March Newsletter – 21.03.16
TOP NEWS
Beijing’s FDI juggernaut lets rip
Richard Wachman Mining Journal 09 Mar 2016
- Make no mistake, China is not pulling in its horns when it comes to investing in raw materials overseas
Accepted, the pace is slowing as other sectors come into Beijing’s gunsights. In February, genetically modified foods company Syngenta of Switzerland was the target of a US$43 billion bid by state-run ChemChina, and if it goes through (amid US security concerns) it will be China’s biggest outbound deal ever.
Equally, in the last eight weeks alone, Chinese companies have spent hundreds of millions to secure minerals in Africa and elsewhere just as pundits were suggesting Beijing’s scramble for resources was heading into the sand.
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Biggest mining equity rally in years built on shaky foundations
Clara Denina Fri Mar 18, 2016 Reuters
The biggest rally for mining company shares since 2009 risks fizzling out as gains have largely been driven by funds reversing bets on lower prices rather than long-term investors looking for value.
The benchmark FTSE 350 mining index, which tracks the performance of the UK’s 11 biggest listed miners, is up 26 percent this year, the biggest quarterly gain since September 2009, and marking a revival after three years of losses.
Sentiment in the sector has been helped by a weaker U.S. currency, which makes dollar-denominated commodities cheaper for non-U.S. consumers and expectations that top consumer China will use further stimulus to boost its flagging economic growth.
As a result prices of commodities such as copper, used widely in power and construction, have risen 7 percent this year, while iron ore is up 29 percent.
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Rio Tinto to Replace CEO Walsh with Copper Chief Jacques
David Stringer James Paton Bloomberg March 17, 2016
Copper boss Jacques replaces iron man Sam Walsh in July
Changes come as mining giant handles commodity price rout
As the mining industry struggles to respond to China’s economic shift, Rio Tinto Group named its top copper executive Jean-Sebastien Jacques as chief executive officer to succeed Sam Walsh
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Barrick Gold names Catherine Raw as CFO, promotes exploration chief
The Canadian Press Financial Post March 17, 2016
TORONTO — Barrick Gold is making changes to its senior management team, including two promotions.
The company says Rob Krcmarov has been named executive vice-president for exploration and growth.
Catherine Raw will become chief financial officer after the company’s annual meeting on April 26, replacing Shaun Usmar. Barrick said Usmar is leaving the company to lead a new mine financing venture in Toronto backed by U.S. hedge fund Elliott Management.
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Mining outlook: volatility will force cuts to operations and jobs
Antonie Hermens Australian Mining 18 March, 2016
The global economic environment has generated a number of significant challenges for the Australian mining industry. Slowing economic growth particularly in China has softened demand; while the oil price war involving Opec nations have resulted in lower prices than projected.
The mining industry’s contribution to the Australian economy is more than $121 billion a year. In terms of export income, it generates $138 billion per annum, which represents over half (54%) of total goods and services.
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COMMODITIES
Gold ETF buying continues to accelerate
Peter Koven Financial Post March 16, 2016
When gold prices plunged in 2013, the main reason was a mass liquidation of the gold being held in exchange-traded funds, which shed a staggering 880 tonnes of the metal.
ETF buying was very limited in 2014 and 2015 as investors had minimal interest in the gold sector. But it has come back in a big way so far in 2016, with ETF gold holdings rising by more than 270 tonnes. That works out to about nine per cent of annual gold mine production.
The rebound in ETF demand has very positive implications for the sector, according to analysts at TD Securities.
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Output cuts halt nickel price fall, more mine closures needed
Louise Heavens, Reuters Wed Mar 16, 2016
- Prolonged slump will force mines to close
- Benchmark LME nickel seen in $7,500-$10,000/T range
- Demand for stainless steel stable, but sluggish
LONDON, March 16 Nickel’s freefall may have halted as output cuts move the chronically oversupplied market towards deficit, but prices are unlikely to recover sharply unless more loss-making mines close.
Prices for the metal used to make stainless steel have crashed more than 40 percent since the start of 2015 on rising stockpiles and weak Chinese demand, leaving around 70 percent of producers losing money, according to consultants at CRU Group.
But cutbacks, at a time when demand is steadying, should boost benchmark prices on the London Metal Exchange, which recently hit 13-year lows at $7,550 a tonne. It is now around $8,525.
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Iron ore price correction in full swing
Frik Els
- A market in deep backwardation spells more volatility ahead
The rally in the price of iron ore went bust on Tuesday with the Northern China benchmark import price falling nearly 7%.
The steelmaking raw material was trading at $51.70 per dry metric tonne CFR Tianjin port on Monday, down $3.8o compared to Monday according to data supplied by The Steel Index.
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From Oscars to Tuna Cans, Tin Gets More Expensive as Mines Quit
Joe Deaux Bloomberg March 17, 2016
- Global output deficit sending inventories to lowest since 2008
- After three-year slump, prices still below cost of production
Smart phones, cars and a prolonged mining slump are creating tighter supplies of tin, a metal used mostly as solder for electrical circuits.
Demand for tin remains strong from all sorts of manufacturers, from makers of food cans and building materials to iPads and Oscar statuettes. At the same time, big exporters like Indonesia and Myanmar are shipping less, following a three-year slump that discouraged investment in mines and smelters. Supplies in 2016 will be the smallest relative to demand in almost two decades, industry forecasts show. Tin on the London Metal Exchange has surged into a bull market, after prices in January were at their lowest since 2009.
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TECHNOLOGY AND INNOVATION
Letter to the editor: In-situ copper leaching is a proven technology
Gary Sutton Northern Miner March 17, 2016
An in-situ copper recovery well field in 2012 at the Florence copper project in Arizona, now owned by Taseko Mines. Credit: Curis Resources
It was recently reported in the Financial Post that in-situ leaching of copper is an “unproven technology.” But after personally spending five years working at the in-situ copper leaching operation at San Manuel, Ariz., I can state that it has definitely been proven.
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Organizers Prepare for the World Mining Con in Rio
Written by E&MJ News 17 March 2016
More than 400 researchers from 34 countries have already confirmed their participation at the 24th edition of the World Mining Congress (WMC). The event, which has attracted a significant number of confirmed participants, consists of a congress, technical-work presentations and a fair. The Brazilian Mining Institute or IBRAM (www.ibram.org.br) is organizing this edition of the WMC, the theme of which shall be “Mining in a World of Innovation.” It will be held for the first time in Brazil between October 18-21, in Rio de Janeiro.
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FINANCIAL
Here’s Why Surging Gold Miner Stocks May Still Be Bargains
Luzi-Ann Javier Bloomberg March 17, 2016
- Production costs drop by a quarter from a record, BI data show
- Compared to reserves, miners are 19% cheaper than year ago
Gold-mining companies that are seeing their shares surge the most in decades are still cheap, based on historic measures of their reserves.
An index of large producers, including Barrick Gold Corp. and Goldcorp Inc., has gained a whopping 90 percent in the past three months, more than four times the gold-price rally. That’s after three years of slumping prices made miners leaner, meaning more of the bullion gains flow through to their bottom lines.
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PROJECTS
Armenian gold mine starts construction next month
Andrew Topf
Shovels in April will start turning on a new gold mine in Armenia, says the managing director of Geoteam, the company behind the Amulsar gold project in southern Armenia.
“Construction will be finished in January 2018 according to our schedule, then mine exploitation will begin. It will last for 10 years,” said Hayk Aloyan, speaking at the Armenia-Canada Mining Forum in Yerevan.
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NexGen Energy drills 42 metres of 15.20% U3O8 at Rook I
Resource World on March 9, 2016
NexGen Energy Ltd. [NXE-TSXV] has released assay results for five angled holes from its winter 2016 drilling program on the 100%-owned Rook I property, Athabasca Basin, northern Saskatchewan.
Hole AR-16-63c2 has intersected 42.0 metres at 15.20% triuranium octoxide (U3O8) and an additional 46.5 metres of 12.99% U3O8 in the higher-grade A2 subzone. When including the 3.5 metres of unmineralized core separating the two mineralized intervals, the hole returned 92.0 metres of 13.51% U3O8. This represents a grade times thickness (GT) of 1,243.
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Paramount Gold Nevada acquiring Calico Resources and its Grassy Mountain Project
Resource World March 14, 2016
Paramount Gold Nevada Corp. [PZG-(NYSE] Calico Resources Corp. [CKB-TSXV] have entered into a definitive agreement under which Paramount will acquire all of the issued and outstanding shares of Calico. Pursuant to the Plan of Arrangement, Paramount will acquire each share of Calico from Calico’s shareholders in exchange for 0.07 of a share of Paramount stock. The transaction implies a value of US $0.085 per Calico share based on the closing prices of each company’s shares on March 11, 2016. Based on the volume-weighted average price of each of the companies on the 20 prior trading days ending on March 11, 2016, the Exchange Ratio represents a premium of approximately 46.5% to Calico’s 20 day VWAP share price.
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