January 13, 2015 – Republic of Mining

Ex-Xstrata CEO Davis Considering a Bid for Vale Nickel Assets – by Firat Kayakiran, Dinesh Nair and Jesse Riseborough (Bloomberg News – January 13, 2015)

January 13, 2015

http://www.bloomberg.com/

Mick Davis, former Xstrata Plc chief executive officer, is considering a bid for Vale SA (VALE5)’s nickel business, according to people with knowledge of the situation.

Davis’s investment vehicle X2 Resources values Vale’s nickel business at $5 billion to $7 billion, two of the people said, who asked not to be identified because the negotiations are private. There hasn’t been any formal negotiation between X2 and Vale about the assets yet, they said.

X2 has raised about $4.8 billion from equity investors including Asia’s largest raw-materials trader Noble Group Ltd. (NOBL), private-equity fund TPG Capital and sovereign-wealth and pension funds to create a mid-tier mining company. It has been hunting for assets to buy from the world’s largest miners such as Vale, BHP Billiton Ltd. (BHP) and Anglo American Plc.

Vale’s American depositary receipts, the equivalent of one ordinary share, erased losses and rose 1.4 percent to $8.67 at 2:35 p.m. in New York.

Vale, which as well as being the world’s leading iron-ore miner is also the biggest nickel producer, has already said it may try to raise cash from the business.

The company is considering the sale of a minority stake in its metals-producing unit, which it valued at as much as $35 billion, in an initial public offering, Chief Financial Officer Luciano Siani said Dec. 2. The unit includes copper as well as nickel.

Patent office decision may help KWG to cut chromite production costs in half – by Jamie Smith (tbnewswatch.com – January 13, 2015)

January 13, 2015

http://www.tbnewswatch.com/default.aspx

THUNDER BAY — Mining is an expensive industry. Just ask KWG Resources, which received good news from the U.S. Patent Office’s International Searching Authority earlier this month. The office found that KWG’s process for using natural gas and an accelerant, rather than a standard electric arc furnace, to process chromite is a novel one.

Vice-president of exploration and development Moe Lavigne said the idea could cut costs by more than half for its proposed operation. It could also have the potential to license the process to mines around the world but it hasn’t had the chance to get the process out of the lab yet.

“We haven’t tested it on chromites from around the world yet but we suspect that it’ll be applicable to any chromite deposit on the planet,” he said. Typically an electric furnace needs to burn at around 1,700 C in order to separate chromite, made of chromium, iron and oxygen. KWG’s process could do the same using natural gas at 1,200 C. That saves energy costs but also equipment costs by burning at a lower temperature.

“At 1,700 C just about everything melts,” Lavigne said. The footprint for the plant is also about a quarter of the size of an electric furnace like the one proposed by once KWG senior partner Cliffs Natural Resources. Electricity prices means a typical plant would likely be built in Quebec or Manitoba where prices are cheaper but natural gas is the same price across the country.

Goldcorp Inc warns of massive writedown of up to US$2.7B on Argentina mine – by Peter Koven (National Post – January 13, 2015)

January 13, 2015

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

Goldcorp Inc. expects to record a massive writedown of up to US$2.7 billion on its new Cerro Negro mine in Argentina due to ongoing political and economic challenges in that country.

The Argentine government has made life extremely difficult on foreign mining companies by restricting the imports of goods and services and implementing exchange rate controls that limit companies’ ability to convert Argentine pesos into U.S. dollars. Inflation is also very high; Goldcorp previously said that every time it brings a dollar into Argentina at the official exchange rate, suppliers and contractors treat it at the “unofficial” rate, which is almost 70% higher.

The ultimate cost of the impairment, which will be reported in Goldcorp’s fourth quarter earnings, should fall between US$2.3 billion and US$2.7 billion, the Vancouver-based miner said on Monday night.

Goldcorp did not see these problems coming back in 2010, when it paid $3.6 billion to acquire the Cerro Negro project. Chief executive Chuck Jeannes has said that he expects the challenges to gradually fade over time. Construction costs at Cerro Negro ran far over budget, but the mine finally reached commercial production at the start of January. It is expected to be a major cash flow generator for Goldcorp, with production of up to 475,000 ounces this year.

$50 Oil Kills Bonanza Dream Making Greenlanders Millionaires – by Peter Levring (Bloomberg News – January 12, 2015)

January 13, 2015

http://www.bloomberg.com/

Greenland, an island that may be sitting on trillions of dollars of oil, has had to acknowledge that its dream of tapping into that wealth looks increasingly far-fetched.

Back when oil was headed for $150 a barrel, Greenlanders girded for a production boom after inviting in some of the world’s biggest explorers, including Chevron Corp. and Exxon Mobil Corp. (XOM) Now, with Brent crude dipping below $50 last week, Deputy Prime Minister Andreas Uldum says Greenland’s hope of growing rich quickly on fossil fuels was “naïve.”

“I myself believed back when I was first elected” to parliament in 2009 “that billions from oil and minerals would start flowing to us the next year or the year after that,” he said in an interview in Copenhagen. “However, that’s just not the reality. I don’t know any politician in Greenland today who won’t admit to having fueled the hysteria.”

Oil Prices

The nation of about 56,000 had imagined its oil and mineral production would turn every citizen into a millionaire. Instead, Greenland continues to rely on an annual 3.68 billion-krone ($586 million) subsidy from Denmark to stay afloat, a sum that’s equivalent to almost half its gross domestic product. Talk of severing ties from its former colonial master has also faded as Greenlanders see little prospect of achieving economic independence anytime soon.

Stephen Harper: Oil’s worst enemy – by Chris Sorensen (MACLEAN’S Magazine – January 5, 2015)

January 13, 2015

http://www.macleans.ca/

By trying to protect and promote the oil sector, the Harper government effectively shackled Canada’s pipelines in purgatory

It was nine years ago that Neil Camarta first realized an image crisis loomed over Canada’s oil sands. He and his daughter were browsing inside a small shop on London’s trendy Carnaby Street when they spotted a row of “Stop the Tar Sands” T-shirts hanging on the wall.

Camarta, a longtime industry executive who’s held senior positions at Shell, Petro Canada and Suncor, braced for the inevitable as his daughter chatted with the 20-year-olds behind the counter. “She said, ‘You know, my dad works in the oil sands,’ ” he recalls. “And I was like, ‘Oh my God.’ So, all of a sudden we’re in it. I’m arguing with all these young people.”

These days Camarta runs a smaller company that makes upgrading equipment for the oil sands. He was happy to defend the industry’s record, he says, but he still wonders how Fort McMurray emerged as ground zero in the race to save the planet from climate change. After all, the energy-intensive oil sands sector accounts for less than half a per cent of global greenhouse gas emissions, although one would hardly know that based on all the attention it gets.

“Literally everyone now knows what the oil sands are and they don’t think well of us,” Camarta says of the world’s third-largest proven oil reserves. “We had our heads down building these big projects. We weren’t spending enough time managing our reputation.”

Ivanhoe Mines challenges media report alleging coercive tactics in S Africa – by Henry Lazenby (MiningWeekly.com – January 12, 2015)

January 13, 2015

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

TORONTO (miningweekly.com) – South Africa-focused project development Ivanhoe Mines on Monday lashed out at journalists at one of Canada’s premier national newspapers for publishing a story on Friday alleging the company used illegal coercive tactics to obtain the necessary permits for its Platreef polymetallic mine, near Mokopane, on the northern limb of the country’s mineral-rich Bushveld Complex.

Senior management of TSX-listed Ivanhoe and its subsidiary, Ivanplats, published an open letter challenging The Globe and Mail’s editor of the Report on Business Paul Waldie and Africa correspondent Geoffrey York, charging the cover story was “blighted by false allegations and misrepresentations, and gratuitous exaggerations”.

Among the examples cited in the article, two men, including an official from Ivanhoe, told an 82-year-old villager to give up her land or stand to lose her monthly pension of about $450/m. In the open letter, the companies point out that they were never given an opportunity by The Globe to comment on this specific allegation before it was published.

The letter also stated: “For the record, the company now does challenge and deny the allegation presented by The Globe concerning use of what would be an unacceptable negotiating tactic. It already is a matter of record that well known Platreef critics previously have made similar allegations of pressure tactics as a ploy against other business entities, which also have been unfounded.”

NEWS RELEASE: OMA member Vale employees dig deep to support their communities

January 13, 2015

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

The numbers are in and the joint fundraising campaign by nickel and copper miner Vale and the United Steelworkers brought in more than $865,000 for the United Way Centraide Sudbury and Nipissing Districts. Vale matches donations by its employees and this cooperative fundraising effort is the largest single contributor to the United Way in Sudbury.

“Vale employees are very committed to the communities in which they live and work,” said Kelly Strong, Vice President Canada and U.K. Operations for Vale. “Their ongoing generosity is incredible and something we can all be very proud of.”

This year’s effort, which surpassed the $865,000 mark, represents a 20% increase above last year’s campaign. “It never ceases to amaze me every year, USW Local 6500 members dig deep in their pockets to help those in need,” said Rick Bertrand, President USW Local 6500. “Their kindness, compassion and commitment is truly remarkable.”

“I would like to personally thank Vale and United Steelworkers for the overwhelming support provided over the past 32 years,” said Mike Di Brina, Sudbury United Way Campaign Chair. “To know that approximately $16 million have flowed into our community through the United Way is beyond what anyone could expect from one group.”

Lake Shore exceeds its gold production targets – by Staff (Timmins Daily Press – January 13, 2015)

January 13, 2015

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – Lake Shore Gold in Timmins reports that gold production in 2014 exceeded the yearly target by a significant amount.

The company said it had set a target range of 160,000 to 180,000 ounces of gold for 2014. As it turned out, 186,500 ounces of gold were poured in during 2014, the company said in a news release. Company president Tony Makuch said a similar production target is being set for 2015.

The company said its Bell Creek mill processed 1,245,900 tonnes of ore, at an average grade of 4.8 grams per tonne. The ore was from the LSG Timmins West mining complex and the Bell Creek Mine. Of the 186,500 ounces of gold poured last year, the company reported gold sales of 183,300 ounces at an average selling price of US$1,269 per ounce (CDN $1,398 per ounce).

Production in the fourth quarter of 2014 totalled 43,200 ounces, which resulted from processing 331,400 tonnes at an average grade of 4.2 grams per tonne. The company poured 42,400 ounces during that fourth quarter, while gold sales totalled 41,200 ounces at an average selling price of US$1,200 per ounce ($1,360 per ounce).

LSG has also reported significant improvement in debt repayments as the company strives to improve its financial position, said the release.

Wynne’s actions snub Sudbury on free choice – by Carol Mulligan (Sudbury Star – January 13, 2015)

January 13, 2015

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

There was something oddly symbolic about a gesture at a news conference in Sudbury Wednesday. Hours after Kathleen Wynne announced a byelection for Feb. 5, she spoke to reporters at a local hotel. Positive and upbeat, the premier was pleased to be in Sudbury. The city looked Christmas-card pretty under fresh snow.

Wynne introduced Glenn Thibeault, former New Democrat MP, as the best man to represent Sudbury at Queen’s Park. Thibeault seemed nervous and had every right to be. For six years, Sudburians sent him to Ottawa under the NDP banner. Many are angry at what they see as betrayal.

Taking to the podium, Thibeault dropped his pen. Wynne swooped in, picked it up and handed it to him. It was a small movement, but to some indicative of how tightly Thibeault is being handled by the premier.

After hand-picking the former United Way executive director, Wynne and party brass are doing everything they can to ensure he doesn’t drop the ball. It has nothing to do, they say, with Wynne and powerful Sudbury Liberals wanting a member they could quickly promote to cabinet.

It’s about pressing Sudbury issues that need Thibeault’s attention — the expansion of Maley Dr., an arterial road; the four-laning of Highway 69; infrastructure for the Ring of Fire mineral belt.

‘This one is special’: Fission Uranium’s monster resource estimate rekindles takeover chatter – by Peter Koven (National Post – January 13, 2015)

January 13, 2015

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

The monster resource estimate announced by Fission Uranium Corp. has boosted takeover speculation around the company, and chief executive Dev Randhawa isn’t doing anything to douse that talk.

He said in an interview Monday that investment bankers have already set up a data room for potential bidders. But he is in no rush to do a deal, as the company continues to expand its Patterson Lake South (PLS) uranium discovery in Saskatchewan’s Athabasca Basin.

“We don’t control if someone comes and makes a run at us. We are ready for it if someone does,” Mr. Randhawa said. It has been clear for several months that Fission’s PLS discovery is one of the best uranium finds in decades. But investors and analysts were still highly impressed when they saw the initial resource estimate.

Kelowna, B.C.-based Fission said late Friday the deposit contains an estimated 105.5 million pounds of uranium resources, of which almost 80 million are in the “indicated” category (the rest are in the more speculative “inferred” category). While the discovery is much smaller than Saskatchewan’s two largest uranium mines (McArthur River and Cigar Lake), it compares favourably to everything else in the province. And more than half of the resource comprises a “high-grade zone” that could potentially be mined at very low costs.

Alcoa Profit Tops Estimates as Autos Drive Aluminum Use – by Liezel Hill (Bloomberg News – January 12, 2015)

January 13, 2015

http://www.bloomberg.com/

Alcoa Inc. (AA), the largest U.S. aluminum producer, posted better-than-expected fourth-quarter earnings and sales as orders from the auto and aerospace industries boosted demand for the lightweight metal.

Profit excluding one-time items was 33 cents a share, the New York-based company said today in a statement, exceeding the 27-cent average of 19 estimates compiled by Bloomberg. Sales rose 14 percent to $6.38 billion, compared with the $6.05 billion average estimate. The shares rose as much as 2.4 percent in extended trading.

Alcoa shipped a record volume of automotive aluminum sheet in the quarter. Auto companies such as Ford Motor Co., which started making its lightweight, aluminum-bodied F-150 pickup in November, are using more of the metal to boost fuel efficiency. Alcoa also predicted orders of commercial and regional jets will help boost aerospace sales by as much as 10 percent this year. It said overall global aluminum demand will rise 7 percent in 2015.

“Fundamentally Alcoa continues to improve and we would continue to be buyers,” Josh Sullivan, an analyst at Stern Agee & Leach Inc. who has a buy rating, said in a note today.

The company, the first in the Standard & Poor’s 500 Index to publish fourth-quarter earnings, reported after the close of trading.

Cliffs CEO warns Iron Range lawmakers over aid deal for Essar Steel – by John Myers (Duluth News Tribune – January 12, 2015)

January 13, 2015

http://www.duluthnewstribune.com/

The head of Cliffs Natural Resources met with Iron Range state lawmakers Monday evening in St. Paul, warning the state’s ongoing help for Essar Steel may impact his company’s operations in Minnesota.

In his first ever meeting with the Range delegation, Cliffs CEO Lourenco Goncalves told lawmakers that Essar’s entry into the U.S. taconite iron ore market may upset what has been a well-balanced supply-and-demand chain.

“It was a very friendly meeting. Not confrontational at all. But he made it clear that giving Essar Steel any additional state subsidy may have a detrimental impact on Cliffs down the road,’’ state Rep. Carly Melin, DFL-Hibbing, told the News Tribune.

Goncalves has headed the Cleveland-based company since August, after Cliffs’ previous management team was ousted in a hostile takeover by the New York hedge fund Casablanca Capital.

Cliffs says Essar will become a direct competitor for its taconite iron ore operations – including NorthShore Mining, United Taconite and Hibbing Taconite in Minnesota. Cliffs has some 1,850 employees at the three Minnesota plants, with a payroll of over $250 million annually.