February Newsletter – 27.02.2023

  • Beijing probes illegal mining activities in Chinese lithium hub
  • Saudi Arabia launches third aerial geophysical survey in Asir region
  • 5 die in SW China mine as hope fades for 47 trapped in north
  • Coal india converts 30 mined out areas into eco tourism destinations
  • Ghana gold play Blue Gold International prepping for IPO this year
  • Gold miner Amman considering $1 billion Indonesian IPO
  • Resource firms’ spinoffs may attract pension fund interest
  • Bear Creek eyes 49% output increase from Mercedes gold mine this year
  • Geological Survey of India has been digging for lithium for last 5 years

Beijing probes illegal mining activities in Chinese lithium hub

Yichun, Jiangxi province

China’s central government has sent a working group to probe illegal mining in the country’s lithium hub Yichun, financial news outlet Yicai reported on Sunday.

Yicai, citing sources, said the probe comes amid a “shutdown and rectification” of lithium producers in Yichun, a small city in southern Jiangxi province known by some as Asia’s lithium capital.

News of the probe follows a Yichun local government announcement on Thursday that it was cracking down on criminal activity in the lithium battery industry, such as unlicensed and environmentally damaging mining.

Yichun has 1.1 million tonnes of lithium oxide reserves and accounts for 12% of global output, according to the South China Morning Post.

One lithium analyst, who declined to be named, told Yicai that the industry optimistically estimates that the shutdown will last for about a month.

Yichun currently produces between 10,000 tons and 12,000 tons of lithium carbonate per month, it reported. “If production is suspended for a month, the affected scale may account for about 10% of the global market,” the analyst said.

Lithium batteries are a key component in electric vehicles, demand for which has grown rapidly in recent years as climate-conscious consumers snap up cars with electric powertrains amid soaring fuel prices.


Saudi Arabia launches third aerial geophysical survey in Asir region

RIYADH: An aerial geophysical survey project, part of the Regional Geological Survey Program implemented by the Saudi Geological Survey, was launched recently in the Asir region, with the support and direct follow-up of Prince Turki bin Talal bin Abdulaziz, governor of the region.

SGS spokesman Tareq Aba Al-Khail said that the project, which is also one of the initiatives of the National Industrial Development and Logistics Program, aims to maximize the added value from the mining sector by gathering high-resolution and reliable geological data for the Arabian Shield.

Data will feed and enrich the content of the national geological database, and will be used to support mineral exploration, which will help in Saudi Arabia’s economic growth and diversify its revenue sources. Data will also serve as a foundation for attracting investments in the mining sector, achieving one of the major goals of the Kingdom’s Vision 2030.

Aba Al-Khail added that in conjunction with this national work, the SGS has called for a workshop to introduce the project, in coordination with the emirate of Asir region and under the direct supervision of the governor of the region.

Prince Turki has issued directions to hold a workshop with leaders of the governorates, heads of centers, employees of the emirate and officials in the Asir region to review the objectives, importance, duration and work of the project.

Aba Al-Khail said that this introductory meeting with officials is a simultaneous and important step to deliver joint awareness introductory media messages to all segments of society in the Asir region about the nature of the project.

“The project seeks to gather geophysical data through devices and sensors by specialized aircraft,” he said, stressing the importance of the support and cooperation of the community of the Asir region for the success of the national mission.


5 die in SW China mine as hope fades for 47 trapped in north

BEIJING (AP) — At least five workers were killed in a roof collapse at a mine in southwestern China, as hope appeared to be fading for 47 miners trapped under tons of rubble after a mining disaster last week in northern China.

Deadly mine disasters occur regularly in China, although authorities have reduced their toll greatly by emphasizing safety and closing smaller operations that lacked necessary equipment.

In the mine in Sichuan province, 25 miners were underground when part of the roof collapsed Sunday morning. Five were killed, three were badly injured and the others escaped, the provincial Department of Emergency Management said. Reports said the mine did not produce coal, but gave no details.

Meanwhile, rescue efforts were continuing at the open-pit mine in the Inner Mongolian region’s Alxa League. The death toll remains six with six others pulled from the rubble alive. The cause for the collapse of a mine wall six days ago is under investigation and an unknown number of people have been detained.


Coal India converts 30 mined out areas into eco tourism destinations

NEW DELHI : Coal India Limited (CIL) has transformed 30 abandoned mining areas into eco-parks and eco-tourism destinations, providing a source of income for locals and boosting the region’s green cover.

“Coal India Limited (CIL) is in the process of converting its abandoned mines into eco-parks which have become popular as eco-tourism destinations. These eco-parks and tourism sites are also proving to be a source of livelihood for local populace,” the ministry of coal said in a statement.


Ghana gold play Blue Gold International prepping for IPO this year

Ghana gold mining opportunity Blue Gold International, a private UK company, is understood to be preparing for an IPO later this year, according to broker Fox Davies Capital. The gold miner is currently seeking to raise £8m, with up to £30m from convertible loans so that it can scale up production from around 40k ounces per year to 80k ounces by the end of this year.

Blue Gold International reckons it can even take production at the site past 120k ounces next year (2024). Currently it has plans to list on the London Stock Exchange in Q3 this year.

The company owns the Bogoso / Prestea gold mine in Ghana. It acquired the operating company from Golden Star Resources in 2020. Historical production from the mine has been in excess of 9m ounces. The mine has 4.07m ounces of Measured and Indicated resources grading at 2.28 g/t Au.


Gold miner Amman considering $1 billion Indonesian IPO

PT Amman Mineral International, which owns the second-largest copper and gold mine in Indonesia, is considering an initial public offering in Jakarta that could raise as much as $1 billion, according to people with knowledge of the matter.

The company is working with financial advisers to prepare for a listing, which could happen as soon as in the first half of the year, said the people, asking not to be identified as the information is private. Deliberations are ongoing and details including size and timing of the IPO could change, they said.

Amman Mineral’s management continuously evaluates various opportunities and options for growth and will decide on the best option when conditions and timing are ripe, its representative said in response to a Bloomberg News query. She declined to comment on the IPO plans.

At $1 billion, Amman Mineral’s IPO could be the largest in Indonesia since Mitratel’s $1.3 billion share sale in November 2021, according to data compiled by Bloomberg. Indonesia has been the most active IPO market in Southeast Asia so far this year, hosting about $656 million worth of deals.


Resource firms’ spinoffs may attract pension fund interest

When BHP Group BHPLF spun out a collection of unwanted mines back in 2015, irreverent Australian analysts and media showed their disdain for the business by labelling it “CrapCo.”

Executives at CrapCo – eventually branded as South32 Ltd. SOUHY got the last laugh. Their portfolio of aluminum, manganese and steelmaking coal properties turned in better stock market performance than parent BHP for several years after the launch. The price of South32 shares has doubled since their debut.

South32′s humble roots are worth revisiting as resource companies prepare for at least three large spinoffs on the Toronto Stock Exchange.

Teck Resources Ltd. TECK-B-T is exploring splitting off its steelmaking coal business, worth an estimated $11-billion, to focus on copper and other future-friendly metals. The Vancouver-based miner could detail plans for the country’s largest coal company when it releases financial results on Tuesday.

In May, Paris-based TotalEnergies SE TTE-N is scheduled to ask shareholders to approve creation of a $2-billion-plus public company that owns its stakes in two oil sands projects. And Brazil’s Vale SA is working on raising money to pay down debt by spinning out a stake in nickel and copper mines the company values at $40-billion, including Canadian properties acquired in the takeover of Inco a generation back.

Count on some variation of the CrapCo nickname to be slapped on Teck’s British Columbia mines and Total’s Alberta projects. These are serious greenhouse-gas emitters, and the current owners are exiting because they don’t fit low carbon growth strategies. A great many investors will see the words “coal” and “oil sands” and steer clear on well-founded environmental, social and governance (ESG) concerns. These stocks will debut as orphans, relatively small compared with rivals and in unloved sectors.

However, both Teck’s coal business and Total’s stakes in the Fort Hills and Surmont projects are highly profitable businesses that throw off significant cash when commodity prices go their way. Teck, the world’s second-largest coal exporter, made a gross profit of $5.5-billion on coal sales of $8.7-billion through the first nine months of 2022.

Yet when these two spinoffs debut on the TSX, it’s highly likely environmental issues will weigh heavy on their share prices. Market dynamics will also undermine the newly launched companies, as past experience at companies such as BHP shows many shareholders dump stakes in spin-outs the moment they receive the stock.


Bear Creek eyes 49% output increase from Mercedes gold mine this year

Mercedes gold mine in northern Mexico

Bear Creek Mining (TSXV: BCM) has raised the production guidance for its Mercedes gold mine in Sonora, Mexico, following the conclusion of its operations improvement program in January that delivered a solid continuous improvement base for 2023.

The Mercedes mine is forecast to produce 65,000 to 75,000 ounces of gold for the year, representing a 49% increase over 2022. Average cash cost per gold ounce is expected to be in the range of $830-$940, with all-in sustaining cost (AISC) between $1,120-$1,290 per ounce.

Bear Creek initiated the Mercedes operations improvement program shortly after acquiring the property in April 2022. It included a GAP analysis to identify potential improvements in mine planning, operating efficiencies and equipment utilization, with a targeted minimum production of 70,000 gold ounces per year.

Located in the northwestern edge of Mexico’s epithermal gold and silver deposits belt, the Mercedes mine consists of six known main deposits. Since entering commercial production in 2011, the mine operated primarily from the Diluvio and Lupita zones.

Under Bear Creek’s ownership, mine planning and development at Mercedes is now shifting toward higher-grade deposits utilizing cut and fill mining methods, which is expected to support increased production during 2023.

As infrastructure development in previously shutdown operations returns to safe levels, they will be brought back into production and are expected to “significantly increase” mill feed grade, the company said.

The Marianas and San Martin deposits began contributing to Mercedes’ production in late January and will become larger contributors as working areas continue to be developed. Ore from Rey de Oro should be delivered to the mill in March.


Geological Survey of India has been digging for lithium for last 5 years

The recent announcement by the government about the discovery of the largest reserves of lithium in the country triggered a lot of hope and curiosity.

While nearly 5.9 million tonnes of lithium reserves have been discovered in Reasi district of Jammu and Kashmir; however, during the last five years, the Geological Survey of India (GSI), an attached office of the Ministry of Mines, has carried out 20 projects on lithium and associated elements in Andhra Pradesh, Arunachal Pradesh, Bihar, Chhattisgarh, Himachal Pradesh, Jharkhand, Jammu & Kashmir, Madhya Pradesh, Meghalaya, Rajasthan.

During the field season programme 2022-23, the GSI has taken up 18 projects on lithium and associated elements in Arunachal Pradesh, Chhattisgarh, Jammu & Kashmir, Jharkhand, Meghalaya, Nagaland, Rajasthan. However, the resource of lithium has not yet been augmented by the GSI.

As per information from the Ministry, Mineral Exploration & Consultancy Limited, a CPSE under the Ministry of Mines, has undertaken an exploration project for lithium in Ladakh. Further, the Atomic Minerals Directorate for Exploration and Research, a constituent unit of the Department of Atomic Energy, is carrying out exploration for lithium in parts of Mandya and Yadgir districts in Karnataka.



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