April Newsletter – 04.04.16
ANNOUNCEMENTS
Behre Dolbear is sponsoring the SME’s 4th Current Trends in Mining Finance Conference on April 24-27th in New York City.
Behre Dolbear is sponsoring the 121 Mining Investment, London, 14-15th April 2016.
Tanya Matveeva, Senior Geologist will be speaking at the 7th Central Asian Mining and Exploration Forum, 19-21 April, Astana, on behalf of Behre Dolbear.
TOP NEWS
Miners Lead Biggest Gain in South African Stocks in Two Weeks
Neo Khanyile, Bloomberg, March 30, 2016
- All share index heads for best quarterly gain since March 2015
- Mining stocks benefitting from dollar weakness: Vunani
Mining stocks led a rally in South African shares, with the benchmark index advancing the most in more than two weeks, as some investors bet that a weaker dollar will prove positive for commodity prices.
The FTSE/JSE Africa All Share Share Index gained for the first time in five days, ending the longest losing streak since Feb. 11. The gauge added 1.4 percent, the most since March 14, rising to 52,495.46 by the close in Johannesburg. The quarterly gain is 3.6 percent, the largest since March 2015.
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Commodities could be headed for ‘buffalo jump’ as investors rush for the exits, Barclays warns
Commodities including oil and copper are at risk of steep declines as recent advances aren’t fully grounded in improved fundamentals, according to Barclays Plc, which warned that prices may tumble as investors rush for the exits.
Copper may slump to the low US$4,000s a metric ton, from US$4,945 in London last week, while oil could fall back to the low US$30s a barrel, analyst Kevin Norrish said in a note. The risk for raw materials is that investors seek to liquidate bets on gains quickly and in unison, with potentially highly negative consequences, Norrish wrote in the note entitled “Buffalo Jump,” a term that describes a cliff where Native Americans herded bison to their death.
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Barrick Gold Corp cuts executive chairman John Thornton’s pay by 76% after investor criticism
Doug Alexander, Bloomberg News, March 24, 2016
Barrick Gold Corp.awarded Executive Chairman John Thornton US$3.08 million in total compensation, 76 per cent less than last year, after he gave up his bonus in the wake of investor criticism of pay packages at the world’s largest gold producer.
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Is gold headed for a correction? Top consultancies offer up mixed price outlooks for 2016
Peter Koven, Financial Post, March 31, 2016
TORONTO — The world’s top two gold consultancies have offered up mixed outlooks for prices in 2016.
Metals Focus and Thomson Reuters GFMS each launched their 2016 gold reports on Thursday. Both firms are cautious on gold in the short term, as they see prices pulling back in the second quarter after rising a whopping 16 per cent in the first quarter. But Metals Focus thinks the second half of 2016 will be very strong, while GFMS is optimistic but more guarded.
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Kinross Makes $728 Million Bet on West Africa Mine to Cut Costs
Danielle Bochove, Bloomberg March 30, 2016
- Canadian gold miner expects production to increase 87%
- Company considers expansions at two other U.S. mines
Kinross Gold Corp. will go ahead with the expansion of its troubled Tasiast gold mine in Mauritania which it says will swell annual production by 87 percent and help bring down costs.
The West African mine will reach full production of 409,000 ounces by the end of the first quarter of 2018 when the first phase is complete, the Toronto-based company said Wednesday in a statement. Kinross will make a decision about whether to proceed with the second stage of expansion — which would increase production to 777,000 ounces — toward the end of 2017, Chief Executive Officer J. Paul Rollinson said in a telephone interview after the release.
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COMMODITIES
Marc Faber: Gold Still Most Desirable Currency in Wake of Brussels Attack
The Gold Report Staff, March 28, 2016
After several years of low gold prices, 2016 has brought a rebound, with the metal rising almost 20% since the first of the year, although recent price corrections have slowed gold’s advance. After the Brussels terrorist attacks last Tuesday, gold rose briefly, but then was undercut by a strong U.S. dollar rally. Investors are wondering whether gold is in a temporary correction mode or if the three-month bull has run its course. Marc Faber and other experts weigh in.
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Magnis Nears Graphite Sales Deals as Electric Car Demand Booms
Rebecca Keenan, Bloomberg, March 31, 2016
Magnis Resources Ltd., developing a $269 million mine in Tanzania to produce graphite used in lithium-ion batteries, has held advanced discussions with customers to secure sales agreements ahead of finalizing funding for the project, the company said.
“Demand is growing immensely and people agree that lithium-ion batteries are taking off and they are the way of the future,” Frank Poullas, chairman of Magnis, said in an interview in Perth on Thursday.
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China’s Copper Bloat May Squash the Best Rally in Two Years
Agnieszka De Sousa, Bloomberg, March 30, 2016
Analysts including CRU Group to Barclays Plc are predicting losses, and money managers have pulled back bullish wagers. Demand from China, the world’s biggest buyer of the metal, is increasing at the slowest pace in a decade and there’s not enough appetite to absorb a surplus that accumulated over the past few months, according to CRU, a London-based metals researcher.
LEGAL AND REGULATORY
Thousands rally in Mongolia over foreign mining concessions
Associated Press, March 30, 2016
A rare public protest in Mongolia’s capital on Wednesday drew thousands of demonstrators who criticized foreign mining concessions and demanded action to prop up the tottering economy.
More than 2,000 demonstrators in Ulaanbaatar’s Freedom Square also called for parliament to be dissolved and a new government formed over alleged corruption and the economic crisis battering the vast, landlocked nation.
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Guinea and Burkina Faso to take back unused mining permits
Bloomberg, March 31, 2016
Guinea and Burkina Faso plan to take back hundreds of unused mining permits for re-auction, ministers said this week, as governments try to reignite interest in the sector amid a downturn.
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Vedanta’s Misery Is India’s Bounty
Andy Mukherjee, Bloomberg March 31, 2016
India just won a tidy $860 million surprise present, for which the country’s taxpayers and government owe a vote of thanks to Vedanta Resources Plc.
The gift came in the form of a special cash dividend announced Wednesday by Hindustan Zinc, a former state-controlled miner that was privatized 14 years ago. Vedanta’s Indian unit, which owns about 65 percent of the zinc producer according to Bloomberg data, would love to buy the 29.5 percent stake still held by cash-strapped authorities, who would be glad to sell, except that any deal can’t go through because the country’s top court is yet to decide whether the 2002 privatization was legal in the first place.
But Hindustan Zinc is sitting on something that’s extremely valuable for Vedanta’s lenders: $5.3 billion in cash.
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Zambian Mining Companies Disputing Power-Tariff Increase
Matthew Hill, Bloomberg, March 31, 2016
- Talks between companies and government over increase ongoing
- Mines facing low metal prices, government’s finances strained
Most mining companies in Zambia, Africa’s second-biggest copper producer, are disputing an electricity-price increase and aren’t paying the tariffs that came into effect in January, Deputy Energy Minister Charles Zulu said.
The government raised power prices for companies including Barrick Gold Corp. and Glencore Plc to 10.35 cents per kilowatt-hour to help fund expensive emergency imports amid a severe electricity shortage. It more than tripled tariffs for other customers in December, but reversed them the following month after a public outcry.
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FINANCIAL
Kinross Gold Corp upgraded to buy at TD
Jonathan Ratner, Financial Post, March 31, 2016
Kinross Gold Corp. was upgraded to buy from hold at TD Securities as the miner appears to being taking a wise approach with its expansion plan for the Tasiast gold mine in Mauritania.
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TECHNOLOGY AND INNOVATION
How Saskatchewan remade uranium mining
Vladimir Basov
String of high-grade high-tonnage discoveries reestablishes Canadian province as the world’s richest uranium jurisdiction.
It’s a fact that new high-grade high-tonnage metal deposits are becoming extremely scarce, with falling grades and a lack of new world-class deposit discoveries.
While it is next to impossible to imagine, for example, discovery of a new 200g/tonne 25 million ozt gold deposit, it is just has become a routine process for one particular commodity in one particular jurisdiction.
Athabasca sedimentary basin, located mainly in Canada’s Saskatchewan province, contains both high-grade and high-tonnage unique, a.k.a “unconformity” bonanza-type uranium deposits.
Just for comparison, Priargunsky underground uranium mine in Trans-Baikal region of Russia has approximately 0.15% grade of uranium in resources, while in Saskatchewan the world’s highest-grade and second-biggest Cigar Lake underground uranium mine boasts an average 15% grade of uranium in resources. And this is a mind-blowing 100-times difference.
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Breakthrough aircraft to transform remote mining
Frik Els
Lockheed lands $480m customer for aircraft combining power of helicopter, airplane and hovercraft dramatically altering mining and exploration economics.
On Wednesday, Lockheed Martin signed the first customer for the LMH-1, the giant defense contractor’s hybrid airship. The LMH-1 is a unique new aircraft which is part helium dirigible, part cargo helicopter, part passenger airliner and part hovercraft.
UK-based Straightline Aviation signed a letter of intent with Hybrid Enterprises, the exclusive reseller of the hybrid airship, to purchase up to 12 aircraft with a potential value of roughly $480 million.
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Impala Platinum Plans to Run Refinery on Fuel Cells in Two Years
Kevin Crowley, Bloomber, March 31, 2016
- Springs refinery currently uses 22 megawatts of power
- Miner wants to stimulate demand for platinum amid low prices
Impala Platinum Holdings Ltd., the world’s second-biggest producer of the metal, plans to power its 22-megawatt refinery in South Africa using hydrogen and methane-powered fuel cells within the next two years.
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PROJECTS
Teck forges ahead with Fort Hills, expects big reward when cyclical market rebounds
Henry Lazenby, Creamer Media, 31st March 2016
TORONTO (miningweekly.com) – Canadian diversified miner Teck Resources is aiming to end 2016 with more than $500-million cash in the bank despite funding its portion of the Fort Hills oil sands project construction, in Alberta, and dealing with low commodity prices across its core portfolio. The Vancouver-based company, which is the largest producer of steelmaking coking coal in North America, with a significant holding of copper and zinc assets in the Americas, would rely on internal free cash flows from its core business units, excluding the Fort Hills project, to fund the remaining $1.2-billion of its share of $2.94-billion in capital expenses, placing significant strain on the company’s balance sheet during the commodity price downturn.
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Azimut refines highly prospective gold target on the Eleonore South Property in the Eleonore mining camp
Your Mining News, March 31, 2016
Azimut Exploration Inc. (“Azimut” or “the Company”) (TSXV: AZM) has refined the highly prospective target area on the Eleonore South Property by re-analyzing public data. The roughly 14km2 target area is principally defined by a strong gold-arsenic anomaly and a 10.3-km-long tonalite-metasediment contact. The target area, which remains largely untested by drilling, appears to be part of a large gold system with considerable exploration potential.
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Avnel announces definitive feasibility study results for Kalana Main Project
Your Mining News, March 31, 2016
Avnel Gold Mining Limited (“Avnel” or the “Company”) (TSX:AVK) is pleased to announce results from a definitive feasibility study for its Kalana Main Project in south-western Mali with an effective date of March 1, 2016 (the “DFS”). The Company is reporting a maiden Mineral Reserve of 1.96 million ounces of gold and an updated Measured plus Indicated Mineral Resource estimate of 3.06 million ounces of gold for the Kalana Main project.
