February 9, 2015 – Republic of Mining

Gina Rinehart’s Roy Hill mine is set for nasty losses – by Robert Gottliebsen (The Australian – February 9, 2015)

February 9, 2015

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

IF THE current iron ore price decline continues into 2017 and beyond, then Gina Rinehart’s massive $10 billion Roy Hill mine project is set for very large losses when it starts production next year.

And if the reports of safety problems in the construction phase are right, then the capital costs will blow out beyond $10bn, especially if unions start playing hard ball, as they often do when there is a safety cause.

Accordingly, it makes perfect sense for Gina Rinehart to sell her Fairfax shares because additional funding will almost certainly be needed. The fact that she is unhappy with Fairfax management and can exit at a small profit makes the sale even more sensible. It’s an investment that was made when the iron ore price was booming.

The royalties the family receives from Rio Tinto iron ore production provide an underlying base of additional funding which means that the Hancock empire is not about to fall over. Nevertheless, the Hancock empire is set for a nasty experience.

If the mine, rail and ports are constructed on budget, the hi-tech facility is expected to have operating costs that would enable it to be profitable on a cash basis even if the iron ore price stays at existing levels.

Mining companies suffer reversal of fortune in Africa – by James Wilson and Andrew England (Financial Times – February 8, 2015)

February 9, 2015

http://www.ft.com/intl/companies/mining

Mining companies’ excitement over Africa is being cooled by fresh five-year lows in commodity prices — resulting in cuts to investment in even the most resource-rich countries.

When the commodities supercycle was in full swing, Africa was a frontier of choice, offering investors some of the best but least-explored mineral resources. Miners scrambled for choice assets, exemplified by Rio Tinto’s $3.7bn acquisition of a coal project in Mozambique in 2011. But, in sharp contrast, the past year has been bitter for miners. South Africa’s platinum sector endured a five-month strike; iron ore mines closed in Ebola-hit Sierra Leone; and copper-rich Zambia crossed swords with global companies over a tax rise.

This stark reversal of fortune was highlighted when Rio sold out of Mozambique for just $50m last year, cutting its heavy losses on a hasty deal. In in recent weeks, the outlook has turned even more ominous, as commodities prices reached their lowest in more than five years fuelled by oversupply and fears over Chinese demand.

“When you look at the prices, obviously all of the mines are seriously concerned,” says Jackson Sikamo, president of the Zambian Chamber of Mines. “The Chinese economy is affecting everybody around the world. The Chinese economy sneezes and all of us catch a cold.”

Uranium-rich Australian state to examine possible nuclear industry – by Morag MacKinnon (Reuters U.K. – February 8, 2015)

February 9, 2015

http://uk.reuters.com/

PERTH – Feb 8 (Reuters) – – South Australia, home to one of the largest uranium deposits in the world, will conduct an inquiry into the potential benefits and risks of establishing a nuclear industry there, the state government said on Sunday.

South Australian Premier Jay Weatherill said a commission would be set up to investigate the potential of the nuclear industry to deliver economic growth and combat climate change, and to examine the risks involved.

Australia’s uranium reserves are the world’s largest, according to the World Nuclear Association, accounting for almost a third of known global deposits, but it has no nuclear power plants of its own.

“This is an opportunity to explore practical, financial and ethical issues raised by deeper involvement in nuclear industries,” Weatherill wrote on his twitter account. BHP Billiton’s Olympic Dam mine in South Australia is one of the largest uranium deposits in the world.

In 2012, the global miner shelved a planned $20 billion expansion of the mine due to falling copper and uranium prices, dealing a big blow to South Australia’s economy.

After Mount Polley: ‘This is Indigenous Law’ – by Jerome Turner (The Tyee.ca – February 7, 2015)

February 9, 2015

http://thetyee.ca/

Six months after dam breach calamity, First Nation takes the lead on mining regulation.

Thursday marked six months since the Imperial Metals-owned Mount Polley mine became the site of the most devastating tailings storage facility disaster in Canadian history, when nearly 25 million cubic metres of toxic mine effluent waste and chemicals spilled.

The spill damaged both Hazeltine Creek and Quesnel Lake, which reside within the traditional territorial boundaries of the Secwepemc Nation.

An official report on why the spill happened from the Mount Polley mine itself was set for release at the end of January, but the B.C. government altered the regulations. Now a report from Mount Polley isn’t due until 2017.

Such moves from the provincial government have spurred the Secwepemc, and specifically the Xat’sūll (Soda Creek) First Nation, to takes steps to ensure nothing like Mount Polley happens again.

The Northern Secwepemc te Qelmucw leadership council, which is composed of four northern Secwepemc bands, finalized a mining policy dated Nov. 19, 2014. Formation of the mining policy began in 2012, but the Mount Polley spill provided the council the motivation to finish it.

Mine Tales: Nonmetals a valuable resource in N. Arizona – by William Ascarza (Arizona Daily Star – February 9, 2015)

February 9, 2015

http://tucson.com/

While Southern Arizona is known for its porphyry copper deposits, Northern Arizona is better known for its nonmetallic commodities, including basalt, helium, potash and carbon dioxide (CO2).

More than 600 cinder cones comprise the 1,800-square-mile San Francisco Volcano Field and its south-central edge of Flagstaff in Coconino County.

Created by strombolian (low-level) eruptions over the past 6 million years, the San Francisco Volcanic Field includes Sunset Crater, the state’s youngest volcano and most recent example of an eruption that occurred 1,000 years ago.

The area is known for its commercial production of scoria, a volcanic rock composed of basalt and andesite. These fine-grained, dark-colored, igneous rocks make up the cinder cones, which average 1,000 feet in height and a half-mile in diameter at the base.

The Atchison, Topeka & Santa Fe Railway Co. quarried and stockpiled basalt at Winona for use in railroad ballast, concrete aggregate and cinder block. Sheep Hill, a large volcanic cone on the east side of Flagstaff, hosts a cinder pit mining operation clearly defined by the impacted disturbance on its western flank. Its colorful striations dominate the landscape, and its product is used to provide traction on winter roads and as a decorative landscape material.

Afghanistan’s dilemma: copper or culture – by Lynne O’Donnell (Associated Press/Regina Leader Post – February 7, 2015)

February 9, 2015

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

Mining could endanger treasures

Treasures from Afghanistan’s largely forgotten Buddhist past are buried beneath sandy hills surrounding the ancient Silk Road town of Mes Aynak – along with enough copper to make the land glow green in the morning light.

An estimated five million tonnes of copper, one of the biggest deposits in the world, could provide a major export for a war-ravaged country desperately in need of jobs and cash. But the potential bonanza could endanger rare artifacts that survived the rule of the Taliban and offer a window into Afghanistan’s rich pre-Islamic history.

“The copper mine and its extraction are very important. But more important is our national culture,” said Abdul Qadir Timor, director of archeology at Afghanistan’s Culture Ministry. “Copper is a temporary source of income. Afghanistan might benefit for five or six years after mining begins, and then the resource comes to an end.”

The government is determined to develop Afghanistan’s estimated $3-trillion worth of minerals and petroleum, an untapped source of revenue that could transform the country. The withdrawal of U.S.-led combat forces at the end of 2014 and a parallel drop in foreign aid have left the government strapped for cash. It hopes to attract global firms to exploit oil, natural gas and minerals, ranging from gold and silver to the blue lapis lazuli for which the country has been known since ancient times.

NEWS RELEASE: Carlisle Signs Exploration Agreement With First Nation

February 9, 2015

TORONTO, Feb. 9, 2015 (GLOBE NEWSWIRE) — Carlisle Goldfields Limited (“Carlisle” or the “Company”) (TSX:CGJ) is pleased to announce that it, together with its Lynn Lake Joint Venture (the “LLJV”) partner AuRico Gold Inc. (“AuRico”), has entered into a comprehensive Exploration Agreement (the “Agreement”) with the Marcel Colomb First Nation (“MCFN”) and the Marcel Colomb Development Corporation (“MCDC”).

The Agreement states that “…the MCFN is committed to principals of economic sustainability and growth for its members, environmental stewardship and self-determination in respect of MCFN lands and resources and wishes to establish a cooperative and respectful long-term relationship with both AuRico and Carlisle.” Further, “the LLJV recognizes and respects the Aboriginal and Treaty rights and interests of MCFN, together with their constitutional and other legal rights and desires to maintain open and friendly, cooperative, on-going communications and a positive working relationship,” and further that “this Exploration Agreement is not in derogation of abrogation of any inherent treaty, aboriginal, title or like right of MCFN.”

The Agreement also states that “…the parties agree that it is their common objective to assist MCDC and MCFN members to benefit from business opportunities associated with Exploration Activities undertaken by the LLJV…” and that…”assuming the Feasibility Study is positive, the Parties commit to make best efforts to develop an Impact Benefit Agreement (IBA) consistent with this Exploration Agreement.”

Chief Andrew Colomb of the Marcel Colomb First Nation stated that “We are pleased to have signed this Agreement with Carlisle and AuRico. Carlisle has proven to be a supportive and engaged partner of the Marcel Colomb First Nation over the years.

Methodology change sees Indian economy grow faster than China’s – by Rajesh Kumar Singh and Manoj Kumar (Reuters India – February 9, 2015)

February 9, 2015

http://in.reuters.com/

NEW DELHI – (Reuters) – Taken at face value, India on Monday became the fastest growing major economy in the world after its statisticians changed the way they measure Asia’s third-largest economy and showed it clocked faster growth than China in the December quarter.

It marks a dramatic turnaround for an economy that a fortnight ago was assumed to be struggling to gain momentum under Prime Minister Narendra Modi’s reform-minded government. Prior to Modi’s election last May, the economy had endured its weakest phase of growth since the 1980s.

The statistical recovery is in large measure due to changes both in the way authorities calculate gross domestic product (GDP) and the base year. Under the new method, the economy expanded 7.5 percent year-on-year during the last quarter, higher than 7.3 percent growth recorded by China in the latest quarter.

New Delhi also revised up growth for the first half of fiscal 2014/15 to 7.4 percent from the 5.5 percent reported earlier and forecast the full-year GDP growth to accelerate to 7.4 percent from a revised 6.9 percent a year earlier.

The new estimate is sharply higher than the Reserve Bank of India’s (RBI) growth projection of around 5.5 percent for the year under the old method.

The reading has left economists confounded as it is at odds with other indicators such as industrial production, trade and tax collection figures, which suggest the economy is still suffering from slack.

Sudbury needs premier needs to act boldly [turn Laurentian in global Harvard of hardrock mining] – by Stan Sudol (Sudbury Star – February 9, 2015)

May 4, 2015February 9, 2015

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

Note: this is the second of two parts.

Sudbury: Paris of the Mining World

While I can’t remember who coined the phrase, “Sudbury, the Paris of the Mining World” – I wish I had been that clever – there is an amazing amount of truth to the statement. Obviously, in no uncertain terms, does any part of Sudbury remind anyone – even in a drugged or drunken state – of Paris.

However, my lake-filled, mid-sized hometown does have a wide variety of retail, tourist, educational and other amenities that most tiny isolated mining towns do not and it is located only 400 km north of Canada’s largest city, Toronto.

A few years ago, a colleague who moved from Red Lake to Sudbury almost considered herself in “mining heaven” with the abundance of amenities not found in that tiny gold mining centre.

In addition to the Ontario government’s new differentiation and international student outreach policies, there are many other reasons why all post-secondary mining programs should be relocated to Sudbury’s Laurentian University.

Accent: Laurentian as ‘Harvard of Hardrock Mining’ – by Stan Sudol (Sudbury Star – February 7, 2015)

May 4, 2015February 9, 2015

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

Note: This is the first of two parts.

Laurentian University economics professor David Robinson, who ran for the Green Party in Sudbury’s provincial byelection on Thursday, has done a terrific job in highlighting mining issues and his plans to ensure that Sudbury continues to become Ontario’s centre of mining excellence.

It’s a refreshing policy approach that often gets overlooked by other politicians, but in fairness to Glenn Thibeault and even Premier Kathleen Wynne, both have also mentioned — but not with the same passion as Robinson — and promoted Sudbury’s mining sector.

However, as with many issues related to Premier Wynne and the mining sector — including the Ring of Fire — there seems to be more “political talk” and very “little solid walk.” Actually, dodging and spinning would be a better description of her government’s mining policy in general.

If Premier Wynne is truly serious about promoting and establishing Sudbury as a centre of mining excellence, then she must merge and relocate all of Ontario’s university mining programs to Laurentian and significantly expand and establish a “Global Harvard of Hardrock Mining” with a mandate to educate the next generation of miners in Canada and from around the world.

With this consolidation, not only would the premier solidify Sudbury’s premier role in underground mining, supply and services, mining education and research in Canada, she would also dovetail with current policy proposals from her own Ministry of Training, Colleges and Universities that are trying to cut duplication in the university sector and increase the number of international students attending the province’s universities.

Gold mining stocks massacred – by Frik Els (Mining.com – February 6, 2015)

February 9, 2015

http://www.mining.com/

Gold on Friday dropped more than 2% after a stronger than expected jobs report in the US rekindled fears that interest rates in the world’s largest economy may rise sooner than thought.

In afternoon trade on the Comex division of the New York Mercantile Exchange gold for April delivery shed 2.2% or $27.70 to $1,235.00 an ounce after earlier in the day falling to a low of $1,228 an ounce.

Gold’s 2015 gains – the metal is still up 4% or just over $50 since the start of the year – have been ascribed to safe haven buying amid currency turmoil, a slowing global economy and a debt crisis in the Eurozone.

But with the first hike in more than six year likely at the Fed’s June meeting raising the opportunity costs of holding gold because the metal provides no yield, gold traders refocused their attention on fundamental factors.

Higher rates also boost the value of the dollar – already trading at multi-year highs – which usually move in the opposite direction of the gold price. Investors have been worrying over further asset writedowns, a declining production profile and problems at board level.

Cliffs terminates Ring of Fire assessment process – by Staff (Northern Ontario Business – February 6, 2015)

February 9, 2015

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.

The federal environmental assessment of Cliffs Natural Resources’ chromite project in the Ring of Fire has been terminated.

The Cleveland-based iron ore miner notified the Canadian Environmental Assessment Agency (CEAA) on Jan. 5 that it wanted to halt the comprehensive study process that began in September 2011. The CEAA posted the notice of termination on its website, Feb. 5.

Cliffs is now looking to sell its chromite properties in the James Bay lowlands, including its flagship Black Thor deposit. It’s been part of a slow retreat by Cliffs, once regarded as the star mining player in the Ring of Fire, to eventually pull up stakes in Ontario following a management shakeup last summer.

New Cliffs chairman and chief executive officer Lourenco Goncalves told national media outlets last fall that the Ring of Fire didn’t fit into their long-range strategy. The company, instead, is focusing on its core iron-ore assets in Michigan and Minnesota, and catering to its domestic customers.

Since 2010, Cliffs spent $500 million on outlining the mineral potential at Black Thor, but ran into a series of obstacles in securing agreements with the provincial government and First Nations on extending transportation infrastructure into the remote region.

A Silver Lining Coated in Coal Dust in Eastern Ukraine – by Andrew E. Kramerjan (New York Times – January 31, 2015)

February 9, 2015

http://www.nytimes.com/

SNIZHNE, Ukraine — Outside Vladimir Moroz’s snug little brick home, winter and hardship grip war-stricken eastern Ukraine. Money is scarce, the store shelves are bare and an icy wind whips over the snowy steppe.

Inside, a retired miner smiles broadly. He peels off his gloves and flexes his cold-stiffened hands over a stove and his prized, glowing, once-illicit source of warmth: backyard coal dug from dangerous, unregulated mines.

In a region plagued by upheaval and misfortune, coal miners who take pride in their grit and self-reliance have found at least one silver lining in changes sweeping over their land. The rebel government has decided to allow private mining, a long-stigmatized, legally proscribed but nevertheless widespread practice in Ukraine’s east.

“I have my own potatoes, my own carrots, my own cabbage and my own mine,” Mr. Moroz said, referring to the dank pit under a shed out back. “This is how we live.”

Deep in the backcountry of Donbass, as the rebellious region of eastern Ukraine is known, rich seams of coal undulate just under the hills. In places, kicking back the topsoil with a boot reveals glistening layers of coal, as mysterious and alluring to these miners as onyx.

Gangs Live Underground for Months to Feed Illegal Gold Trade – by Kevin Crowley (Bloomberg News – January 19, 2015)

February 9, 2015

http://www.bloomberg.com/

(Bloomberg) — Hein Westraadt, a security manager at South Africa’s largest gold producer, was finishing up some paperwork when a colleague rushed to his desk with a tip-off.

Thirty-three illegal miners had smuggled themselves into one of Sibanye Gold Ltd.’s biggest mines, and had been stealing ore undetected for three months, while living more than a mile underground.

Westraadt’s discovery is a window into South Africa’s illegal precious-metals trade, worth as much as $1.3 billion a year, spanning poor immigrants, mine employees, metal dealers, makeshift refineries and criminal gangs. The concoction of corruption and poverty that encourages men to mine illegally is spreading the problem from abandoned mines to working ones, threatening the operations of a 120-year-old industry that has produced a third of all the world’s gold.

“It’s a huge problem across South Africa,” said Graham Briggs, chief executive officer of Harmony Gold Mining Co., which shut Kusasalethu, its biggest operation, for two weeks in October after it was invaded by more than 100 alleged illegal miners. “There’s certainly more aggression and it’s more competitive. Any number of illegal miners can be a threat to your organization, especially from a safety perspective.”