Showing posts with label Canada. Show all posts
Showing posts with label Canada. Show all posts

Monday, December 3, 2012

GAS Canadian Oil Sands to invest C$1.3bn in Syncrude operations next year

Canadian Oil Sands, which has the largest stake in the Syncrude Canada oil sands project in northern Alberta, expects booming US light crude production to keep on pressuring prices for the synthetic oil that Syncrude pumps out in large volumes, its CEO Marcel Coutu said on Friday.

Canadian Oil Sands, which announced a C$1.3-billion 2013 capital spending budget late Thursday, expects its product to fetch $5 a barrel less on average than the US oil benchmark, West Texas Intermediate (WTI), next year. The differential varies widely. In 2011, synthetic fetched a premium to WTI of $8.27 a barrel on average, and in 2012, it has sold for an average discount of $1.38 a barrel, according to Shorcan Energy Brokers.

Syncrude, a joint venture of international oil companies, produces light crude processed from the oil sands, which has similar characteristics to the oil produced in fast-growing volumes in the Bakken region of North Dakota using horizontal drilling and hydraulic fracturing techniques.

The International Energy Agency last week singled out the Bakken as one of the main drivers of its forecast for the US to overtake Saudi Arabia and Russia as the world's top oil producer by 2017.

"Refineries are looking to accept this oil. It's easier to process. I think that's clear," Coutu told analysts. "So I think that we will continue to have a discount for light product, which ours is one of, and we will find refineries that will take our product."

The crudes compete for pipeline capacity to US Midwest refineries and surging output has spawned a major expansion of rail capacity as new pipelines to move the surging volumes are slow to get built.

In early November, Suncor Energy said rising light oil production threatened the profitability of a planned 200 000 bl/d oil sands upgrading facility called Voyageur.

Suncor is also a partner in Syncrude, which has a capacity of 350 000 bl/d. Last year, the Syncrude partners pushed back some of their large expansion plans, partly to iron out reliability issues that had led to unplanned outages.

Canadian Oil Sands has a 37% stake in the project, located north of Fort McMurray, Alberta.

About 63%, or C$836-million, of its 2013 budget will be invested in projects to replace or relocate mining infrastructure and to develop facilities to reclaim tailings, a by-product of the mining process. The rest will be spent on regular maintenance, the company said in a statement.

It will spend C$393-million on maintenance, including a planned outage of one of its upgrading units in the second half of 2013.

Canadian Oil Sands said it expects Syncrude to produce 105-million to 115-million barrels in 2013, or about 301 000 bl/d at the midpoint. That represented an increase of about 3% from estimated 2012 volumes.

Costs per barrel were expected to be C$36.67, about 3% lower than this year.

The company intends to maintain its quarterly dividend of 35 Canadian cents a share through 2013, the CEO said.

Cash flow, which gives a glimpse into the company's ability to fund development and pay out dividends, is estimated at C$1.04-billion, or C$2.16 a share, for 2013, the company said.

"Given Canadian Oil Sands' strong balance sheet, we believe the company is capable of managing the dividend while funding its major project spending over the next couple of years," National Bank Financial analyst Kyle Preston said in research note. "Following the completion of these projects, we expect the company will have a much more balanced payout profile going forward."

Shares of Canadian Oil Sands, which has a market value of C$9.91-billion, were off 13 Canadian cents at C$20.30 on the TSX on Friday. They have fallen 15% so far this year.

Syncrude's other partners are Imperial Oil, Nexen, Sinopec, JX Holdings' Mocal Energy, and Murphy Oil.

Edited by: Creamer Media Reporter

Friday, November 9, 2012

Canada’s coal industry contributed $5.2bn to GDP in 2011 - PwC

Canada’s coal mining industry had contributed about $5.2-billion to the country’s gross domestic product (GDP) in 2011, a report by PricewaterhouseCoopers (PwC) had found.

The report, commissioned by the Coal Association of Canada, revealed that coal production in Canada delivered more economic and social benefits than expected, and included $3.2-billion in direct impacts and $2-billion of indirect impacts. The industry was also a positive contributor to Canada’s trade balance and benefited employment and communities.

Canada’s coal sector has experienced strong revenue growth and capital investment in recent years, and increased demand for metallurgical coal in emerging Asian economies, coupled with rising energy prices, had resulted in revenue growing at a yearly average rate of 15% between 2001 and 2010.

Capital investment rose yearly by almost 20% on average during the same timeframe.

“PwC’s research showed coal consumption in developed countries has remained stable over the last decade, but coal consumption in emerging economies has doubled and is trending upwards. If these consumption trends continue, we expect coal prices to continue above historic levels,” PwC director of economics and statistics and report author Janice Plumstead said in a statement.
Along with a contribution to Canada’s GDP and export trade, the report found the coal industry benefited Canadians through employment. Over 42 000 people were directly and indirectly employed in the coal industry. This included those who work in mine production, construction, exploration, transportation and reclamation activities as well as those who supplied goods and services to the industry.

Since 2004, employment in the coal sector had been steadily increasing and accounted for 14% of total mining employment. Average coal industry salaries were more than double the average national wage. From 2001 to 2010, salaries in the mining industry increased by 37%.

Along with employment, Canadians directly benefited from the coal industry through the royalties coal companies pay to governments. In addition to royalties exceeding $300-million a year, additional economic impacts on government revenues in 2011 were estimated at $698-million, which was available to fund public infrastructure, such as roads, hospitals, schools and government programmes, which have the potential to enrich the lives of Canadians.

The report found Canada had about 6.6-billion tons of recoverable coal reserves as at 2009, which was the latest year complete information was available for. These reserves are mainly located in British Columbia, Alberta, Saskatchewan and Nova Scotia.

The reserves comprised about 53% of bituminous coal and 47% subbituminous and lignite coal. The report found the country had recoverable coal reserves to support about another hundred years of future production and PwC said Canada’s coal potential could be even larger with a broader measure of coal resources in place estimated at 190-billion tons.

Canada produces about 60-million tons of metallurgical and thermal coal a year, the value of which reached $7-billion in 2011. Alberta produced about 30-million tons of coal in 2010, followed by BC with 27-million tons and Saskatchewan with almost ten-million tons.

The sales value of exported metallurgical coal was found to have totalled $8-billion in 2011, representing almost 40% of coal produced in Canada.

“Coal has always played an important role in contributing to Canada’s economic strength, however, this report helps to confirm the profound impacts the coal industry has on our economy and our communities through employment, taxes and royalties to governments and regional expenditures,” Coal Association of Canada president Ann Marie Hann said.

Edited by: Creamer Media Reporter

Monday, October 29, 2012

African Barrick lowers guidance after ‘challenging’ quarter

London-listed African Barrick Gold has again lowered its production guidance, citing illegal mining activities at North Mara and lower-than-planned production levels at Bulyanhulu and Buzwagi.
The Tanzania-focused mining company said on Friday its 2012 production would be between 5% and 10% below the bottom of its previous range of 675 000 oz to 725 000 oz of gold.

African Barrick Gold, a unit of Canada’s Barrick Gold, is forecasting a cash cost of $900/oz to $950/oz for the financial year.
Last year, the gold miner produced 688 278 oz, which was below its forecast of 700 000 oz to 760 000 oz. In 2010, delays and fuel theft at Buzwagi forced the company to lower its forecast twice.

CEO Greg Hawkins said that the September quarter had been a challenging three months for African Barrick.

“We were expecting to see a step-up in production levels leading into the end of the year and 2013, but there have been production interruptions and issues across each of our sites.

“The ramp-up in grade at North Mara is positive and expected to continue in fourth quarter, but we have been disrupted in our efforts to mine it at a normal rate given an increase in illegal mining operations,” he said.

African Barrick produced 147 786 oz for the third quarter, which was in line with the production from the first and second quarters of the year, but a 19% decrease compared with the corresponding quarter in 2011.

The miner also reported revenue of $265-million for the period, $89-million lower than the $354-million in the third quarter of 2011, owing to lower mining activity at its operations in Tanzania.

Although production increased at North Mara by 17%, this was more than offset by the impact of lower mined grades at Buzwagi stope and mobile equipment availability issues at Bulyanhulu, and batch milling at Tulawaka.

At Bulyanhulu, mining performance was impacted by reduced stope availability, lower availability of underground mobile equipment and paste filling delays, which resulted in lower ore tons hoisted.

Mill throughput was 9% lower than the third quarter, as a result of the lower mining activity in the quarter, leading to lower production. Buzwagi saw a marked improvement in equipment availability, which led to tons mined being 53% higher than in the third quarter of last year and a 22% improvement over the previous quarter.

Further, the planned focus on the waste-stripping programme has resulted in mining of lower-grade areas of the pit and, therefore, a decrease in the head grade delivered to the plant. “It is anticipated that this would enable higher grade zones to be accessed later this year and into 2013,” the company said in a statement.

Throughput levels were also lower than expected owing to unplanned mill maintenance. At Tulawaka, there was an increased focus on underground development work aimed at extending the mine life. As a result, there was a 30% decline in ore tons mined compared with last year’s comparative period.

“Together with the lack of surface stockpiles, this led to continued batch processing of the underground material blended with mineralised waste,” it added.

At a group level, gold sales were in line with production, and 20% lower than last year, owing to the decrease in production.
Meanwhile, Hawkins said African Barrick’s acquisition of an exploration package in Kenya represented an important first step in expanding the business more broadly in Africa.

The company bought ASX-listed Aviva Corporation’s Aviva Mining Kenyan gold and base metals assets in a deal valued at A$20-million.

Edited by: Mariaan Webb

Friday, September 28, 2012

Lundin Mining in search of new acquisitions

Lundin Mining is seeking mine acquisitions in Europe, Canada, Mexico and South America, but not Russia.

The company wants to invest up about US $600 mln in zinc and copper mine acquisitions.

The company wants to boost its production after the company experienced various failed deals and mergers last year.

The company owns the Tenke-Fungurume copper-cobolt mine in the Democratic Republic of Congo.

Chief Executive Paul Conibear said "We are looking at copper and zinc mines that produce 30,000 to 70,000 tonnes of metal per year."

"We are going to be very disciplined, but when we find something for the right price, we will act quickly and aggressively."

Lundin Mining, listed in both Toronto and Stockholm, has up to 4 billion crowns ($604.05 million) to spend on acquisition, the paper said.

Early in 2011, Lundin agreed a $9 billion tie up with rival miner Inmet Mining.

But this fell apart after Equinox Minerals launched a hostile bid for Lundin. Equinox itself was taken over by Barrick Gold and Lundin failed to attract any new suitors and has since then been focusing on expanding its existing mines.

The Tenke project, which is operated by Freeport McMoRan, is on its way to total annual output of 195,000 tonnes of copper cathode. The expansion is expected to be completed in 2013.

Conibear said further investment could take production to close to 300,000 tonnes by 2015.

Lundin is also looking at expanding ore production at its Zinkgruvan mine in Sweden by up to 40 percent to 1.4-1.5 million tonnes a year from the current 1.1 million tonnes.

"We have had a very strong development at Zinkgruvan this year and production is at a record level," he said. "We hope to be able to make a decision on expansion at the end of the year."

At the Neves-Corvo mine in Portugal, Lundin is looking at spending $500 million over the next 5-6 years to boost production.

"Another alternative is for a smaller production increase with less risk," Conibear said, adding that decision would also be taken at the end of the year.

 

acquisitions, democratic republic of the congo, global, mining, canada, mexico, tenke project, mining, lundin mining

Wednesday, July 11, 2012

Globex Mining and Queenston Mining start 5,200 metre drill program at Wood Pandora property

Globex Mining and Queenston Mining said this week that they are starting an eight-hole, 5,200 metre diamond drill program on the Wood Pandora joint venture property near Cadillac, Quebec.

The 50/50 split Wood Pandora property straddles the gold localizing Cadillac Break and is near the LaRonde Mine property operated by Agnico-Eagle Mines.

The project hosts historic inferred mineral resources of 1.43 million tonnes grading 5.3 grams per tonne gold in two deposits, Wood and Central Cadillac.

In 2008, the joint venture announced an NI 43-101 inferred mineral resource on a new gold discovery, called the Ironwood Zone, amounting to 243,200 tonnes grading 17.3 g/t gold.

Globex and Queenston also announced the results of a four-hole drill program in the fall of last year, near the no.3 shaft on the Pandora portion of the property.
All holes encountered significant gold mineralization, the companies said, with the deepest hole, W-11-92, intersecting 4.9 metres grading 28.86 g/t gold within the Cadillac Break at around 350 metres below surface.

A follow up drill program was recommended to target the Cadillac Break in the vicinity of the W-11-92 hole, where the mineralization remains open both east and west along strike and to depth.

"It is important to note that the Lapa Gold deposit currently being mined by Agnico-Eagle occurs on the Cadillac Break 3 km to the east and the Lapa deposit begins at a vertical depth similar to the depth of the mineralization encountered in JV hole W-11-92," Globex and Queenston said in a statement.

Last week, Globex announced the second closing of its previously announced private placement, raising $453,000 in gross proceeds.
Globex said it will put the proceeds toward exploration on some of its properties in Quebec and Ontario. As last Wednesday, the company had raised an approximate total of $1.75 million in the private placement financing.

Source: http://www.proactiveinvestors.co.uk

Tuesday, May 22, 2012

Yukon juniors with cash to burn

With almost C$300 million set to go into mineral exploration in the Yukon in 2012

Despite a rocky junior market, exploration continues apace in the Yukon, which is set to have near record exploration expenditures this year. Natural Resources Canada recently estimated nearly C$300 million would go into mineral exploration in the Yukon during 2012, just a little bit less than last year's C$307 million.

Who is spending the money? Below is an overview of the exploration plans of some of the most prominent Yukon explorers. No favouritism. The list is in alphabetic order. It shows a slew of junior explorers and miners are cashed up and either already drilling or planning to start drilling soon on sizeable exploration programs:

Atac Resources (TSX-V: ATC)
C$20 million in cash.
Focusing on the Rackla Gold project and recently started a 15,000-metre drilling campaign mostly on the Conrad, Osiris, Isis and Isis East targets.
Recent drilling included high-grade gold intercepts over notable strike length with as much as 44 metres @ 4.41 g/t gold at Osiris late last year.

Ethos Gold (TSX-V: ECC)
C$14 million in cash.
To spend C$7.3 million mostly on the Betty gold project.
To drill 16,000 metres following up on extensive surface anomalies, with as much 7.3 g/t gold over 50 metres in a trench last year.

Golden Predator (TSX: GPD)
C$14 million in cash.
Budgets C$10 million for the Brewery Creek project, with drilling ongoing.
Expanding on and defining the Brewery Creek resource: 20 million @ 0.89 g/t gold, indicated, about half of which is in oxide.

Kaminak Gold (TSX-V: KAM)
C$21 million in cash at the end of December and then in May it raised C$5 million.
It plans 50,000 metres of drilling to move toward a first - and much anticipated - resource on the Coffee gold project.
It is drilling gaps and extensions to several structures hosting high-grade gold, as recently reported in these pages.

Monster Mining (TSX-V: MAN)
C$2.4 million in cash.
To drill 2,000 or so metres on the Caribou Hill target on its Keno-Lightning project near Alexco's Bellekeno silver mine.
Last year it hit high grade silver in the Caribou Hill area with 11 of 14 drillholes showing plus 1,000 g/t silver and silver mineralization over 300-metre strike length so far.

Northern Freegold (TSX-V: NFR)
C$4 million in cash at the end of December and it subsequently raised about C$7 million, mostly in flow-through shares.
This year it plans 25,000 metres of drilling, largely to expand on resources.
For example: it plans on testing extensions to the Revenue deposit beyond long gold/copper intercepts that included 305 metres @ 0.47 g/t gold, 3.68 g/t silver, 0.12 percent copper and 0.02 percent moly.

Northern Tiger (TSX-V: NTR)
C$2 million in cash, end of January.
To do follow-up drilling at the 3Ace project, where it recently hit as much as 2.58 g/t gold over 53 metres.

Ryan Gold (TSX-V:RYG)
C$43 million in cash.
To spend C$10 million or so on drilling at the Ida Oro project (6,000 metres) and the Flume project (1,500 metres)
Ida Oro had numerous long intercepts last year with low-grade gold over broad widths - as much as 137 metres @ 0.56 g/t gold. Ryan Gold said it would drill to the south of last year's collars beneath more gold anomalies.

Victoria Gold (TSX-V: VIT)
C$30 million in cash.
Pushing ahead the advanced-stage Eagle Gold project with some 4.8 million ounces gold in resources.
Now in the permitting stage following a feasibility study in which it outlined a 200,000-ounce per year gold mine that would cost about C$400 million to build.
Sees 2015 production.


Exploration notes for a couple Yukon miners:

Alexco Resource (TSX: AXU)
C$37 million in cash.
To spend C$12 million in 2012 on exploration, with 29,000 metres of drilling, much of it beyond the operating Bellekeno silver mine.
Includes some 4,000 metres at Flame & Moth, which has yielded bonanza-grade silver in recent drilling as covered in these pages.


Capstone Mining
(TSX: CS)
C$502 million in cash.
To spend C$5 million testing gaps between deposits at the Minto mine, for which it is considering a super-pit.

Tuesday, May 15, 2012

Chinese steel giant invests heavily in Quebec iron ore property

Toronto to Shanghai is a long haul, even in the age of intercontinental air travel, and Allen Palmiere can attest to that because he’s made the 23-hour trip more than 20 times since taking over Adriana Resources Inc. of Toronto in June 2009.

As president and chief executive officer of Adriana, Palmiere, a 59-year-old industry veteran, has made the exhausting journey to meet with Deng Qilin, president and chairman of the board of Wuhan Iron & Steel (Group) Corp (WISCO), a state-owned company that employs 140,000 people.

And the reason behind Palmiere’s many visits was quite clear: to establish a joint venture partnership with WISCO on its Lac Otelnuk iron ore project in northern Quebec.

"It has the potential to be one of the largest deposits in the world," says Palmiere. "If we’re right in our estimates, the mine life will be in excess of 100 years."

Drilling to date has yielded a resource estimated to be in the neighbourhood of 6.45 billion tonnes. Small wonder, then, that the Chinese steel-making giant came knocking on Adriana’s door, coincidentally a few weeks after Palmiere arrived following his departure from the top job at HudBay Minerals.

WISCO produces 36 million tonnes of steel annually — which makes it one of China’s big three — but it is planning to boost production to 60 million tonnes per year by 2015.

The company needs new sources of iron ore and it possesses the size and stature necessary to fund or finance a project on the scale of Lac Otelnuk, which will cost an estimated $12.9 billion.

Still, it took two-and-a-half years of negotiation, and all those trips to China, before Palmiere and Deng were able to affix their signatures in mid-December last year to a joint venture agreement that gives WISCO a 60-per cent share of the project and Adriana the balance.

"It took a long time for them to get serious," he says. "But it is one of the largest investments in mining that a Chinese, state-owned company has ever made."

The property is located in an extension of the long-established Labrador Trough iron ore district, but on the Quebec side of the border. More specifically, it’s about 170 kilometres northwest of the mining town of Schefferville and some 250 kilometres south of the first-nations community of Kuujjuaq. It was first explored in the late 1970s by a Nevada-based junior miner that has long since disappeared.

"They only drilled holes 30 metres deep and the price of iron ore was so low they didn’t come up with anything that was close to economical," says Palmiere.

Adriana acquired 129 contiguous claims from a tiny, prospector-owned company called Bedford Resources several years before Palmiere arrived but mothballed it in favour of a project in Brazil. He decided they should concentrate their efforts on Lac Otelnuk.

Adriana drilled much deeper than the Nevada company had and discovered an ore body that started at or near surface and was 100 metres thick on average. Encouraged by those results, Adriana began staking more land and now holds 34,823 hectares.

The company’s published resource estimates (6.45 billion tonnes) are based on results obtained from drilling a zone that is nine kilometres long by two wide. Last summer, Adriana explored two different locations, one of them 14 kilometres to the north and a second four kilometres to the south.

In early March, the company was awaiting a new resource calculation, based on that program, and it still had another 15 kilometres of strike length to drill.

"We have a very, very large deposit, but we need to build a very large mine to make this work," Palmiere says. "The only way you can justify the infrastructure is to amortize it over large-scale production."

WISCO is one of the few companies in the world big enough to finance such a project. The Adriana-WISCO joint venture company, Lac Otelnuk Mining, is expected to employ as many as 3,000 people.

The open pit mining operation is projected to produce 50 million tonnes annually and the partners hope to have it up and running by the end of 2017. Adriana released a preliminary economic analysis in April 2011 and now has a combined pre-feasibility and feasibility study underway. It should be complete by the spring of 2013, which ideally allows for environmental permitting by year end 2013 and a start on construction in early 2014.

The project requires construction of a mine, a camp for the workers, a power line likely run from Schefferville, a concentrator, a pellet plant, a railway and port facilities.

Lac Otelnuk Mining will be extracting taconite ore, crushing it to the consistency of a powder resembling flour, removing the magnetite through a process of magnetic separation and mixing it with bentonite.

From there it will go into a furnace to produce the final product — high-grade pellets containing about 67.5 per cent iron ore.

Palmiere says Adriana has more or less ruled out building a rail line north to Kuujjuaq on Ungava Bay because it is frozen for a good part of the year. That means the company will have to construct a rail line south some 850 kilometres to Sept-Iles. It will have to purchase (at a cost of $2.6 billion) 98 locomotives and 7,200 rail cars in order to move the projected annual production of 50 million tonnes.

As for port facilities, the company may be able to enter into a partnership agreement with the Port Authority of Sept-Iles, which in mid-February announced a $220-million expansion aimed largely at serving iron ore producers in the Labrador Trough.

The project involves construction of new terminal facilities and a 450-metre multi-use dock with two berths.

At some point in the future, a permanent community could arise around the Lac Otelnuk project; it will be big enough to support a town, Palmiere says, but that is not part of the planning at the moment. He envisions the use of charter aircraft to pick up workers, perhaps as many as 1,000 a week, from Montreal, Quebec City, Sept-Iles and other locales and flying them in for two- to three-week stints at the mine.

It may be the end of the decade before the mine is operating at capacity, but Palmiere has no doubt it will happen.

"At 50 million tonnes annually we’ll be the largest producer in the Labrador Trough by far," he says. "This project has no comparables in Canadian mine development. It’s one of the biggest in the world."

Friday, May 11, 2012

Increased foreign expansion exposes Canadian mining companies to risk

TORONTO— The current economic climate has created an ideal setting for the growth of Canadian mining companies. And for many, there may be no better way to embrace this opportunity than through foreign expansion. Grant Thornton LLP announced today the release of Venturing into new territory—mining and risk in emerging markets, a white paper that explains the changing environment for companies expanding into new markets and provides advice how those companies can proactively manage risk.

“Canadian mining companies are looking for opportunities for growth,” says Mark Zastre, Global Mining Industry Leader, Grant Thornton LLP in Canada. “Previously unexplored markets offer numerous advantages for mining companies looking to spread their wings. Strong commodity prices mean resources that were once economically unviable—or located in areas of the world that would have once been considered too high-risk for the return on investment—are an increasing target of foreign investment.”

But expanding into new markets comes with its fair share of risks, particularly for mining companies looking to expand into countries where corruption, bribery and fraud may be more commonplace than at home. It’s prudent for mining companies to be aware of and address risks associated with foreign expansion.

Investing in an economy whose social and business activity is in the process of rapid growth and industrialization can present investors with risks from a multitude of angles. Fragile governments, unclear laws surrounding property ownership, the absence of clearly defined legal systems, structures and processes, and increased risk of political interference are but a few additional factors that can add to the risk of doing business in these markets. Add to this increased incidents of bribery, expectations of facilitation payments or other such accommodations, and the possibility that reports, agreements and contracts may not be as “iron clad” as companies may have been led to believe.

To reduce exposure to foreign expansion risks, it’s important that mining companies conduct proper due diligence and ensure that the correct procedures are in place to help ward off any threats. Companies can also be more prepared by reviewing the advice found in Venturing into new territory—mining and risk in emerging markets.

The report expands on advice such as:

  • Thoroughly research the new country and understand the specific risks involved. Conduct a detailed risk analysis, and when acquiring an existing company, pinpoint all of their locations, define their activities and review their existing anti-corruption procedures.
  • Build the right internal and external teams to help navigate through the new risks. This sometimes means making changes to the teams.
  • Examine current processes and business plans to see where improvements can be made. Conduct a gap assessment—compare the existing “state of the nation” to determine where the company might be exposed and put a plan into place to bridge any gaps.
  • Have a trusted adviser on the ground—one who is familiar with both the country and the culture—and who is in a position to go right to the source and evaluate claims made in any resource estimates and financial statements.
  • Take the time to understand the applicable laws in the new market. Evaluate the processes involved with business plans to assess legislative risk—for example, if transporting across borders.
  • When acquiring the assets purported to be held by a target company, don’t take reports at face-value. Take the time to verify ownership.

In addition to providing timely advice to growing mining companies, Venturing into new territory—mining and risk in emerging markets explains changes in current anti-corruption and anti-bribery legislation to help companies understand these new risks. Government in countries like the US and the UK—and to a lesser degree Canada—are now tackling bribery and corruption more vigorously and from a global perspective. This means the risk of fines, penalties and jail time for senior executives and officers is increasing. In some instances, such as with the UK Bribery Act, simply not having an anti-corruption policy in place can get companies into trouble.

This means mining companies need to consider take a proactive approach to anti-corruption legislation, including conducting a corruption and bribery risk assessment to identify gaps and taking the time to educate employees and local partners. Companies should also ensure that any overseas acquisitions, joint venture partners and other entities have unblemished records to avoid guilt by association.

Advance copies of Venturing into new territory—mining and risk in emerging markets were distributed at The Prospectors and Developers Association of Canada’s (PDAC) Convention, the mineral industry’s largest annual convention, on March 4, 2012. The final version is now available to the public at http://insights.grantthornton.ca/issue/57403.

Tuesday, May 8, 2012

Not a gold bull or bear, but a gold agnostic: Eric Coffin

As a contrarian, all the doom and gloom tells Eric Coffin the market is about to pull out of its tailspin and he talks about why the Yukon is an area play he still believes in. Gold Report interview

The Gold Report: Eric, the gold bears recently outnumbered the gold bulls in Bloomberg's weekly Gold Bull/Gold Bear Sentiment Survey for the fourth time in a year. Are you a bull or a bear?

Eric Coffin: I think the gold price is going to end the year higher, so I guess that makes me bullish, but I think of myself as agnostic.

There needs to be a return of calm to Europe for the gold price to move much higher. The currency pair trade between the euro and the dollar is going to be a big determinant to the gold price. There's been more noise about the EU providing stimulus funds to offset all the government budget cuts in Europe. All of those countries have to deal with their debt loads. But it's not realistic to think that they can cut their deficit and 3% off their gross domestic product year after year and realistically get any net growth.

The other side of that equation is that the U.S. has slowed down. That'll help the gold price because a lot of goldbugs are riding on there being another round of quantitative easing. I'm not sure it's going to happen. But as long as Federal Reserve Chairman Ben Bernanke keeps saying it might happen, that's good enough.

TGR: Stagnant gold prices are translating to equities. Canaccord reports that "sector weakness in the gold equities over the last six years has typically ended with 'V'-shaped corrections to the upside." Do you believe that's what will happen this time?

EC: I sure hope so because I'm on the buy side, not the sell side. I'm going to feel pretty dumb if it doesn't happen. We're still in a bull market for gold. In a secular bull market, generally speaking, coming out of a dip tends to be an impressive move.

TGR: Many Yukon junior mining companies are starting their 2012 exploration programs after completing off-season financing on buyers' terms. What types of companies are getting financing?

EC: The only financings I've seen in the past five months are either relatively new deals where investors have a lot of respect for management-which is a roundabout way of saying that investors figure management will figure out a way to make money regardless-or companies that have something pretty definitive with a bunch of drill holes. Companies that didn't take the opportunity to raise money last year are going to have to pull a rabbit out of their hat. The Yukon is an expensive place. There's no getting around it.

Outside of companies with discoveries, nobody's really done large financings and that's going to be tough. About 60% of the companies are going to have a hard time undertaking any significant programs this year. If the market gets better, which I think is going to happen, they still have a shot, but it's at buyers' terms.

I suspect a lot of companies are going to say, "Let's just wait and see if next year is better." You haven't seen many announcements. Quite a few of those companies that were talking last year about doing $4, $6, $8 million exploration programs-many of those programs aren't going to happen.

TGR: Desjardins Capital reports that 26 mergers and acquisitions worth a combined $30 billion (B) took place during 2010 and 2011. There are about 120 more companies operating in the Yukon. Are other junior explorers going to be forced to merge?

EC: I think there will be merger activity at the junior level. There are a lot of companies with decent but not spectacular projects where they haven't done enough work and are not in a position to raise money. A merger is one way out for them.

TGR: Is it still fair to call the Yukon an area play when the shares of most of the juniors operating there have declined considerably, often by more than half? Even good results often don't tangibly move share prices.

EC: It still is an area play. This is a fairly common path even for a successful area play. The easy money has been made or, as is the case here, the market's just lousy and there is a lot of consolidation. The Yukon is getting to that point. The few companies that have done well will have the ability to pick up a lot of projects. In any area play, anywhere from a third to a half of the companies involved are piggybacking on the play to help raise money. Those companies tend to disappear quickly if they don't find something large right away or if the financing environment gets difficult. The bad market has exacerbated things but a large number of drop outs from an area play at this stage is not an unexpected development.

TGR: What are your thoughts on what's happening in Peru?

EC: The political landscape has shifted a lot in Peru. It's made it very difficult for anybody outside of Peru-and maybe even inside Peru-to get a handle on what's a good spot and what isn't. There are a lot of South American countries where mining companies just shouldn't go because they're bound to face a political or indigenous population problem and they won't get permitting. Now no one seems to know what the good areas and the bad areas are. That's going to make it tough for everybody in Peru until this stuff gets clarified.

TGR: Do you have some parting thoughts for us on the market and how it translates to the retail investor?

EC: I'm fairly comfortable that the U.S. is going to do OK over the next couple of years. It's going to have another political fight at the end of the year when tax cuts die. Europe has the capability to pull itself out of its problems. In a large measure, it's political decision-making. I certainly appreciate northern Europeans and Germans that don't really see why they should be footing the bill, but they can afford to foot the bill.

We're not particularly worried about China. It's trying to rebalance its economy. China's in a different boat from Europe or the U.S. in that it's got $3 trillion in reserves and can open the taps anytime it wants. China will increase the growth rate when it feels it's the right time to do it.

The world economy will do OK as well. I know it feels like the end of the world for investors that own a lot of resource stocks as I do. The secular bull market hasn't ended. Ironically, all the political problems in different producing regions are going to extend that secular bull market in metals because it's that much harder to grow production to a point that knocks metal prices down.

I'll just leave you with a contrarian thought: Everybody's so negative right now because this is what bottoms look like. Everybody thinks the world is coming to an end. Everybody thinks it's the worst market they've ever been in. Everybody thinks nothing is ever going to go up. That's what a bottom looks like. It's not fun to go through. There's so much negativity everywhere that it's telling me as a contrarian that there's probably not a lot more pain to go through before things start getting better.

If readers would like to download HRA's new company report on Precipitate Gold Corp., HRA has set up a special free report offer for a limited time. Simply click here and they will send you the report.

Eric Coffin is the editor of the HRA (Hard Rock Analyst) family of publications. Responsible for the "financial analysis" side of HRA, Coffin has a degree in corporate and investment finance. He has extensive experience in merger and acquisitions and small-company financing and promotion. For many years, he tracked the financial performance and funding of all exchange-listed Canadian mining companies and has helped with the formation of several successful exploration ventures. Coffin was one of the first analysts to point out the disastrous effects of gold hedging and gold loan-capital financing in 1997. He also predicted the start of the current secular bull market in commodities based on the movement of the U.S. dollar in 2001 and the acceleration of growth in Asia and India. Coffin can be reached at hra@publishers-mgmt.com or the website www.hraadvisory.com.

Source: The Gold Report

Thursday, March 22, 2012

China eyes Canadian uranium mines

Takeover activity is poised to heat up in the Canadian uranium sector as energy-hungry China hunts for feedstock to fuel its growing family of nuclear reactors.

The state-controlled China Daily recently reported that the country plans to buy more uranium mines abroad, and is looking in Canada. China also expects to import more uranium this year as its nuclear program resumes after being halted following Japan’s Fukushima nuclear disaster.

China has 15 reactors in operation and 25 under construction, and plans to build another 50. It imports nearly all its uranium from Kazakhstan, Uzbekistan, Namibia and Australia.

“It comes as a surprise” that China is showing its hand by publicly targeting this country’s miners, which could boost the prices of potential acquisitions, said Versant Partners analyst Rob Chang. But he said the country’s announcement deserves to be taken seriously in the wake of Prime Minister Stephen Harper’s decision last month to overturn previous trading bans and permit uranium sales to China for civilian use.

China would most likely focus on buying Canadian “exploration companies with high-quality assets” because there are no ownership restrictions on early-stage firms, Mr. Chang said. However, Ottawa bars foreigners from owning more than a 49-per-cent stake in a company that is mining the metal.

China has already been on the acquisition trail for explorers in Africa. China Guangdong Nuclear Power Corp., its nuclear agency, recently struck a $2.4-billion (U.S.) deal to snap up Australia-based Extract Resources Ltd. (EXT-T8.97----%), which owns a huge uranium deposit in Namibia.

In Canada, uranium juniors such as Fission Energy Corp. (FIS-X0.67-0.02-2.90%), which has a property in Saskatchewan’s Athabasca Basin, Kivalliq Energy Corp. (KIV-X0.50----%), which has a deposit in Nunavut, and Strateco Resources Inc. (RSC-T0.50-0.03-4.81%), which is developing the Matoush project in northern Quebec, could be of interest, Mr. Chang said.

There is industry speculation that the Conservative government will relax its foreign ownership laws on uranium mines. Throne speeches since 2010 have talked about lifting regulations that inhibit the growth of Canada’s uranium industry.

Foreigners are already snapping up Canadian exploration companies. Last year, British mining giant Rio Tinto PLC (RIO-N54.59-0.56-1.02%) trumped Cameco Corp. (CCO-T22.81-0.44-1.89%) to buy Hathor Exploration for about $625-million (Canadian). Paladin Energy Ltd. (PDN-T1.97-0.01-0.51%), Australia’s second-biggest uranium miner, acquired the Michelin uranium project in Labrador for $261-million from Fronteer Gold Inc.

Euro Pacific Canada analyst Merrill McHenry, who is bearish on the uranium sector because Japan’s 52 reactors are still shut down, agrees that Fission Energy could be a strategic acquisition for China. If ownership rules don’t change, China could comply by partnering with a player like Cameco when it comes time to extract uranium, he said.

Macusani Yellowcake Inc. (YEL-X0.15----%), which has acquired Southern Andes Energy Inc. and merged their uranium properties in Peru, is also a potential takeover candidate, Mr. McHenry suggested. But those deposits would need to be combined with another project for the play to become economically viable, he added.

The Chinese could buy Macusani Yellowcake and also acquire an additional nearby deposit in Peru from Fission Energy through an outright purchase or joint venture with that company, he said.

“You would then not have a foreign-ownership problem with the Canadian assets [because they are not in Canada].”

China could also become involved with Canadian uranium projects through joint ventures in properties like Paladin’s Michelin project, he said. A three-year moratorium on uranium mining on Inuit lands was lifted this month and the Chinese could help finance the next phase, he said.

“They [Paladin] would need a mill so we are talking about a substantial amount of capital expenditures.”

Next week’s Canadian budget will be good for mining, oilsands

The Canadian federal budget due to be released next week will please miners and the oil patch and is likely to make environmental groups see red, not green.

The Canadian Press reports that the budget will propose a streamlined environmental assessment process and reforms to the Fisheries Act ending federal oversight of much of Canada’s fresh water:

The package will eventually see Ottawa pay far less attention to small projects, impose time limits on major environmental hearings and pull out of the process altogether if a province is ready to step in with similar standards.

The latter became an issue with Taseko Mines’ Prosperity project in northern BC, when the provincial government approved the mine after conducting an environmental assessment process, only to have the mine rejected by the federal government based on its own environmental review. That project is currently undergoing a second environmental review.

CP quotes Natural Resources Minister Joe Oliver saying ”Clearly, we need to focus our attention and reviews where they really matter — on big projects with the potential for the greatest economic and environmental impact.” The minister notes $500 billion of new energy and mining projects are at stake in the next 10 years.

Oliver came under fire from environmentalists recently when he said that green groups opposing the Northern Gateway pipeline are taking foreign money to undermine the project. Regarding reform of the Fisheries Act contained in the upcoming budget, CP reports “environmentalists and a large network of environmental scientists are furious about the idea and say Ottawa is ready to abdicate its national and international obligations to protect waterways.”

Wednesday, March 14, 2012

Japan buys US$435m Xstrata’s stake in Canadian coal operations

Japanese JX Nippon Oil & Energy acquired a 25% of diversified miner Xstrata Coal operations in Western Canada for US$435 million, creating a joint venture that will build the business and market coal in Japan, said the companies.

The assets include First Coal tenements and the Lossan and Sukunka coal deposits in northern British Columbia, which Xstrata Coal (LON:XTA) acquired last year. The company retains the remaining 75% interest and will develop, operate and manage the assets on behalf of the joint venture, while JX will be the exclusive marketing agent for First Coal and Sukunka coal in Japan.

“There are meaningful synergies between these assets, creating the opportunity to develop a substantial and efficient complex of mining assets, unlocking significant value for our shareholders and other stakeholders in our operations,” said Xstrata Coal CEO Peter Freyberg.

Last week, the diversified mining giant announced it was buying a 236 million tonnes coking coal deposit in British Columbia from Talisman Energy, primarily an oil and gas firm.

Japan’s steel companies are keen to reduce their dependence on Australian coking coal, particularly after low supply early last year as a consequence of devastating floods in Queensland — the core of Australia’s coal mining industry, reports Reuters.

The massive Peace River coalfields supply China and Asian markets of the steelmaking ingredient.

Metallurgical coal has been trading at around the $220–$235 per tonne level in January this year, down from record levels of $330/tonne last year.

Sunday, March 4, 2012

Xmet to expedite acquisition of 100% interest in Duquesne-Ottoman Project (853,000 ounces Au and growing

TORONTO, ONTARIO- Xmet Inc. (“Xmet” or the “Company”) (TSX VENTURE:XME)(OTCQX:XMTTF) is pleased to announce that it has signed a New Option Agreement with Globex Mining Enterprises Inc. and Geoconseil Jack Stoch Ltee which allows the Company to now acquire a 100% interest in the Duquesne-Ottoman rather than the 75% provided for in the current option agreement. The New Option Agreement sets out two ways Xmet can acquire 100% of the Duquesne-Ottoman Project.

  1. A cash payment of $6.5 million payable within six months of signing of the New Option Agreement to immediately acquire a 75% interest plus the additional option to acquire the final 25%, good for a period of 4 years, at a price of $2.5m in the first year, $2.6m in the second year, $2.7m in the third year and $2.8m in the fourth year.

Or

  1. A cash payment of $9 million payable within six months of signing of the New Option Agreement.

In both cases, Globex and Geoconseil will retain its existing sliding scale Gross Metal Royalty of between 2.5% to 3.5% of all metals produced from the properties. Should Xmet not exercise and complete either of the above new options available to it, the existing option agreement will remain in place.

Other positive features resulting from exercising the New Option include:

  1. Xmet’s previous obligation to carry out an additional approximately $6 million in work obligations over the next four years is eliminated;
  2. Xmet’s carrying costs of 5% per annum on $6m in previously deferred payments are eliminated; and
  3. Xmet’s right to acquire the final 25% of the Project at a fixed price for a period of 4 years is established.

“After nearly two years of efficient and successful Gold discovery on the Duquesne-Ottoman Project, led by Xmet`s President & COO Charles Beaudry, management saw the need to accelerate our option payments and acquire the right to the final 25% interest in order to create a clear path to 100% ownership of Duquesne-Ottoman as soon as possible. Xmet’s technical achievements on the Project have not translated into increased stock value. This New Option Agreement is designed to remedy this situation and align Xmet`s valuation with our peer group who ‘own’ their gold. We are confident that this new option agreement will create an immediate path to ownership that should give us improved multiples on our per ounce resource that translates into increased shareholder value,” says Xmet’s Chairman and CEO Alexander Stewart.

The Duquesne Ottoman project currently has an NI 43-101 compliant Inferred Resource of inferred resource of 4,171,000 tonnes at an average grade 5.2 g/t Au (6.36 g/t Au uncut) hosting 727,000 ounces Au cut (853,000 uncut ounces Au), prepared by Watts, Griffis, McOuat Ltd. (See Xmet news release October 25, 2011). Additionally Xmet has completed 9,000 metres of its fully funded 13,000 metre Phase Two diamond drilling program on Duquesne-Ottoman, which aims to expand the resource beyond the current compliant amount.

Xmet management is very pleased with the terms set out under the New Option Agreement and would like to thank the management of Globex Mining Enterprises Inc. and Geoconseil Jack Stoch Ltee for their support in our mutual goal of moving the Duquesne-Ottoman project towards a Gold producing success story.

About Xmet Inc.

Xmet is a gold exploration company focused on advanced projects in existing mining camps in Canada where exploration and mining costs are minimized and where previous and historic producing mines make for much easier permitting and minimizes community and First Nations social community risks. Xmet’s flagship project, the Duquesne-Ottoman property, which covers an area of 928.6 hectares, is located approximately 30 kilometres north of the city of Rouyn-Noranda and 10 kilometres east of the village of Duparquet within the townships of Duparquet and Destor in the Province of Quebec.

For the latest updates, news releases and events, please visit us at www.xmet.ca and follow Xmet Inc. on Facebook and Twitter.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. Mr. Charles Beaudry, P.Geo., Xmet’s President, COO and Director, is the designated Qualified Person responsible for this release.