March Newsletter – 22.03.2021


  • Greek lawmakers seal revised deal to restart Eldorado’s mines investment
  • Endeavour plans mill refurb after El Cubo purchase
  • Barrick reports strong financials in 2020
  • U.S. looks to Canada for minerals to build electric vehicles – documents
  • China backing autocratic regimes to secure resources — report
  • Mining profits reach $230 billion a year, topped only by oil & gas, pharma
  • Gold X To Be Acquired For $315 Million By Gran Colombia In All-Stock Transaction
  • Mining tycoon Mick Davis joins the dash for SPAC cash to build up green energy mining giant
  • China’s Wanbao Mining produces first cobalt hydroxide in Congo

Greek lawmakers seal revised deal to restart Eldorado’s mines investment

ATHENS, March 17 (Reuters) – Greek lawmakers approved a revised contract with Canada’s Eldorado Gold Corp on Wednesday, opening the way for restarting a major mining investment stalled for years over licensing and environmental concerns.

The Vancouver-based miner has been embroiled for years in a standoff with Greece over environmental concerns around its Skouries, Olympias and Stratoni projects in northern Greece, known as the Kassandra mines.

The previous leftist Syriza government revoked permits and delayed licensing for Eldorado’s mining operations, prompting the company to halt part of its investment plan and seek several hundred million euros in compensation for lost revenue.

The two parties resorted to arbitration but failed to settle their differences.

The conservative government of Prime Minister Kyriakos Mitsotakis soon reopened talks with the company after taking power in 2019. It views the project as a vital investment for a country still struggling with the aftermath of a decade-long financial crisis.

Last month, Greece signed an amended agreement with Eldorado, including a bigger investment plan of $3.1 billion for the mines, creation of additional jobs and higher royalties.

Endeavour plans mill refurb after El Cubo purchase

Endeavour Silver has big plans for the El Cubo mill facility at the silver-gold complex in Guanajuato region in Mexico it will acquire from VanGold Mining.

The purchase deal, made for US$15 million in cash and share payments plus up to $3 million in contingent payments, is expected to close by the end of this month.

Endeavour said that its refurbishment project will begin in the coming months, approximately early in the fourth quarter, when it will start processing resources from both the El Pinguico and El Cubo properties in Guanajuato. The sites are just 8 kilometres away by road.

From there, the mill will ramp up to a throughput of about 750 tonnes per day. It did not indicate if any equipment upgrades would be part of the refurbishment.

According to a preliminary economic assessment of El Cubo completed by Behre Dolbear, the combined project has total indicated resources of 718,655 tonnes grading 160g/t silver and 1.90g/t gold, or 306 /t silver equivalent, which equates to 7.2Moz.

Total inferred resources total 1,45Mt grading 214g/t silver and 2.78g/t gold, or 435g/t silver equivalent – equating to 20.4Moz.

Barrick reports strong financials in 2020

Despite the challenges posed by the covid-19 pandemic, Barrick Gold (TSX: ABX) (NYSE: GOLD) reported ending 2020 with one of the industry’s strongest balance sheets.

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Loulo-Gounkoto complex in Mali

In its 2020 annual report, the Toronto-based miner first highlighted the fact that it increased its quarterly dividend threefold to 9 cents per share since the announcement of its merger with Randgold Resources in 2018. This means that, in the past two years, the Barrick share price has grown by 118% against a 92% increase in the GDX as of December 31, 2020.

In the document, the company points out that one of the key drivers of the positive figures was its ability to capitalize on higher gold prices, with net earnings adding up to $2,324 million.

“In 2020, gold revenues increased by 27% compared to the prior year, primarily due to the impact of recording a full year of production from Nevada Gold Mines, which was formed on July 1, 2019, and is consolidated and included in revenue at 100%,” the report states. “Excluding the impact of Nevada Gold Mines, gold revenues increased by 12% compared to the prior year resulting from a higher realized gold price, partially offset by lower sales volume. The average market gold price for 2020 was $1,770 per ounce versus $1,393 per ounce in the prior year.”

The rise in the yellow metal and the $1.5-billion sale of non-core assets such as the Eskay Creek gold-silver project in Canada, were also important for Barrick to register an operating cash flow of $5.4 billion and record free cash flow of $3.4 billion.

U.S. looks to Canada for minerals to build electric vehicles – documents

The U.S. government is working to help American miners and battery makers expand into Canada, part of a strategy to boost regional production of minerals used to make electric vehicles and counter Chinese competitors.

On Thursday, the U.S. Department of Commerce held a closed-door virtual meeting with miners and battery manufacturers to discuss ways to boost Canadian production of EV materials, according to documents seen by Reuters.

A source who attended the meeting said there was no indication that the Commerce Department would offer financial incentives for new mines or other supply chain components in Canada.

But department officials did stress the need to act now to build a U.S.-Canada EV supply chain, much like Europe has been doing and Asia has already done, according to a second source who attended the meeting.

The move comes as demand for electrified transportation is set to surge over the next decade.

Conservationists have strongly opposed several large U.S. mining projects, leading officials to look north of the border to Canada and its supply of 13 of the 35 minerals deemed critical for national defense by Washington.

Tesla Inc, Talon Metals Corp and Livent Corp were among the more-than 30 attendees at Thursday’s meeting who discussed ways Washington can help U.S. companies expand in Canada and overcome logistical challenges, according to the documents.

China backing autocratic regimes to secure resources — report

China’s dependence on foreign natural resources to meet internal demand has pushed Beijing to lock up natural resource supplies, gaining preferential access to available output, but also shifting the current geopolitical map, a new study suggests.

President Xi Jinping’s regime is pivoting towards more autocratic regimes that represent greater stability for its supply lines than democracies that are, or may become, hostile to China, the latest research from risk consultancy Verisk Maplecroft shows.

The task has been easy for Beijing when it comes to oil and gas. Many of the largest hydrocarbon producers, such as Saudi Arabia and Russia, are autocracies or illiberal democracies.

China’s attempt to replicate the model for other commodities, such as iron ore, has been hindered by the fact that most producers of the steelmaking material are democracies. “Beijing has little choice but to cooperate with them, regardless of their regime type,” Verisk Maplecroft says.

Mining profits reach $230 billion a year, topped only by oil & gas, pharma

Mining companies adopted a more conservative approach after the 2015-16 market downturn to adjust to more volatile commodity prices, focusing on cost cutting, productivity and expanding liquidity says a new report by Moody’s Investor Service, a ratings agency.

Moody’s says earnings for the 130 rated issuers in the industry have improved since the mid-decade downturn, with EBITDA for 12 months through September 2020 totaling $230 billion, the third-largest among the global sectors, after oil & gas and pharmaceuticals.

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Debts for the industry total $670 billion but the debt-to-earnings ratio has been cut substantially since 2015, going from 3.8 at the end of the downcycle to 2.7 for the twelve months to end September 2020.

The better overall position for major miners is a result of a strategy of de-risking operations following the downturn by forming joint ventures on large projects, having a disciplined approach to dividends, liability management and projects requiring significant capital outlays.

Decarbonisation is benefiting the industry, says Moody’s, adding that mining intensity is unlikely to decrease, with no clear substitutes for mining, either for inputs or end products. New markets will also strain supply in the near term.

Gold X To Be Acquired For $315 Million By Gran Colombia In All-Stock Transaction

Gran Colombia Gold (TSX: GCM) announced that it has entered into an arrangement to acquire the remaining portion of Gold X Mining (TSXV: GLDX) that it doesn’t currently own. The value of the transaction is currently pegged at $315 million.

The transaction will see Gran Colombia acquire the remaining portion of the company. Prior to the announcement, the firm held an 18% stake in the junior firm. Shareholders of Gold X are set to receive 0.6948 of a Gran Colombia share for each Gold X share held, implying consideration of $4.10 per share, representing a 39% premium to the closing price of the equity on Friday.

Completion of the transaction is expected to allow for the “creation of a new, Latin American-focused growth platform,” with the combined entity having operations and assets in Colombia and Guyana. The combined firm is expected to have significant mineral reserves as well as US$100 million in cash on hand and better access to equity markets.

Under the terms of the arrangement, approval of 66 2/3% of Gold X shareholders is required, with the special meeting of shareholders currently anticipated to be held in May 2021. A termination fee of $5.5 million has also been put into place.

Mining tycoon Mick Davis joins the dash for SPAC cash to build up green energy mining giant

Sir Mick Davis, the former boss of Xstrata and one of the biggest names in mining, today raised $300 million for his new mining venture with a special purpose acquisition company in the US.

The former Conservative party treasurer has partnered his Vision Blue Resources business with the New York-listed SPAC ESM Acquisition Company to hunt for and invest in new mining ventures that will produce minerals needed for electric vehicles and other green energy technologies.

SPACs have raised billions of dollars in the US and Amsterdam to build warchests to buy businesses.

In the case of ESM Acquisition Company, Davis, known as “Mick the Miner” is the chief executive and director.

Davis’s plan is to use his Vision Blue business to invest in smaller mining projects, while ESM will seek big investment opportunities, gearing up the $300 million with debt for the right opportunity.

Another sponsor of the SPAC is Texan private equity mining investor Energy and Minerals Group, which has 20 mining operations around the world.

Separately from the SPAC deal, Vision Blue today bought an $11 million stake in London Stock Exchange-listed Ferro-Alloy Resources, which is developing a vanadium mine in Southern Kazakhstan.

China’s Wanbao Mining produces first cobalt hydroxide in Congo

China’s Wanbao Mining said on Monday it had produced the first batch of cobalt hydroxide – a chemical used in batteries for electric vehicles (EVs) – from its Pumpi mine in the Democratic Republic of Congo (DRC) on March 12.

Wanbao, a subsidiary of state-owned Chinese military supplier Norinco, said the Pumpi copper-cobalt project in Kolwezi has now been fully commissioned following the production of the first copper cathodes six months ago.

Prices for cobalt have gained some 65% so far in 2021, hitting two-year highs of around $53,000 a tonne on resurgent EV demand in China and Europe.

Pumpi, in which Wanbao has a 75% stake, is designed to produce around 5,000 tonnes of cobalt hydroxide per year on a metal content basis; Morocco’s Managem holds 20% and the DRC government 5%.


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