Republic of Mining

Mining industry facing major hurdles – by Douglas Morrison (Northern Ontario Business – September 25, 2015)

September 29, 2015

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

Douglas Morrison is the President and CEO of the Sudbury-based Centre for Excellence in Mining Innovation (CEMI) and network director, Ultra-Deep Mining Network.

The mining industry, in Canada and elsewhere, is facing major challenges — now brought into sharp focus by weak demand and low prices. But the problems within the mining industry have been developing for some time and it is naive to think that increased metal prices, through increased demand, will solve this. And although ‘cost-cutting’ that most companies are using may limit some damage in the very short term, it will make it all the more difficult to go on to address the real issues — deep-seated issues that have been ignored for too long.

There are essentially five issues the mining industry Canada needs to address: people, mine productivity, environmental performance, exploration, and new mine development. Each of these will be discussed in turn over the next few issues and I believe that collective action by the industry is the only real way forward. But — first things first —people.

The demographics of the mining industry are reaching crisis proportions. For several years, the federal Mining Industry Human Resources Council (MiHR) has issued reports projecting the future demand and supply of every category of employee, highlighting the developing chasm of a shortfall of well over 100,000 over the next 10 years.

Ontario mining state of play – by Douglas Morrison (Northern Ontario Business – August 28, 2015)

September 29, 2015

Douglas Morrison is the President and CEO of the Sudbury-based Centre for Excellence in Mining Innovation (CEMI) and network director, Ultra-Deep Mining Network.

Ontario will have to confront a decline in the mining industry over the next five to 10 years. Major mining operations, such as Kidd Creek in Timmins, will close in five years’ time and there are no major operations of this scale in development, or new deposits of this scale being drilled off.

Moreover, the Prospectors and Developers Association of Canada (PDAC) has documented a large decrease in prospecting activity in the province. An operation of the scale of Kidd Creek takes about 10 years to bring into steady-state production — so if we started building one tomorrow, there would still be a production gap of at least five years.

In Ontario we have the largest, most comprehensive and most coherent mining service and supply sector anywhere in the world. This sector of the industry provides three to four jobs for every direct job in active mining operations, but as the total amount of mining production in Ontario decreases, the service and supply sector must contract also.

World’s best coming to Sudbury for mining games – by Keith Dempsey (Sudbury Star – September 29, 2015)

September 29, 2015

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

The Nickel City will host the 2016 International Mines Rescue Competition. Hosted by Workplace Safety North and Ontario Mine Rescue, the event will bring mine rescue teams from around the world for the competition, which will be held from Aug. 19-Aug. 26.

Vale, Glencore, KGHM, Goldcorp and Drager are sponsoring the event.

“Quite frankly, the competition we’ll see is second to none,” Alex Gryska, Canada International Mines Rescue Competition co-ordinator, said. “If you take a look at this event, you’re going to have volunteers and full-timers (taking part), so you’ll have individuals that are in this event who are full-time mine rescue responders, so the level of capability will be extremely high.”

Hosting the International Mines Rescue Competition in Canada has been something Gryska has been chasing for years.

“I’ve been connected with the International Mines Rescue body since 2001, and my colleagues oversee mine rescue in their respective organizations, so I’ve been connected with them,” Gryska said.

NEWS RELEASE: Northern Superior Initiates Final Preparations for Trial Against the Ontario Government: October 5th, 2015

September 29, 2015

www.nsuperior.com

Sudbury, Ontario, September 29, 2015 – Northern Superior Resources Inc. (TSXV: SUP) (“Northern Superior” or “NSR”) has completed preparations for its trial against the Ontario Government, set to begin October 5th 2015. The following press brief is intended to assist NSR’s shareholders, stakeholders and interested parties following the litigation.

Background

1. NSR is a small junior mineral exploration company with its head office in Sudbury. It explores for gold in Québec and Ontario. NSR is a reporting issuer in British Columbia, Alberta, Ontario and Québec.

2. Starting in mid-2005 and through to December 2011, NSR obtained certain mining claims (described below in more detail) under Ontario’s Mining Act. Under the provisions of the Mining Act in force at the time the claims were acquired, this entitled NSR to enter and exclusively use the areas of the claims as was necessary for prospecting and mineral exploration. With the mining claims, NSR also obtained the right to apply for further rights to extract minerals and to develop and operate a mine(s).

3. At the time NSR obtained its claims, nothing in the Mining Act provisions regarding mineral claims addressed Aboriginal consultation nor required anything from NSR in this regard. NSR assumed that Ontario had done or would do what was required in order to be able to grant NSR the exploration rights associated with the Claims and for NSR to be able to actually conduct the exploration it wished to carry out. No one suggested otherwise to NSR.

BHP Billiton sees strong earnings growth even in low carbon world (Reuters U.S. – September 29, 2015)

September 29, 2015

http://www.reuters.com/

MELBOURNE – BHP Billiton, the world’s largest miner, said on Tuesday it sees its earnings doubling over the next 15 years, even in a world where carbon emissions are cut to limit global warming to 2 degrees Celsius.

Under pressure from UK investors who fear fossil fuel assets could become worthless under tough climate policies, BHP released analyses of its copper, coal, oil, gas, potash, uranium and iron ore assets showing the company will hold up well under what it considers the most realistic scenarios.

Even with the 2 degrees C limit – equivalent to a rise of about 3.5 degrees Fahrenheit – that has been set for UN climate talks later this year, demand in 2030 for all of BHP’s commodities except thermal coal would be higher than in 2014.

Uranium would be the biggest winner as more nuclear power would be needed, BHP said. “In this scenario, our portfolio remains resilient, and our analysis indicates that margins remain strong and even increase in some commodities,” Chief Commercial Officer Dean Dalla Valle told reporters ahead of an investor briefing in London.

NDP lays out Northern Ontario platform – by Keith Dempsey (Sudbury Star – September 29, 2015)

September 29, 2015

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

An NDP government led by Tom Mulcair would spend $1 billion over 20 years to help develop the so-called Ring of Fire, the party’s northeastern Ontario candidates said Monday.

An NDP government would also make FedNor a full standalone regional economic agency and increase its funding by $12.6 million; and it would take a number of steps to improve the lives of natives living in first nations across Northern Ontario, the candidates said.

They outlined the party’s Northern Ontario platform during a press conference at the Northern Ontario School of Medicine in Sudbury.

“We’re the only party that has (a platform),” said Claude Gravelle, who is running to hold on his Nickel Belt seat. “We’re unique people in Northern Ontario. The highlights in this platform for me is the $1 billion in the Ring of Fire. The Ring of Fire has to be developed. The Ring of Fire will be developed, and when it’s developed, that will create jobs throughout Northern Ontario.”

Glencore Rebounds as Analysts Say $50 Billion Plunge Is Overdone – by Jesse Riseborough (Bloomberg News – September 29, 2015)

September 29, 2015

http://www.bloomberg.com/

Glencore Plc, the commodities group that’s lost almost $50 billion in market value this year, rallied in London as analysts said the rout probably didn’t reflect its true value and Citigroup Inc. wrote the management should consider taking the company private.

The Swiss company rose as much as 11 percent on Tuesday, clawing back some of the 29 percent slump yesterday driven by concern the company has too much debt to withstand the declines in commodities. Even so, Glencore’s credit-default swaps rose again today, signaling that the company has a 56 percent chance of default in five years, according to data from S&P Capital IQ’s CMA.

“The pummeling of Glencore yesterday was irrational,” Robin Bhar, an analyst at Societe Generale SA, said by phone from London. “Unless you think commodity prices are going close to zero, then this was overdone.”

Glencore has been embroiled in a China-led slowdown that’s hit prices for commodities from oil to copper to coal, heightening investor concern about its debt and sending the shares down 77 percent this year.

Vale Proposes Dividend Cut Amid ‘Uncertain’ Commodities Outlook – by Paul Kiernan (Wall Street Journal – September 28, 2015)

September 28, 2015

http://www.wsj.com/

Company proposes cutting second part of 2015 dividend to $500 million from $1 billion

RIO DE JANEIRO—Brazilian mining giant Vale SA proposed cutting dividends even more than planned Monday as it grapples with an “uncertain scenario” for commodity prices.

Vale’s management proposed reducing the second tranche of its 2015 dividend to $500 million, or about $0.10 per share as of Aug. 31. The board of directors is set to review the proposal at an Oct. 15 meeting, and payment would take place on Oct. 30.

If approved, the payment would come in at half the $1 billion that Vale doled out in the first tranche of 2015 dividends in April. The company said in January that it expected to pay $2 billion in dividends this year.

The downturn in prices for commodities like nickel and iron ore, of which Vale is the world’s largest producer, has since proved more lasting than mining companies had expected.

With Glencore, Commodity Rout Beginning to Look Like a Crisis – by Bradley Olson (Bloomberg News – September 28, 2015)

September 28, 2015

http://www.bloomberg.com/news

The 15-month commodities free-fall is starting to resemble a full-blown crisis.

Investors are reacting to diminished demand from China and an end to the cheap-money era provided by the Federal Reserve. A Bloomberg index of commodity futures has fallen 50 percent since a 2011 high, and eight of the 10 worst performers in the Standard & Poor’s 500 Index this year are commodities-related businesses.

Now it all seems to be coming apart at once. Alcoa Inc., the biggest U.S. aluminum producer, said it would break itself into two companies amid a glut stemming from booming production. Royal Dutch Shell Plc announced it would abandon its drilling campaign in U.S. Arctic waters after spending $7 billion.

And the carnage culminated Monday with Glencore Plc, the commodities powerhouse that came to symbolize the era with its initial public offering in 2011 and bold acquisition of a rival in 2013, falling by as much as 31 percent in London trading.

Rio Tinto and BHP Billiton to keep dividends despite pressure, says Macquarie – by Stephen Cauchi (Australian Financial Review – September 28, 2015)

September 28, 2015

http://www.afr.com/

BHP and Rio Tinto would have to trim their dividends in coming years due to crashing commodity prices, according to research released on Monday by Macquarie, with Rio tipped to be the better performer of the two.

Both companies remain committed to progressive dividend policies, in which dividends rise in line with earnings per share. The dividends would continue, said Macquarie. But the bank nevertheless trimmed its forecasts for both companies.

For BHP, “we now only factor a flat payment of $US1.24 a share for the next three years, a payment of $US6.5 billion”.

For Rio, “we have reduced our dividend growth assumptions … with our dividend compound annual growth rate reducing from 4 per cent to 2 per cent over the next three years.”

BHP’s dividend per share in 2015, averaged over 12 months, was $1.68. Rio’s interim 2015 dividend per share was $1.44.

UPDATE 4-Copper, Glencore send Zambian kwacha into freefall – by Chris Mfula and Karin Strohecker (Reuters U.S. – September 28, 2015)

September 28, 2015

http://www.reuters.com/

LUSAKA/LONDON, Sept 28 (Reuters) – Zambia’s currency went into freefall on Monday as prices for its copper exports hit a one-month low, feeding fears that mining giant Glencore might further rein in its extensive operations there.

The kwacha was down more than 17 percent against the dollar at one point, its biggest one-day fall on record, further hampered by a rating downgrade from credit agency Moody’s that the government criticised as unsolicited.

“We have a double-whammy, meaning copper prices continue to soften, and production targets are really at risk because of the Glencore news,” said Kevin Daly, portfolio manager at Aberdeen Asset Management in London.

Glencore’s Mopani Copper Mines is the second largest employer in Zambia after the government, but fears over the mining and trading company’s ability to withstand a prolonged fall in metals prices sent its shares tumbling 25 percent on Monday.

Glencore Needs a Little Privacy – by Liam Denning (Bloomberg Business – September 28, 2015)

September 28, 2015

http://www.bloomberg.com/

Could Mick Davis save Glencore?

That might seem like an odd (or churlish) question to ask: After all, it was Glencore’s decision to buy Xstrata, the mining behemoth that Davis built, which saddled the commodity trading firm with a lot of the debt now weighing on its shares.

The latter slumped 27 percent on Monday to about 70 pence each after Investec Securities released a report speculating that depressed commodity prices could wipe out Glencore’s equity value. That report came just days after one from Goldman Sachs throwing doubt on Glencore’s investment-grade credit rating — a big deal for a trading firm. The shares sank below 100 pence for the first time since 2011’s initial public offering, when they priced at 530 pence apiece.

That 87 percent drop since the IPO makes Glencore the worst-performing major mining stock aside from Vale — which at least has the excuse of being listed in Brazil. Apart from Glencore’s balance sheet having made its stock a pinata for analysts, the crisis raises a more fundamental question: Should Glencore exist in its current form?

Alcoa to split into two as aluminum glut batters legacy business – by Nick Carey (Reuters U.S. – September 28, 2015)

September 28, 2015

http://www.reuters.com/

CHICAGO – Alcoa Inc (AA.N) said Monday it will break itself in two, separating its faster growing business manufacturing parts for planes and automobiles from its traditional aluminum smelting operations as shareholders seek higher returns amid a commodity slump.

Pressured by a 42 percent drop in its share price this year and a surge in Chinese aluminum exports, Alcoa is splitting into two publicly traded companies focusing on smelting and higher-tech products. It is joining a wave of major corporations which this year have divested business to add shareholder value.

Alcoa shares jumped 2.4 percent to $9.29 as analysts applauded its intensified focus on products for expanding businesses like aerospace and auto.

The stock surge made the 127-year-old company the biggest percentage gainer on the benchmark S&P 500 index.

The global glut of aluminum, which has depressed prices, has battered Alcoa stock, driving the company’s market value this year down to about $12 billion.

In refreshing change, gold producers pitch investors on their survival instincts – by David Milstead (Globe and Mail – September 26, 2015)

September 28, 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.

Can a gold company be all things to all kinds of gold investors? Let’s hear what Goldcorp Inc. CEO Chuck Jeannes had to say at this week’s Denver Gold Forum.

“I think there’s a couple camps out there. One would be the group that continues to believe very much in gold, and in the near term, thinks gold is going up, and is very much focused on our leverage to the gold price,” Mr. Jeannes said in kicking off Goldcorp’s investor presentation.

“I think Goldcorp is a very good choice for that camp of investor. We’ve got growing production this year, our costs are declining, we have zero limitations on our exposure to gold price, no hedging, no streams on gold assets, so we give you that exposure.

“The biggest and second camp of investors are those who continue to believe in gold, but are concerned about what the price is going to do in the near and medium term, so you want to minimize your risk of holding shares while you wait for the gold price to recover – and you don’t know when that’s going to happen,” Mr. Jeannes continued.

“For that class of investor, I think Goldcorp is a really safe choice.

NEWS RELEASE: Horizonte consolidates Araguaia nickel project through acquisition of Glencore project

September 28, 2015

/PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL./

LONDON, Sept. 28, 2015 /CNW/ – Horizonte Minerals Plc, (AIM: HZM, TSX: HZM) (‘Horizonte’, ‘HZM’ or ‘the Company’) the nickel development company focused in Brazil, is pleased to announce that it has reached agreement to indirectly acquire through wholly owned subsidiaries in Brazil the advanced high-grade Glencore Araguaia nickel project (‘GAP’) in north central Brazil (the ‘Proposed Transaction’). GAP combined with Horizonte’s 100% owned high-grade Araguaia nickel project (‘Araguaia’ or ‘Araguaia Project’) creates one of the world’s largest nickel saprolite projects in terms of size and grade, in a premier mining jurisdiction that has a defined path to feasibility.

Highlights

The combination of GAP and Horizonte’s Araguaia Project will create one of the largest saprolite nickel projects in the world (the “Enlarged Project”).
Additional resources with potential to provide ore grading 2% nickel for the first 10 years of mine life.
Higher nickel grades are expected to improve project economics delivering a shorter capital repayment period and a lower break even nickel price.
Upfront consideration on closing of US$2M to be satisfied through issue of HZM shares.
Total acquisition cost US$8M.
Placing of new shares to raise £1.55M through existing cornerstone shareholders.