Republic of Mining

Mining Fund X2 Resources Loses Two Large Investors; Looks to Restructure – by Ben Dummett and Sarah McFarlane (Wall Street Journal – July 15, 2016)

July 18, 2016

http://www.wsj.com/

Once hailed as leader of a new wave of investment into mining

X2 Resources, the massive fund once hailed as the leader of a new wave of investment into the beleaguered mining industry, is restructuring after losing two key investors and failing to execute any deals, according to people familiar with the matter.

Launched in 2013 by Mick Davis, the former chief executive of miner Xstrata PLC, the fund won commitments of $5.6 billion on the promise of picking up bargains as the commodities’ bust forced fire sales.

X2 Resources was one of several private-equity style funds founded by high profile former mining executives and bankers that were trumpeted in the media and industry as a key source of funding for a sector that investors were fleeing. But none of these funds have made significant investments.

First-hand account of the “romance of the Klondike” – by Karen Bachmann (Timmins Daily Press – July 16, 2016)

July 18, 2016

http://www.timminspress.com/

Ah, the romance of the Klondike. Or perhaps more appropriately – ah, the romance of the Porcupine Gold Rush; venturing into the wilderness, armed with a canoe, a pick, and a dream! Well, as a good friend of mine reminded me, “it’s always romantic for those who were not there,” and he certainly was right.

Waltzing into the Porcupine back in 1908-1909 was no great picnic; the railway did not venture this way which meant walking and portaging with little stops along the way at halfway houses, a.k.a. “tents with airs above their station.” But why listen to me? Here is an excerpt from the diaries of Charles Auer, one of the early prospectors to the Porcupine – and I’ll wager big bucks he didn’t find the whole affair “romantic:”

– Friday, June 14th, 1 p.m. –

For the past two hours, we have been wind-bound about two miles north of the mouth of the Abitibi with a heavy sea driving directly on shore so that we will have to stay here until it lets up as we cannot weather the seas to get around a point about half a mile to the south.

Silver jumps 50 percent, but beware the devil’s metal – by Jan Harvey (Reuters U.S. – July 13, 2016)

July 18, 2016

http://www.reuters.com/

LONDON – Silver prices have leapt nearly 50 percent so far this year, reversing three years of losses, but history shows investors hoping to hop aboard the bandwagon should be wary.

A surge in gold and upbeat prices of industrial metals, along with prospects for yet more monetary stimulus from leading central banks, have prompted some heart-stopping moves. “I’ve lost hair this year,” one silver trader said after the market shot up by almost a third in one month alone. “And about 20 pounds.”

On the face of it, silver has a lot of appeal. It tends to track gold prices, but its low liquidity usually leads it to outperform the move in gold by around 1.5 times.

Metals rebound restores some luster to lowly zinc and nickel – by Peter Koven(Financial Post – July 15, 2016)

July 15, 2016

http://business.financialpost.com/

After many months in the gutter, two of the world’s least-loved metals are enjoying an honest-to-goodness turnaround.

Zinc and nickel are both soaring this summer after recovering from shocking depths early in the year. Zinc touched US$1.00 a pound on Thursday for the first time since mid-2015, while nickel jumped to a nine-month high of US$4.73 a pound. Zinc is up 48 per cent from its January low, and nickel is up 38 per cent in the same period.

These moves were a long time coming. For the past two years, experts have been warning of major supply-side problems in these markets and predicting that rallies were inevitable. It took a while for them to materialize, in part because of high inventories. And now that they are finally here, there is debate about whether they are sustainable.

Samsung’s Ambitious Foray Into Mining Backfires – by Daniel Stacey and Jonathan Cheng (Wall Street Journal – July 14, 2016)

July 15, 2016

http://www.wsj.com/

Conglomerate’s construction arm lost at least $700 million constructing one of the world’s biggest iron-ore mines

PERTH, Australia—In June 2013, Samsung officials gathered in a park here to celebrate a landmark deal with an Australian tycoon to construct one of the world’s biggest iron-ore mines. Crocodile steaks sizzled on the barbecue, while a senior executive thanked staff for securing the nearly $6 billion contract.

Samsung had built megaprojects before, like the Burj Khalifa skyscraper in Dubai, through its construction arm, Samsung C&T Corp. It figured the Roy Hill mine, owned by Australian billionaire Gina Rinehart, would be another coup, tapping into the global commodity boom.

Instead, the Korean conglomerate best known for smartphones and refrigerators lost at least $700 million in two years on its first foray into mining, Samsung C&T said.

KPS withdraws bids for Essar Algoma, U.S. Steel Canada – by Greg Keenan (Globe and Mail – July 15, 2016)

July 15, 2016

http://www.theglobeandmail.com/

KPS Capital Partners LP has abandoned its bids for Essar Steel Algoma Inc. and U.S. Steel Canada Inc., ending its effort to combine two Canadian steel mills that have been operating in creditor protection.

The New York-based private equity fund withdrew the bids because it was unable to reach agreements with the Ontario government, a source familiar with the matter said Thursday. The Ontario government was involved because of combined pension liabilities that exceeded $1-billion at the two steel makers, as well as unknown environmental costs.

KPS had teamed up with Essar Algoma’s term lending syndicate to make an offer that was anointed by Essar Algoma as the preferred bid. Its withdrawal from the U.S. Steel Canada sales process leaves Bedrock Industries Group LLC, another private equity fund, as the only bidder remaining in that auction.

BHP, Vale joint venture boss in Brazil ‘environmental crime’ probe – by Daniel Palmer (The Australian – July 14, 2016)

July 15, 2016

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

BHP Billiton has confirmed operations at its troubled Samarco iron ore joint venture will likely not restart this year.

The miner, which controls Samarco with Brazil’s Vale, said the process of receiving regulatory approval for a restart of operations would take an extended period in the wake of last November’s tragic tailings dam collapse. “Samarco has confirmed it is unlikely to have in place the necessary approvals to restart its operations in this calendar year,” BHP said in a statement.

“Samarco makes an important contribution to the national economy and the livelihoods of thousands of people but Samarco’s operations will restart only when it is safe to do so, and when all regulatory approvals are granted and accepted by the relevant authorities and communities.”

New China deal casts dim light on Canadian potash sector – by Ian McGugan (Globe and Mail – July 15, 2016)

July 15, 2016

http://www.theglobeandmail.com/

A new deal to sell potash to Chinese buyers at a price dramatically lower than last year is being taken as good news by investors in Canadian potash stocks – a sign of just how far expectations for the sector have fallen.

Belaruskali, the major Belarusian producer, signed a contract to deliver potash to Chinese buyers for $219 (U.S.) a tonne, according to several industry observers on Thursday. Although the reported price is nearly one-third less than the $315 a tonne that was agreed upon last year, it is better than analysts had feared.

Still, the size of the decline demonstrates how much the market for the crop nutrient has deteriorated in recent months. It also underscores concerns about whether Potash Corp. of Saskatchewan Inc., one of this country’s most-followed dividend stocks, will be able to maintain its generous payout.

First Nations hear hard truth that UN indigenous rights declaration is ‘unworkable’ as law – by John Ivison (National Post – July 15, 2016)

July 15, 2016

http://news.nationalpost.com/

It’s been the prettiest love story in recent Canadian political history — the romancing of the Assembly of First Nations by the Liberal government. But there are early signs that the relationship between the star-crossed lovers could be fraying.

Jody Wilson-Raybould, the justice minister, spoke at the AFN’s general assembly in Niagara Falls Wednesday, where she dropped the bombshell that adopting the United Nations Declaration on the Rights of Indigenous Peoples as Canadian law is “unworkable.”

She went further. “Respectfully, it is a political distraction to undertaking the hard work required to actually implement it,” she said. This will have come as news to Perry Bellegarde, the AFN’s national chief, who celebrated the Trudeau government’s “unqualified support” for UNDRIP as a historic day on the path to reconciliation.

Light at the end of the tunnel for silicosis victims – by Liesl Peyper (MiningMx – July 14, 2016)

July 15, 2016

http://www.miningmx.com/

IT has been a difficult year for the mining industry insofar as health and safety has been concerned, but the tide is turning for a large number of mineworkers and their families who are set to receive compensation for silicosis.

In March this year, some 4,365 claimants who sued Anglo American SA and AngloGold Ashanti for the lung diseases silicosis and silico-tuberculosis, reached a landmark settlement with the two mining companies.

In accordance with the settlement, a compensation amount of R454m will be paid to the Qhubeka Trust for distribution among the claimants who meet the criteria for payment. This was the first large-scale settlement of silicosis litigation in South Africa.

How Alberta’s new oilsands adviser dreamed up the ‘Great Bear Rainforest’ to rein in our resources – by Peter Foster (Financial Post – July 15, 2016)

July 15, 2016

http://business.financialpost.com/

Justin Trudeau keeps saying that B.C.’s Great Bear Rainforest is “no place for a pipeline.” This assertion has no more rational basis than “Four legs good, two legs bad,” or “Because it’s 2015.” It does, however, reflect the extraordinary success of the radical environmental movement in controlling, or stopping, economic development by rebranding — or claiming guardianship over — great swathes of Canada, and infiltrating the political system.

Trudeau’s chief adviser is Gerald Butts, former head of WWF Canada. Go to WWF Canada’s website and you will find the claim that the Great Bear is, guess what, “no place for an oil pipeline.”

Radical greens scored another, and closely related, victory this week with the appointment of Tzeporah Berman, co-founder of ForestEthics (now known as STAND) and former co-director of Greenpeace’s global climate and energy program, as co-chair of the panel appointed by the Alberta NDP government to look at how its cap on greenhouse gas emissions will work.

Brazil prosecutors open criminal probe into Samarco CEO (Reuters U.S. – July 13, 2016)

July 15, 2016

http://www.reuters.com/

Brazilian federal prosecutors said on Wednesday they opened an investigation into alleged environmental crimes by Roberto Carvalho, chief executive of iron-ore mining company Samarco Mineração SA, over a deadly damburst last year.

According to a statement released by prosecutors, Samarco, a 50-50 joint venture between Brazil’s Vale SA and Australia’s BHP Billiton Ltd, has failed to fully implement emergency precautionary measures ordered by Brazil’s environmental protection agency Ibama in the wake of the October 2015 tailings dam burst.

In what has been billed the worst environmental disaster in Brazil’s history, the flood of iron-rich mud killed 19 people, wiped out several towns and polluted hundreds of kilometers (miles) of rivers in Brazil’s Minas Gerais and Espirito Santo states.

A Loss For China And A Win For Russia In The Philippines – by Tim Treadgold (Forbes Magazine – July 14, 2016)

July 14, 2016

http://www.forbes.com/

Russia is a likely winner from changing government policy in the Philippines just as the South East Asian country emerges as a thorn in the side of China.

The problem between China and the Philippines is well understood and relates to disputed territorial claims by China to a vast area of the South China Sea that is close to other countries, including the Philippines, Vietnam and Malaysia.

Earlier this week an international disputes court in the Netherlands found against China and in favor of a case taken by the Philippines against the Chinese claims which are based on ancient history and modern “island building”.

Dawson City’s mining office is booming, and some thank reality TV – by Cheryl Kawaja (CBC News North – July 14, 2016)

July 14, 2016

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

‘A lot of people don’t understand how the mining system works here,’ says Dawson mining recorder

Dawson City’s mining recorder is having a busy summer, and some locals believe reality TV is one of the reasons. “It’s been fairly hectic,” said Janet Bell-MacDonald at the Dawson Mining Lands Office. “We have up to 30 visitors a day coming through our office.”

Bell-MacDonald says 1129 quartz claims were staked last month, up from just 184 in June of last year — a six-fold increase. The number of placer claims staked is also up, from 57 in June 2015 to 265 last month.

What accounts for the jump? Bell-MacDonald said it’s hard to say exactly, since there are no statistics to track why people are staking, but she said there are likely several factors.

Peregrine Diamonds needs a $95M all-weather road – by Jane Sponagle (CBC News North – July 13, 2016)

July 14, 2016

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

‘The road in is a critical piece of infrastructure’

A diamond company working on Baffin Island says it could spend 10 years extracting roughly $2.5 billion in net revenue — but first it needs to build a $95 million all-weather road to Iqaluit.

Peregrine Diamonds president and chief executive officer Tom Peregoodoff held a conference call with stakeholders Tuesday to talk about the two kimberlite pipes that make up phase one of the Chidliak diamond project, 120 km northeast of Iqaluit. Peregrine has been exploring at Chidliak since 2005.

But to get the project up and running, the company needs to build a 160 km all-season road from Iqaluit to the site. “The road in is a critical piece of infrastructure and we need that prior to commencement of construction to minimize our construction capital costs,” said Peregoodoff.