Tuesday 12th December 2017

Resource Clips


March, 2013

Fortnight in review

March 28th, 2013

A mining and exploration retrospect for March 16 to 28, 2013

by Greg Klein

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Qualified person de-qualified

A geologist who faked assays and wrote false news releases has been slammed by the Ontario Securities Commission. On March 28 the OSC announced sanctions against Bernard Boily, a one-time VP of exploration for Bear Lake Gold TSXV:BLG who worked on the company’s Larder Lake gold project in the Cadillac Break of northeastern Ontario.

Some examples of his fanciful figures follow, with real results in brackets:

  • 8.5 grams per tonne gold over 1.2 metres true width (2.6 g/t over 1.2 metres)
  • 10.6 g/t over 6.5 metres (3.6 g/t over 6.5 metres)
  • 9.9 g/t over 6.5 metres (1.3 g/t over 2.1 metres)
  • 23.4 g/t over 0.6 metres (3.1 g/t over 0.6 metres)
  • 10.5 g/t over 2.1 metres (1.7 g/t over 2.1 metres).
A mining and exploration retrospect

His scam came to light in July 2009 after Bear Lake hired an independent firm, InnovExplo Inc, to compile a resource estimate. Bear Lake then hired other independents to investigate. Investors, meanwhile, launched a class action suit. That was settled in April 2010 under confidential terms.

The OSC banned Boily from trading securities for 15 years, fined him $750,000 with $50,000 costs, and barred him from QP-ing for life.

In a statement announcing the penalties, OSC director of enforcement Tom Atkinson said Boily’s behaviour ran “contrary to the important gatekeeper role played by qualified persons in the securities disclosure regime.”

But Larder Lake’s not barren. Drilling continues by Bear Lake’s JV partner Gold Fields Abitibi Exploration, a subsidiary of the multi-billion-market-cap Gold Fields Ltd.

In January a Vancouver ex-QP, John Gregory Paterson, got a six-year prison term for faking assays while CEO of Southwestern Resources.

Speaking of fraud

Bre-X, the outrage that brought about QPs and NI 43-101 in the first place, is coming to an anti-climactic end. That’s according to an Ontario judge quoted in the March 21 Globe and Mail as he granted a bankruptcy trustee’s request to drop its legal action against Bre-X, its former officers and other companies involved. The G&M stated that an Alberta court is likely to approve a similar request and an Ontario class action suit will likely be dropped.

But some people made money and it wasn’t just company insiders. Clint Docken, the lawyer representing the Alberta class action suit, told the paper that trustees Deloitte & Touche got $3.9 million in fees and paid its lawyers $8 million, leaving $79,000 in Bre-X coffers. “A lawyer representing the trustee was not available for comment,” the G&M stated.

No charges were ever laid and “little also came of a move by the trustee to freeze the assets of [John] Felderhof, his ex-wife Ingrid and former Bre-X chief executive officer David Walsh, who died in 1998.” Nor is there any trace of the $75 million the Felderhofs got by selling Bre-X shares, the story added.

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March 28th, 2013

Eric Coffin: Resource sector paradigm shift, Part I by GoldSeek
I’ll take my chances the central banks are right on gold by the Grandich Report
Insider buying of gold stocks surges to multi-year highs by VantageWire
Lucara Diamond president/CEO William Lamb discusses a 239-carat diamond found on the Karowe Mine in Botswana by Equedia
Don Mosher: Is the Venture exchange on its deathbed? by the Gold Report

Looking at uranium

March 27th, 2013

Some perspective on the supply, demand and price scenario

by Greg Klein

Updated March 27, 2013

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Now responsible for roughly 15% of global electricity generation, nuclear energy continues to expand. After the earthquakes and tsunami that caused Japan’s Fukushima Daiichi accident, uranium prices fell from a 2011 high of $72.63 a pound to a low of $41.25 in November 2012. More recently the price has nudged up to a March 25, 2013, level of $42.25. But countries like China, Korea and India plan to add significantly more nuclear generation, while even Japan is re-starting some of its reactors.

Cameco Corp TSX:CCO’s fourth quarter report released February 8 reiterated the company’s view that “the near-term environment for the industry was challenging but that the long-term outlook remained very positive.”

Some perspective on uranium’s supply, demand and price scenario

According to environmentalists like Greenpeace co-founder Patrick Moore, nuclear energy is the world’s most viable source of electricity.

This year’s anticipated end of the Russia/U.S. highly enriched uranium (HEU) program (also known as megatons to megawatts) would remove up to 24 million pounds of annual supply from former Soviet warheads converted to fuel. But Cameco’s forecast also considered the retirement of older reactors in other countries and India’s 2020 nuclear target, which has been scaled down from 20 to 14.6 gigawatts.

As a result, Cameco stated, “While the market continues to evolve, our current estimates project nuclear generating capacity to reach about 510 gigawatts by 2022 from today’s 392 gigawatts, which represents average annual growth of 3%. Of this expected growth, approximately 64 new reactors with 64 gigawatts of generating capacity are under construction today.”

As for prices, there’s “no formal exchange for uranium as there is for other commodities,” explains the Ux Consulting Co. “Uranium price indicators are developed by a small number of private business organizations [like Ux] that independently monitor uranium market activities, including offers, bids and transactions.”

In a November 2012 interview with the Daily Crux, Sprott Global Resource Investments chairman Rick Rule said uranium prices are “irrationally depressed.” The Fukushima accident, he said, took 20 million pounds of annual uranium demand off the market while Japan placed a 15-million-pound surplus on the market. He also noted HEU’s anticipated end in 2013.

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March 27th, 2013

Gold, a hedge against financial repression by GoldSeek
I’ll take my chances the central banks are right on gold by the Grandich Report
Insider buying of gold stocks surges to multi-year highs by VantageWire
Lucara Diamond president/CEO William Lamb discusses a 239-carat diamond found on the Karowe Mine in Botswana by Equedia
Don Mosher: Is the Venture exchange on its deathbed? by the Gold Report

March 26th, 2013

Insider buying of gold stocks surges to multi-year highs by VantageWire
Lucara Diamond president/CEO William Lamb discusses a 239-carat diamond found on the Karowe Mine in Botswana by Equedia
Don Mosher: Is the Venture exchange on its deathbed? by the Gold Report
Update: U.S. stock market, gold, mining and exploration by the Grandich Report
Rick Mills: Central banque royales by GoldSeek

Martin Walter, president/CEO of Treasury Metals, on the Goliath gold project in northwestern Ontario

March 26th, 2013

…Read More

March 25th, 2013

Don Mosher: Is the Venture exchange on its deathbed? by the Gold Report
Chris Berry: Energy-metals juniors with derisked projects are takeout bait by VantageWire
Update: U.S. stock market, gold, mining and exploration by the Grandich Report
Rick Mills: Central banque royales by GoldSeek
Has the NYSE morphed from exchange to TV studio? by Equedia

Conflict-free tantalum

March 24th, 2013

End-users can help real miners develop legitimate sources of this crucial metal

by Michael Kachanovsky

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Tantalum is not well-known. Rarely mentioned in financial news, the metal is often traded in opaque transactions between processors and end-users. Its worldwide production is a fraction of the output for more common metals like aluminum and copper.

Tantalum demand has been estimated between six and seven million pounds per year, a tiny market indeed. But do not assume that tantalum is unimportant, as it plays a significant role in nearly all high-end electronics. The metal is irreplaceable. It cannot be substituted with other, more commonly available elements or alloys without losing qualities in the finished components.

Conflict-free tantalum

Although not a well-known commodity, tantalum has wide-ranging applications that suggest end-users will take steps to secure
their future supply.

Tantalum production can’t keep pace even with current demand. Meanwhile new products require additional supply. End-users are acutely aware of this shortfall. Since Australia’s Wodgina mine closed in 2012, a major source of tantalum production was lost and spot prices have risen steadily. Wodgina accounted for about 1.4 million pounds per year. Now Australia produces just a few thousand pounds a year.

Brazil remains a dominant tantalum source, with several operating mines. About a quarter of historic world supply originated from the country. The Mibra mine, operated by Companhia Industrial Fluminense, is the country’s largest tantalum producer. But even this mine was limited to processing tailings during recent months while expansion plans were underway to increase open pit production. Mibra is expected to produce about 400,000 pounds tantalum per year, still a relatively small amount of the world’s total projected demand.

Ethiopia was once a significant producer. The Kenticha mine is considered to have one of the world’s largest tantalum resources. But production has been suspended due to contamination from uranium, which caused problems with radioactivity during transport. In 2012 Ethiopian exports were halted and the country is considering new processing capacity to deal with the problem. However Elinito, a significant mine developer with other African assets, recently offered to invest in a processing plant to restart Kenticha’s production. The plant would use a hydrometallurgical circuit to remove uranium, yielding a high-purity tantalum-niobium concentrate. For the immediate future, however, this is still on the drawing board, pending government approval and development of the processing plant.

Mozambique has also been a significant tantalum exporter. Here too, production shortfalls have limited output in recent years. The Marropino mine is the country’s largest producer, operated by the Noventa Group. The company has reported a string of operational problems including severe weather, processing plant shutdowns and unreliable electrical supply, all of which cut production sharply. Mine output has fallen from more than 5,300 pounds to just 1,600 pounds in 2012 and early 2013. While the company states that it aspires to increase future tantalum production, the situation in Mozambique is not unique. It illustrates tantalum’s tenuous supply outlook.

With few legitimate sources for tantalum production, much of the world’s supply comes from conflict minerals. They are delivered by small-scale artisanal output that is smuggled across borders to be sold from neutral countries. For example, in the Democratic Republic of the Congo, rebel groups control large parts of the country. They have imposed dictatorial rule on local communities and generated small-scale mine production under conditions so harsh that they actually approach slavery. High-value minerals and diamonds, including tantalum concentrate, are smuggled into neighbouring countries like Rwanda and sold to finance the rebels’ activities. Since there are no producing tantalum mines in Rwanda, it is likely that much of the country’s output comes from DRC conflict sources. One could make the same assumption for several other nearby countries.

The human and environmental toll of mining and smuggling conflict minerals presents a crisis. However, in an age when money is often the only consideration, this human rights abuse is often ignored. The proportion of this shadow tantalum inventory in total world supply is difficult to estimate.

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The uranium rush is on

March 22nd, 2013

Saskatchewan’s southwestern Athabasca Basin hosts a staking stampede

by Greg Klein

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This could be just what the beleaguered exploration sector needs—a good old-fashioned staking rush. And that’s exactly what’s going on in northern Saskatchewan’s uranium-rich Athabasca Basin. Although the market hasn’t fully caught on, companies are flocking into the area, drawn by the sensational Fission Energy TSXV:FIS and Alpha Minerals TSXV:AMW discovery at Patterson Lake South.

Saskatchewan’s southwestern Athabasca Basin hosts a staking stampede

A major uranium discovery has diverted explorers’ attention
to an under-explored region of northern Saskatchewan.

The Basin’s no stranger to frenetic activity. It last happened in the early and mid-part of the century’s first decade. But that was on the east side, whose mines now comprise one of the world’s most important sources of uranium. This time the stampede is to the west side, some of it a little outside the Basin. Among the driving forces are Saskatchewan’s new online staking system, an increasingly optimistic supply-demand scenario and an escalating stream of news from the Fission/Alpha 50/50 JV.

That started in July 2011, when boulder field samples brought assays as high as 39.6% U3O8. By November 2012, drilling confirmed the discovery not only with high grades but—in glaring contrast to the Basin’s east side—shallow mineralization. This year’s step-outs have the sector wondering just how big this might be. Not surprisingly, other explorers aren’t content to watch from the sidelines.

“We were quick to jump in there,” says Skyharbour Resources TSXV:SYH manager of corporate development and communications Jordan Trimble. His company snapped up five properties totalling nearly 80,000 hectares, one of the area’s largest packages according to a March 20 announcement. Two of the properties lie 27 kilometres and 35 kilometres north of the PLS discovery, another two 15 kilometres south and the fifth 90 kilometres east.

“We have a connection with a guy from Calgary who was one of the first prospectors in there,” Trimble points out. “Given that you can now stake online, it’s incredibly cheap. We got that land package for about 30 cents an acre. Packages of land have been offered to me in the last few days in the same area, comparable properties for upwards of $10 an acre. So already I think we’ve created value just with the acquisition at the cost we did.”

Last December’s inauguration of Saskatchewan’s e-registry was “certainly part of it,” he says. “But online staking or no online staking, there’s no shadow of doubt in my mind that this area would have seen a staking rush, given the [PLS] discovery. It’s a one-of-a-kind discovery.”

Michael Schuss concurs. The president/CEO of Canadian International Minerals TSXV:CIN says Patterson Lake South “is probably going to be one of the biggest discoveries in Canadian history. I wouldn’t call us ambulance-chasers by nature, but we saw the opportunity and thought we better move on it.”

Just one day before Skyharbour’s announcement, CIN revealed it nabbed a 20-claim, 25,225-hectare package in the same district. Like Skyharbour, the company’s looking at further nearby acquisitions.

Of all the news pouring out of the Fission/Alpha project, Schuss singles out the February 19 announcement of 57.5 metres of mineralization from a step-out 385 metres on strike. The JV partners were “either extremely lucky or it’s so big you couldn’t miss it. I think that’s what kicked off the staking rush.

“The excitement of Patterson Lake South is a discovery outside the traditional Athabasca Basin,” Schuss maintains. “It shouldn’t have been there. The staking has gone way beyond south of the basin. That’s something we haven’t seen before. It’s an exciting time in the industry.”

He credits people like Fission director Jody Dahrouge and Alpha director Warren Stanyer, who were among the PLS visionaries. “At first it was wildcatting at best,” Schuss says. “To go from concept to discovery in four years is an exceptional timetable. That’s part of the excitement. It also shows that in Canada you can still find major deposits in places that people drive right over.” Highway 955 cuts through PLS on its way to the former Cluff Lake uranium mine.

Schuss adds, “The staking rush is a nice feeling for a change because we probably haven’t had one in Canada since Voisey’s Bay, about 20 years ago.”

And the excitement brings a new focus to some companies.

“Skyharbour had been dormant for two years, looking for deals,” explains Trimble. “We waited patiently through a real tough market, researched uranium, saw it from the perspective of both current equity valuations in the space and the lack of what you could call saturation. You don’t have as many uranium companies clamouring for investor dollars.”

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March 22nd, 2013

Mexico’s Guerrero gold belt, home of low-cost gold production and analyst Merrill McHenry’s favourite miners by the Gold Report
Chris Berry: Energy-metals juniors with derisked projects are takeout bait by VantageWire
Update: U.S. stock market, gold, mining and exploration by the Grandich Report
Rick Mills: Central banque royales by GoldSeek
Has the NYSE morphed from exchange to TV studio? by Equedia