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Day: March 6, 2015

Take-Over Bids in Canada – A Must Read for Businesses, Boards and Bidders

http://www.fasken.com/en/home/

Click here for the 2015 Canadian Take-Over Bid Study

Toronto (Canada) – February 19, 2015 – International business law firm Fasken Martineau has released the results of a new 10-year empirical analysis of contested corporate take-overs in Canada. It arrives just as Canada’s securities regulators are set to release a proposal to make the most significant changes to the take-over bid rules in years, with the goal of levelling the playing field between bidders and target companies in unsolicited acquisitions.

Examining all 143 hostile take-over contests for control between 2005-14, Fasken Martineau’s study offers a sweeping, insightful overview of a decade’s worth of contested M&A deals in Canada. The research offers some surprising findings and will be of interest to all participants in Canada’s thriving M&A market, including boards, shareholders, bidders, advisors and regulators.

The study was co-authored by Fasken Martineau corporate partners in Toronto Aaron J. Atkinson and Bradley A. Freelan, both of whom have extensive experience advising in M&A, including contested transactions.

The study is the first of its kind in Canada and coincides with expected amendments to the Canadian take-over bid regime by the country’s securities regulators. In Canada, unlike the United States, boards do not have the ability to “just say no” to a hostile bidder to prevent it from proceeding. This has led to a spirited debate in Canada as to the proper role of the board in a transaction that is ultimately between the bidder and shareholders.

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Polish Coal Miners Ride Solidarity Legacy to Oblivion – by Ladka Mortkowitz and BauerovaMarek Strzelecki (Bloomberg News – March 6, 2015)

http://www.bloomberg.com/

(Bloomberg) — For decades, Polish coal miners have enjoyed benefits that are the envy of their working class countrymen: An annual bonus of two months’ pay regardless of performance, company-sponsored holidays, retirement before 50, and no weekend shifts. Today, that legacy of the communist era threatens the mostly state-owned mining sector and is digging a hole in the national budget.

To understand why reform remains elusive, take a drive through Upper Silesia, the coal-rich region in southern Poland that’s home to two dozen mines. The snowy countryside, drained of color in the feeble winter light, is framed by smoking chimney stacks and elevator towers that haul coal up from the pits.

Even as European coal prices have fallen by half in recent years and producers have struggled, powerful unions have foiled government attempts to close failing operations, cut jobs, and restore the sector to profitability. In January, the Economy Ministry cautioned that without significant restructuring Kompania Weglowa SA — the European Union’s largest coal producer — risked bankruptcy.

With their historical ties to Lech Walesa’s Solidarity, Poland’s roughly 100,000 miners are clinging to their jobs. Their unions’ links to the 1980’s movement mean they can easily forge alliances across the political spectrum — and threaten any reform-minded government with widespread strikes.

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Cda. gaining poor rep starting up mining projects — Charest – by Len Gillis (Timmins Daily Press – March 5, 2015)

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – Former Quebec premier Jean Charest told a breakfast audience in Timmins Thursday that government needs to be more pro-active when it comes to resource development because Canada is getting a reputation as a place where such projects do not get done quickly enough.

Charest was in Timmins as part of a quick cross-country tour for the Partnership for Resource Trade (PRT), a pro-resources organization.

Charest was in Vancouver and Winnipeg earlier this week and after his appearance in Timmins he will be speaking in Moncton and Halifax next week. The tour is sponsored by the Canadian Chamber of Commerce.

“The PRT is a group put that was together so we can have a much better dialogue about the future of resources in Canada and what role it plays in our economy,” Charest explained, adding there is growing concern about how resources are being managed.

“There is a sense that we must, in Canada, have a much, much better debate, dialogue, conversation, call it what we want, about the future of resources and how we manage them,” Charest told the Timmins business audience at Cedar Meadows Resort.

As a private sector lawyer, Charest travels the world setting up and negotiating agreements for Canadian mining companies. He said this gives him insight into how others see our country.

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First Nations seek to reset relationship with Queen’s Park – by Ian Ross (Northern Ontario Business – March 3, 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. Ian Ross is the editor of Northern Ontario Business ianross@nob.on.ca.

Ontario Regional Chief Stan Beardy is confident that a new relationship is emerging with Queen’s Park following a summit late last fall designed to find common ground on key issues that will allow resource development to proceed in the Far North.

First Nation leaders from across Ontario met in late November for a “Leaders in the Legislature” event with Ontario cabinet ministers in Toronto to table Aboriginal priorities starting at the community level.

Beardy called the intensive three-day event “a step in the right direction” with a series of roundtables on resource benefits and revenue sharing, treaty awareness, health, education, infrastructure, economic development and missing and murdered indigenous women.

The chiefs matched their issues with the appropriate ministers based on their mandate letters from the premier. Beardy said First Nations aren’t out to block resource development projects, but the law is on their side and must be allowed to participate and benefit from them.

With a number of Supreme Court decisions recognizing Aboriginal title to land – include last June’s Tsilhqot’in decision in British Columbia – Beardy said First Nations are taking a more proactive approach in discussing priority issues with government.

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Copper faces looming supply gap – Teck Resources – by Simon Rees (MiningWeekly.com – March 5, 2015)

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

TORONTO (miningweekly.com) – The level of new copper output will be unable to plug a supply gap that could develop as early as 2017, Canadian diversified miner Teck Resources manager for market research Michael Schwartz told an audience at the Prospectors and Developers Association of Canada 2015 convention.

Teck had calculated that the average yearly rate of copper demand growth would reach 2.7% in the coming years. This equated to about 680 000 t of new supply being required each year, a level producers would be unable to match.

This supply/demand fundamental was in stark contrast with copper’s performance over the past 12 months, with Schwartz noting that Wood McKenzie had recorded a 300 000 t surplus for 2014. “Although we are showing a balanced market to a slight deficit,” he added.

The overhang had been reflected in the red metal’s price, which was currently hovering at around $2.65/lb, compared with a 52-week high of about $3.25/lb. Producers with cost-of-production rates above $2.50/lb would continue to struggle, Schwartz pointed out.

Disruption to output, which offered price support depending on its severity, would become an increasingly important issue as the industry mined lower-grade zones in remoter areas.

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Lukas Lundin: Guts, glory and betting against the grain – by Rachelle Younglai (Globe and Mail – March 6, 2015)

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.

Lukas Lundin has no tricks for how to play the market, but somehow he has timed his deals impeccably.

The mining tycoon managed to sell a big gold mine for billions at the top of cycle. Then after bullion slumped 30 per cent he bought another gold project for a fraction of the original cost.

“It was some luck and some skill,” the executive said in an interview at this week’s Prospectors & Developers Association of Canada conference. Mr. Lundin said he learned his deal-making skills from his father, Adolf Lundin, who founded the $11.8-billion Vancouver- based Lundin Group, a conglomerate of mining and energy companies.

“He had a big appetite for risk,” said Mr. Lundin. One of the family’s 11 companies is called NGEx Resources Inc. It stands for “No Guts, No Glory Exploration,” a play on patriarch Lundin’s “no guts, no glory” motto.

“He was a big speculator, took big risks, sometimes maybe not calculated. Hopefully I take more risks that are calculated,” said Mr. Lundin.

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Breaking mining’s ‘rock ceiling’ for women – by Derrick Penner (Vancouver Sun – March 6, 2015)

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

Goldcorp among companies taking steps to make industry more welcoming

By the numbers, the mining industry still looks very much like a boys club. Just 17 per cent of the sector’s workforce in Canada is female, according to Mining Association of Canada statistics.

Industry leaders know they need to raise that number over the long term if the sector expects to maintain a sustainable pool of applicants to fill jobs in its rapidly aging workforce.

The industry has also launched programs to recruit more minority groups and First Nations, which has proved a particularly successful strategy in northern B.C. Vancouver-headquartered Goldcorp Inc. has adopted its own edge in recruiting by expanding Creating Choices, its internal training and mentorship program for women.

The program is “becoming one of the tools” attracting potential recruits, said Anna Tudela, Goldcorp’s vice-president of regulatory affairs and corporate secretary and the program’s creator.

“In the mining industry, we’re lacking the (future) workforce,” Tudela said. “We will have to attract more women,” as well as workers from diverse backgrounds.

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Iron Ore Sinks as China Ushers in Slower Growth – by Rhiannon Hoyle (Wall street Journal – March 6, 2015)

http://www.wsj.com/

Iron ore prices crash to six-year low after China lowers its growth forecast

SYDNEY—As China’s top officials heralded a new era of slower growth, iron ore, a resource that has powered years of breakneck expansion in the world’s second-largest economy, bore the brunt of ill sentiment in commodity markets.

The steelmaking ingredient’s value crashed to a six-year low late Thursday, after China lowered its economic growth forecast, reigniting concerns about its appetite for the raw material at a time when supplies are already outpacing demand.

Some of the world’s biggest miners, including Rio Tinto PLC and BHP Billiton Ltd. , have been aggressively expanding their operations in the Pilbara iron-ore mining hub of northwest Australia, betting that China will still need more of the commodity to make steel for its skyscrapers and for industries such as auto manufacturing.

But with China’s growth already slowing, their expansion has resulted in an emerging iron ore glut.

Beijing has now further rattled the market by lowering China’s annual growth forecast to 7%–down from last year’s goal of about 7.5%, and actual growth of 7.4%. Chinese leaders are now talking of a “new normal” for the economy.

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Rocky road ahead for sputtering China – by Brian Milner (Globe and Mail – March 6, 2015)

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.

China has cut its growth target for this year by half a percentage point to about 7 per cent, a level that would mark its slowest expansion in a quarter of a century.

It also ought to dispel any notion that its leadership can engineer a fairly smooth economic transition toward the greater manufacture and domestic consumption of higher-value goods without serious growth hiccups and heavy state intervention.

The less optimistic outlook makes sense for a government that typically does whatever is necessary to meet – and preferably exceed – its publicly avowed goals for the economy.

The technocrats have known for some time that the sputtering economy has no chance of exceeding 7 per cent growth this year, and that it may take considerable data massaging (a government specialty) just to reach the lower bar. Major headwinds include continued weak demand in key export markets, serious manufacturing overcapacity and a bubble-ridden property market teetering on the brink.

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Realizing the Indian Dream – by Jim O’Neill (Project Syndicate – March 5, 2015)

http://www.project-syndicate.org/

NEW DELHI – It is not often that I get to wear two hats at once. But that is exactly what happened earlier this month, when I spent a few days in New Delhi.

I was in India primarily as part of my current role as Chairman of a review for the British prime minister on anti-microbial resistance (AMR). But my visit coincided with the presentation of India’s 2015-2016 budget, the first under Prime Minister Narendra Modi. Given some of my other interests and experiences, I found what was presented to be very interesting.

Following recent revisions to its GDP figures, India’s economy has recently grown – in real terms – slightly faster than China’s. A key feature of my research into the BRIC economies (Brazil, Russia, India, and China) more than ten years ago was that at some point during this decade, India would start to grow faster than China and continue to do so for dozens of years.

The reasoning is straightforward. India’s demographics are considerably better than China’s, and the size and growth rate of a country’s workforce is one of the two key factors that drive long-term economic performance – the other being productivity. Between now and 2030, the growth rate of India’s workforce will add as much to the existing stock of labor as continental Europe’s four largest economies put together.

India is less urbanized than China, and it is in the early stages of benefiting from the virtuous forces that normally accompany that process.

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Glencore transitioning into deficit in most commodities – Glasenberg – by Martin Creamer (MiningWeekly.com – March 3, 2015)

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

JOHANNESBURG (miningweekly.com) – Diversified major Glencore was transitioning into deficit in most of the commodities it produced, CEO Ivan Glasenberg said on Tuesday.

Glasenberg, who has presided over returning $9.3-billion to shareholders in dividends and buybacks since 2011, told analysts and media in teleconferences in which Creamer Media’s Mining Weekly Online took part that most of the company’s commodities were free of oversupply threats.

“In most of our commodities, there’s no big supply coming into the market,” he said, adding that some of its commodities were already in deficit.

“We’re pretty comfortable we’re in the right commodities, which should bode well for the future,” he said, outlining how the company had returned $3.3-billion to shareholders during 2014.

Both a miner and a marketer, Glencore did far better than its peers in the 12 months to December 31, with earnings before interest, taxes, depreciation and amortisation (Ebitda) of $12.8-billion only 2% down on 2013.

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Ottawa Urged To Share Resource Taxes With Aboriginals – by Bob Weber (Canadian Press/Huffington Post – March 3, 2015)

http://www.huffingtonpost.ca/politics/

EDMONTON – First Nations should get some of the money generated by resources on their lands, suggests a report commissioned by the federal government and the Assembly of First Nations.

The report, released Tuesday by the Working Group on Natural Resource Development, says a First Nations resource tax could be a consistent and practical way for mineral and energy wealth to benefit aboriginal communities.

“We strongly urge the federal government, along with the provinces and territories, to come together with First Nations to explore options for resource revenue sharing,” says the report.

“This discussion is long overdue and requires immediate action in order to bring greater predictability to resource development in Canada and establish a long-term pathway to greater First Nations self-reliance.”

The group was struck after a meeting between Prime Minister Stephen Harper and former Assembly of First Nations grand chief Shawn Atleo. Its report was issued after meetings in Toronto and Edmonton between First Nations, governments, industry and non-governmental organizations.

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Goldcorp Sees Investors Taking Shine to ‘Beaten-Up’ Industry – by Liezel Hill(Bloomberg News – March 3, 2015)

http://www.bloomberg.com/

(Bloomberg) — The world’s largest gold producer by market value says investor sentiment for the sector may finally be starting to turn after years as one of the least-loved industries.

“There’s generalist value investors out there saying ‘OK, I like looking at beaten-up sectors, this sector is really beaten up,’” Goldcorp Inc. Chief Executive Officer Chuck Jeannes said in an interview Tuesday at Bloomberg’s Toronto office. “People are trying to call the bottom.”

Jeannes said he’s been fielding more calls from unfamiliar investors and has a new entity among its top 10 shareholders. Artisan Partners, a Milwaukee, Wisconsin-based investment company with more than $100 billion in assets, added 15.7 million shares in Goldcorp last year, making it the seventh-largest holder, according to data compiled by Bloomberg.

The Philadelphia Stock Exchange Gold & Silver Index plunged 70 percent from the start of 2011 to the end of last year. Producers struggled to contain costs and wrote off billions of dollars after prices for the metal — which had risen to more than $1,900 an ounce — began dropping in 2012. The Standard & Poor’s 500 Index climbed 64 percent in the past four years.

Goldcorp fell 2.4 percent to C$25.45 at the close in Toronto. The shares, which have risen 19 percent in 2015, have dropped in the prior four years.

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