Republic of Mining

Tahoe Resources-Lake Shore Gold’s $945M deal brings potential benefits for both sides – by Peter Kovin (National Post – February 9, 2016)

February 9, 2016

http://business.financialpost.com/

TORONTO – Tahoe Resources Inc.’s friendly $945 million deal to buy Lake Shore Gold Corp. is being viewed as a logical transaction that addresses challenges faced by both companies.

Tahoe gets to diversify into Canada, increase its growth profile and reduce exposure to Guatemala, a very challenging jurisdiction. Lake Shore, meanwhile, can develop its projects quickly without worrying about diluting shareholders or taking on more debt.

“We believe this transaction brings strong mutual benefits to our respective shareholders and establishes the premier low-cost precious metals producer in the Americas,” Tahoe chief executive Kevin McArthur claimed on a conference call.

Investors’ rush to gold, bonds, an overreaction to temporary problems – by Ian McGugan (Globe and Mail – February 9, 2016)

February 9, 2016

http://www.theglobeandmail.com/

Growing fears of a new financial crisis are driving a stampede to safety by investors spooked about what lies ahead for the global economy.

Stock markets around the world tumbled Monday as money poured into what people perceive as safe assets – primarily government bonds and gold. The hardest-hit stocks were those of global banks, the companies most vulnerable if world growth were to abruptly slow and asset prices were to sour.

Meanwhile, gold jumped, touching $1,200 (U.S.) an ounce for the first time since June, and the yield on Canada’s benchmark 10-year government bond fell to its lowest level on record as investors sought havens from the economic storm. A cluster of concerns has combined to chase people out of riskier assets.

Why ‘flow-through shares’ are a flop – by Kevin Libin (National Post – February 9, 2016)

February 9, 2016

http://business.financialpost.com/

You’d be hard pressed to find bigger fans of “flow-through shares” than the Bay Street lawyers and bankers using them to finance roughly a half-billion dollars in mining and energy deals every year.

But they’re hardly alone. Once dubbed by the Financial Post as “Canada’s quirky tax innovation,” flow-through shares were given high praise recently, in another national news outlet, by Richard Sutin, senior partner at Norton Rose Fulbright, who called them a “spectacular success, positioning Canada’s capital markets as a global leader in resource finance.”

And in its “Action Plan for Prosperity” a few years ago, the Coalition for Action on Innovation in Canada, chaired by Liberal big-thinker John Manley, urged policy-makers to build on the “success” of the flow-through share program — which “has helped make Canada a global leader in resource financing” — and expand them to other industries.

Red Tape and Power Struggles: South Africa Is Losing Miners – by Kevin Crowley and Andre Janse Van Vuuren (Bloomberg News – February 9, 2016)

February 9, 2016

http://www.bloomberg.com/

South Africa ranks as one of the richest countries in natural resources from gold to iron ore. The problem: few companies want to deal with the headache of getting it.

Strikes, unreliable power supply, a mining code that’s been under review for six years, and disputes over compulsory holdings by local black shareholders have dented investor confidence in the country. Many nations on the continent have similar problems.

Companies are voting with their feet: BHP Billiton Ltd., the world’s biggest miner, exited the nation last year, leaving only five of the 40 largest commodity producers with operations in South Africa.

Cameco posts lower earnings amid “really tough” global market: CEO – by Alex MacPherson (Saskatoon StarPhoenix – February 8, 2016)

February 9, 2016

http://thestarphoenix.com/

Five years after the Fukushima Daiichi disaster, the uranium market has not recovered as quickly as expected, forcing Cameco Corporation to “learn to live in a different paradigm,” according to its president and CEO.

“I think everybody underestimated the reaction of Japan,” Tim Gitzel said, noting that while the Japanese government abandoned its plan to phase out nuclear power entirely, its stringent regulatory regime has allowed for just three reactor restarts to date. “We thought that would happen a lot faster,” Gitzel said.

The “really tough” global market, combined with factors such as the devalued Canadian dollar, resulted in Cameco posting a $10 million, or $0.03 per share, loss in the fourth quarter, bringing its yearly earnings to $65 million, or $0.16 per share — a 65 per cent slide from the $185 million it made in 2014.

Lonmin CEO says will not shy away from merger or takeover – by Olivia Kumwenda-Mtambo (Reuters U.K. – February 9, 2016)

February 9, 2016

http://uk.reuters.com/

CAPE TOWN – Lonmin (LMI.L) will not “shy away” from a merger or takeover but for now the company was focussed on its plan to survive tough market conditions, its chief executive said on Tuesday.

“We are continuously looking at options to maximise value for our shareholders and all other stakeholders. Should it be of benefit to our shareholders and stakeholders it’s not something we would shy away from,” CEO Ben Magara told Reuters in an interview at a mining conference in Cape Town.

Magara said the company was for now focussed turning cash positive in a low price environment – which involves closing high-cost shaft and cutting jobs.

De Beers halts exploration of diamond mine near Attawapiskat, Ont. (CBC News Sudbury – February 08, 2016)

February 8, 2016

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

Bulk sampling of mine extension may be pushed back as First Nation voices concerns

The De Beers diamond company has ceased exploration of the Tango extension near the Victor mine due to local pushback. The Victor mine is located in the James Bay lowlands of northern Ontario, and is the province’s only diamond mine.

DeBeers is hoping to extend mining operations into a nearby deposit called Tango, but first needs to determine it’s feasibility. The company said the exploration is required as the Victor mine enters its final years.

Tom Ormsby, a spokesman for De Beers Canada, said the company has halted its plan to take a bulk sample of the new mining grounds.

Dark clouds gather for South Africa’s miners – by James Wilson and Andrew England (Financial Times – February 7, 2016)

February 8, 2016

http://www.ft.com/

Johannesburg – It is one of the mining industry’s historic heartlands and is endowed with some of the world’s richest mineral deposits. But right now South Africa is a place where some of the largest miners in the world are reluctant to do business.

More than 600 job cuts announced last week by South32, the Australian mining company that was last year spun out of BHP Billiton, are the latest indication of how South Africa is bearing the brunt of the worst commodities downturn in more than a decade. In total, 32,000 mining jobs in the country, about 6 per cent of the industry workforce, are subject to formal consultations that could lead to redundancies.

This will provide a bleak backdrop on Monday to the start of the Mining Indaba, one of the world’s leading conferences for mining executives and investors. As well as South32’s redundancies at its South African manganese mines, Lonmin is cutting 6,000 jobs at its platinum shafts in the country.

New open pit mine in Timmins expected as Lake Shore Gold is merged with Tahoe Resources – by Alan S. Hale (Timmins Daily Press – February 8, 2016)

February 8, 2016

http://www.timminspress.com/

Lake Shore Gold will soon become part of Tahoe Resources. The mining companies announced on Monday that Tahoe intends to buy a 75% stake in Lake Shore by exchanging shares in that company for Tahoe shares.

This announcement comes after trading on Lake Shore Gold’s shares were halted on Friday. It appeared at the time that it was to halt market speculation after positive news from an ongoing exploration project, but it now seems it was in anticipation of announcing the merger.

Under the agreement announced on Monday, each common share of Lake Shore Gold will be exchanged for a 0.1467 share in Tahoe which, when the markets closed on Friday, was worth $1.71. This would mean Lake Shore Gold shareholders would make a 15 cent profit on every share they own.

Private-Equity Mining Deals Seen Rising in 2016 as Majors Sell – by Jesse Riseborough (Bloomberg News – February 8, 2016)

February 8, 2016

http://www.bloomberg.com/

The value of private-equity deals in the mining industry will rise this year from $3.2 billion in 2015 as top producers seeking to cut the fat amid a global commodity rout offload unwanted operations, according to U.K. law firm Berwin Leighton Paisner.

“The majors are looking to divest a lot more,” Alexander Keepin, head of mining at BLP, said in a phone interview. “There should be a point where the value expectations of the majors and the cash available from the private-equity groups means that there will be more transactions.”

The biggest miners have been battered by the slump in commodity prices that’s forced producers to scrap payouts to investors, sell shares to bolster cash reserves and dispose of lower-quality mines and smelters.

Value of U.S. metal mine production drops 15% – by Andrew Topf (Mining.com – February 7, 2016)

February 8, 2016

http://www.mining.com/

The USGS also says the States is now 100% dependent on other countries for 19 minerals

The United States earned less from its mines in 2015 and became more reliant on outside sources for critical metals, according to a new report from the U.S. Geological Survey (USGS).

The data comes from statistics gathered by the USGS on about 90 mineral commodities considered essential for the U.S. economy and national security.

Concerns have been raised for years that the United States is too dependent on other countries, namely China, for rare earth elements deemed essential for its aerospace and electronics industries, leading to suggestions that the U.S. create a strategic minerals reserve.

Arizona Mining shows upside at Taylor (Northern Miner – February 5, 2016)

February 8, 2016

http://www.northernminer.com/

VANCOUVER — When it comes to opportunities in the junior space that tick the prerequisite boxes for mineral development, there aren’t many that can match Arizona Mining (TSX: AZ) and its emerging Taylor zinc-lead-silver deposit roughly 80 km due southeast of Tucson.

The company features an accomplished management team and strong financial backing, and it completed a promising drill campaign last year that hints at the potential for a great mining opportunity driven by high grades and a clear permitting path.

Arizona is the brainchild of chairman — and well-known corporate finance figure — Richard Warke, who founded Augusta Resource and Ventana Gold. The company previously operated under the Wildcat Silver banner before shifting it’s identify in mid-2015 to signal a new focus on the Taylor discovery, which is part of the 140 sq. km Hermosa project.

Trading halted on Lake Shore Gold shares – by Len Gillis (Timmins Daily Press – February 5, 2016)

February 8, 2016

http://www.timminspress.com/

TIMMINS – There was so much excitement and market speculation about a Lake Shore Gold Timmins property that trading in company shares was halted on Friday and the company was asked by regulators to issue a public statement.

This follows the positive news that was released by the company on Thursday revealing the results of 13 drill holes for a high grade gold zone at the “Whitney Project” which describes the area located near the old Hallnor Mine property in Timmins.

The results are from the first surface exploration drilling done on the Whitney property since LSG became the new owners last fall. The Whitney property was a prospect that was owned and explored by Temex Resources Corp. Just last September, Temex shareholders approved a takeover deal by Lake Shore for all outstanding common shares.

Miner Tahoe Resources adds Ontario gold mines with Lake Shore buy (Reuters U.S. – February 8, 2016)

February 8, 2016

http://www.reuters.com/

Miner Tahoe Resources Inc (TAHO.N) (THO.TO) said it would buy Canada’s Lake Shore Gold Corp (LSG.TO) for about C$751 million ($540 million) to add low-cost gold mines in Ontario to its portfolio.

Precious metals miners have been clamping down on costs amid a sharp decline in the price of bullion that has weighed on exploration spending, capital to sustain operations and dividends.

Spot gold prices XAU= have fallen nearly 40 percent from its peak of $1,920.30 an ounce in September 2011. The deal comes after Goldcorp Inc (G.TO) sold its 25.6 percent stake in Tahoe for C$998.5 million last June.

Norway’s sovereign wealth fund asked miners to consider coal demergers – by Peter Ker (The Age – February 7, 2016)

February 8, 2016

http://www.theage.com.au/

Norway’s influential sovereign wealth fund asked mining companies in its investment sphere to consider spinning out their coal assets in 2015.

The fund, which is a top five shareholder in BHP Billiton, made the request just months before BHP spun out South32. The coal push was revealed in the fund’s 2015 annual report. It also shows the fund divested from 73 companies in 2015 for ethical and governance reasons.

The fund has made headlines in recent years for its increasingly strict stance against investing in fossil fuels. It took the stance further in 2015 by asking miners to consider divestments of their own.