March 16, 2015 – Republic of Mining

Barrick Gold eyes sale of key Chilean copper mine – by James Wilson (Financial Times – March 15, 2015)

March 16, 2015

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

Barrick Gold is eyeing the sale of one of its “crown jewels”, a Chilean copper mine, as the Canadian miner tries to meet an ambitious debt reduction target to help restore its lustre for investors.

Bankers and mining executives said the Chilean copper mine, one of Barrick’s key assets, would be of potential interest to a number of private equity vehicles, including Mick Davis’s X2 Resources. Mr Davis, one of the best-known mining executives, headed Xstrata before its 2012 sale to Glencore. X2 has raised $5.6bn and is hunting for mining deals.

A sale of the Zaldívar mine by Barrick, which mines more gold annually than any other company, could be expected to realise more than $1.5bn. It would be one of the most eye-catching mine sales since the sector’s sharp downturn, showing how companies that are under fire are having to respond to falling commodity prices and protect balance sheets by selling choice assets.

While X2 would be interested in Zaldívar, other interest could come from Chinese groups looking to acquire resources, one banker said. China’s Minmetals bought Las Bambas, a former Xstrata project that is one of the largest copper mines under construction, last year.

Teck, the Canadian mining group, is also on the hunt for copper assets, its chief executive said this month. X2 declined to comment.

COMMENTARY: Exploitation in disguise – Plan Nord is unfair and unsustainable – by George Ghabrial (McGill Daily – March 16, 2015)

March 16, 2015

http://www.mcgilldaily.com/

Plan Nord is an economic development project for Northern Quebec originally introduced by Jean Charest’s Liberal government in 2011. After a 19-month hold during the tenure of the Parti Quebecois, the plan was revived by Quebec Premier Philippe Couillard in 2014. Despite the official rhetoric, the government’s current approach to northern Quebec land and its Indigenous inhabitants is economically self-serving and environmentally destructive.

The plan is the second-largest mining development project in the history of Canada, just after the tar sands development in Alberta. If successful, 72 per cent of Quebec’s land will be transformed over 25 years. The aim is to develop the region to facilitate resource extraction and to make profit. The plan also entails developing infrastructure in northern Quebec, such as roads, airports, hydroelectric facilities and housing.

Couillard calls it “an exemplary sustainable development project,” and a report in Canadian Mining Journal estimates it will create and sustain 20,000 jobs, as well as $80 billion in public and private investment: $47 billion to renewable energy and $33 billion to mining and infrastructure. Bringing jobs to Northern Quebec is an aspect the government is particularly keen to stress; however, Quebec’s mining industry stands to benefit most.

The government does have a fund of $1.2 billion set aside for infrastructure development, but this is mainly meant to make it easier for mining companies to access resource-rich areas. Moreover, since the program’s revival in 2014, the government has been offering economic incentives for Quebec-based mining companies.

Weak rand double-edged sword for mining companies in South Africa – by Ed Stoddard and Silvia Anonioli (Reuters India – March 12, 2015)

March 16, 2015

http://in.reuters.com/

(Reuters) – The sliding rand is a double-edged sword for mining companies in South Africa, with cost inflation, wage claims and potential labour unrest outweighing the gains that exporters traditionally derive from domestic currency weakness.

The drop in the rand , near 13-year lows against the dollar, should benefit diversified mining giants such as Anglo American, BHP Billiton and Glencore as well as domestic companies such as gold producers Gold Fields and Anglo Gold Ashanti.

The rand has lost 7 percent so far in 2015 against the dollar, which has risen against emerging market currencies across the board on expectations of U.S. rate hikes. The flip side of this is that the rand gold price has increased over 4 percent this year even as the spot gold price in dollars has fallen 2.5 percent over the same period.

That’s good news for mining companies in the country who benefit from mostly cheaper costs but higher income from sales of their commodities.

However, those gains may evaporate in the face of inflationary pressures which are poised to lift costs longer term and will strengthen the resolve of the South African labour force – no strangers to strikes – to obtain bigger pay rises.

News Release: Rio Tinto – Making modern life work

March 16, 2015

PDAC: Is Canadian mining poised for a rebound? – by Peter Diekmeyer (Australian Mining – March 16, 2015)

March 16, 2015

http://www.miningaustralia.com.au/home

Close to twenty-five thousand mining industry producers and suppliers converged earlier this month at the 2015 Prospectors & Developers Association of Canada conference. Sentiment at the gathering, which PDAC bills as the “world’s largest exploration and mining event,” was cautiously optimistic.

“When the average price of mining stocks listed in the Toronto Venture Exchange’s mining component is down 85 percent – 90 percent if you include companies that were taken out of the index because they went bankrupt, you have what amounts to a huge sale,” said Rick Rule, chairman of Sprott Global Resource Investments. “That means assets and properties are 90 percent cheaper. Years from now, investors will look back on 2015 as the “good old days,” when almost everything could be had at a really good price.”

Brent Cook, a mining investor and publisher of Exploration Insights agrees. “The industry has had a terrible time during the past five years, particularly on the exploration side, where discoveries of economically feasible deposits are fewer and farther between. There will be some further washing out of unsuccessful plays in coming months. But we are beginning to see green shoots indicating that a recovery may be on the way.”

Canada, which like Australia, is blessed with a wide variety of resources, can somewhat be regarded of a proxy for global extractions industries, which have literally been clobbered across the board. A recent report by Barcley’s described 2014 as the worst for commodities since 2008.

Canada’s big mining firms to expand prospecting within the nation – by Rachelle Younglai (Globe and Mail – March 16, 2015)

March 16, 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.

After three years of falling commodity prices, big mining companies are taking the lead on exploration in Canada as cash-strapped junior miners struggle to stay afloat.

Centerra Gold Inc. will spend upward of $100-million to develop a gold deposit in Ontario. Goldcorp Inc. is spending about 10 per cent more on exploration in 2015 than it did last year. Agnico Eagle Mines Ltd. is expanding its exploration team in Nunavut after it found gold on boulders near its mine in the territory.

“We have a lot of evidence that there is gold in the area,” said Sean Boyd, Agnico’s chief executive. The company is moving eight drill rigs and about 80 miners to its arctic camp, in order to locate the source of the golden boulders.

Traditionally, small mining companies have done the bulk of the prospecting in Canada. But with commodity prices at multiyear lows and a dearth of high-profile discoveries, investors are unwilling to bankroll junior miners with little or no track record.

Last year, junior companies spent a total of $742.5-million exploring in Canada, while the senior companies spent a total of $1.2-billion, according to government data. At the height of the commodity boom in 2011, the groups of small and big companies each spent around $2-billion.

Exploration companies get consultation tax break (CBC News North – March 14, 2015)

March 16, 2015

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

Companies can now write-off cost to consult aboriginal groups

The federal government has created a new tax break for Canadian exploration companies that will allow them to deduct expenses related to consultation with aboriginal groups.

Exploration companies can spend tens of thousands of dollars explaining their projects to aboriginal communities that live near proposed mine sites. Costs associated with environmental and First Nations consultation will now qualify as a Canadian Exploration Expense.

Costs include flights to communities, hotels, hall rentals, vehicle rentals, publication of materials, translation of information into local languages — and of course, the small courtesy of bringing coffee and snacks.

Resource Analyst John Kaiser says offering tax deductions could help junior companies survive the early financial hurdles of early-stage exploration. “When it starts to show up early in the exploration cycle, before you even know if there’s anything worth developing, the costs become onerous,” he said.

Jamie Kneen of MiningWatch Canada says the change could attract more investors but it doesn’t address capacity issues that aboriginal groups face. “The mounds of applications and papers they get to go through — from water permits to land use plans — they don’t have time time and capacity to deal with it all. This doesn’t address that at all,” he said.

Where’s the logic in Ontario’s power play? – by Konrad Yakabuski (Globe and Mail – March 16, 2015)

March 16, 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.

The mandate Ontario’s Liberal government handed former TD Bank chief Ed Clark was flawed from the outset. Selling off prized electricity assets to pay for transit projects smacked more of a cash grab than a considered approach to maximizing value and making sound energy policy.

In the end, Mr. Clark’s panel recommended last fall that Ontario maintain full ownership of Hydro One’s transmission assets, made up of 30,000 kilometres of high-voltage lines across the province, and privatize the utility’s distribution arm, which serves 1.4 million Ontarians. “There is far less reason to regard distribution as a core strategic asset than transmission,” the panel said.

As The Globe and Mail revealed last week, however, Premier Kathleen Wynne’s government is now thinking of both selling up to 60 per cent of the transmission business to investors and privatizing the distribution arm in order to spur a sector-wide consolidation among the spate of “local distribution companies” that interface with electricity customers across the province.

Both are interesting ideas. But the devil is in the details. And when it comes to Ontario governments meddling in the electricity sector, the details always seem to ruin everything.

On what grounds can the provincial government justify using proceeds from selling electricity assets to fund transit?

Snap Lake mine could close if dissolved solid limit not raised: De Beers – by Guy Quenneville (CBC News North – March 13, 2015)

March 16, 2015

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

Company asking Mackenzie Valley Land and Water Board to nearly triple limit

De Beers Canada says some recommendations for how to tackle a groundwater problem at its Snap Lake diamond mine could, if implemented, result in the mine closing down early — a move that would put 300 N.W.T. residents out of work.

De Beers has encountered higher than expected volumes of total dissolved solids (TDS) — including mineral salts — in water leaking through the inner walls of the underground mine, located 220 kilometres northeast of Yellowknife.

The company treats that water and releases it back into the lake. But to avoid going over the acceptable level of TDS for the lake, the company has also been storing TDS-high water underground since June 2014. De Beers is asking the Mackenzie Valley Land and Water Board to nearly triple the highest allowed level of TDS in Snap Lake to 1,000 milligrams per litre.

“Snap Lake mine cannot continue to operate if a level of [total dissolved solids] is set that is not sustainable,” said Glen Koropchuk, De Beers Canada’s chief operating officer.

Koropchuk said De Beers has already spent $20 million to capture and release TDS-high water at Snap Lake. It’s one of several unanticipated issues Koropchuk says De Beers has faced at Snap Lake since the mine opened in 2008.

Spring budget is Liberals’ fire sale to cure 12 years of mismanagement – by Christina Blizzard (Toronto Sun – March 14, 2015)

March 16, 2015

http://www.torontosun.com/

TORONTO – The deficit-plagued Liberal government of Kathleen Wynne is hanging the “For Sale” sign on government assets. The Liberals’ spring budget won’t be so much a fiscally responsible financial document outlining the government’s plan to prudently manage government programs as it will be a fire sale to help fund the Liberals’ 12 years of mismanagement.

Suddenly, Hydro One is for sale. And the government is going to open up wine and beer sales to large grocery stores and rake in millions in franchise fees.

This all has a Nixon to China flavour to it. If a Conservative government suggests changes to liquor sales or selling off utilities, it’s accused of being in the pockets of big business.

When Mike Harris’ government suggested selling off parts of Hydro One more than a decade ago, it was slammed for trading away the province’s “central nervous system.”

The difference back then was that Harris suggested selling off Hydro One because his government philosophically believed the private sector could do a better job. In hindsight, looking at the mess Hydro One is in, Harris was right.

Primero targets 2018 start-up for Grey Fox Mine – by Ron Grech (Timmins Daily Press – March 14, 2015)

March 16, 2015

The Daily Press is the city of Timmins broadsheet newspaper.

BLACK RIVER-MATHESON – Primero Mining Corporation is aiming to have a new open pit mine in operation by 2018. Ernest Mast, the newly appointed president and chief operating officer, said they plan to begin construction on the Grey Fox open pit next year.

Primero currently operates the Black Fox Mine Black River-Matheson which has both an underground and open pit operation. “That open pit operation will cease later this year,” said Mast, who was appointed president last month. “We will see a decrease in employment from that but then when Grey Fox opens, it is just going to take up that personnel.”

Based solely on confirmed reserves, the Black Fox underground mine may have just another four years of operation. However, Mast said there is considerable evidence to suggest Black Fox will enjoy a considerably longer lifespan. The Grey Fox property is located about three kilometres south of Black Fox Mine.

Both mines are on the geological Destor-Porcupine Fault Zone which extends from Val d’Or to to the west of Timmins.

“Obviously numerous mines are on that trend,” said Mast. “One of the characteristics of the mines on this trend is that most go down to 1,200 to 1,400 metres, and right now we’re only at 520 metres and our drilling at around the 650 metre level has given us the best intercepts (drill results) in the history of the mine and those were recently announced.

HISTORY: A look back at the Hollinger Mine – by Karen Bachmann (Timmins Daily Press – March 14, 2015)

March 16, 2015

The Daily Press is the city of Timmins broadsheet newspaper.

Karen Bachmann is the director/curator of the Timmins Museum and a local author.

TIMMINS – If you live in Timmins (or you’ve just driven through), you’ve passed by this complex, for lack of a better word, many, many times. It is a local landmark, a symbol of the Porcupine then and now. It is a monument to the thousands of miners and their families who have called this community home; indirectly, it has helped countless others set up businesses and make a home in this community. Its contribution to the social fabric of Timmins cannot be diminished – the people involved saw fit to start a hospital, a school, a train station, hotels, homes, sports facilities and clubs. The history of Timmins, like it or not, is intimately attached to the Hollinger Consolidated Gold Mines – even today.

The Daily Press published a brilliant supplement to their paper in July 1960, that celebrated the 50th anniversary of the Hollinger Gold Mine. As part of that celebration, Jules Timmins, president and chairman of the company (at 72 years young), was called upon to pour the 18,490th gold bullion bar, marking the Hollinger’s total production (to that date – July 22, to be exact) at a half-billion dollars, the largest output record of its kind in Canada. At that time, the Hollinger was the largest gold mine in Timmins and the second largest in Canada (it had just been surpassed by Kerr-Addison, in annual production).

A.F. Brigham, a former mine manager, predicted, back in the early 1920s, that the Hollinger would achieve this milestone by the end of the century. He did not count on the addition of the Schumacher property, which raised the reserves at the mine from 4 million tons (give or take) to a very healthy 6.3 million tons – allowing for the aforementioned feat to be achieved in half the time.

NEWS RELEASE: KWG Resources Inc.: Black Horse Option Term Extended

March 16, 2015

TORONTO, ONTARIO–(Marketwired – March 13, 2015) -KWG Resources Inc. (“KWG”) (CSE:KWG)(TSX VENTURE:KWG)(FRANKFURT:KW6) has reached agreement with Bold Ventures Inc. (“Bold”) (TSXV: BOL) to satisfy its obligations to make the third payment of $700,000 required under Bold’s option agreement with Fancamp Exploration Ltd. (“Fancamp”) (TSXV: FNC) on the Black Horse claims (the “Option Agreement”), by delivery to Fancamp of 35 million common shares of KWG (valued at $0.02 per common share) (the “Share Issuance”) on or before March 19, 2015. In consideration of the foregoing and a payment of $5,000 by KWG, Bold has extended the time by which KWG must complete the exploration expenditures required by the Option Agreement to September 30, 2015.

The Canadian Securities Exchange (the “CSE”) has agreed to waive its minimum issue price requirements with respect to the Share Issuance; however, the TSX Venture Exchange (the “TSXV”) was unable to grant a similar waiver. Consequently, in order to proceed with the Share Issuance, KWG will seek to delist its common shares from the TSXV subject to meeting any voluntary delisting requirements (including board approval).

KWG has the right to earn an 80% interest in Bold’s interest in the chromite resources comprising the Black Horse claims, and a 20% interest in their non-chromite resources, by making the payments and exploration expenditures required under the Option Agreement. KWG has incurred $5.8 million of a total of $8 million of exploration expenditures that Bold is required to complete by March 31, 2016 in order for Bold to earn a 50% joint venture interest in the claims, with operatorship of all subsequent programs.

Mining downturn a chance for governments to craft competitive policies: World Bank (Northern Miner – March 13, 2015)

March 16, 2015

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

Like other regions, Latin America has seen a slowdown in mining investment thanks to the global decline in commodities prices.

But however much it might hurt in the short-term, the slowdown represents a chance for Latin American countries to rethink their strategies around mining and the industry’s strategic role in spurring economic development, says Paulo de Sa, Practice Manager with the World Bank’s Energy and Extractives Global Practice group (GEEDR).

“It’s an opportunity for governments to think about competitiveness of their industries,” he said at a World Bank sponsored forum on mining in Latin America during the Prospectors and Developers Association of Canada convention in March.

While in previous commodity downturns, countries cut taxes to remain competitive in a “race to the bottom,” de Sa is hopeful that this time around, governments will explore other ways to achieve competitiveness. “We believe there are many, many ways of continuing to be attractive to mining investment other than just reducing the taxes,” he said.

To give governments some ideas on how to do that, the forum heard from officials from several different jurisdictions inside and outside of Latin America.