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Afghanistan’s $1-trillion mining dream is fading

September 20th, 2013

by Anthony Halley | September 20, 2013 | Reprinted by permission of

Afghanistan’s $1-trillion mining dream is fading

Afghan gold deposits (Image: British Geological Survey)


Afghanistan’s plan to develop its estimated $1 trillion worth of mineral resources received a serious blow when China announced its desire to undo a multi-billion-dollar agreement to help create a mining industry in the war-torn nation.

The deal, inked in 2007, was to send $3 billion of Chinese investment into the world’s second-largest copper deposit, the 5.5-million-tonne Mes Aynak near Kabul.

With little more than a year remaining until international forces exit Afghanistan, and without firm Chinese support on the horizon, the government may now be forced to “scale back plans for attracting mining companies to exploit its minerals reserves, including copper, gold, iron ore and rare earths,” writes Lynne O’Donnell for the South China Morning Post.

Complex security obstacles aside, Afghanistan’s timing may prove to be off. With the economies of China and other major developing nations slowing, weak commodities prices and massive, industry-wide cost-cutting, Afghanistan may have missed its window to take part in the boom.

“Until global demand recovers and there is a sense of optimism about growth and mineral prices that will eventually re-trigger big mining interest in new greenfields projects, I think Afghanistan will struggle to develop its minerals assets over the next five years,” said Peter Hickson of Global Materials Advisors.

See also: The iron ore slice of the $1-trillion Afghanistan resource pie

Reprinted by permission of

Year in review: Part II

December 29th, 2012

A mining and exploration retrospect for 2012

by Greg Klein

Read Part I of Year in Review.

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Graphite boom, bust and echo

One of the commodities that excited the 2012 market, graphite began stirring interest in 2011 and really gained momentum early this year. But the precipitous fall, right around April Fool’s Day, let cynics bask in schadenfreude. It was a bubble all along, they insisted.

Well, not quite. Despite reduced share values, work continued as the front-runners advanced their projects and earlier-stage companies competed for position in graphite’s second wave of potential producers. By autumn some of the advanced-stage outfits, far from humbled by last spring’s events, boldly indulged themselves in a blatant bragging contest.

Old king coal to regain its throne

If clean carbon doesn’t excite investors like it used to, plain old dirty carbon might. By 2017 coal’s share of the global energy market will rival that of oil. So says the International Energy Agency, which issued its Medium-Term Coal Market Report in December.

A mining and exploration retrospect for 2012

The forecast sees China consuming over half the world’s production by 2017. “Even if Chinese GDP growth were to slow to a 4.6% average over the period, coal demand would still increase both globally and in China,” the report stated. India, with the world’s “largest pocket of energy poverty,” will take second place for consumption.

Coal’s growth in demand is slowing, however. But its share of the energy mix continues to increase even though Europe’s “coal renaissance” (sic) appears to be temporary.

Bringing coal miners to new hassle

Chinese provide much of the market and often the investment. So why shouldn’t they provide the workers too? That seems to be the rationale of Chinese interests behind four British Columbia coal projects.

The proponents plan to use Chinese underground workers exclusively at the most advanced project, HD Mining International’s Murray River, for 30 months of construction and two additional years of mining. Only then would Canadians be initiated into the mysteries of Chinese longwall mining. But with only 10% of the workforce to be replaced by Canadians each year, Chinese “temporary” workers would staff the mine until about 2026. The B.C. government has known about these intentions since at least 2007.

The HD Mining saga has seen new developments almost every week since the United Steelworkers broke the story on October 9.

As Greenland’s example suggests, the scheme might represent another facet of China’s growing power.

Geopolitical geology

Resource imperialism aside, resource nationalism and other aspects of country risk continued throughout 2012. South American Silver TSX:SAC continues to seek compensation after spending over $16 million on a silver-polymetallic project that the Bolivian government then snatched as a freebie. Centerra Gold TSX:CG escaped nationalization in Kyrgyzstan but works its way through somewhat Byzantine political and regulatory intrigue, as does Stans Energy TSXV:HRE. In November the latter claimed a court victory over a hostile parliamentary committee.

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Week in review

November 30th, 2012

A mining and exploration retrospect for November 24 to 30, 2012

by Greg Klein

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Amalgamation, acquisitions bring big news to Canada’s uranium play

Friday’s announcement from Clermont Capital Inc TSXV:XYZ.P and NexGen Energy Ltd shows companies joining forces to combine money, projects and expertise in uranium exploration. Clermont announced a letter of intent to acquire NexGen in a three-cornered amalgamation in which a Clermont subsidiary amalgamates with NexGen to create a new Clermont subsidiary. The capital pool company intends the acquisition as a qualifying transaction to become a TSXV Tier-2 issuer.

So there’s good money and a good technical team coming behind the deal. And it’s happening when the market’s clearly hungry for a discovery. It sure looks like Fission and Alpha have something to be excited about. We hope that we can be part of that ride as well.—Clermont Capital president/CEO/director Arlen Hansen on a planned amalgamation with NexGen Energy and properties acquisition

Currently NexGen’s key asset is the Radio uranium project in northern Saskatchewan’s Athabasca Basin. NexGen holds an option to acquire an initial 70%, then the remaining 30% subject to a 2% NSR. Exploration has identified drill targets that are interpreted to be on the same structural trend as Rio Tinto’s Roughrider deposits and Fission Energy’s TSXV:FIS J-Zone. Roughrider holds resources of 17.2 million pounds U3O8 indicated and 40.7 million pounds inferred, while the J-Zone holds 7.37 million pounds indicated and 1.51 million pounds inferred. NexGen plans drilling in Q1 2013.

NexGen’s wholly-owned Rook 1 property sits directly northeast of the near-surface Patterson Lake South uranium project, a JV of Fission and Alpha Minerals TSXV:AMW.

On November 15 NexGen announced a definitive agreement to purchase the majority of Mega Uranium’s TSX:MGA Canadian projects in the Athabasca Basin and Nunavut’s Thelon Basin. As a result, Mega is anticipated to acquire up to a 38% interest in NexGen.

Among the conditions for the Clermont-NexGen acquisition, NexGen would close a private placement of at least $6.6 million. Prior to closing the acquisition, Clermont would consolidate its shares on a 2.35-for-one basis. On closing, NexGen shareholders would receive one post-consolidation Clermont share for each NexGen share.

Speaking to ResourceClips Friday afternoon, Clermont president/CEO/director Arlen Hansen said, “It’s a very large land package and uranium exploration takes a lot of time and money, so we’re getting the NexGen operational team, which includes some ex-Rio Tinto guys and Leigh Curyer, who raised hundreds of millions of dollars for Southern Cross before it was taken out in the uranium sector as well.

“So there’s good money and a good technical team coming behind the deal. And it’s happening when the market’s clearly hungry for a discovery. It sure looks like Fission and Alpha have something to be excited about. We hope that we can be part of that ride as well.”

U3082014 apologizes. Now VMS goes after axeman#, tamerackerdown and nttg2005

A mining and exploration retrospect

VMS Ventures TSXV:VMS greeted Friday by announcing progress in its battle against anonymous posters on the Stockhouse bullboard. Following what the company alleges to have been “false and malicious posts” between November 2, 2010 and May 10, 2012, VMS has now received court orders requiring internet service providers to identify three more commentators. The company had already obtained court orders requiring Stockhouse to divulge their internet protocol addresses. VMS said it “intends to pursue all legal options available against these posters in order to protect its reputation.”

The company also announced a settlement with a poster identified as U3082014 regarding statements uploaded between April 15, 2011 and August 27, 2012. Details are confidential, apart from the apology U3082014 submitted to VMS’ lawyers in September and posted on Wednesday.

Richmont closes Francoeur Mine, suspends Wasamac exploration

Francoeur had been struggling but, just the same, the news seemed sudden. Richmont Mines TSX:RIC announced Thursday the immediate shutdown of its 20-year-old gold mine in Quebec’s Rouyn-Noranda region. President/CEO Paul Carmel blamed the decision on high costs due to “low realized grades, difficult mining conditions and a tight labour pool for the experienced miners required for the challenging mining conditions at Francoeur.” As recently as November 8, however, Carmel sounded fairly optimistic as he spoke of “ramping up the Francoeur Mine to full production levels.”

The company’s pre-tax write-off will range between $11 million and $13 million. Immediate layoffs hit 115 workers, while another 35 will stay on for four months of decommissioning. Richmont is holding to its 2012 guidance of 65,000 ounces but 2013 is estimated between 65,000 and 70,000 ounces, down from a previous projection of 85,000 to 95,000 ounces. The company also operates the Beaufor Mine near Val d’Or, Quebec and the Island Gold Mine in northern Ontario.

Exploration at Richmont’s Wasamac gold project near Rouyn-Noranda has been suspended until next year.

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Kilo reports Democratic Republic of Congo Assays of 4.96 g/t Gold over 11.2m

January 11th, 2012

Resource Clips - essential news on junior gold mining and junior silver miningKilo Goldmines Ltd TSXV:KGL announced results from the Manzako Prospect of its Somituri Project in northeast Democratic Republic of Congo. Assays include

4.96 g/t gold over 11.2 metres
(including 7.62 g/t over 5.3 metres)
1.24 g/t over 10 metres
(including 1.4 g/t over 8.4 metres)
1.26 g/t over 1.1 metres

The company owns a 71.25% interest in the DRC entity that holds the Somituri Project exploitation permits. The Manzako Prospect is approximately five kilometres from the company’s Adumbi Gold Deposit.

President/CEO Alex van Hoeken speaks to from Kabul, Afghanistan. “Somituri is an exploration project in which we have [an inferred resource estimate of] two million ounces in a prospect called Adumbi. Manzako is one of the target areas in the near vicinity. Within about a three to five-kilometre radius we have eight other targets which are mined by artisanal miners and appear to be on long structures. We’ve previously had very good results. Our most recent results just confirm the continuation of the prospective area. The ultimate objective is to add ounces to what we’ve already found. So what we’re trying to do is expand the resource base.”

Last December, Kilo received US$1.43 million from Rio Tinto, a joint venture partner along with Suez Holdings Ltd, in the Isiro Iron Ore Project in northeast DRC.

I’ve been working in the DRC for the last 12 years, so I have no problems. I know my way around; I’ve got my network; my wife is a lawyer there. I’m quite comfortable. It’s not the easiest place to work, but if you know your way around, it’s doable—Alex van Hoeken

“The project was originally held 75% by us and 25% by a local partner,” van Hoeken explains. “Rio exercised an option to buy 15% from that partner and they brought forward a payment to us. They were supposed to pay it to us in December 2012, but they brought it forward to December 2011. To us, that’s great because it means they’re highly confident about the project. It’s still early days; we’ve only drilled an initial number of holes. But we’re getting encouraging results so we’ll continue the program. The fact that Rio has purchased the option from the local partner and given us the accelerated payment just means that the project is on track and highly prospective.

“I’ve been working in the DRC for the last 12 years so I have no problems,” he adds. “I know my way around; I’ve got my network; my wife is a lawyer there. I’m quite comfortable. It’s not the easiest place to work, but if you know your way around, it’s doable.

“The logistics are challenging. It’s remote. But that applies to many projects. And the infrastructure is improving. New roads are being built, cellphone networks are being brought up. I can definitely see the difference between now and 12 years ago.”

Kilo, along with a group led by UK-based corporate financier David Buckle, submitted a bid for mining rights in Afghanistan’s Hajigak Iron Ore Deposit.

“We’re now in the middle of discussions with the Afghanistan Ministry of Mines,” van Hoeken says. “It would be premature to say anything further.

“We have a very good, very open relationship with David Buckle. We make joint decisions; we’re meeting all the Afghan parties together; we work as partners. The plan is to create an independent entity which would have its own project team. I would offer input and assistance. It will be run independently from the projects in the Congo.

“We’ll be working with locals for security.” he points out. “The province where the project is located is considered one of the safest in the country. The need for security probably won’t be as high as you might think.”

Van Hoeken concludes, “I think Kilo is completely undervalued for its assets and potential compared to our peers in the industry. Based on that alone, I think an investment is more than justified, despite the potential downside—because the potential upside is so much larger.”

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Alex van Hoeken

by Greg Klein