Thursday 14th December 2017

Resource Clips


October, 2015

Chart: Junior miners—Doom, gloom or boom?

October 30th, 2015

PwC report recaps malaise, but recent traction may indicate signs of life

by Jeff Desjardins | posted with permission of Visual Capitalist | October 30, 2015

The Chart of the Week is a Friday feature of Visual Capitalist.

Junior miners: Doom, gloom or boom?

From the PwC report Junior Mine 2015 summarizing the top 100 junior miners
on the TSXV. In the exploration group, there were 63 companies this year.

If it wasn’t already clear, the junior companies that explore, develop and mine the world’s metals are struggling. PwC recently recapped the malaise of these companies in its latest Junior Mine 2015 report, but also highlighted some success stories of those that have been able to bypass the onslaught.

The report, which looks at the top 100 junior mining companies traded on the TSX Venture exchange, had findings that make junior mining executives want to bury their heads in the sand. The average market capitalization of exploration companies is down 51.2% from 2014 to 2015. The amount of money raised in equity and debt markets for exploration companies is down 33.4% over the same timeframe.

Furthermore, the average company on the top 100 list has $7 million cash, which is down from $10 million last year. In 2011 the average cash in the bank was $22.7 million.

Remember, these are the results of the “best” companies in the space. This doesn’t include the zombies or any of the other hurting companies.

Signs of life?

Every coin has two sides, and here’s the other side to this one. Over the last two months, data shows that things aren’t getting worse. In fact, it could even be argued that things are getting better.

Since the end of the “flash crash” that hit markets on August 24, when the Dow dropped 1,100 points in the first five minutes of trading, miners have been up. The TSX Venture is up 4.1%, the GDXJ (Junior Gold Miners ETF) is up 3.9% and the HUI (Basket of Unhedged Gold Stocks) is up 8%. Even more spectacular is the GLDX (Global X Gold Explorers ETF), which is up a solid 17% since the August lows.

This is obviously not anything definitive. However, seeing all four of these major indices up at the same time is a good sign.

Now we just need a rags-to-riches story like that of Voisey’s Bay to get the market really humming.

October 30th, 2015

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China agrees to major nuclear power investment in UK facility Stockhouse
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TiO2 World Summit 2015: “Suppliers listen but they don’t hear” Industrial Minerals

Integra Gold president/CEO Stephen de Jong hopes an online contest will lead to another Abitibi deposit

October 29th, 2015

…Read more

Voisey’s Bay infographic Part 2—The auction

October 29th, 2015

Presented by Equitas Resources TSXV:EQT | Posted with permission of Visual Capitalist | October 29, 2015

The Story of Voisey’s Bay: The Auction (Part 2 of 3)

Preface

The hit at diamond drill hole #2 of 33 metres of massive sulphides turned Voisey’s Bay from caribou pasture to one of the most exciting stories in the mining world. For a full recap of the events leading to this point, check out Part 1 of the Voisey’s Bay story.

In Part 2 we look at the ensuing bidding war that occurred once it was clear that Voisey’s Bay had all of the action. Again, we have turned to Jacquie McNish’s fabulous book The Big Score, which documents the history of the discovery, biographical elements of Robert Friedland’s life, and the ensuing bidding war between Inco and Falconbridge that led to one of the most spectacular takeovers in mining history. If you like these infographics, then look into buying Jacquie’s book. It’s gripping and full of information.

Finally, it’s worth noting that Part 3 of this series will be released within a week or two.

Setting the stage

The discovery of massive sulphides with hole #2 brought increased attention to the former diamond play. However, the stock price didn’t really explode until the assays came in: 2.23% nickel, 1.47% copper and 0.123% cobalt. Diamond Fields traded in December 1994 at $13.50 per share, up from $4.65 just a month prior.

The company doubled down on drilling, but up until January 1995 they hit nothing after hole #2. The price dribbled down to $11.

However it was in February 1995 that the results for holes #7 and #8 were released and they were some of the most significant holes for the entire project. The holes were in the Ovoid, which would soon be a famed and ultra-rich section of the Voisey’s Bay discovery.

Hole #7 was 104 metres long and had 3.9% nickel, 2.8% copper and 0.14% cobalt. Hole #8 was 111 metres long and had 3.7% nickel, 2.78% copper and 0.13% cobalt. This propelled the stock price to $20 in February 1995.

Continued exploration of the Ovoid revealed a bowl-shaped orebody lying just below surface. This deposit had surface dimensions of some 800 metres by 350 metres and extended to depths of about 125 metres. More nickel from Ovoid came in every month and the stock price continued to rise.

At this point, Diamond Fields could no longer fly under the radar. Major mining couldn’t stand to watch as one of the world’s greatest base metal deposits blossomed outside of their influence.

The suitors

Three major mining companies vied to get in on the action. Here’s some history on each of them.

Teck

At this time, the Canadian diversified mining company Teck had nine mines in operation and a reputation as a swift deal maker.

In 1947, Teck’s founder Norman Keevil Sr. was one of the first explorers to use magnetic survey technology that was initially employed by the U.S. military to find submarines. With this technology, he found one of the richest copper deposits in Canada.

He once impressed a plane load of investors by flying them over a 150-foot copper vein that was exposed to the air. It shone like a newly minted penny as they passed over, stunning even the most skeptical investors. (He had previously parachuted a crew in to polish the ore in the bush.)

Inco

The International Nickel Company was founded in 1902 and for most of the 20th century it remained the dominant player in nickel exploration, production and marketing.

The company virtually invented the nickel market: In 1890, global output of nickel was 3,000 tonnes. Nickel was mainly used for military purposes but sales dried up at the end of WWI. The company discovered nickel alloys that were marketed for use in automobiles, pipes, industry, coins and even kitchen sinks.

By 1951, the world consumed 130,000 tonnes of nickel a year with 90% of it supplied by Inco. By 1995, Inco was still the market leader in nickel, producing 26% of the world’s nickel with $2.3 billion in sales each year.

Falconbridge

In 1901, American inventor Thomas Edison found a nickel-copper ore body in the area northeast of Sudbury. However, it wasn’t until 1928 that Thayer Lindsley, the founder of Falconbridge, bought these claims and began to turn them into its first mine.

At the time, Inco had the only technology in North America to refine nickel, so Falconbridge sent its production to Norway where the company purchased an operating refinery.

Falconbridge was smaller than Inco but seen as more aggressive and nimble. The company produced 11% of the world’s nickel in 1995.

The bidding begins

While Inco, Falconbridge and up to a dozen other global miners spent resources on calculating the value of Voisey’s Bay, Teck was the first to approach with a different strategy.

In less than a day, and without seeing any core, Teck was able to do a simple deal less than four pages long: $108 million for 10% of the company, or the equivalent of $36 per share. Teck also surrendered its voting rights to Friedland to prevent future hostile takeovers.

That got the market talking. Days later, Diamond Fields would trade at over $40 per share with a market capitalization of more than $1 billion.

In May 1995, after much posturing between Inco and Diamond Fields executives, another deal was struck. This time, Inco bought a 25% stake of Voisey’s Bay for US$386.7 million in preferred shares and cash, as well as 8% of Diamond Fields from company co-founder Jean-Raymond Boulle and early investor Robertson Stephens.

By the time the deal closed in June 1995, Diamond Fields’ stock price doubled again to $80.

In August, after months of drilling misses outside the Ovoid, there were signs of light: one metre of massive sulphides in hole #166.

In November, drill hole #202 retrieved 40 metres of massive sulphides, the largest section of sulphides found outside the Ovoid. It was now clear that there was a series of deposits at Voisey’s Bay. The hole assayed 3.36% nickel and became a part of what is known as the Eastern Deeps.

The showdown

In December, Inco and Falconbridge both began to aggressively pursue Diamond Fields.

First, Inco presented a deal in principle for $3.5 billion, or $31 per share. Then Falconbridge intercepted with an official offer for $4 billion, or $36 per share. This was a risky move for the smaller company, but it limited its downside by adding $100 million in fees to the agreement in case the deal wasn’t finalized.

Next, the two competitors (Inco and Falconbridge) teamed together through a mutual connection to present an offer in tandem.

It was instantly shot down by Friedland.

Finally on March 26, 1996, Inco announced a takeover bid of its own for $4.5 billion of Diamond Fields—the equivalent of $43.50 per share or $174 pre-split. Inco’s stock price dropped but the company held on, making the total value of the deal closer to $4.3 billion. On April 3, the deal was officially signed by all parties.

Watch for Part 3, Voisey’s Bay today, coming in early November.

See Part 1: The discovery.

Posted with permission of Visual Capitalist.

October 29th, 2015

Ted Cruz: The U.S. needs to audit the Fed GoldSeek
World’s biggest gold miners answer price slump with more output NAI 500
China agrees to major nuclear power investment in UK facility Stockhouse
Paul Harris preaches investor patience in Colombia Streetwise Reports
Mining for cosmetics: Mineralogy and the ancient art of looking good Geology for Investors
TiO2 World Summit 2015: “Suppliers listen but they don’t hear” Industrial Minerals
When stock traders become market cheerleaders Equities Canada

OSC plans whistleblower rewards but PDAC opposes payouts

October 28th, 2015

by Greg Klein | October 28, 2015

Determined to enact Canada’s first investment-related whistleblower program by next spring, the Ontario Securities Commission released a revised set of proposals for public comment on October 28. The plan would encourage reporting of serious securities-related misconduct in Ontario by offering cash rewards, now up to a maximum of $5 million. Insider trading, along with accounting and disclosure violations, would be among the targeted misdeeds. The OSC also expects the program “to entice companies to self-report wrongdoing.”

Informants might qualify for 5% to 15% of sanctions up to a maximum of $1.5 million, regardless of whether the OSC collects from the malefactor. But if the commission collects over $10 million, the informant’s share could reach as high as $5 million.

We receive incredibly high-quality tips that not only cause us to open investigations, but also enable us to bring enforcement actions much quicker and save on those resources.—Jane Norberg, U.S. Securities and Exchange Commission

The OSC pledged to take reasonable steps to protect informants’ identities and guard against retaliation.

The revised proposals would open the program to compliance officers, auditors, managers and directors under certain circumstances, even if they share blame. But culpable whistleblowers could still face prosecution.

The recommendations follow written submissions from 17 participants and a roundtable discussion with 12 panellists following the original announcement last February.

The Prospectors and Developers Association of Canada argued against cash rewards. Saying they could encourage “bounty hunting behaviour and framing companies for financial gains,” PDAC warned that the OSC might lack the resources to handle tips. “Overly cautious issuers,” meanwhile, could face higher compliance costs for additional legal advice.

“Reporting of fraud should be a moral obligation and not driven by financial incentives,” stated PDAC’s submission. “As mentioned in the proposal, both the United Kingdom and Australia’s whistleblower programs do not include financial incentives. Given that the UK and Australia are closer to Canada when it comes to the size of capital markets, the OSC should consider a system that is similar to theirs.”

But the Small Investor Protection Association stated that the U.S. Securities and Exchange Commission found financial rewards a powerful incentive. The association said the payout scale originally proposed by the OSC “may be a little light—it is well below SEC levels.”

Speaking at last June’s roundtable, SEC representative Jane Norberg said the agency received over 3,600 tips in fiscal 2014, about 10 a day and up 12.5% from the previous year. With 58 tips coming from Canada, info poured in from 60 countries as well as across the U.S.

In its four years of operation, the SEC’s program paid 17 people sums totalling more than $50 million. One informant from outside the U.S. got over $30 million.

The OSC’s revised proposals remain open for e-mailed comments until January 12. “This is a game changer for the OSC and our ability to achieve stronger outcomes for investors and the capital markets,” said OSC CEO/chairperson Howard Wetston. But should the program be enacted, he won’t be around to oversee it. Wetston’s five-year term ends November 15.

Infographic: The story of Voisey’s Bay—The discovery (Part 1 of 3)

October 28th, 2015

Presented by Equitas Resources TSXV:EQT | Posted with permission of Visual Capitalist | October 28, 2015

The story of Voisey’s Bay: The discovery (Part 1 of 3)

Preface

The legendary story of one of Canada’s most significant base metal discoveries happened just before the dawn of the internet era. While some investors recall the sequence of events and the value that was created by Diamond Fields Resources, there are many investors today, both new and old, who are not familiar with the story of Voisey’s Bay.

For this infographic we have turned to Jacquie McNish’s fabulous book The Big Score, which documents the history of the discovery, biographical elements of Robert Friedland’s life, and the ensuing bidding war between Inco and Falconbridge that led to one of the most spectacular takeovers in mining history. If you like these infographics, then look into buying Jacquie’s book. It’s gripping and full of information.

Part 2 on the ensuing bidding war for Voisey’s Bay will be released on October 29. Part 3 will be released in the following week or two.

The origins

By its very definition, a discovery is the breakthrough action of finding something of value that no one knew existed. Discoveries come in all shapes and sizes—but it turns out many of the very best discoveries happen in the most unsuspected conditions.

Labrador is bigger than Great Britain and has over 8,000 kilometres of coastline, yet a population of just 26,700. Caribou outnumber people by a ratio of 13:1.

In 1985, geologists of the Newfoundland Department of Mines and Energy conducted a survey of one of the most remote parts of Labrador. Voisey’s Bay is 35 kilometres from Nain, a town of 1,000 people.

The team, in a helicopter-supported survey, tested samples in the area, but were not encouraged by the low metal content of the weathered rocks exposed at surface. They left and didn’t look back.

In early 1993, Michael McMurrough of a fledgling company called Diamond Fields Resources was looking for untapped diamond properties to add to the company’s property portfolio. He had heard that a place called Labrador had ancient Archean rock formations—one of the earth’s oldest rock groups—which can hold diamonds in kimberlite pipes. While Labrador’s wealth in iron ore is well documented, no diamonds have ever been discovered in the region.

Diamond Fields geologist Rod Baker was sent to Newfoundland in April 1993 but found that the best diamond prospects had just been staked by two Newfoundlanders. Al Chislett and Chris Verbiski, and their prospecting outfit named Archean Resources, eventually convinced Diamond Fields to pay $372,000 in annual instalments over four years to acquire their claims. Diamond Fields also agreed to pay $500,000 to start an exploration program.

The two prospectors sampled throughout the summer of 1993 without much luck, but they did chip some samples of chalcopyrite, a copper-bearing mineral, from an outcrop. The samples came back with 2% copper, and they pushed for Diamond Fields to put more money into the exploration program.

Diamond Fields

At this time, Diamond Fields was a fledgling company. Running under Robert Friedland’s umbrella of Ivanhoe Capital, the company had its share of issues. Legal problems were mounting and the company had finally just raised cash in a desperate move: the company impressed investors with its idea of “vacuuming” diamonds off the seafloor near Namibia.

It was company geologist Richard Garnett who convinced the board of Diamond Fields to pursue the Labrador findings, which he had been tracking. The company eventually allocated $220,000 to Labrador—or 40% of what Chislett and Verbiski recommended for follow-up spending.

The discovery

In August 1994, the prospectors received more detailed assays from the samples they collected—assays that confirmed a multi-element deposit with cobaltite, copper, magnetite and exceptionally high amounts of nickel. In fall, the team tried to beat winter by executing the next phase of exploration.

They hit on drill hole number two. The core was yellow—not from gold, but from high-grade massive sulphides. The hole was 33 metres long and signified that Diamond Fields was finally onto something.

At this point, Robert Friedland reigned in control of the company with one mission: to auction off the discovery for the highest price.

Part 2: The auction to be released October 29.

Posted with permission of Visual Capitalist.

October 28th, 2015

Five things you need to sort out in five years if you run China NAI 500
Investors are eyeing gold once again GoldSeek
China agrees to major nuclear power investment in UK facility Stockhouse
Paul Harris preaches investor patience in Colombia Streetwise Reports
Mining for cosmetics: Mineralogy and the ancient art of looking good Geology for Investors
TiO2 World Summit 2015: “Suppliers listen but they don’t hear” Industrial Minerals
When stock traders become market cheerleaders Equities Canada

Cow Mountain cock-ups cost former Barkerville boss Frank Callaghan $30,000

October 27th, 2015

by Greg Klein | October 27, 2015

One of the industry’s more outrageous resource estimates of recent years has once again caught up with one of Howe Street’s more colourful characters. Frank Callaghan, former president/CEO/director of Barkerville Gold Mines TSXV:BGM, has agreed to pay the British Columbia Securities Commission $30,000 for breaching NI 43-101 disclosure rules. He also got a one-year ban from acting as an officer or director of any reporting issuer and from engaging in investor relations activities. Additionally, he’s required to complete a course on 43-101 requirements.

Under his leadership in June 2012, Barkerville released a resource update for its central B.C. Cariboo gold project that provoked a combination of investor excitement and derision. Once Barkerville filed the technical report to SEDAR, the BCSC hit the company with a cease trade order and demanded a new report by a different qualified person.

A radical revision appeared in May 2013. But that failed to cool Callaghan’s enthusiasm for the more sensational version.

“Two and a half months after Barkerville adopted the revised estimates and retracted the initial estimates, Callaghan publicly repeated, and attempted to justify, the initial estimates in an online article and at an investor presentation. Callaghan acknowledges that his statements in the article and at the presentation contravened provisions of NI 43-101.”

He talked up the original effort even though “BCSC staff cautioned him that attempting [to] justify, validate or compare the initial estimates to the revised estimates is misleading and likely contrary to NI 43-101, his disclosure contradicted Barkerville’s previous disclosure adopting the revised estimates as the only current estimate and he understood disclosing combined inferred and indicated resource estimates was prohibited.”

An apparently contrite Callaghan agreed to the BCSC’s portrayal of events and the penalties imposed.

Callaghan resigned from Barkerville management in July 2014 but initially retained his board position. The company, which emphasizes its “new leadership,” no longer lists him as a director.

ALX Uranium expands Gibbon’s Creek radon anomaly, mobilizes for gravity survey

October 27th, 2015

by Greg Klein | October 27, 2015

Encouraging radon and geophysics results have ALX Uranium TSXV:AL returning to its Gibbon’s Creek project next week to begin a ground gravity survey. The crew will focus on an expanded radon anomaly coinciding with an anomalous DC-resistivity low. Results will help select targets for a drill program anticipated to start before winter sets in on the Athabasca Basin’s north-central rim.

ALX Uranium expands Gibbon’s Creek radon anomaly, mobilizes for gravity survey

This follows last winter’s initial 2,550-metre program focusing on the South Trend and Centre zone targets, which both revealed anomalous radioactivity and/or pathfinder geochemistry. Then last summer 394 radon stations expanded the radon anomaly from a few readings to an area measuring about 1,200 metres by 500 metres. The anomaly features some of the Basin’s highest recorded radon values and coincides with the DC-resistivity low.

Late last month ALX announced a drill program of up to six holes totalling 1,800 metres on Kelic Lake, a 10,056-hectare property on the Basin’s south-central margin.

As a result of the combination of Lakeland Resources and Alpha Exploration, ALX holds one of the Basin’s largest portfolios. The company’s Carter Lake and Hook Lake properties feature around 15 kilometres of untested corridors on strike with the Patterson Lake South, Arrow and Spitfire discoveries. Other drill-ready projects include Newnham Lake and Lazy Edward Bay, the 60%-held Carpenter Lake project and an 80% share of the Gorilla joint venture.

Read more about ALX Uranium.