March 24, 2015 – Republic of Mining

Column: Noront the new king of the Ring – by Stan Sudol (Sudbury star – March 25, 2015)

March 25, 2015March 24, 2015

(L to R) Noront Team at PDAC Awards Ceremony: Glenn Nolan, Vice President, Aboriginal Affairs; Alan Coutts, P.Geo, President and CEO; Kaitlyn Ferris, Manager, Corporate Responsibility; Paul Semple, P.Eng, Chief Operating Officer; Gregory Rieveley, CPA, CA, Chief Financial Officer. (Photo by Stan Sudol)

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

Just when I was ready to title my next Ring of Fire column, “Lost and sinking in the political muskeg of the James Bay lowlands,” a corporate bolt of lightning struck Monday, when Noront Resources, with the backing of Franco Nevada Corporation, announced the acquisition of Cliffs’ chromite properties.

This is a game changer in the Ring of Fire! A Canadian company is putting cold hard cash on the table – during one of the most severe mining busts in decades – in the long-term financial belief of the economic potential of the Ring of Fire.

Franco Nevada is lending Noront U.S. $22.5 million for five years at 7% interest in return for a 3% royalty for Cliffs’ Black Thor chomite deposit and a 2% royalty for all of Noront’s other Ring of Fire properties, with the exception of their Eagle’s Nest nickel/copper/PGM mine. The stock markets seemed to be pleased with this announcement, as Noront shares closed at 48.5 cents on Tuesday, the same as Monday, up almost 37% from their closing price the previous week.

Without a doubt, this is the mining deal of the century — and/or an extraordinary fire sale.

Nevsun Resources Ltd describes reported attack on Eritrea mine as ‘act of vandalism’ – by Claire Brownell and Peter Koven (National Post – March 24, 2015)

March 24, 2015

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

Nevsun Resources Ltd. is describing an attack on its Bisha mine in Eritrea as an “ act of vandalism,” an account that contrasts starkly with African media reports saying the mine was bombed by Ethiopan fighter jets.

In a statement released Sunday, Nevsun said vandals caused minor damage to the base of a tailings thickener at the mine during the night shift on Friday, releasing water into the plant area.

But the Ethiopian news site Tigrai Online said it had confirmed a report that the Ethiopian air force bombed the mine on Friday. Sudanese newspaper Al-Sahafa was the first to report that the attack was a military operation from Ethiopia.

“The Bisha gold mine which is about 150 km from the city of Asmara is on fire and a huge fire and smoke can be seen from far away,” the reports claimed.

But Haywood Securities analyst Stefan Ioannou said he believes Nevsun’s account over the online news report. He noted that the company’s shares opened just 3% lower than Friday’s closing price of $4.55 on the Toronto Stock Exchange, suggesting most investors weren’t taking reports of an air strike very seriously either.

Brad Wall’s good potash play – by Jack M. Mintz (National Post – March 24, 2015)

March 24, 2015

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

Premier Brad Wall of Saskatchewan is now under fire for his 2015 Budget that promises a potash tax review as well as a curb on some investment incentives for the potash industry. Some are calling his bold move a “Stelmach” moment, comparing the ever-popular Saskatchewan Party’s premier to Premier Ed’s royalty review for the Alberta’s oil and gas industry in 2007-8.

‎Saskatchewan’s royalty review is far from being a comparable situation to Alberta’s. Brad Wall inherited a clumsy complicated potash royalty system devised by the NDP in 2001-2 while the Alberta royalty system was relatively well designed before Stelmach started stirring the pot.

If anything, the Stelmach government was making the system worse with proposals that increased rather than reduced distortions. Moreover, Stelmach’s play was a revenue grab while Wall has finally taken a step to clean up a messy system with the promise not to raise revenues under the review. If there is any criticism to be laid, it’s that Wall should have acted sooner.

Wall now has a unique opportunity to not only reform potash taxation but also to ensure a politically stable tax system that has the right balance between competitiveness and public revenues. The major flaws in the current Saskatchewan system are threefold.

First, the system is unfair with differential treatment of potash companies depending on whether they existed before or after 2001-2. Companies after 2002 are taxed on their volumes differently than companies operating before this time.

Cliffs Natural Resources-Noront Resources deal puts new Sudbury smelter in limbo (CBC News Sudbury – March 24, 2015)

March 24, 2015

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

Smelter plant hinged on yet to be negotiated power rates, tax dollars to access Ring of Fire

A proposal for a new smelter in Sudbury has been pushed further into limbo after Cliffs Natural Resources announced a deal to sell off its Ring of Fire assets.

The Cleveland-based company said Monday it had entered into a definitive agreement with Noront Resources to purchase its chromite deposits and associated claims for $20 million.

Then Sudbury MPP Rick Bartolucci announced in 2012 that Cliffs would be building a smelter in Capreol, north of Sudbury, to process the chromite it mined in the far north — along with hundreds of jobs. The company even started taking job applications.

However, the new plant hinged on yet to be negotiated power rates, as well as tax dollars, to access the remote Ring of Fire. Neither issue has been settled since. With the sale of Cliffs’ chromite assets and associated claims to Noront Resources, the ball is effectively in Noront’s park.

However, CEO Al Coutts said the company is focusing on mining at this point — not smelting.

Ivory Coast to clamp down on illegal gold mining – by Joe Bavier (Reuters India – March 24, 2015)

March 24, 2015

http://in.reuters.com/

(Reuters) – Ivory Coast launched an operation on Monday to shut down hundreds of illegal gold mining sites blamed for violence, unregulated immigration and environmental destruction, the defence and mining ministers said.

The West African nation is recovering from a decade-long political crisis that ended in a brief 2011 civil war, and the government is now seeking to develop the mining sector as part of efforts to diversify the economy.

Informal, unregulated gold mining became rampant during the years of turmoil due to the absence of state authority, particularly in the rebel-occupied north.

Minister of Industry and Mines Jean-Claude Brou said the operations, which will be carried out by gendarmes, will begin by dismantling 148 illegal mining sites identified in Ivory Coast’s northern and central regions. They will be extended to the eastern and western regions later in April.

“Once we’ve cleaned things up, those who want to work will come to the administration and seek authorisation. We’ll give them training,” he told journalists in the commercial capital Abidjan. Brou said that, while laws exist to regulate the informal gold mining sector, there were no such permits currently active.

Atlas Copco and Anglo American Announce JDA for Underground Mining Equipment (March 23, 2015)

March 24, 2015

http://www.azomining.com/

A joint development project involving two of the mining industry’s flagship companies – Atlas Copco and Anglo American – is well under way towards a potential milestone in future mining technology.
Atlas Copco, the leading mining and construction equipment manufacturer and Anglo American, the global mining corporation, are set to test a new type of mining machine that is expected to transform the extraction process of ore from underground hard rock mines.

The two companies have been cooperating in a research and development partnership since 2012 and their combined efforts, which center on mechanical excavation technology, are now in an advanced stage with proof-of-concept testing scheduled to start in the fall, 2015.

If all goes according to plan, it will be a milestone for the partnership and one of the most significant examples of innovative technology to emerge from Anglo American’s FutureSmart™ approach to mining.

Scott Barker, President of Atlas Copco’s Underground Rock Excavation Division, says: “We are very proud to be Anglo American’s partner in this joint development project and we are excited at the prospect of demonstrating this potential game-changing technology to the mining industry.”

Donovan Waller, Group Head of Technology Development at Anglo American, comments:

Dayton: ‘Outdated’ clean water standard could doom mining industry – by Tom Scheck (Minnesota Public Radio – March 24, 2015)

March 24, 2015

http://www.mprnews.org/

Gov. Mark Dayton is siding with U.S. Steel in a battle over water pollution standards for the company’s taconite facility in Mountain Iron. In an interview with MPR News, Dayton said the existing sulfate standard aimed at protecting wild rice is out of date, and pushing it could be catastrophic for northeastern Minnesota.

As the Minnesota Pollution Control Agency prepares to release new environmental standards, U.S. Steel is lobbying the Legislature to delay the implementation of a clean water standard aimed at protecting water where wild rice grows.

The existing state standard prevents companies from discharging more than 10 milligrams of sulfate per liter of water. But company lobbyists and Iron Range legislators say the standard is too low. With his latest comments, his strongest to date on the long-running debate, Dayton is joining that group.

“Some people will say, ‘you’re going to abandon the standard,'” Dayton said. “But if the standard is obsolete and it’s not validated by current science and information, then to stick with it and close down an industry isn’t really well advised.”

Dayton said the sulfate standard is outdated and has rarely been enforced since it was first established in 1973. U.S. Steel’s Minntac plant was facing the new standard as it renewed a decades-old permit — something U.S. Steel said would cost hundreds of millions of dollars in upgrades.

Ring of Fire: Ontario has ‘gun to our head’ First Nation chief says – by Jody Porter (CBC News Thunder Bay – March 24, 2015)

March 24, 2015

http://www.cbc.ca/news/canada/thunder-bay

Neskantaga Chief Peter Moonias says Ontario has a ‘hidden agenda’ to support Noront Resources

The Ontario government has put ‘a gun to the head’ of First Nations leaders trying to negotiate a fair deal in the Ring of Fire mining area in the James Bay lowlands, Neskantaga Chief Peter Moonias says. His comments came within hours of Noront Resources announcement on Monday that it had struck a deal to buy Cliffs Natural Resources assets in the area.

Chiefs were informed of the deal at the same time as being told that the province has set an April 1 deadline for a decision on the next step in Noront’s environmental assessment for a proposed nickel mine in the Ring of Fire, Moonias said.

“There’s a hidden agenda,” he said. “We are being targeted with a gun to our head. We have no more opportunity to study the process.” The deadline doesn’t allow enough time for community members in the nine First Nations closest to the Ring of Fire mineral deposits to be informed, Moonias said.

The Matawa First Nations are engaged in a negotiation process about the mining project under a framework agreement with Ontario. Moonias said the sudden announcement of the tight timeline left him disillusioned about the talks.

The Mining Industry’s surprising turn to Solar and Wind Energy – by Joseph Kirschke (Informed Comment – March 23, 2015)

March 24, 2015

http://www.juancole.com/

When mining professionals the world over descended on Toronto’s 2015 Prospectors and Developers Association of Canada Convention (PDAC) at the beginning of March, the investment outlook at one of the industry’s most important events was dim . A global economic slowdown and a glut of metals and minerals for construction, infrastructure and energy on the Chinese mainland also cast a long shadow over budgets for sustainability – an increasingly core element of mineral extraction in the 21st Century.

Still, an embryonic CSR narrative is glimmering more quietly within the business – one with seismic possibilities for international investment to turn the tide against global climate change. As glaciers ebb and crops wither , miners in the Americas, Australia and Africa are beginning to economize with solar, wind and geothermal power where grid electricity is expensive – or non-existent.

Chile, the world’s great copper producer, is Latin America’s green pioneer thanks to its top industry – with 18,000 megawatts of clean energy now in the pipeline. Its greatest alternative energy source is reflected by a 69.5-megawatt solar photovoltaic project and a 115-megawatt wind farm, both powering Antafogasta Minerals S.A.’s Los Pembales copper mine – in a nation that traditionally imports 70 percent of its energy.

Elsewhere in South America, Toronto’s Iamgold uses a 5-megawatt solar farm for its open-pit Rosebel mine deep inside Suriname; the $12 million project, augmenting existing hydropower, was completed under budget in July with a government agreement.

Cliffs to exit Ontario’s Ring of Fire with sale of chromite assets – Business Network News Andrew Bell interviews Noront’s Alan Coatts (March 23, 2015)

March 24, 2015

http://www.bnn.ca/

What 60 Minutes Got Wrong About Rare Earths And China – by Tim Worstall (Forbes Magazine – March 23, 2015)

March 24, 2015

http://www.forbes.com/

Last night 60 Minutes ran a segment on how American industry, and more importantly, the American defense industry, is prostrate before a Chinese monopoly of rare earths production. This is of course very worrying for all sorts of Very Serious People and something no doubt should be done.

There is a slight problem with the analysis 60 Minutes presented though: that problem being that their analysis was wrong. And I say this as someone who works in that rare earth industry, someone who has, at times, been a near monopoly supplier of one of the rare earths and, even, a supplier to the US defense industry of non-Chinese rare earths.

Here are the most important lines in the 60 Minutes report:

But trouble is once again looming for the U.S. rare earth industry. Since restarting operations two years ago, Molycorp’s mountain pass mine has yet to turn a profit, and so deeply in debt that just last week, its own auditor warned it may not be able to stay in business.

Crummy chromite investment – by Kip Keen (Mineweb.com – March 24, 2015)

March 24, 2015

http://www.mineweb.com/

Cliffs exits the Ring of Fire.

So ends Cliffs Natural Resources’ adventure in Northern Ontario with the miner announcing that it has a buyer for its Canadian chromite projects. It was an expensive one.

A half-decade ago Cliffs paid some C$350 million in cash and shares to buy majority control of a series of then newly discovered chromite deposits. They were heralded as world-class with potential to supply the North American steel markets especially.

In 2009 and 2010 Cliffs struck deals to buy the juniors involved in the discoveries. It bought Freewest Resources for about C$240 million (in shares at the time). Then it bought up Spider Resources in 2010 for C$125 million (cash).

These were the juniors that put the region on the map – the so-called Ring of Fire. The potential was often billed as huge – a nebulous ~$60 billion or so in deposit value.

The region garnered promises from the Ontario government especially for major spending on infrastructure. For it was remote and would require new road access hundreds of kilometres long through bush and First Nations territory.

UPDATED: Ring of Fire deal ‘game-changer’ – by Mary Katherine Keown (Sudbury Star – March 24, 2015)

March 24, 2015

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

Noront Resources Ltd. announced Monday it plans to buy Cleveland-based Cliffs Natural Resources’ chromite assets in the Ring of Fire for $20 million.

International companies have touted the region’s mining potential for years, but have yet to take any projects to construction, largely due to transportation and access issues.

“We’re all in with respect to the Ring of Fire. This is where we want to be committed to,” Alan Coutts, Noront’s president and CEO, told The Star on Monday. “We think the region is very prospective, from a geological and exploration point of view.”

Coutts likened the Ring of Fire “to another Sudbury,” predicting “there’ll be multiple mines discovered over time, like in Timmins or Red Lake. We think it’s another one of these emerging mining camps.”

Coutts said the Toronto-based company has been involved in the Ring of Fire since 2007 with the Eagle’s Nest nickel-copper-platinum group deposit.

The chromite deposits are part of Coutts’ longer-term vision. While not an immediate priority, he said he would like to begin extracting nickel within three years and chromite within five years.

Noront president doesn’t rule out ferrachrome smelter for Thunder Bay – by Leith Dunick (tbnewswatch.com – March 23, 2015)

March 24, 2015

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

The president and CEO of Noront Resources is not ruling out a ferrachrome smelter landing in Thunder Bay. Alan Coutts on Monday said Monday nothing is written in stone, after his company spent $20 million to acquire more than 100 claims previously owned by a pair of Cliffs Natural Resources subsidiaries.

Cliffs had originally said Sudbury was its preferred location for the processing plant. “We haven’t settled on anything yet,” Coutts said in an interview with CKPR Radio, adding there is no guarantee the facility will even be built in the province.

“We would like to see that upgrading of the chrome wars happen in Ontario, but a smelter is a big investment. It’s a very energy-intensive process and you’d need to see some really good electricity rates as well.” Coutts said he plans to speak to the province about energy cost, but it’s far too soon in the process for nay firm decisions.

“But we’re looking at this from a fresh viewpoint and all options are open, essentially.” Noront is on record favouring an east-west corridor being built into the Ring of Fire, which would link to the project via Pickle Lake.