Tuesday 27th September 2016

Resource Clips


Week in review

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I think the Canadian system is fabulous for the entire resource exploration and development cycle. And I think it’s a shame that they allow this type of algorithmic hook-up that basically victimizes real speculators, as opposed to those simply trying to harvest the volatility that they’re literally manufacturing in this sector.—John Kaiser, as quoted by Business News Network and Equedia, on algorithmic short-sellers operating on the TSXV

In the past mining interests could extract resources without aiding Zimbabwe, he said. “When Cecil John Rhodes first came into the country, he had the loot committee—they went around looting this country. We have to put a stop to that.”

That historic example came up rather differently in a report issued last November by Partnership Africa Canada. Entitled Reap What You Sow: Greed and Corruption in Zimbabwe’s Marange Diamond Fields, it said Minister of Mines Obert Mpofu’s term in office has seen “perhaps the biggest single plunder of diamonds the world has seen since Cecil Rhodes. Conservative estimates place the losses due to illicit activity at over $2 billion since 2008.”

Meanwhile Zimbabwe’s mining minister lives ostentatiously, the report stated. “His unexplained wealth is emblematic of wider problems of revenue transparency associated with this promising national resource. PAC has identified expenditures of over $20 million—mostly in cash—made by Minister Mpofu over the last three years.”

Chinese apparatchiks running Canadian coal project?

The HD Mining story has yet to take a Christmas break. On Wednesday the United Steelworkers gave media advance notice of a report released on Thursday: Who Owns Huiyong Holdings and other Questions on Planned Chinese-Owned Coal Mines in B.C.

Huiyong Holdings Group owns Huiyong Holdings (B.C.) Ltd, which owns 55% of HD Mining International, the proponent of British Columbia’s Murray River coal project. Canadian Dehua Lvliang owns another 40% of HD Mining, which wants to staff Murray River’s underground operation exclusively with workers from China.

A USW investigation failed to find much info about Huiyong Holdings Group—not even a Chinese- or English-language Web site. The union did state that one Ye Qing, “who met B.C. Jobs Minister Pat Bell and is described in Bell’s now-leaked briefing note as Huiyong’s ‘chief consultant,’ is in fact a highly connected senior apparatchik in the Chinese government and the Chinese Communist Party. In addition to serving briefly as an alternate member of the party’s powerful Central Committee, Ye Qing has been president of Shenhua Group, a state-owned coal-mining corporation reputed to be the world’s largest. He is currently a director of Sinopec, one of China’s three big state-owned and global oil companies, and a senior bureaucrat in the Chinese government.

“Ye Qing is an ‘insider’s insider.’ His involvement points to more than a passing state interest in Huiyong Holdings and its operations.”

But, the union stated, “there is no information the Steelworkers could find on the company’s alleged ownership of six, nine, 10 or more coal mines as company representatives claim.”

In a Canadian Press report published in Wednesday’s Globe and Mail, USW western Canada director Steve Hunt said, “We’re trying to find out something about the mines that they have … What are they experts in? It’s hard to do because we can’t find anything about them.”

On December 14 a federal court denied a request by two unions to block the foreign miners’ work permits. But a judicial review continues to examine how the permits were obtained.

Thursday’s Vancouver Sun ran a lengthy op-ed by HD Mining’s Penggui Yan extoling the proposed mine’s economic benefits and maintaining it could not be built and operated without Chinese expertise.

Bad call

A former corporate communications officer has been fined $2,500 and barred from investor relations for two years after admitting to misrepresentations. On Tuesday the British Columbia Securities Commission announced the penalty handed to Aaron Ross, who had been conducting IR work for Aguila American Gold TSXV:AGL.

Ross admitted contacting potential investors in February 2011, one day before Aguila was to issue drill results. He told prospects the news release would show “high tonnage” with “2 [to] 16 grams/tonne,” the company’s shares should reach “two to three bucks” and the company was “looking at two million ounces” of gold.

The BCSC found his statements materially misleading because he omitted the disclaimer that drill results are only conceptual in nature, the share price forecast was unrealistic and the “two million ounces” weren’t supported by a technical report or the news release.

Ross called people from a list of over 130 names. One of them was a BCSC investigator.

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