August 8, 2014 – Republic of Mining

Hambro’s Dream of Russian Gold Runs Into Mountain of Debt – by Thomas Biesheuvel (Bloomberg News – August 8, 2014)

August 8, 2014

http://www.bloomberg.com/

Peter Hambro dared to go where few others would, in search of gold in 1990s Russia. Investors who followed him reaped tenfold returns over eight years through 2010.

A repeat of that rich success now looks far away as Petropavlovsk Plc (POG), the company Hambro co-founded, confronts a mountain of debt.

The company was on the cusp of a place among the blue-ribbon names on London’s stock exchange until it borrowed more than $1 billion to expand production at its mines in far-eastern Siberia, six time zones from Moscow. The strategy unraveled when a dozen years of gains for bullion prices ended abruptly in 2013.

“The worst position you ever want to be in a falling commodity environment is having a half-built mine,” said Cailey Barker, an analyst at Numis Securities Ltd. in London. “It’s very hard to turn the Titanic around. It may be difficult to come back from here.”

In 2010, Petropavlovsk’s market value exceeded $3 billion and it was mentioned as a future member of the benchmark FTSE 100 Index. That’s shrunk to $111 million, dwarfed by about $819 million owed to banks that the company says now effectively control cash flow from its mines.

Environmental monitoring training underway at Matawa – by Rick Garrick (Wawatay News – August 8, 2014)

August 8, 2014

http://www.wawataynews.ca/

This year’s science and environment workshops at the Nibinamik Youth Retreat were part of the training for the RoFATA Environmental Monitoring Training Program.

“(The youth) really enjoyed it,” said Harry Bunting, a Ring of Fire Aboriginal Training Alliance (RoFATA) environmental monitoring student from Constance Lake. “They learned quite a bit actually, and so did I. I was able to do some sampling of fish, learned how to age a fish and what to do when you are sampling and doing your protocols to help assess the water quality and assess the environment itself.”

The Environmental Monitoring Training Program is being delivered by Four Rivers Matawa Environmental Services Group at the Matawa First Nations building in Thunder Bay.

“As part of the training program, students are assigned to real community based projects or initiatives so that they can learn to do the work by actually doing it,” said Sarah Cockerton, manager of environmental programs at Four Rivers, in an e-mail. “This year, the environmental monitoring students organized, prepared and delivered the science/environmental workshops to the youth in addition to planning and organizing a lot of the logistics to the trip itself.”

The Four Rivers staff and the environmental monitoring students travelled to Nibinamik on July 14 for the youth retreat and returned on July 18. Soon after arriving back in Thunder Bay, the environmental monitoring students were back in class.

BHP Billiton’s thirst triggers an outback water fight – by Sarah Martin (The Australian – August 9, 2014)

August 8, 2014

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

SHANE Oldfield kicks the red rocks on his vast, dry pastoral lease north of Marree where he raises organic Angus beef for export.

The outback Clayton Station in northern South Australia has always been marginal farming land. With an average of 10cm of rain a year the property is dependent on water from the Great Artesian Basin in dry years.

“We are living in a desert, and without the basin we are non-existent,” Mr Oldfield says. “We haven’t had a decent rainfall since February 2012, so without the Great Artesian Basin we wouldn’t be here.”

But while accustomed to battling drought, the Oldfields now have another fight on their hands. The water level of the basin is dropping dramatically, raising fears that the pastoral land will become unviable.

The culprit, they say, is BHP Billiton, which pumps all of its water from the basin to its Olympic Dam mine and the Roxby Downs township 250km away. “BHP aren’t going to own up to the fact that they are sucking the guts out of the basin,’’ he tells The Weekend Australian.

“But they are. They want the water from this country because without the water they can’t mine, and the GAB water is the cheapest water they are ever going to get.”

New Caledonia cancels vast Eramet, Vale nickel project – by AFP (August 8, 2014)

August 8, 2014

http://www.afp.com/en

New Caledonia on Friday cancelled a deal with Brazilian mining giant Vale and France’s Eramet to allow the exploration of one of the last major untapped nickel deposits in the world.

President of the southern province, Philippe Michel, said the agreement signed in April was illegal on five different counts, “each of which is enough to cancel the allocation of the resources”.

New Caledonia, off northeastern Australia, has a quarter of the world’s deposits of nickel, a key ingredient for manufacturing stainless steel.

The French overseas territory has been reviewing its mineral laws after a change of leadership and a surge in nickel prices, which have jumped a third this year after top miner Indonesia banned ore exports.

New Caledonia President Cynthia Ligeard told AFP that she “did not want to react at the moment” on the decision. Eramet also declined to comment.

The government estimates the Pernod and Prony deposits in question are estimated to hold between four million and seven million tonnes, but Michel said the amount had been understated in the deal with the miners.

Mount Polley spill could affect whole mining industry – by Sunny Dhillon (Globe and Mail – August 8, 2014)

August 8, 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.

VANCOUVER — B.C.’s mining association says the Mount Polley spill could lead to changes for the industry, even as First Nations leaders predicted the disaster will affect other resource projects and vowed to push for a public inquiry if they do not get the answers they are seeking.

Millions of cubic metres of waste spewed from a tailings pond into central B.C. waterways on Monday at the Mount Polley copper and gold mine, which is owned by Imperial Metals Corp.

Angela Waterman, vice-president of environment and technical affairs for the Mining Association of B.C., said much about the spill is unknown, but it could have consequences for other mining outfits when the results of investigations come out.

“We’ll have to wait for the report to find out what the underlying cause was, and everybody’s very interested in the findings. And from the findings there will always be learnings, and from that may come new recommendations for industry,” she said in an interview on Thursday.

Ms. Waterman called the spill “an anomaly,” and said she remains optimistic about the industry long-term. She also defended current regulations on how often mines must have inspections, which First Nations and conservation groups have decried as inadequate.

Uganda’s Mineral Exports Dry Up Over ‘Conflict’ Certificate – by Nicholas Bariyo (Wall Street Journal – August 8, 2014)

August 8, 2014

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

Regulations Aimed at Stopping Mineral-Trade Proceeds Funding Violence Have Not Been Put in Place

KAMPALA, Uganda—Mineral exports have ground to a halt because a certification process aimed at stopping so-called “conflict minerals” from leaving the country hasn’t been put in place—dealing a blow to the east African nation’s foreign revenue earnings.

Ugandan exporters have been unable to ship minerals such as gold, tin, tantalum and tungsten to markets in the European Union and the U.S. in the past two months, Matovu Bukenya, the spokesman for the energy and minerals ministry told The Wall Street Journal on Friday.

Uganda is the first nation neighboring mineral-rich but restive Congo to feel the pinch of U.S. legislation aimed at stopping proceeds from the mineral trade funding violent insurgencies that have killed millions in Eastern Congo since the late 1990s.

“We are doing all we can to get certification rights from the Organization of Economic Cooperation and Development to unlock the exports,” Mr. Bukenya said. “Most of our minerals are conflict free but we have to comply with the new regulations to access the markets”

Uganda earns around $100 million every year from legitimate mineral exports but trade officials say that the country is also major conduit for minerals smuggled from Congo to overseas markets.

Water meets drinking criteria, but long-term effects unknown – by Andrea Woo (Globe and Mail – August 8, 2014)

August 8, 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.

VANCOUVER — The water quality near the site of the massive tailings-pond breach this week meets drinking-water standards, according to preliminary test results, but the long-term impact on fish habitats and other wildlife remains unknown.

A water-usage ban will remain in place until additional testing is completed.

Jennifer McGuire, executive director of regional operations at the B.C. Ministry of Environment, delivered the news Thursday afternoon at a public meeting in the rural community of Likely. With her were Premier Christy Clark, Energy and Mines Minister Bill Bennett and Interior Health medical health officer Trevor Corneil.

Medical health officers and water specialists collected samples from three sites at Quesnel Lake and looked at pH levels, turbidity, suspended and dissolved solids, E.coli, dissolved metals and more, Ms. McGuire said.

“All results came back meeting the requirements for Canadian and B.C. drinking-water standards,” she said to applause from residents. “This is very good news.”

Now Showing: Pebble Mine’s Disastrous Future at BC’s Mount Polley Mine – by Joel Reynolds (Huffington Post – August 7, 2014)

August 8, 2014

http://www.huffingtonpost.ca/

Joel Reynolds is the Western Director and a senior attorney in the Los Angeles office of NRDC.

In the early morning of August 4, 2014, a major breach occurred in an earthen dam built to contain millions of tons of mining waste — called “tailings” — at the Mount Polley copper and gold mine in central British Columbia. Now, three days later, an estimated 1.3 billion gallons of contaminated tailings have spilled from the breached pond, sweeping untold volumes of waste and debris into the salmon stream and lake systems in the region and potentially threatening the Fraser River system to the west.

Previously pristine fishing, swimming, and summer vacation destinations like Polley Lake, Hazeltine Creek, and Quesnel Lake — including drinking water sources for the surrounding communities and residents — are now ground zero for toxicity, government health warnings, and “clean-up” – if indeed such a thing is actually possible.

Right now, before our very eyes through horrifying YouTube video, we are witnessing the mine disaster that the communities of Bristol Bay have feared — their “worst nightmare” — from the massive Pebble Mine. It is the toxic time bomb explosion that all of us who’ve fought the Pebble Mine have predicted could happen.

It is the catastrophic impact that, in its Bristol Bay watershed assessment, the EPA described as foreseeable in the event of a “tailings storage facility failure” — in layman’s terms, a dam breach — a finding the Pebble Limited Partnership (and its sole remaining company Northern Dynasty Minerals) have resoundingly and repeatedly challenged as groundless, as bad science, as a violation of their “right to due process.”

Group calls for government inspections of Sask. mine ponds (CBC News Saskatchewan – August 07, 2014)

August 8, 2014

http://www.cbc.ca/news/canada/saskatchewan

Mining companies currently hire independent consultants and present those reports to government

On the heels of one the the worst spill disasters in Canadian history, some people in Saskatchewan are worried about how this province protects and regulates tailings ponds.

It comes after the Mount Polley Mine tailings pond wall collapsed in B.C. Water, contaminated from years of mining, is flowing into nearby lakes and rivers.

In Saskatchewan, mining companies hire consultants for tailings pond inspections. Those reports are passed on to the Ministry of Environment for review.

Peter Prebble of the Saskatchewan Environmental Society said he would prefer the government do its own inspections of the tailings ponds and not rely solely on the company’s reports.

“There’s been a real tendency in Saskatchewan to encourage self regulation by companies, in other words, to encourage them to take more responsibility for ensuring that regulations are met. I’m worried that we’re moving too far in that direction,” he said.

In B.C., a total of 10 billion litres of water and 4.5 million cubic metres of metal-laden sand has leaked out of the tailings ponds.

Half a Loaf? Getting maximum value from the Ring of Fire – by Rick Millette (Northern Policy Institute – August 8, 2014)

August 8, 2014

http://northernpolicy.wordpress.com/

When I was a youngster, we had a neighbour who kept a jar of coins. When kids would visit, he’d offer the jar and say, “take as many as you like”. If you grabbed too many, your bulging fist wouldn’t make it through the neck of the jar. Lesson learned.

As the development of the Ring of Fire moves ahead, those involved will need to make complicated decisions on how much of the Ring’s wealth to keep in Ontario and how much to let go.

At this point, there are many scenarios of where the North’s chromite might end up. It’s certain that the raw ore will be reduced to concentrate at the mine sites, but after that, it’s a guess. When Cliffs Natural Resources was grabbing the headlines, the plan was to have the concentrate shipped to Sudbury to be turned into ferro chrome at a new smelter they would build in Capreol.

Right now, it’s debatable whether the Ring’s chromite will ever see an Ontario smelter due to provincial electrical costs. Quebec and Manitoba sell their power to industries for less than three cents per kilowatt hour (KWH), while Ontario’s rates are based on a spot market that is often double that.

Other than government intervention, there is nothing that would stop a company from shipping the chromite directly to another province or to another country. At the very least, northerners want the chromite smelted into ferro chrome in the North.

No reason to be confident in environmental protection – by Barbara Yaffe (Vancouver Sun – August 7, 2014)

August 8, 2014

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

Missteps give B.C. residents no reason to trust companies or government

Could there be a worse time in B.C. to have a tailings pond disaster?

Never mind that the salmon are spawning. A wee debate is taking place in this province about whether to sanction a pipeline to the coast and tanker transport of bitumen along B.C.’s coastline.

Albertans, hoping to get their petroleum to the West Coast, must be as distressed as British Columbians at the Aug. 4 breach of the Mount Polley tailings pond. Or they should be.

That is because this environmental catastrophe is bound to have a chilling effect on those in B.C. who otherwise might have been open to being convinced that — should Enbridge comply with the province’s five conditions and the 209 imposed by a federal review panel — well, maybe the job-generating Northern Gateway project would be worth the presumably diminished risk.

Not now. A slurry of metal-laden sand and waste water from that Imperial Metals tailings pond could well be mistaken for bitumen, with its greyish colour and ability to carry timber and other detritus along with it on its determined path.

This is what happens when goop mixes with water. A water ban, barring both drinking and bathing, was put in place in the vicinity of the breach and aboriginal fishers now fear for the season’s salmon run.

Company behind Mt. Polley disaster to open mine near Southeast Alaska Fishermen, Native groups concerned – by Anna Bisaro (The Juneau Empire – August 8, 2014)

August 8, 2014

http://juneauempire.com/

After the tailings pond dam breach at Mount Polley on Monday morning, Southeast Alaskans are worried about another Imperial Metals Corporation mine already being constructed at the headwaters of the Stikine watershed, one of the largest salmon producers in the Tongass National Forest.

The Red Chris Project, an open-pit copper and gold mine, is being constructed in northwest British Columbia near the Iskut River, a major tributary of the Stikine River. The Red Chris is predicted to process almost 30,000 tons of ore per day for 28 years, according to the Imperial Metals Corporation website.

“In Southeast Alaska, we will absorb nothing but risk,” Brian Lynch of the Petersburg Vessel Owner’s Association said. “We have everything to lose and nothing to gain.”

Lynch said that, after Monday’s incident, the fact that the Imperial Mines Corporation is also at the helm of the Red Chris Project increases concern for the Stikine watershed. The Stikine is an important salmon-producing river for the Tongass National Forest.

“A breach like this would be a disaster,” Lynch said of the Red Chris Project. “These systems produce a lot of salmon for our billion-dollar-a-year industry.”

Rio Tinto’s Kitimat aluminum smelter upgrade price tag rises to US$4.8 billion – by Ross Marowits (Canadian Business – Aug 7, 2014)

August 8, 2014

http://www.canadianbusiness.com/

The Canadian Press – MONTREAL – Rio Tinto will pump another US$1.5 billion into the aluminum smelter upgrade at Kitimat, B.C., increasing the total project cost to US$4.8 billion, as the mining giant says it remains confident about long-term fundamentals about metal demand.

The London-based company announced Thursday that its board has approved a further $1.5 billion expenditure to complete the modernization. That’s on top of $400 million that was previously allocated but unspent.

Rio Tinto Alcan’s former CEO Jacynthe Cote had said that difficulty in finding the right workers pushed the project off schedule and over budget.

There are about 1,100 employees at Kitimat and nearly 3,000 people working on the smelter upgrade, which is expected to start metal production in the first half of 2015.

Engineering, procurement and construction is 70 per cent complete but construction is only half finished, spokesman Bryan Tucker said Thursday.

The company announced in 2011 that it would upgrade the aging Kitimat smelter, boosting its aluminum production capacity by more than 48 per cent to about 420,000 tonnes per year.

Dissident Shareholders Continue to Strike Fear in the Hearts and Minds of Mining/Energy Executives – by Travis McPherson (Ceo.ca – August 6, 2014)

August 8, 2014

http://ceo.ca/

Just a week after the New York hedge-fund, Casablanca Capital, won its intense proxy fight over the $2.7 billion Cliffs Natural Resources (CLF:NYSE), another New York based fund has sent a warning to Madalena Energy’s management this morning.

In a powerful yet to the point press release this morning, Joshua Silverman of Iroquois Capital Management, LLC stated, “As a shareholder of Madalena we are very concerned with management’s failure to generate shareholder value. We expect to hear some concrete steps the Company is taking to better manage their assets for maximum value creation during their investor conference call tomorrow.”

In May, Madalena (MVN:TSX) surprised investors by acquiring Gran Tierra Energy’s Argentinian assets. Although the deal was accretive on most measures, the rationale for the purchase was unclear due to the fact that management had been telling investors that they were trying to find a farm-in partner for the expensive drilling in Argentina and would be focusing their efforts on their Canadian production.

Haywood Securities’ Senior Energy Analyst, Darrell Bishop said in a note: “there are some investors disappointed that the first major news coming out of Argentina was not a JV deal, as most had expected.”

Dam Burst Threatens Canada Projects Seeking Approval – by Christopher Donville and Liezel Hill (Bloomberg News – August 08, 2014)

August 8, 2014

http://www.businessweek.com/

A dam failure that sent billions of gallons of mine waste flowing down a British Columbia creek threatens to put a chill on new mining projects across Canada.

The Aug. 4 accident at Imperial Metals Corp. (III)’s Mount Polley copper-and-gold mine led the local district authority to declare a state of emergency amid concerns about drinking water and the fate of millions of migrating salmon. Provincial government officials are at the mine, about 400 kilometers (248 miles) northeast of Vancouver, and are testing local rivers and lakes for contamination.

The dam breach has been stabilized and the waste isn’t acidic, Vancouver-based Imperial said in a statement the day after the accident. The company is trying to investigate the spill and mitigate its effects, it said yesterday.
Whatever the cause or final outcome of the accident, it’s already bad news for the mining industry, which accounts for about a fifth of Canada’s exports. Mines trying to obtain permits in British Columbia will now be scrutinized much more closely, Adam Low, an analyst at Raymond James Financial Inc., said in an interview.

“This will, I think, cause everyone in government across the country to re-examine policies,” Bill Bennett, the province’s minister of energy and mining, told reporters Aug. 6.