 10, 2014)

July 11, 2014

http://www.montrealgazette.com/index.html

Declining prices for resources causes an overall re-think

Quebec is turning north again for deal-making and growth. It may find it has to contend with industry contraction first.

Barely a month after sketching out plans to revive the so-called Plan Nord, a multibillion-dollar economic development strategy hatched by former Premier Jean Charest and pinned on natural resource extraction north of the 49th parallel, the reality of world markets has set in. And for many companies active in Quebec’s north, that means shrinking before they expand.

Take Canadian iron ore miner Labrador Iron Mines Holdings. The company, which operates in the Labrador Trough in Quebec, said last week it has stopped operations this year as a flood of new supply cools prices by about 30 per cent so far in 2014. The company is experiencing “considerable strain” on its cash reserves and needs outside investment to continue, its CEO said.

It’s not the only one. U.S.-based Cliffs Natural Resources in February announced a 50 per cent pullback on capital spending this year, putting on hold a planned expansion of its Lac Bloom, Que., facility. It’s also facing a proxy fight from shareholder Casablanca Capital.

Overall, low commodity prices persist after falling significantly last year. Net earnings in the industry remain near a decade low.

Infrastructure deficit thwarting investment [Africa] – by Pimani Baloyi (MiningWeekly.com – July 11, 2014)

July 11, 2014

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

A lack of infrastructure in several African countries continues to hinder investment in new mining projects and efficient operations at existing mining operations, says multidisciplinary mining and engineering consulting firm SRK Consulting.

Company chairperson and corporate consultant Roger Dixon tells Mining Weekly that the lack of infrastructure on the continent has affected the start-up of several coal and iron-ore projects, as mining companies consider effective materials-handling infrastructure as an imperative precondition for the viability of mine operations.

“When mining companies consider whether to start a mining operation, the cost of a rail line and a port to transport . . . will often outweigh the cost of the mine itself.

“For mines that have been established despite inadequate infrastructure – that is, when a mine has to generate its own electricity or transport its ore by road instead of rail – operating costs are usually much higher than what they would have been, had there been adequate, well-run infrastructure,” Dixon explains.

This exposes mining operations in Africa to economic risk and reduces the operations’ expansion opportunities, as well as their opportunities to impact on the economies of their host countries. Dixon adds that host communities and governments expect mining companies to improve the socioeconomic conditions of host communities.

Canada’s ‘strategic asset’ tactic makes for bad foreign investment policy – by Jack M. Mintz (National Post – July 11, 2014)

July 11, 2014

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

Jack M. Mintz is the Palmer Chair, School of Public Policy, University of Calgary.

The “strategic asset” argument was deployed to effect in several recent proposed takeovers

Canada’s on and off again love for foreign direct investment has recently come to play with Warren Buffett’s Berkshire Hathaway Energy’s proposed takeover of AltaLink, an electrical company that owns significant transmission assets in Alberta. The acquisition is being opposed in some quarters using the argument that transmission is a “strategic asset” that should remain in Canadian hands.

In Alberta’s regulated and privatized electrical market, it is not entirely clear why a new person on the block, especially one with deep pockets worth $55-billion, would undermine the fundamentals of the heavily regulated market. A strong owner of AltaLink will add competition to a market characterized by several successful electrical generation and distribution players, including TransAlta, Atco, EPCOR, Capital and ENMAX. In most cases, these privatized hefty companies typically invest not only in Alberta but also globally.

Like these other companies, the new AltaLink, which is focused on Alberta, could transform itself into a significant player investing in energy infrastructure assets in Canada. With both capital and managerial expertise offered by Berkshire Hathaway, AltaLink will be able to support the management of transmission infrastructure owned by Warren Buffett’s worldwide empire.

The “strategic asset” argument was deployed to effect in several recent proposed takeovers. Probably the worst involved Quebec blocking the acquisition of the retailer, Rona.

SCC upholds [Ontario F.N.] Grassy Narrows land title ruling – by Steve Rennie (CTV News – July 11, 2014)

July 11, 2014

http://www.ctvnews.ca/

Canadian Press – OTTAWA — The Supreme Court of Canada has ruled the Ontario government does not need Ottawa’s permission to permit industrial logging on a First Nation’s traditional lands.

While Friday’s unanimous 7-0 ruling may go down as a defeat for the Grassy Narrows First Nation, it does answer an important legal question: can the province can act alone to take up treaty land for forestry and mining? Yes, it can.

“I agree with the Ontario Court of Appeal that Ontario and only Ontario has the power to take up lands under Treaty 3,” Chief Justice Beverley McLachlin wrote in the decision.

Grassy Narrows appealed after Ontario’s highest court ruled in March 2013 that the province has the right to take up treaty land for forestry and mining. Only Ottawa has the power to take up the land, argued the First Nation, because treaty promises were made with the federal Crown.

The Supreme Court rejected that argument. “The promises made in Treaty 3 were promises of the Crown, not those of Canada,” McLachlin wrote. Both levels of government are responsible for fulfilling those promises under the Constitution, she said.

Tsilhqot’in decision fuels uncertainty in Ontario – by Alisha Hiyate (Mining Markets – July 11, 2014)

July 11, 2014

http://www.miningmarkets.ca/

‘Every treaty in Ontario is about to be challenged’

The Supreme Court of Canada’s recent Tsilhqot’in decision will have a ripple effect across Canada and could deter resource investment in the country, according to Neal Smitheman, a partner at law firm Fasken Martineau.

The decision, released on June 26, gave an aboriginal group in British Columbia aboriginal title over lands for the first time in Canada.

Aboriginal title means the group has a collective ownership of the land and the right to profit from its use, including mining and forestry, and the right to decide how the land is used.

The ruling has huge implications in B.C., where there are few settled land claims, but even projects in Ontario, where most of the province is covered by treaties, could be affected.

The decision is likely to inspire legal actions across the country as historic treaties are compared with the landmark ruling, which granted the Tsilhqot’in aboriginal title over a huge swath of land.

“From what we’re hearing, every treaty in Ontario is about to be challenged by First Nations,” said Smitheman in a presentation this week.

Mine-impacted Nunavut hamlets eligible for QIA funding – by David Murphy (Nunatsiaqonline.com – July 11, 2014)

July 11, 2014July 11, 2014

http://www.nunatsiaqonline.ca/

“We want to make sure that the families in the communities are supported”

The Qikiqtani Inuit Association plans to give away $750,000 to communities affected by the Mary River iron mine every year for the next six years.

QIA on July 9 launched its Ilagiiktunut Fund, which intends to offset potential social, economic and cultural impacts of the Mary River iron mine in five North Baffin communities.

Various bodies, such as hamlet councils, committees, groups, and even individuals in Arctic Bay, Clyde River, Hall Beach, Igloolik and Pond Inlet may apply for funding for projects of their choosing.

“750,000 for five communities is a lot of money,” Okalik Eegeesiak, president of QIA, said when she announced the fund on Nunavut Day. The Ilagiiktunut Fund replenishes to $750,000 every year, with QIA and Baffinland Iron Mines Corp. each contributing $375,000. Eegeesiak said the fund is essential for those working at the mine and their families.

“Because in a mining operation there’s at least a two-week-in, two-week-out period where staff work at the mine site, leaving the families behind,” Eegeesiak said.

Geologists seek work – any work – as mining boom goes bust – by James Regan (July 11, 2014)

July 11, 2014

http://www.reuters.com/

SYDNEY – (Reuters) – After 25 years working around the world as a highly paid geologist earning a six-digit salary, Phil Scheimer is back in Australia weighing up his future prospects: day labourer or pizza delivery man.

The collapse of the global mining boom is decimating the ranks of working geologists. With little chance of employment, many are being forced into unwanted career changes to pay the bills.

“I just want the phone to ring and for someone to say we’ve got work for you, any work,” says Scheimer from his home in Perth, a city in western Australia that rode the mining boom over the past decade but is now facing tens of thousands of people returning from mining camps jobless.

While scores of truck drivers, equipment operators, mechanics and other mining staff have also seen their numbers pared, geologists are among the hardest hit as companies abandon exploration and concentrate on working existing mines.

“Times are dire,” said Perth-based geology consultant Wendy Corbett. “I have been in the exploration industry for 41 years and this is the worst I have ever seen it.”

A second unemployed geologist, who has explored for nickel in Australia and Africa, said he had recently completed a three-day barista’s course and hoped for a steady paycheck after interviewing with a Sydney coffee house.

EDITORIAL: Gloomy outlook for SA economy (Business Day – July 11, 2014)

July 11, 2014

http://www.bdlive.co.za/

THE real economy is limping along, if Thursday’s mining and manufacturing numbers are anything to go by.

That doesn’t necessarily mean we are in a recession, technically speaking. But it does confirm that economic growth is likely to be extremely weak this year.

It suggests, too, that the Reserve Bank’s monetary policy committee will have an interesting time (as always) when it meets next week. That is especially so given the latest set of minutes from the US Federal Reserve, which confirm that “tapering” will end in October — but don’t provide clear signals on the big question of when exactly the Fed will start hiking interest rates.

It’s an important issue for our central bankers because if they are looking to ensure SA is not behind the curve on interest rates, it would be good to have a notion of what that US curve might look like.

But the data on SA’s economic performance are likely to weigh more heavily. The latest monthly figures show a picture of the production side of the economy that is gloomier than expected — and the platinum strike was by no means the only culprit. After the economy went negative in the first quarter, the market has been looking closely at the monthly figures to try to predict how the second quarter might turn out. April’s data had been stronger than expected, but that was not the case in May, when mining output fell 3.1% from April, worse than the consensus forecast of a 1.7% decline.

Aboriginal title ruling ‘all but guarantees uncertainty’ for CA mining projects – by Dorothy Kosich (Mineweb.com – July 11, 2014)

July 11, 2014

http://www.mineweb.com/

“Future natural resources projects may be scuttled, and existing projects may be halted or shut down,” said Ravina Bains of the Fraser Institute.

RENO (MINEWEB) – In a briefing published Thursday, British Columbia’s Fraser Institute’s Centre for Aboriginal Policy Studies warned that a recent Canadian Supreme Court ruling granting a group of six B.C. First Nations title to a large piece of land outside their reserves “will likely stunt economic development across Canada”.

“This court ruling all but guarantees uncertainty for natural resource projects in Canada and a potential increase in cost for economic development across the country,” said Ravina Bains, associate director of Aboriginal policy studies at the Fraser Institute.”

Unlike previous court rulings, the Tsilhqot-in Nation v. British Columbia judgment states that Aboriginal title can extend to all traditional territories and is not limited to specific villages. “This is particularly important in B.C. where one-third of the country’s First Nations reserves reside and where outstanding claims involve more than 100% of the province’s land,” said the Frasier Institute study.

Why the Supreme Court’s Tsilhqot’in land title decision is no game changer – by Robin Junger (National Post – July 10, 2014)

July 11, 2014

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

Robin Junger is a lawyer with McMillan LLP and co-chairs its aboriginal and environmental law groups. He is a former Deputy Minister of Energy, Mines and Petroleum Resources for the Province of British Columbia.

The recent decision of the Supreme Court of Canada in Tsilhqot’in v. British Columbia is important. But it is not the first case dealing with aboriginal title and it is not a “game changer” that will undermine governmental authority or the ability to approve projects in the resource sector.

Perhaps the most legally significant aspect of the judgment is that it confirms, subject to certain requirements, governments – including provincial governments – can continue to regulate the land base where aboriginal title is claimed or proven.

And the reasons for which title can be infringed are not vague. The court has, twice now, expressly stated that these reasons can include purposes such as infrastructure development, mining, and forestry, provided justification is shown. So while this decision is historic and significant for the Tsilhqot’in people who have been the first to successfully prove title in a specific area, it simply does not represent a fundamental advance for the law of aboriginal title.

PRECIOUS-Gold steadies near 3-1/2-month high, set for 6th weekly gain – by Jan Harvey (Reuters U.S. – July 11, 2014)

July 11, 2014

http://www.reuters.com/

LONDON, July 11 (Reuters) – Gold steadied near 3-1/2-month highs on Friday as stock markets recovered from the selloff seen in the previous session on concerns over the health of Portugal’s biggest bank, with the metal still on track for a sixth week of gains.

European shares recovered following Thursday’s slide, taking some upward pressure off gold, but investors remained cautious as Banco Espirito Santo attempted to reassure the market after trading in its shares was suspended.

Concerns over the financial stability of the euro zone have driven gold prices sharply higher in previous years, as investors bought the metal as a safe store of value.

Spot gold was at $1,337.50 an ounce by 1204 GMT, up 0.2 percent but off the previous day’s peak of $1,345, its highest since mid-March. U.S. gold futures for August delivery were down 20 cents an ounce at $1,339.00.

“Geopolitical uncertainty and concerns of any potential contagion into Portugal’s wider banking sector and indeed the euro zone’s wider banking sector were clearly supporting gold yesterday,” Mitsubishi analyst Jonathan Butler said.

“The longer-term trend since early June shows that there is still underlying strength in gold.”

Supreme Court to decide on Grassy Narrows logging dispute – by Jody Porter (CBC News Thunder Bay – July 10, 2014)

July 11, 2014

http://www.cbc.ca/news/canada/thunder-bay

Ontario First Nation argues province has no jurisdiction on treaty lands

A ruling from the Supreme Court of Canada on Friday will help determine who controls resource extraction across much of the country.

Grassy Narrows First Nation, north of Kenora, Ont., is arguing that the province does not have the right to issue logging or mining permits on its traditional lands.

“After years of trying to get the [forest] industry and the minister of natural resources to take it easy on the forest, we decided to launch a court case,” said trapper J.B. Fobister, one of the plaintiffs in the case that was launched in 2000.

Fobister said many people in Grassy Narrows need the forest to make a living. He estimates he makes up to $10,000 a year trapping pine marten. Some families rely on moose as a major food source.

But Fobister said industrial logging in the area interferes with all of that. “If you have no forest, you don’t have animals,” he said. “We need to see some benefits from the destruction of our homeland. There is no plan to replace what is taken from us.”

Why China’s mood is souring on Canada’s oil patch – by Claudia Cattaneo (National Post – July 11, 2014)

July 11, 2014

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

Barely two years since the national outcry over China’s aggressive push into Canada’s oil patch, some of the major acquisitions are looking messy to hopeless.

Instead of reaping the rewards of their first big step out into a free market oil industry, Chinese investors seem more focused on cutting costs and bailing out. Scores of executives have been fired for failing to deliver.

Some blame Ottawa’s more restrictive foreign ownership rules for the subsequent Chinese investment chill. But China’s increasingly sour mood has more to do with bitterness over the high prices paid, frustrations with long timelines to turn resources into production and Canada’s difficult operating environment. One senior Chinese investor said there were expectations that operating in Canada would be easy once federal government approval was obtained.

The change in mood is having an impact. Among the companies feeling the brunt is Athabasca Oil Corp., which is awaiting a $1.23-billion payout from PetroChina after the Calgary-based company exercised a put option to sell its remaining stake in the Dover oil sands project.

Athabasca chief operating officer Rob Broen said at a TD Securities investment conference this week his company is in the final stages of closing the deal and “expects to receive the proceeds in the near term.”

PRESS RELEASE: First gold bar poured at Dufferin Mine [Nova Scotia]

July 11, 2014

Rimouski, July, 10 2014 – Ressources Appalaches (APP – TSXV and OU3 – FWB) is pleased to announce the first gold bar poured at the Dufferin Mine in Nova Scotia. Final gold recovery is being optimized at the mine. A first dore (bullion) was poured and delivered to Johnson Matthey refinery in Ontario for final refining. Production results will be published after the commissioning period when the mine reaches full capacity.

Entire production circuit is in operation: mining, milling and concentration. Commissioning and optimization of the production is continuing as planned to reach full production capacity of 300 tons per day in August. The average plant production in June was more than 50% with peaks in excess of 200 tons per day. Recent upgrading on the grinding system: ball mill and cone crusher have been made to improve productivity.

Work is currently concentrated on optimization of the dore smelting furnace, on the adjustment of the laboratory and the installation of new equipment to optimize the concentration of gold. At the beginning of the circuit, a new recovery system (sluice) for coarse gold of more than 3 mm in diameter will be installed and at the end of the circuit, a small mill (rod mill) to facilitate uniform particle size for separation of gold from sulfides.

Hiring staff is now complete with 80 full-time employees hired including 20 miners and 15 plant operators and teams of geologists, engineers, mechanics and electricians.