McEwen cautions investors about Argentina decrees

McEwen Mining CEO Rob McEwen on Thursday cautioned shareholders that recent energy-industry expropriation and Argentina government policy decrees augured negatively for its San José silver/gold mine and other development projects.

At its general meeting, McEwen said there is uncertainty with regard to repatriating funds from the San José, which could impair the company's ability to internally finance its projects.

“If these uncertainties persist, the company would need to seek external financing alternatives for the development of El Gallo Phase 2,” he said in a statement.

Colombian based boutique investment analyst Caiman Valores said that since President Christina Kirchner won a landslide victory in the October 2011 elections, she had demanded that all oil and gas companies operating in Argentina, including foreign companies, repatriate all future export earnings to Argentina.

This also included demanding that Argentine companies not pay dividends and reinvest those funds in Argentina.

This may also be applied to the mining industry.

Valores said in conjunction with this demand the government has also introduced regulations that significantly increase the amount of capital a bank must hold before being legally able to pay a dividend.

As a result of this pressure combined with the regulatory changes many Argentine companies such Spanish oil and gas company Repsol subsidiary YPF, Banco Macro, BBVA Banco Frances and Telecom Argentina agree to either not pay dividends or be unable to do so due to changed regulation.

McEwen Mining said the expropriation of YPF was not entirely unexpected in Argentina, but what surprised everyone was the abrupt way that the government announced the expropriation.

Further, McEwen Mining’s Jenya Meshcheryakova said that in it is not known whether Repsol would be compensated for the expropriation for an asset that it valued at between $10-million and $14-million.

“Although we don’t agree with the expropriation, Argentina has some legitimate justification, for example, owing to the lack of investment in exploration and development by Repsol. The government’s motives were both economic and political, and the complete story is very complex,” she said in an email to Mining Weekly Online.

Hydrocarbon companies are seen as an obvious target for expropriation because it was previously controlled by the State, but it was privatised under President Carlos Saúl Menem.

“In my experience, such companies are an irresistible target for expropriation by populist or leftist governments,” she said.

In contrast, the mining industry in Argentina had never been a State enterprise, with the exception of the State coal company.

“Throughout the mercurial history of Argentina, no mining operations have ever been nationalised – even during the Juan Peron era. We interpret President Kirschner’s recent strong support of the mining industry as a signal that the government does not intend to expropriate mining projects,” Meshcheryakova said.

McEwen told investors the corporation remained on schedule and on budget with the Mexico-based El Gallo Phase 1 project, with the first gold pour during scheduled for the third quarter.

The San José mine also remained on track to meet the full-year production guidance of 85 000 oz of gold and 5.7-million ounces of silver.

Meanwhile, despite the current weakness in precious metals prices, gold bull McEwen also reaffirmed his view that gold may touch $5 000/oz by the end of this cycle.

China to increase 2012 rare earth exports by 10,680 metric tons

An additional 10,680 tonnes of light and medium to heavy rare earths will be allocated this year to 12 Chinese companies for export, China's Commerce Department has announced.

The Chinese Ministry of Commerce Thursday announced an update to the 2012 rare-earth export quotas, which increased allocations by an additional 10,680 tonnes for a total of 21,226 tonnes this year.

The government had previously insisted its total rare earths export quotas would remain about the same this year as last year at 30,184 tonnes. However, the U.S., the European Union and Japan in March filed a complaint at the World Trade Organization over China's rare earths quotas.

Now, China plans to announce additional annual rare earths quotas this summer.

Of the additional quotas announced Thursday, 9,490 tonnes are light rare earths, while 1,190 tonnes are medium and heavy rare earths, according to the MOC statement.

The extra quotas will be provided to 12 companies, which have received environmental verification by China's Department of Environmental Protection, the ministry said. Those companies include the Baogang Group, China's largest light rare earths producer, and the Aluminum Corporation of China (Chalco).

The MOC stressed that companies who have yet to pass the environmental examination will not get rare earths export rights if they fail to meet the second round of environmental examinations before the end of July. Thus far, China has imposed production caps, stricter environmental standards, and export quotas.

Meanwhile, the Commerce Department also announced the consolidation of the quota allocations for three smelting companies-Changshu Shengchang Rare Earth Smelting, Funing Rare Earth Industry and Jiangsu Zhuo Group Nano Rare Earth-into a single allocation for their parent company Chalco Rare Earth (Jiangsu), a subsidiary of the Aluminum Corporation of China.

On Tuesday, the chief secretary of the Resource Department of China's Ministry of Industry and Information Technology said the central government has a plan to consolidate its many rare earth manufacturers into one large company that represents the entire sector.

In an interview with China Radio International (CRI), Chen Yanhai said the government intends to carry out the merger and upgrade of its rare earths sector within two years. "The government will establish a platform for companies with good reputations in the industry to make the first step," said Yanhai. "Local competitors can later merge into larger enterprises."

Gold mining helping to diversify Peru's economy- WGC

Peru's economy is diversifying and lessening its dependence on mineral exports, according to Terry Heymann, director of Responsible Gold, World Gold Council (WGC).

Mining exports in Peru accounted for 61% of total exports or US$21.7bn in 2010. Gold exports were US$7.7bn in the same year, 41% of which came from four mines: Yanacocha, Cerro Corona, Lagunas Norte and Orcopampa.

The WGC took these four mines as the basis of a study on the economic contribution of large-scale gold mining in Peru.

US-based Newmont (NYSE: NEM) controls 51.4% of Yanacocha which is located in Cajamarca region. Local miner Buenaventura (NYSE: BVN) and the World Bank's International Finance Corporation hold 43.7% and 5% stakes, respectively.

South African Gold Fields (NYSE: GFI) has 98.5% of Cerro Corona, also in Cajamarca. Barrick Gold (NYSE: ABX) owns the Lagunas Norte operation in La Libertad, while Orcopampa in Arequipa is owned by Buenaventura.

The four operations contributed 6.6% of foreign direct investment (FDI) in 2011 with spending of US$1.4bn. The projected spending estimate for this year is US$2.3bn.

Employment at these operations is set to peak at over 5,000 of which 90% is Peruvian, according to Heymann.

Resource dependent economies can face macroeconomic risks and government challenges. Concerns include the emergence of Dutch disease or not being able to make the benefits felt in the local area.

However, the WGC report estimates that salaries will cost the four mines US$337mn/y from 2012-18. "This will bring money into circulation," Heymann said.

At the same time, indirect job creation in the same period will add 8,700 jobs a year. "This will exceed 10,000 jobs a year in 2012 and in 2014," he added.

LOCAL SOURCING

The companies used local Peruvian suppliers for 88% of their procurement spend in 2007-13 which totaled US$1.2bn/y. "Procurement can be up to double the taxes paid by miners," Heymann said.

Of the total, US$165mn was spent with community suppliers, creating an entrepreneurial culture in the areas which saw the start up of catering, apparel and other industries.

"This is a huge opportunity for developing human capital which will outlast the life of mine," Heymann said.

At the same time, taxes, royalties, the canon and voluntary contributions all contribute to local infrastructure and services development.

The mining canon gathered US$2bn from 2001-10, with the four miners in the study contributing US$200-250mn in 2010. "That has the potential to transform [society]," Heymann said.

The WGC study concluded that gold mining can drive economic and social development. The benefits increase when strong links are established between the mines and the host economies, allowing small and medium-sized companies to grow.

Local and regional governments have a stake in the revenues of the miners but they must have the capacity to spend these resources, according to the report.

Mining represents over 60% of Peru's exports. Gold exports totaled US$6.415bn in 2011. Peru is Latin America's largest gold producer and the sixth globally.

Peru's mining investment portfolio currently stands at over US$53bn.

Heymann presented the WGC study at the 10th International Gold Symposium, held in Lima Peru from May 14-16.

Latin American mining investment boom continues unabated

Over the past decade, mining investment in Latin America has more than doubled, even after experiencing a sharp drop in 2009. According to a report by the Metals Economic Group, Latin America is now the primary destination for mining exploration investment in the world, with 25% of total investment going to Chile, Peru, Brazil, Colombia, Mexico and Argentina.

In 2003, hardly 10% of global mining investment was headed towards Latin America, but today big announcements abound.

London-based Hochschild Mining, which operates throughout Latin America, recently said it will invest another LIMA$425 million in two silver projects near its Arcata and Pallanca mines in southern Peru over the next two years.

Unveiled earlier this week at the International Gold Symposium in Lima by Hochschild’s executive chairman, Eduardo Hochschild, this is the latest mining investment announced for Peru, and for Latin American mining in general, which continues to experience an investment boom.

Other recent announcements have included a combined $1.3 billion investment into Colombia’s coal mining industry by the Drummond Company Inc., Cerrejon Mineria Responsable and Glencore International’s Prodeco Coal; as well as South African miner Gold Fields’ increased investment for its Peruvian Chucapaca project to $1.2 billion, from an earlier US$750 million.

Over the next five to 10 years, more than $425 billion in investments have already been announced, again, with a focus on Chile, Peru and Colombia, from such companies as BHP Billiton, Xstrata and Rio Tinto, among others.

Minas Conga is indicative of a national problem, Buenaventura CEO says

The difficulties surrounding the development of the US$4.8bn Minas Conga copper-gold project in Peru's Cajamarca region are indicative of a national problem, according to the CEO of local precious metals miner Buenaventura (NYSE: BVN), Roque Benavides.

US-based Newmont Mining (NYSE: NEM) controls 51.35% of Conga, while Buenaventura and the World Bank's International Finance Corporation hold 43.65% and 5% stakes, respectively.

"What is happening is a national problem... it's not an exception; it's a national problem that we want to solve," Benavides said.

The environmental impact study (EIS) for Conga was approved by authorities in October 2010 and the company received all the pertinent licenses to start construction.

"Suddenly, anti-mining residents and authorities said that it could not go ahead," Benavides said. "This indicates a problem between the national and regional governments, and not a company problem."

Newmont was forced to suspend construction in November last year due to increasingly violent protests against the project.

"We're expecting to make an announcement regarding the development of Conga in the next few days," Benavides said.

Conga will provide more and better quality water, additional opportunities for small and medium-sized companies and include infrastructure badly needed by the communities, according to Benavides.

Peru cannot allow the suspension of projects such as US-based Southern Copper's (NYSE, BVL: SCCO) Tía María or Canadian firm Bear Creek Mining's (TSX-V, Lima: BCM) Santa Ana. By allowing such events, "we're benefitting other countries," Benavides said.

Conga is the largest project in Peru's current mining portfolio, which stands at US$53.391bn.

Peru must address risks or lose out to other countries - Buenaventura CEO

Peru has the conditions to benefit from a sustainable mining industry but several risks must be addressed, according to the CEO of local precious metals miner Buenaventura (NYSE: BVN), Roque Benavides.

Peru has been subject to certain global trends such as labor disputes and strikes, like the one took place at the Buenaventura's 19.3%-owned Cerro Verde operation last year.

In addition, the country has adhered to a worldwide trend of raising taxes as higher metals prices have prompted governments to seek a larger share of profits.

Growing cash costs, in this case for gold production, is a further risk. In 2010, the global average cash cost was US$560/oz, Benavides said. However, due to factors such as lower grades, exchange rate fluctuations, and higher taxes and labor costs, the figure rose to US$643/oz last year.

Meanwhile, miners are looking at opportunities in other parts of the world, according to Benavides. "Competition is big," he said, pointing to opportunities in countries such as the Dominican Republic, the Democratic Republic of the Congo and Mongolia.

Peru is ranked as the sixth most attractive country in the world for mining, according to studies carried out by the Fraser Institute. Chile, the US, Mexico, Canada and Brazil are considered to be more competitive, according to Benavides.

PRODUCTION THREAT

Peru is the world's second biggest producer of silver, copper and zinc, and sixth largest gold producer.

"Over the last three years, gold, silver, copper and zinc production have fallen," Benavides said.

Peru's mineral exports totaled a record US$27bn last year but high metals prices are "hiding the lack of competitiveness," Benavides said.

"In terms of dollars we have increased but the permanent and fundamental value is volume," he added.

DELAYS

Peru's mining portfolio stands at US$53.4bn in 46 projects, according to the mines and energy ministry (MEM).

However, "projects are being delayed," which could affect the 2.5mn people that depend on the mining industry, roughly more than 10% of Peru's population.

A slowdown in mining development would also affect local suppliers. "Miners buy 90% of their inputs locally," according to the CEO. Only 9% is provided by imports.

A mere 1% of the national territory has mining exploration or activity, just 13.6% is under concession to miners and only 0.84% is in production.

"If we want to compete, if we want to win over other countries... we have to make an effort," Benavides said.

Mining represents over 60% of Peru's exports.

Benavides was speaking at the 10th International Gold Symposium, being held in Lima from May 14-16.

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."

Barrick Gold sees 2012 Peru output down slightly

Barrick Gold, the world's largest gold producer, said on Monday its production of the yellow metal in Peru should be slightly lower this year than in 2011.

In 2011, Barrick's Lagunas Norte mine in the Andean nation produced 763,000 ounces of gold while its Pierina mine produced 152,000 ounces.

"In Lagunas Norte (production) will be similar to last year and in Pierina it will be slightly lower," said Darrell Wagner, general manager of Barrick Misquichilca, the company's Peruvian subsidiary.

Barrick said last year it would invest $550 million in Peru by 2013, mostly to expand the Lagunas Norte mine. Pierina is only expected to produce gold until 2014.

Wagner expressed optimism for the price of gold,, which fell to a 4-1/2-month low of $1,556 on Monday on pressure from the worsening debt crisis in the euro zone.

"I am hopeful that it will continue to rise in the long term," Wagner told journalists on the sidelines of Lima's International Gold Symposium.

Anti-mining protests in Peru have cast a shadow over the biennial conference, as U.S.-based Newmont Mining Corp decides whether to move forward with its stalled $4.8 billion Conga gold project.

Demonstrators worried about water supplies halted construction on what would be the most expensive mine ever built in Peru, the world's No. 6 gold producer, and the government has said Newmont should improve the project's environmental plan.

"The big issue that is on everybody's mind is the community and social issues," said Wagner.

"We need the help of the government. The mining companies are willing to do our part but the communities need to do their part as well," he said.

Peru is Latin America's largest gold producer and the world's No. 2 copper and silver producer. Mining accounts for 60 percent of its exports.

Peruvian miners cancel plans for two-day strike

Peru's federation of mining unions said on Saturday it had called off plans for a national strike on May 14 and 15 after the government implemented a law granting more retirement benefits to workers in the world's number-two copper producer.

"We've just had a meeting to suspend the planned show of force as the regulation of the retirement law was published today, so all the mining unions have suspended any action," Luis Castillo, the head of the National Federation of Mine, Metallurgical and Iron and Steel Workers of Peru, told Reuters.

The federation represents the majority of the country's mining unions.

The new law was approved by Congress in July of last year but hadn't yet been implemented. It creates a special retirement fund that will be financed by 0.5% of mining companies' annual income and 0.5% of workers' gross monthly salary.

The mining sector accounts for 60% of export revenue in Peru, the world's second largest producer of silver and zinc and its sixth largest gold producer.

Tacna authorities agree to restart talks over mining development

Authorities from Peru's southernmost Tacna region have agreed to restart roundtable discussions to resolve a conflict over mining development in the area, state news agency Andina reported.

US-based Southern Copper (NYSE, BVL: SCCO) is carrying out a US$600mn expansion project at its Toquepala copper mine in the region. However, since last year local authorities have been calling on the government to suspend the company's water rights.

Tacna authorities have also said that SCC should build a desalination plant to supply its operations.

In February this year, authorities from Tacna refused an investment package of around US$218mn being offered by SCC. The package included the construction of three reservoirs and irrigation infrastructure for 4,500ha, as well as water treatment and distribution projects. SCC also offered to finance a water availability study in the region.

Tacna mayor Fidel Carita Monroy will advise regional president Guillermo Chocano of the decision to restart talks at the latest next Monday (May 14), according to the report.

The mayor called on local authorities to maintain their unity in the face of mining activities in order to find a solution and avoid social conflicts.

The roundtable, which involves representatives from the private and public sectors was set up in October last year.

The Toquepala concentrator expansion project is expected to increase milling capacity to 60,000t/d.

SCC is 80.9% owned by Grupo México(BMV: GMEXICOB), with the remainder held by the international investment community.

China's strong economic rise has produced mixed results for Latin America - Fitch

The spectacular economic rise of China during the last several years has generally had a positive impact on Latin America, but it has also produced negative effects for some countries, ratings agency Fitch said in a special report on the this issue.

China's transformation into an economic powerhouse has benefitted the region in terms of increased bilateral trade, more foreign direct investment and deeper financial ties, Fitch said.

The country's voracious appetite for natural resources has also pushed up prices on many of the commodities that Latin American countries export, which in turn has contributed to higher economic growth and stronger public finances.

In the region, Brazil, Chile and Peru have reached the highest degree of integration with China, and this has had a positive effect on their sovereign ratings, Fitch said, adding that Bolivia and Colombia have also benefitted in the same way, but to a lesser degree.

THE DOWNSIDES

The main negative impact from China's economic rise has been on countries that import commodities and produce manufactured goods. Mexico is one such example, as well as Central America and the Caribbean, Fitch said.

The agency also noted that even commodities-exporting countries benefitting from China's strong demand have generally failed to translate this into productivity gains, institutional reforms and greater diversification of their economies.

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.

20-billion-tonne iron ore mine in Bolivia in jeopardy

Malaysian News Agency Bernama.com reports that a huge iron ore mine in Bolivia may be doomed as a result of conflicts between the proponent and the Bolivian government.
 
The plan by India’s Jindal Steel & Power to mine the 20-billion tonne deposit has run into trouble after the Bolivian government asked the company for another $18 million in bank guarantees for not meeting contractual obligations. A similar amount was demanded in 2010 for not meeting commitments.
 
Bernama.com reports a source close to the development saying the project may now be unsalvageable:
 
“The writing is on the wall. It is hard to see how we can make this relationship work from here,” said a company official close to the negotiations.
 
The mine would be the largest foreign investment in Bolivia under President Evo Morales.
 
Wall Street Journal (sub required) reported yesterday that Jindal is scouting around for iron-ore and coking coal projects. The company expects to spend up to $6 billion over the next four years in order to achieve a five-fold increase in steel production, according to WSJ.
 
Clearances for new mines in India often take years and steel companies need to look far ahead to plan their supplies.

Newmont's Yanacocha lifts Peru March gold output 5.1%

The Peruvian Energy & Mines Ministry reports the country's gold output climbed for a fourth month in March on gains at Newmont Mining's Yanacocha mine which increased production by 27%.

Peru's gold output climbed for a fourth month in March on gains at Newmont Mining Corp. (NEM)'s Yanacocha mine, the government said.

Gold production rose 5.1 percent to 13,758 kilograms from a year earlier, the Energy & Mines Ministry said today in an e- mailed statement. Copper output added 0.9 percent to 108,864 metric tons from March 2011.

Gold output climbed after Yanacocha, Latin America's largest gold mine, increased production by 27 percent. Copper producers Cia. Minera Antamina SA and Southern Copper Corp. (SCCO) boosted output by 25 percent and 15 percent, respectively.

Peru is the world's third-largest copper and zinc producer and No. 6 in gold.

Silver, zinc, lead and molybdenum production all gained in March, while tin, iron and tungsten fell.

On the Comex in New York, gold futures for June delivery fell 2.1 percent to $1,604.50 an ounce, the biggest decline for a most-active contract since April 4. Earlier, the price touched $1,595.50, the lowest since Jan. 4.

Peru Mining - Project Profiles

Name	Project Type	Investment	Startup date	Project stage	Capacity / Output
Alicia		Other		Exploration
Antamina Expansión		US$1bn - US$3bn		Construction
Antapaccay Expansión Tintaya	Zinc	US$1bn - US$3bn	2012	Construction	215,000 Zinc t/y tons per year
Azulcocha	Copper	Other	2013	Construction	160,000 Copper t/y tons per year
Bayóvar (En Operación)		US$500mn - US$1000mn		Operation
Cañariaco Norte	Phosphates	US$1bn - US$3bn	2010	Feasibility Study	4 Phosphates Mt/y million tons per year
Cerro Ccopane	Silver	US$1bn - US$3bn	2015	Exploration	911,000 Silver oz/y ounces per year
Cerro Verde - Proyecto plataforma de lixiviación 4B (En Operación)		US$0mn - US$70mn		Operation
Chucapaca	Copper	US$500mn - US$1000mn	2010	Pre-feasibility Study	30 Copper Mt/y million tons per year
Cobrecon	Gold	Other	2015	Exploration	500,000 Gold oz/y ounces per year
Constancia		US$1bn - US$3bn		Feasibility Study Update
Corani	Silver	US$500mn - US$1000mn	2014	Feasibility Study	2 Silver oz/y ounces per year
Crucero	Silver	Other	2015	Exploration	15 Silver Moz/y million ounces per year
Esquilache		Other		Exploration
Etapa de Sulfuros de La Arena		US$100mn - US$500mn		Feasibility Study
Expansión Cerro Verde	Molybdenum	US$3bn - US$5bn	2016	Environmental Impact Study (EIS)	17 Molybdenum Mlb/y Million pounds per year
Haquira	Molybdenum	US$1bn - US$3bn	2016	Exploration	17 Molybdenum Mlb/y Million pounds per year
Hierro Apurímac	Copper	US$1bn - US$3bn	2013	Advanced Exploration	230,000 Copper t/y tons per year
Hilarión	Iron	US$100mn - US$500mn		Pre-feasibility Study	20 Iron Mt/y million tons per year
Inmaculada		US$100mn - US$500mn		Feasibility Study
La Granja	Silver	US$3bn - US$5bn	2013	Pre-feasibility Study	12 Silver Moz/y million ounces per year
La Zanja (En Operación)	Copper	US$0mn - US$70mn	2016	Operation	300,000 Copper t/y tons per year
Las Bambas	Silver	US$3bn - US$5bn	2009	Installation License Approved	200,000 Silver oz/y ounces per year
Los Calatos	Copper	US$1bn - US$3bn	2014	Exploration	400,000 Copper t/y tons per year
Los Chancas		US$1bn - US$3bn		Feasibility Study
Magistral	Copper	US$100mn - US$500mn	2013	Tender Awarded	53,000 Copper t/y tons per year
Marcona Expansión	Molybdenum	US$1bn - US$3bn	2012	Detail Engineering	2,860 Molybdenum t/y tons per year
Michiquillay	Iron	US$500mn - US$1000mn	2012	Social and Environmental Impact Assessment (SEIA)	10 Iron Mt/y million tons per year
Mina Justa	Copper	US$500mn - US$1000mn	2016	Tender	155,000 Copper t/y tons per year
Minas Conga	Copper	US$3bn - US$5bn	2013	Suspended	110,000 Copper t/y tons per year
Ollachea	Gold	US$100mn - US$500mn	2014	Financial Assessment Study	117,000 Gold oz/y ounces per year
Pampa de Pongo	Gold	US$3bn - US$5bn	2014	Exploration	117,000 Gold oz/y ounces per year
Pampa el Toro	Iron	Other	2015	Exploration	10 Iron Mt/y million tons per year
Pico Machay		Other		Feasibility Study
Proyecto Galeno	Gold	US$1bn - US$3bn		Environmental Impact Study (EIS)	50,000 Gold oz/y ounces per year
Proyecto Polimetálico Santander	Copper	Other	2016	Construction	144,000 Copper t/y tons per year
Pucamarca		US$70mn - US$100mn		Construction
Pucará (En Operación)	Gold	Other	2012	Operation	70,000 Gold oz/y ounces per year
Pukaqaqa		US$100mn - US$500mn		Feasibility Study
Quechua		US$500mn - US$1000mn		Environmental Impact Study (EIS)
Quellaveco	Copper	US$3bn - US$5bn	2014	Feasibility Study	76,000 Copper t/y tons per year
Río Blanco	Copper	US$1bn - US$3bn	2014	Postponed	225,000 Copper t/y tons per year
San Luis	Molybdenum	US$70mn - US$100mn	2015	Environmental Impact Assessment	1,800 Molybdenum t/y tons per year
Santa Ana	Silver	US$70mn - US$100mn		Suspended	2 Silver Moz/y million ounces per year
Shahuindo	Silver	US$70mn - US$100mn	2013	Feasibility Study	4 Silver Moz/y million ounces per year
Tajo Norte Expansion		US$100mn - US$500mn		Construction
Tantahuatay (En Operación)		US$0mn - US$70mn		Operation
Tesoro Gold	Gold	Other	2011	Exploration	100,000 Gold oz/y ounces per year
Toro Blanco		Other		Exploration
Toromocho		US$1bn - US$3bn		Construction
Tía María Expansión	Copper	US$1bn - US$3bn	2013	Environmental Impact Assessment	1 Copper Mt/y million tons per year
Urumalqui	Copper	Other	2015	Exploration	120,000 Copper t/y tons per year
Yanque		US$500mn - US$1000mn		Pre-feasibility Study
Zafranal		Other		Exploration