October 9, 2014 – Republic of Mining

Investors Shun World’s Richest Mineral Store in South Africa – by Kevin Crowley and Andre Janse van Vuuren (Washington Post – October 09, 2014)

October 9, 2014

http://www.washingtonpost.com/business/

Oct. 9 (Bloomberg) — South Africa has the world’s richest mineral deposits, with $3.3 trillion in platinum, gold, iron ore and coal. That’s not enough to satisfy investors.

Extended labor strikes, aging mines and regulatory uncertainty have dragged the stock-market values of South African miners to a four-year low compared with global peers. At the start of 2013, the stocks traded with almost no discount.

“Without a question, if I look on a national level, South Africa is one of the most difficult places to operate in the world,” said Charl Malan, who helps manages $33 billion at Van Eck Associates Corp. in New York. “If you’re a non-South African company you trade at a premium multiple to a South African company.”

The shifting investor sentiment is a key topic at the Joburg Indaba conference that started in Johannesburg yesterday. A five-month platinum strike, dwindling gold reserves, persistent power blackouts and uncertainty over policy have prompted mining companies to act.

Anglo American Plc, the largest platinum producer, is selling mines that supplied one-third of its output last year. BHP Billiton Ltd., the world’s biggest miner, is planning to spin off some operations into a new company that will hold most of its assets in South Africa.

Falling commodities are crushing the TSX Venture – by David Pett (Regina Leader Post – October 9, 2014)

October 9, 2014

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

Down 17% in the past month and 65% since 2011

The outsized gains and repeated record highs of the past few years on most global equity benchmarks still far outweigh the mounting losses of the past few weeks. Then there’s the SP/TSX Venture composite index.

Canada’s resource-heavy junior stock exchange is down a nightmarish 65% since peaking in early 2011, including a 17% drop in the past month alone, and it’s hard to envision much of a rebound anytime soon with oil, gold and other commodities still on the skids.

“The underperformance of the Venture will likely continue,” said Arthur Salzer, chief executive at Northland Wealth Management in Markham, Ont. “While it may be a surprise to some investors, the commodity supercycle has ended.”

Historically, bull markets in commodities have lasted 15 to 20 years, but the cycle this time around, which began in the early 2000s, was much shorter.

Mr. Salzer said extreme amounts of capital were raised to finance mining projects around the world during the past 10 years, leading to a vast oversupply of many hard commodities, including iron ore, copper and nickel. “We may have experienced 20 years of financing within a decade’s worth of time,” he said.

NEWS RELEASE: First Uranium Concentrate Produced from Ore Mined at Cigar Lake

October 9, 2014

SASKATOON, SASKATCHEWAN–(Marketwired – Oct. 8, 2014) – ALL AMOUNTS ARE STATED IN CDN $ (UNLESS NOTED)

Cameco (TSX:CCO) (NYSE:CCJ) announced today that the McClean Lake mill has started producing uranium concentrate from ore mined at the Cigar Lake operation in northern Saskatchewan.

The McClean Lake mill, operated by AREVA Resources Canada Inc., recently completed modifications required to safely process the high-grade ore from the Cigar Lake mine. Cigar Lake ore is transported by truck to the McClean Lake mill located 70 kilometres northeast of the minesite for processing.

Mining at Cigar Lake began in March 2014. To date, Cameco has delivered about 1,400 tonnes of ore to McClean Lake. Mining was suspended in July 2014 to allow the orebody to freeze more thoroughly. Mining resumed in the first week of September and ore deliveries to the mill are ongoing. The mill is expected to produce up to 1 million pounds of uranium concentrate from Cigar Lake ore in 2014 and ramp up to its full production rate of 18 million pounds by 2018 (Cameco’s share 9 million pounds).

“Cigar Lake is among the world’s richest and most technically challenging orebodies and I congratulate all of the people who helped to bring it into production,” said Cameco president and CEO Tim Gitzel. “It provides Cameco with a large-scale, low-cost production centre and positions us to take full advantage of the long-term growth we see coming in our industry.”

Chile Seeking to Loosen Major Miners’ Grip on Idle Land – by Matt Craze (Bloomberg News – October 7, 2014)

October 9, 2014

http://www.bloomberg.com/

Chile’s government will seek talks with large-scale mining companies to make more land available for smaller mineral explorers as it seeks to expand the copper industry, the world’s largest.

Two-thirds of land with potential for discoveries is in the hands of major mining companies and vast areas under concession are lying idle, Deputy Mining Minister Ignacio Moreno told a conference in Santiago today. Chile is falling behind Mexico and Peru in capturing mining investment, he said.

“Everyone knows there is a problem that we have to take on,” Moreno said. “For the exploration companies this topic creates a lot of enthusiasm. For the majors it causes concern.”

The government will seek talks with the industry and act with “prudence” to achieve a consensus before reaching a conclusion next year, Moreno said. One proposal under study is to create a tax for land concessions that are not being explored, he said.

Chile, which produces a third of the world’s copper, says major companies including state-owned Codelco, Anglo American Plc and BHP Billiton Ltd. plan to invest more than $100 billion in new copper and gold mines.

Commodities under pressure as China continues economic realignment – Simon Rees (MiningWeekly.com – October 9, 2014)

October 9, 2014

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

TORONTO (miningweekly.com) – Commodity prices will continue to face near-term challenges that are linked to the dip in Chinese growth. However, support is likely to come from the country’s new economic agenda, Scotiabank VP and commodity market specialist Patricia Mohr told attendees at the recent Global Chinese Financial Forum.

Gold will come under greater pressure as the US recovery gathers pace, while some opportunities are apparent in base metals, particularly with zinc. “In addition, because of the tremendous expansion in US and Canadian oil and gas production, there are some excellent prospects in the pipeline and railways sectors,” Mohr said.

NEW ORDER

China dominates the global base metals market, accounting for 46% of global demand. Given this, the country’s economic fortunes are closely monitored, with any dip in growth potentially representative of a reduced metals uptake. Chinese gross domestic product (GDP) growth for 2014 will be over 7%, which compares with 7.7% in 2013, Mohr said.

In the long term, support for commodities will come from China’s new economic agenda that was born out of a leadership change in 2013. One of the agenda’s central goals is to spur greater urbanisation to underpin growth and boost further infrastructure investment.

SPECIAL REPORT: Evangelist Len Lindstrom’s African gold mining venture fails – by Geoff Leo (CBC News Saskatchewan – October 09, 2014)

October 9, 2014

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

700 Canadians, including Saskatoon’s Dean Britton, lose money in ‘God’s business’

A Saskatoon man who invested his life savings in an African gold mining company run by a globe-trotting Canadian televangelist is worried the entire project may have collapsed.

Dean Britton said for the past several years, evangelist-turned-CEO Len Lindstrom has virtually cut off contact with many of the 700 Canadians who invested at least $18 million in Liberty International Mineral Corporation.

And so Britton has taken it upon himself to research the company and communicate with as many of Lindstrom’s investors as possible. “He is such an expert at only telling his half of the story,” Britton said of Lindstrom. “I’m going to show the other half.”

Mining venture seemed like ‘God’s business’

A decade ago, Britton was tantalized by Lindstrom’s investment pitch of an African gold mine. Lindstrom explained he had licenced 21,000 square kilometres of potentially gold-rich land in Liberia.

Alcoa earnings beat forecasts, propelled by higher aluminum prices – by Allison Martell and Nicole Mordant (Reuters India – October 9, 2014)

October 9, 2014

http://in.reuters.com/

REUTERS – Alcoa Inc (AA.N) reported a stronger-than-expected increase in third-quarter profit on Wednesday as higher aluminum prices and lower costs drove a recovery in its business unit that produces aluminum.

In an interview, Alcoa Chief Executive Klaus Kleinfeld said the “upstream” raw materials business had its best quarter since the 2008 economic slump. “Our performance this time is more great proof that our strategy is working,” he said.

The aluminum company traditionally has been one of the first S&P 500 companies to report quarterly results, and some see it as a bellwether for the broader U.S. economy because it supplies major industries such as auto and airplane manufacturing.

Alcoa’s stock rose 2 percent in after-hours trading to $16.42. It is up 50 percent this year, outperforming the market and aluminum prices.

In the third quarter, Alcoa’s net income rose to $149 million, or 12 cents a share, from $24 million, or 2 cents, even as it took restructuring charges for smelter closures.

Alcoa’s growing business making specialized goods for automotive and aerospace customers has helped offset a weak market for less-processed aluminum. The company has also been working to improve costs.

Norilsk Sinks in Nickel Bear Market Wiping Out 46% Gain – by Halia Pavliva (Bloomberg News – October 8, 2014)

October 9, 2014

http://www.bloomberg.com/

OAO GMK Norilsk Nickel (NILSY), the best performer earlier this year among Russian shares traded in the U.S., sank to a six-month low on concern demand will weaken amid expectations for a slowdown in global economic growth.

American depositary receipts of the world’s largest nickel producer dropped 1.6 percent to $17.23 yesterday as the metal, used to prevent corrosion in stainless steel, slumped the most in two weeks. The stock has lost 20 percent since July, reversing a five-month rally that made it stand out as the benchmark Micex Index tumbled after President Vladimir Putin’s annexation of Crimea in March.

Nickel entered a bear market last month amid a slowdown in China, the largest metals consumer, and as stockpiles ballooned to a record. The International Monetary Fund on Oct. 7 cut its forecast for global growth, sparking concern that demand will ebb. Norilsk skirted the selloff in Russian equities triggered by sanctions over the nation’s role in the Ukraine war, surging 46 percent to an almost three-year high in July after months of nickel shortages.

“The company, which wasn’t affected by the sanctions, is now reacting to investors’ concern over economic growth, particularly in China, because that signals less demand for the metal,” Sergey Donskoy, an analyst at Societe Generale SA in Moscow, said by phone yesterday.

NEWS RELEASE: Ionic Engineering: ‘Innovation is Alive and Well in Sudbury Mining Industry’

October 9, 2014

www.ionic-eng.com

Stephan Matusch, P.Eng, MBA is President & CEO – Ionic Engineering Group of Companies.

There has been some recent discussion in the local media that Sudbury, Sudbury companies, and the local mining industry in particular are not very open to innovation. As a mechanical/electrical engineer who has built my entire career, and a number of successful businesses entirely on the strength of our innovation – innovation that came out of Sudbury and Northern Ontario, and innovation that was completed with the assistance and cooperation of the local mining industry–I think I am well qualified to object to this.

In the course of building my businesses, I have had the unique opportunity to travel to pretty much every corner of the world. I and our companies have worked for mining companies across the world. But we have also worked in many other industries associated with innovation, such as electronics, new energy, automotive and consumer goods. I’ve been fortunate enough to be part of a lot of innovative projects in a lot of companies and industries and so I very well understand what innovation is.

I would like to state, unequivocally, that Sudbury, and the businesses in Sudbury are highly innovative. But…. it’s important to understand what “innovation” means. Innovation runs across a spectrum. On one end, you have “bleeding edge” innovation. This includes self-driving cars, fusion reactors, vasimir plasma rockets, robo-surgeons and fully autonomous mining. This is “sexy” innovation. It’s very risky, expensive, and leads to great photo-ops with executives and politicians standing beside some very complex equipment that will likely never see light of day.

RB Energy shutters Quebec lithium mine as financing fails – by Peter Koven (National Post – October 8, 2014)

October 9, 2014

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

TORONTO – The Lundin magic touch is paying off right now for Lundin Mining Corp. But it is not doing much for RB Energy Inc.

On Monday, Lundin Mining announced it has put together a US$2.2-billion financing package for a copper acquisition. It was a major achievement in a volatile commodity market, and shows how much faith investors have in chairman Lukas Lundin and his Lundin Group of Companies.

Meanwhile, RB Energy said Wednesday it has to shut down its Quebec Lithium mine because it failed to raise the funds needed to keep it going. Most of the staff were laid off, and three directors resigned.

While not officially listed as part of the Lundin Group, RB shares its Vancouver head office with the Lundins and is led by the same management team that ran Red Back Mining Inc., which was the crown jewel of the Lundin Group. Red Back was sold in 2010 for US$7.1-billion.

The Red Back team, led by chief executive Rick Clark, got control of the Quebec lithium mine early this year through a merger with Canada Lithium Corp.

The long and short on the stunning drop in oil prices – by Eric Reguly (Globe and Mail – October 9, 2014)

October 9, 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.

ROME — The commodities markets can work in mysterious ways, and oil is certainly doing that now. While the common assumption is that the speculative short positions held by the hedge funds are overtaking the market, they are in fact greatly outnumbered by the speculative long positions. That means more hedgies hope to profit from rising prices than falling ones.

That’s a brave bet when oil prices are in something close to freefall. As oil prices plunge, it is the longs, not the shorts, who are looking vulnerable.

In late September, the speculative long positions on U.S. oil prices – West Texas intermediate (WTI) is the benchmark – was about 420,000 contracts (each contract represents 1,000 barrels). The short positions amounted to only about 130,000 contracts, putting the net speculative long position at 290,00 contracts. That net position is extremely high, historically speaking. What do the longs see that the shorts do not? They could be gambling on an imminent bounce-back in prices. Or they could be dead wrong.

To be sure, the oil glut in North America is not as extreme as it appears elsewhere on the planet; fed by surging shale oil production, newly expanded refineries in the United States are running flat out and exporting a lot of their output, narrowing the traditional price gap between WTI and Brent crude, the latter being the effective global benchmark.

Cliffs Natural Resources Sees No Deadline to Sell Noncore Assets – by John Miller (Wall Street Journal – October 8, 2014)

October 9, 2014

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

Despite Continuing Talks Over Shedding Some Mines, CEO Says ‘There Is No Ticking Clock’

Under fire as his company’s stock plummets, the chief executive of Cliffs Natural Resources, Inc. said that despite continuing talks to sell some mines at home and abroad, he isn’t under any deadline to sell noncore assets and urges patience.

“There’s no ticking clock,” said Lourenco Goncalves, whose company’s share price has fallen by more than half since he took over in August.

S&P has lowered the Cleveland-based miner’s credit rating to BB- from BBB- with a negative outlook, mostly because of falling iron ore prices. “They’re predicting the past,” referring to Cliffs’ poor performance in the recent few years, Mr. Goncalves said of the rating firm. Of the stock-price decline, he said, “I haven’t sold a share,” adding, “I can’t control stupidity” in the market.

Cliffs, one of the worst performers on the S&P 500 index in the past two years, has been hurt by declining iron-ore prices, which have fallen over 40% this year, due to oversupply and slumping Chinese demand. Cliffs suffered a net loss of $1.9 million in the second quarter of 2014, versus a $133.1 million profit over the same period a year ago. Its revenue dropped 26%.

Cliffs isn’t alone in being hit by falling iron ore prices. The iron-ore industry is on the verge of a potentially massive shake-up. Rio Tinto Group, one of the world’s top three producers, disclosed this week that it had received a takeover offer this past summer from Glencore GLNCY -2.06% PLC. Such an offer is expected to become attractive to Rio Tinto shareholders if iron ore prices fall further and the company’s financial performance slackens.

North Bay mine builder lands salt mine rehab work – by Ian Ross (Northern Ontario Business – October 8, 2014)

October 9, 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. Ian Ross is the editor of Northern Ontario Business ianross@nob.on.ca.

Cementation Canada will be on familiar turf later this year as the North Bay mine builder has landed a major contract to rehabilitate the shafts at a Goderich salt mine.

Kansas-based Compass Minerals, the owners of the Sifto salt mine, selected Cementation as part of a “multi-million-dollar” upgrade to reline the walls of two 55-year-old shafts at the mine, located on the shores of Lake Huron.

Details of the contract were to be ironed out in September, but project engineering work has already started. Cementation has some lineage to Goderich dating back decades when a predecessor company sunk the original No. 1 shaft in 1959, followed by a second one in 1968.

The job involves both underground and surface work that will see as many as 100 Cementation workers and sub-contractors on the site at peak periods of the three-year project.

Cementation president Roy Slack explained the company’s history dates back to the early 1900s and its Belgian founder, Albert Francois, who patented the grouting process for the mining industry.

Make no little plans, my son [Economic planning northern Ontario] – by David Robinson (Northern Ontario Business – October 2014)

October 9, 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

As an economist, I often get calls from the media about national and provincial issues. As an economist who studies economic development in Northern Ontario, I don’t get many calls. Most of those are asking for a speaker and almost none want my advice on economic development. I have only had a few calls from First Nation communities. I’d like to think I know something about development, so why am I left sitting in a corner sad and lonely?

It could be because everyone knows that academics, including me, are pretty useless. I’d hate to think so, but it could be. It could be the economic development people in Northern Ontario are so good they don’t need academic advice. It could be that the province is doing such a good job that that no one needs independent research and advice from the ivory tower.

My guess is that that because Northern universities have never focused on economic development issues for the North, media people and economic development officers simply don’t think about heading to the campus for help. The exception is the Community Economic and Social Development program at Algoma University. More recently, Laurentian University has established a new School of Northern Development that will do research and provide courses on Northern Ontario development. Things are getting better, however slowly.