October 8, 2015 – Republic of Mining

Analysts say major U.S. banks on hook to Glencore – by Kate Kelly (CNBC.com – October 7, 2015)

October 8, 2015

http://www.cnbc.com/

A new report estimates that Bank of America, Citigroup, JPMorgan Chase, and Morgan Stanley have lent $350 million apiece to the troubled commodity giant Glencore PLC — meaning they will be on the hook for potential losses if things deteriorate at the trading and mining company.

In a note issued late Wednesday afternoon, analysts at CreditSights used accountings of bank loans prepared by the data firm Dealogic to estimate who had lent what to Glencore as part of its $15.3 billion revolving credit facility.

The analysts deduced that “North American banks accounted for 20 percent” of the revolver, according to the note, with four major U.S. banks taking the lead and four Canadian banks in similar positions. Goldman Sachs and Wells Fargo were notably absent.

Of the 60 or so lenders reportedly part of the revolving credit facility, which is broken up in to a one-year and a five-year tranche, about 34 banks are in lead positions, said someone familiar with the credit structure, with equal dollar exposure to Glencore.

Mining stocks surge as end of commodity rout called – by Frik Els (Mining.com – October 7, 2015)

October 8, 2015

http://www.mining.com/

Morgan Stanley sees a sharp reversal in commodities with prices rising nearly 20% by 2017 making mining stocks historically attractive

Investors returned to the metals and mining sector in a big way on Wednesday after an analyst report called a bottom in the commodities rout.

On the Comex market in New York copper for delivery in December climbed 1.7% to a three-week high of $2.3960 or $5,280 a tonne before paring some of the gains in afternoon trade. The red metal is up more than 6% from a six-year low hit at the end of September.

The benchmark price of iron ore also advanced on Wednesday to exchange hands for $54.50 extending the steelmaking raw material’s bull run since hitting record lows in July. Iron ore is up 24% from the trough staying above the $50 a tonne level for the last 12 weeks.

Iron ore and copper are seen as bellwethers for the mining sector and today’s rally comes on the back of a positive research note from Morgan Stanley quoted in the Wall Street Journal.

Glencore’s pursuit of Rio Tinto has come full circle – by Peter Kerr (Sydney Morning Herald – October 8, 2015)

October 8, 2015

http://www.smh.com.au/

It was supposed to be the year that advanced Ivan Glasenberg’s plans for global domination of the commodities sector.

But the year since Rio Tinto rebuffed merger overtures from Glasenberg’s Glencore, which was marked on Thursday, has become the South African entrepreneur’s annus horribilis.

Not only did the merger, seen by some as inevitable and by others as unlikely, not come to fruition, but the process prompted the market to compare the two companies thoroughly. That comparison has not flattered Glencore.

The merger approach came amid the peak of the iron ore crisis – prices had fallen by 44 per cent in 12 months, and Glasenberg had whipped up a debate about both Rio Tinto’s reliance on the bulk commodity and its controversial strategy of continuing to expand exports into weak markets.

Glasenberg, on the other hand, portrayed himself as the commodities guru with the better-placed, more-diversified portfolio that had an oil hedge and exposure to the base metals that most predicted would shine in 2015.

Aluminum premium bubble over? Just don’t tell the LME – by Andy Home (Reuters U.S. – October 7, 2015)

October 8, 2015

http://www.reuters.com/

LONDON – So is the aluminum premium bubble well and truly over? It certainly feels that way.

Japanese buyers have just secured a premium of $90 per metric tons over London Metal Exchange (LME) cash metal for their fourth-quarter shipments.

As recently as the first quarter of this year, Japanese premiums were at a record high of $425 per metric tons (468 tons).

Moreover, these Q4 2015 premiums are the lowest since the third quarter of 2009, marking a return to historical norms.

The scale of the collapse in Japanese premiums is partly down to specific local drivers but even that statement reflects a return to normality, where physical premiums don’t move in global lock-step but rather mirror regional supply-demand dynamics.

U.S. and European premiums are higher at around $155 and $120 per metric tons respectively but have fallen a long, long way since the start of this year.

Paris’s scary climate agenda – by Peter Foster (National Post – October 7, 2015)

October 8, 2015

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

Details of two international agreements were released on Monday. One, the Trans-Pacific Partnership, which reduces trade barriers between 12 signatories, including Canada, got lots of ink. The other, which purports to control global weather, end the era of fossil fuels, and place all human activity under bureaucratic control, got very little.

The pretensions of the latter text, released by the Ad Hoc Working Group on the Durban Platform for Enhanced Action, ADP, which is assigned to come up with an agreement to put to the vast UN climate meeting in Paris in December, are mind-boggling. The fact that they attracted little attention means either that the media and public have no idea of the climate agenda’s implications, or that nobody takes the agenda seriously. Probably both. After all, the UN has been promoting the “urgent threat of climate change” for more than 25 years.

While the text of the TPP has yet to be finalized, that of the Paris meeting is skeletal. But, like skeletons, it is scary.

If anybody doubts the significance of the changes to which the puppeteers of Paris aspire, they should refer to remarks made last week by Mark Carney, the Governor of the Bank of England, who suggested that the climate thrust could destroy massive value as oil and gas assets are “stranded” by climate legislation.

Mining operator convicted of 2 misdemeanors for polluting Southwest Alaska river – by Jerzy Shedlock (Alaska Dispatch News – October 7, 2015)

October 8, 2015

http://www.adn.com/

A Southwest Alaska mine operator from Canada was convicted of two misdemeanor violations of the federal Clean Water Act on Wednesday in Anchorage for allowing muddy water to seep into a salmon stream over the course of two mining seasons.

The government charged James Slade — a mining consultant from Calgary, Alberta, who became chief operating officer for XS Platinum Inc. in 2010 — with six felonies. The charges included conspiracy, various violations of the Clean Water Act and submission of a false report.

Jurors could have found that Slade violated the regulations knowingly or negligently. They decided Slade’s actions were irresponsible but could not reach a unanimous decision about whether he knew he was breaking the law on two of the charges. What could have been felony convictions were instead found to be misdemeanors.

The jury deliberated for two days, finding Slade not guilty of half of his alleged crimes. The government will decide next week whether or not to retry Slade for three charges on which jurors were deadlocked, said First Assistant U.S. Attorney Kevin Feldis.

Statement from the Arizona Mining Association – by Kelly Norton (October 8, 2015)

October 8, 2015

http://www.azmining.com/

Kelly Norton is the President of the Arizona Mining Association.

“Reforms proposed for the Mining Law will not fix the challenging legacy mine situation in the U.S. but will instead distract policymakers from effective solutions.

“The mining industry is not opposed to a royalty on new mines provided it sustains a competitive environment for U.S. mines, the mining economy and the employment it supports, and is coupled with a timely and efficient permitting process.

“Legislative initiatives proposing punitive royalties on new mining will only kill investment, jobs, and local revenue generated by modern mining.

“Modern mining is a highly regulated industry unlike the by-gone era when exhausted mines were not regulated and simply abandoned. Post-mining reclamation and restoration is a requirement of modern mining and includes both state and federal regulations.

Why Alaska doesn’t trust BC – by Judith Lavoie (DeSmog Canada/Troy Media – October 2, 2015)

October 8, 2015

http://www.troymedia.com/

Energy and Mines Minister Bill Bennett visited southeast Alaska this summer, trying to calm critics of the province’s aggressive push to build at least 10 mines close to the Alaska border.

“I understand why people feel so strongly about protecting what they have,” Bennett said at a news conference in Juneau. “There’s a way of life here that has tremendous value and the people here don’t want to lose it. I get that.”

Bennett’s conciliatory tone was in response to an unprecedented outpouring of concern from a powerful alliance of Alaskan politicians, tribes, fishing organizations and environmental groups. They’re perturbed by the modern-day gold rush alongside vital transboundary salmon rivers such as the Unuk, Taku and Stikine.

Indeed, long-held perceptions of Canada as a country with strict environmental standards and B.C. as a province that values natural beauty have taken a beating in southeast Alaska. Many now regard Canadians as bad neighbours who unilaterally make decisions that could threaten the region’s two major economic drivers – tourism and fishing.

Copper’s outlook may be rosier than you thought – by Andy Home (Reuters U.S. – October 7, 2015)

October 8, 2015

http://www.reuters.com/

German copper producer Aurubis has just rung the bell on the start of the “mating season”, the annual negotiation of term contracts for shipments in the following year.

It has announced it will be reducing its copper cathode premium from $110 per tonne over LME cash metal this year to $92 next year.

Aurubis’ preemptive move will raise expectations of a similar-sized reduction in the annual premium from Chile’s Codelco, the world’s largest producer. Its European premium has been higher than that of Aurubis in both 2014 and 2015 at $112 per tonne.

The case for cutting copper premiums seems obvious. Everyone’s worried about the state of demand, particularly in China, which accounts for around 45 percent of global copper usage.

The price itself looks wobbly. Currently trading around $5,250 per tonne, basis LME three-month metal, it is already down by around 16 percent so far this year with plenty of bears calling for lower prices still.

U.S. Steel Canada may become independent again – by Greg Keenan (Globe and Mail – October 8, 2015)

October 8, 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.

TORONTO — The 100-year-old steel maker once known as Stelco Inc. may become independent again after United States Steel Corp. gave up on trying to restructure the company it purchased in 2007.

U.S. Steel Canada Inc., possessing the youngest integrated steel mill in North America and an idle steel-making mill in Hamilton, would proceed on its own or be sold after U.S. Steel and its stakeholders failed to reach a deal on the future of the Canadian unit within its troubled Pittsburgh-based parent company.

U.S. Steel will not bid for the Canadian assets, but will maintain all services and arrangements that the Canadian unit requires for up to 24 months under a transition agreement the parent company put forth Wednesday at an Ontario Superior Court hearing.

“Absent a consensual restructuring or a [sales and restructuring process] transaction at this time, U.S. Steel Canada needs to bring stability to its operations while it starts the process to disengage itself from U.S. Steel as well as to work toward developing new markets and customers for its steel products,” court-appointed monitor Alex Morrison said in a report.

Former Centerra Gold CEO avoids extradition to Kyrgyzstan as Bulgarian court rejects request – by Peter Koven (National Post – October 8, 2015)

October 8, 2015

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

Len Homeniuk’s long nightmare is almost over.

The former chief executive of Toronto-based Centerra Gold Inc. expects to head home to California later this month after a Bulgarian court Wednesday refused to extradite him to Kyrgyzstan on corruption charges. Homeniuk always maintained the allegations are false.

“The court had a complex issue to deal with, and it dealt with it in the right way,” he said in a phone interview from Sofia. “So I’m very pleased.”

Homeniuk, 68, was arrested by Bulgarian authorities on July 27 while on a vacation cruise on the Danube River with his family. The joint Canada-U.S. citizen spent 11 days in prison, and then spent several weeks under house arrest in Sofia with his wife. He was finally granted bail in mid-September, but could not leave the country until the Bulgarian court ruled on the extradition request.

NEWS RELEASE: Franco-Nevada to Acquire a Silver Stream on the Antamina mine from Teck for US$610 million

October 8, 2015

http://www.franco-nevada.com/

TORONTO, October 7, 2015 – Franco-Nevada Corporation (TSX: FNV; NYSE: FNV) has agreed to acquire a silver stream on production from the Antamina mine (“Antamina”) in Peru from Teck Resources Limited (“Teck”). Teck owns a 22.50% interest in Compania Miñera Antamina S.A. (“CMA”), the Antamina joint venture company, along with partners BHP Billiton Plc (33.75%), Glencore Plc (33.75%) and Mitsubishi Corporation (10.00%).

“Franco-Nevada is pleased to partner with Teck on the Antamina mine to create our first pure silver stream,” said David Harquail, President and CEO of Franco-Nevada. “This further strengthens and diversifies our portfolio with a proven, long-life, high-margin asset that will be immediately accretive. This investment provides our shareholders with metal price optionality over multiple cycles and potential further exploration and expansion upside.”

Transaction Highlights

 A cornerstone investment : Antamina is an established mine that commenced operations in 2001. The mine is owned and operated by some of the largest and best regarded mining companies in the industry.The partners at Antamina have invested over US$6.5 billion to date in constructing and expanding the mine and its infrastructure.

Gold Grade is King at Kirkland Lake – by Lawrie Williams (Lawrieongold.com – October 8, 2015)

October 8, 2015

http://lawrieongold.com/

In general gold mining and exploration juniors have been having a horrendous three or four years since the gold price started its decline from its peak at the end of Q3 2011, but high grade, profitable operations like Kirkland Lake Gold (TSX: KGI) have tended to buck the overall trend – and here it is indeed the gold grade which is the key.

In short, Kirkland Lake gold is one of the highest grade operating gold mines in Canada – or indeed in the world. And it is being very successful in maintaining mill grade at very close to reserve grade – achieved by current management under George Ogilvie, former CEO of Rambler Metals and Mining, in not chasing tonnage, but rather putting the emphasis on grades to the mill.

It is thus running well under mill throughput capacity of over 2,000 tonnes a day, but generating excellent returns as a result – and leaves it with scope for expansion from existing operations, let alone from the excellent exploration potential across its land holdings. LawrieOnGold interviewed Ogilvie yesterday in London and these are the impressions gained.

Nickel to rise above $20,000/tonne by 2017 – Alto Capital (Mineweb.com – October 8, 2015)

October 8, 2015

http://www.mineweb.com/

A longer-term perspective supports price appreciation.

A bullish outlook that will see nickel climb out of its current price slump and double in value to in excess of US$20,000 a tonne before March 2017, has been forecast today by market observer, Alto Capital.

Addressing the Paydirt 2015 Australian Nickel Conference in Perth today, Alto Capital research analyst, Mr Carey Smith, said that while the sector was under substantial cost and price pain, nonetheless the trend factors and outlook were far more substantial than they appeared.

“The nickel market has been dismal due to a recipe of stockpiles are up, production is up and demand is down,” Mr Smith said.

“However, going forward, stockpiled Indonesian high grade laterite nickel in China has all been consumed, China Nickel Pig Iron (NPI) production is in decline, global nickel supply is decreasing with only Independence Group’s Nova Bollinger project on the horizon and most producers/miners are losing money – so they will minimise their operations and/or get out of the game,” he said.