Tuesday 25th October 2016

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Chris Berry examines nickel, its paradox and potential

October 23rd, 2015

by Greg Klein | October 23, 2015

What happened to the nickel bull? Chris Berry sees an interesting contrarian case study and a pricing paradox that might indicate a future supply deficit. His latest Zimtu Research report looks at the factors that kept prices down despite a 2014 export ban by Indonesia, then the source of 15% of global supply.

But he considers the current price as not only unsustainable but “sowing the seeds for higher nickel prices in the coming years and, along with it, additional exploration and development.”

His conclusion states, “One would think that those companies brave enough to be developing early-stage nickel deposits at this point in the commodity cycle could fill the gap of lost production in coming years. This is of course all subject to a rebound in the nickel price. This rebound could commence as early as next year…”

Berry’s six-page report shows his usual combination of clarity, detail and insight, as he discusses prospects for one of the “most ubiquitous” metals in our lives.

Download A Closer Look at Nickel: An Unsustainable Current Reality?

Read about Chris Berry’s Zimtu Research report on magnesium.

Vale to add at least 15 years to Voisey’s Bay lifespan

August 10th, 2015

by Greg Klein | August 10, 2015

The commitment was made in March 2013 but confirmed August 10: Vale NYE:VALE intends to develop two underground deposits that would extend its Voisey’s Bay nickel operation past 2035. A joint announcement by the company and the government of Newfoundland and Labrador projected hundreds of construction jobs as well as a workforce that would grow from 450 to 850 people at the mine and its Long Harbour processing plant.

Vale to add at least 15 years to Voisey’s Bay lifespan

Production began in 2005 and will continue past
2035 as Voisey’s Bay goes underground.

“We are very excited about our future here and we look forward to the continued support of all of our stakeholders as we move forward,” said Stuart Macnaughton, Vale’s Newfoundland and Labrador VP.

The Reid Brook and Eastern Deeps deposits sit adjacent to the current open pit. Procurement planning begins immediately, with construction slated to start next year. The company expects to begin ore production by 2020.

Although Vale made the commitment with the province in 2013, confirmation had been expected last June following completion of an engineering report. The mine, which opened in 2005 following the historic 1993 discovery, currently produces 6,000 tonnes per day of nickel-cobalt-copper and copper concentrate.

Long Harbour, a $4.3-billion hydrometallurgical facility 117 kilometres west of Saint John’s, is expected to begin processing Voisey’s concentrate next year after ramping up operations. While Long Harbour began operations in 2014 with higher-grade concentrate from Indonesia, Voisey’s material still goes to Vale’s Sudbury and Thompson locations for processing.

Disruption and energy metals

June 4th, 2015

Old paradigms can’t meet emerging demands, says Chris Berry

by Greg Klein

There was a time when epoch-making events happened, well, only every epoch or so. Now upheavals in technology, demographics and business bring “disruption” to mind more frequently. But whether the word’s a cliché or not, Chris Berry insists real disruption, not incremental change, will be necessary to accommodate new and emerging market forces. The president of House Mountain Partners and co-editor of the Disruptive Discoveries Journal sees particular significance for energy minerals.

Speaking at a May 31 Canvest ’15 presentation, Berry portrayed Western economies as slowing, stagnant or even shrinking. Productivity, to offer one key metric, has stalled. That’s holding back wages, consumption and growth.

Old paradigms can’t meet emerging demands, says Chris Berry

Chris Berry: Incremental growth can’t
meet the needs of emerging markets.

Another pull on Western economies is what Berry calls the supercycle hangover. “The first decade of the century saw unprecedented increases in metal prices and metals demand. In addition to that, what we also saw was increases in supply, increases in capacity, the expectation and thinking being that metals prices would either continue to increase or stay permanently high for longer, and that demand from the Chinas, the Indias, the Indonesias of the world would underpin that. Obviously that has not happened.”

But while countries like China and India have slowed their rate of growth, they’re still growing “in many cases well above global GDP.” Can they be accommodated by change that occurs at a merely incremental rate?

Berry thinks not—not when some 600 million people in Africa, half the continent’s population, lack reliable access to electricity. Or when China’s population is only 53% urbanized. In India the figure drops to 32%. “Talk to demographics experts, economists, they say 75% is the benchmark,” Berry said.

Africans, Chinese and Indians “know how we live and ultimately aspire to that,” Berry maintained. But “the current economic paradigm, the growth model, obviously has failed.”

At the same time, deflationary forces can play a positive role, he argues.

Lithium-ion batteries provide one example. On a compound annualized basis, their costs per kilowatt hour have been falling about 14% annually. That means the technology, “whether it’s storage or iPhones, is only set to become more ubiquitous because it’s becoming more affordable, more powerful, every single year.”

Electric vehicle batteries now cost about $400 per kilowatt hour, Berry said. To compete with internal combustion engines, the price would have to drop to an estimated $175. “If the 14% annualized growth rate continues, we’ll be there by about 2022 or 2024. So we’re not that far away.”

Along with the “collapse” of battery prices comes a corresponding fall for silicon photovoltaic cells, measured in price per watt. “This is going to reshape how we produce and consume energy going forward.”

Stepping aside from energy, Berry mentioned the cost to sequence a human genome. “As recently as 2001 it was a $100-million endeavour,” he said. “Now they’re saying within five years you’ll be able to sequence your own genome, so you’ll know everything there is to know about your health, all the good and the bad and how to control that, for about $1,000. That’s amazing. That has huge implications for health care and insurance industries as well.”

If you extrapolate the potential demand, there simply is just not enough lithium and cobalt and graphite above ground and ready to be implemented into these supply chains.—Chris Berry

While media seem to give Tesla Motors a near-monopoly on publicity, the electric vehicle industry goes well beyond one company. After Toyota introduced America’s first e-v in 2000, the market now features 24 plug-ins and 36 hybrids. “Consumers have a choice because technology is rapidly changing and rapidly decreasing in price.”

As for metals implications, “I think you have to look at this disruption thesis for mining in a five- to 10-year window.”

Should e-vs capture 10% of global market share in 10 years, they’d amount to about 10 million cars annually. “That would require one million tonnes of copper every single year. That’s the equivalent of the largest copper mine output in the world, Escondida.”

Do today’s producers anticipate such expansion? “I think the biggest issue everyone is overlooking right now is raw materials access.” Apart from Tesla, an LG Chem joint venture plans to churn out 100,000 e-v batteries by the end of 2016. “If you extrapolate the potential demand, there simply is just not enough lithium and cobalt and graphite above ground and ready to be implemented into these supply chains.” That can only raise prices, Berry stated.

“The question is, what does it mean for specific juniors, specific companies along the entire value chain?” With the converging phenomena of urbanization, declining energy costs, sustainable growth and larger, healthier populations spending more money, the longer-term outlook remains positive for a number of energy metals.

But the disruption Berry sees in this context doesn’t come from technology. It comes from new business models, like the way Tesla’s vertical integration eliminates middlemen. “The car’s amazing, but it’s not disruptive,” he insisted. “It’s an incremental improvement. Similarly, you can look at Apple. The iPod was not disruptive, it was the iTunes store. It’s different business models, that’s what’s disruptive.”


(Shanghai photo credit for index and archives pages: TonyV3112 / Shutterstock.com)

South of Voisey’s Bay

March 25th, 2015

New developments put Equitas Resources in search of a nearby nickel discovery

by Greg Klein

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The greatest find of Canada’s first diamond rush failed to locate a single gemstone. Instead Robert Friedland’s Diamond Fields Resources stumbled onto nickel with cobalt and copper—much more prosaic stuff but in such magnificent quantities that, just three years after its 1993 discovery, Voisey’s Bay sold for $4.3 billion. Yet the Labrador region remains under-explored. Now, with the advantages of new technology plus single ownership of a recently compiled land package, Equitas Resources TSXV:EQT puts new impetus into the search for a second deposit.

Just 30 kilometres south of Voisey’s, the company’s 25,050-hectare Garland project came together after two years of research by Dahrouge Geological Consulting. According to Equitas VP of exploration Everett Makela, this puts the “most prospective area outside of the Vale mine property” under a single operator for the first time, a significant advantage for effective exploration.

New developments put Equitas Resources in search of a nearby nickel discovery

Despite its proximity to Voisey’s, patchwork ownership
and outdated methods left the region under-explored.

This, in an area where deposits could come in clusters. That’s the case for major nickel camps like Sudbury, Norilsk, Thompson and Raglan, Makela emphasizes. Therefore “the likelihood of discovering more Voisey’s Bay-type deposits in the region is high.” But if that’s so, why has the area been neglected?

“The reality is that, after 20 years of exploration by scores of companies combing the surface, the remaining prospective environments are buried,” he explains. “In the case of the Garland project, that is most likely under younger cover rocks. Voisey’s Bay itself was exposed by a fortunate erosional history. It takes a strong commitment to advance the next stage. Commitment to exploring the deeper sub-surface requires insight into critical elements of the mineralizing process and employment of state-of-the-art geophysical methods.”

State-of-the-art exploration is already underway at Garland, where a VTEM-plus survey began in February. Previously some 10 separate companies explored relatively small pieces of the current Garland project with now-outdated electromagnetic surveys that penetrated only to about 75 metres. Equitas’ regional-scale geophysics can reach a maximum 10 times that depth, all the better to detect large, highly conductive nickel sulphide deposits.

As for insight, Makela brings Equitas solid expertise. The Sudbury native began his career in 1981 as a geological assistant with pre-Vale Inco. By the time he retired in 2012, Makela was Vale’s principal geologist for North America. “I’ve worked alongside some of the leading experts in nickel exploration and benefited greatly from access to the resources of leading global nickel companies,” he says. “My experience spans the gamut from target generation through to resource definition.”

He’s worked in the U.S., Mexico, Greenland, South Africa and Brazil, along with “years of focus on Sudbury and Voisey’s Bay that gave me a strong background in world-class mineralized systems and the business of building mines.” In fact Makela served on the Inco team that conducted initial due diligence prior to the multi-billion-dollar Voisey’s acquisition.

So what does he see at Garland? Well, enough of what he saw at Voisey’s to stoke his enthusiasm.

“Aside from having the same favourable address, along an Archean-Proterozoic boundary, Garland and Voisey’s share a remarkable number of geological signatures,” he points out. “Both are located at the intersection of a regional-scale east-west corridor of faults with a northeast-trending fault set. The combined movement is likely to have caused the open space that allowed emplacement of the Voisey’s Bay ores. That’s the same style of structural offset that we believe we have on our own property. Magnetic signatures and interpreted structural deformation are very similar.

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Alberta most attractive mining destination in Canada, third worldwide

March 3rd, 2014

by Cecilia Jamasmie | March 3, 2014 | Reprinted by permission of MINING.com

Alberta most attractive mining destination in Canada, third worldwide

Oilsands development in northern Alberta.


For the second consecutive year, Alberta—home to the booming and controversial oilsands industry—ranked first in the country and third worldwide as the most attractive jurisdiction for mining investors in the Fraser Institute’s annual global survey of mining executives.

The study, released March 3 as the Prospectors and Developers Association of Canada convention kicked off in Toronto, is based on input from 690 mineral exploration and development company executives.

Sweden and Finland scored the top places in this year’s survey, which spotlighted 112 jurisdictions worldwide. Kyrgyzstan and Venezuela were named the worst two countries to venture.

“Miners praise Alberta for its transparent and productive approach to mining policy. The province offers competitive taxation regimes, sound legal systems and relatively low uncertainty around land claims. That’s what miners look for,” said Kenneth Green, Fraser Institute senior director of energy and natural resources.

Two other Canadian jurisdictions—New Brunswick (7), and Newfoundland and Labrador (9)—ranked in the top 10 worldwide, followed by Saskatchewan (12), Yukon (19), Quebec (21), Manitoba (26), Ontario (28), Nova Scotia (29), British Columbia (32), Nunavut (44) and the Northwest Territories (47).

Quebec, once the darling of mining investors, continued to fall down the rabbit hole. From 2007 to 2009, the French-speaking district topped the survey, then dropped to fifth in 2011, 11th in 2012 and finally 21st worldwide in 2013, due in part to amendments to Quebec’s mining act and recent tax policy changes.

“If Quebec wants to renew confidence in the global mining sector, it should reduce red tape, minimize the risk associated with policy changes and tax increases, and respect negotiated contracts,” Green said.

B.C. dropped to 32nd from 31st in 2012, though the survey recorded improved perceptions regarding the western province’s political stability and availability of labour and skills.

The Canadian public policy think tank also identified the 10 places mining enthusiasts should avoid. From the bottom, they are Kyrgyzstan, Venezuela, Philippines, Argentina (La Rioja and Mendoza), Angola, Zimbabwe, Ivory Coast, Indonesia and Madagascar.

Reprinted by permission of MINING.com

Indonesia ban rocks nickel market

January 13th, 2014

by Frik Els | January 12, 2014 | Reprinted by permission of MINING.com

Indonesia rocked the mining world on January 12, putting into effect an outright ban on nickel, bauxite and tin ore exports.

The Asian nation is the world’s premier thermal coal and tin exporter and is also a gold and copper powerhouse, but the ban on nickel and bauxite ore would have the most dramatic effect on markets.

Last week Indonesian energy and resource ministry officials scrambled to ease provisions of the raw mineral export prohibition that President Susilo Bambang Yudhoyono signed into law on January 12, the most controversial decision of his 10-year presidency.

Indonesia dominates the nickel export business, accounting for over a fifth of global supply at an estimated 400,000 tonnes of contained metal. Chinese nickel pig iron producers imported more than 30 million tonnes of nickel ore from Indonesia last year and China’s aluminium smelters rely on Indonesia for 20% of their feedstock.

According to the latest rules under the ban, base metals including copper, manganese, lead, zinc and tin will be allowed to be exported in concentrate until 2017.

This benefits producers like Freeport-McMoRan Copper & Gold NYE:FCX, which operates the world’s third-largest copper mine at Grasberg in the West Papua province and warned about a 60% drop in output should copper form part of the ban. Phoenix-based Freeport-McMoRan and Newmont Mining NYE:NEM together account for 97% of Indonesia’s copper exports.

[The ban] is the biggest supply risk facing base metals in a long time. The market has been very complacent, thinking the Indonesians would backtrack.

However against expectations of a last-minute climbdown by authorities, the nickel and bauxite ore ban, as well as the prohibition of unprocessed exports of tin, chromium, gold and silver, went into effect January 12.

FT.com quoted Gayle Berry, base metals analyst at UK bank Barclays earlier as saying the ban “is the biggest supply risk facing base metals in a long time. The market has been very complacent, thinking the Indonesians would backtrack.”

Privately owned Ibris Nickel last week announced it will cease operations in Indonesia, laying off 1,400 workers at its two-million-tonne-per-year mine. The nickel industry employs some 200,000 Indonesians across hundreds of small-scale operations.

Reuters reports the Indonesian Mineral Entrepreneurs Association said it planned to challenge the ban in the Supreme Court and Constitutional Court while almost 30,000 mine workers have been laid off, sparking protest in the capital Jakarta:

“We call on all mining workers to prepare to go on the streets and swarm the presidential palace if the government goes ahead with the implementation of the ban,” said Juan Forti Silalahi of the National Mine Workers Union in a statement on January 11.

So far the price of nickel has not reacted in a big way to the looming ban, but now all bets are off.



Three-months nickel on the LME retreated more than 20% in 2013 from opening levels of $17,450 and, after hitting a high of $18,700 in February, dropped to a four-year low in October amid an oversupplied market.

After a brief uptick in December to over $14,200, the steelmaking raw material last week fell back to the mid-$13,000s and on January 10 the contract closed at $13,725.

Even without the Indonesian ban, the prospects for nickel aren’t rosy.

Global output is forecast to rise for the first time to over two million tonnes in 2015. That’s up from 1.4 million tonnes in 2007.

Stockpiling of ore and metal in anticipation of Indonesian disruptions and the inexorable rise of nickel warehouse levels over the past two years—hitting a record 260,000 tonnes last week—have also kept prices subdued.



Indonesia, with a population of 240 million, goes to the polls for parliamentary elections in April and in July will choose a new president, so much can change over the course of the year before the true extent of the ban can be felt.

Reprinted by permission of MINING.com

Athabasca Basin and beyond

September 22nd, 2013

Uranium news from Saskatchewan and elsewhere for September 14 to 20, 2013

by Greg Klein

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Fission and Alpha sign acquisition agreement, Denison challenges Mega for Rockgate

Another burst of merger and acquisition activity hit the markets last week. Joint September 18 statements from Fission Uranium TSXV:FCU and Alpha Minerals TSXV:AMW announced a definitive agreement for the former’s acquisition of the latter. The proposed Mega Uranium TSX:MGA/Rockgate Capital TSX:RGT merger, however, took a surprising turn with Denison Mines’ TSX:DML unsolicited pitch for Rockgate. Denison’s September 17 announcement claimed a 38% premium over Mega’s offer, based on the previous day’s closing prices.

Uranium news from Saskatchewan and elsewhere for September 14 to 20, 2013

In addition to taking a run at Rockgate, Denison filed a revised
43-101 report for six deposits on its Mutanga property in Zambia.

The Fission/Alpha rationale is to put their 50/50 joint venture under a single owner, creating a company solely focused on Patterson Lake South and presumably a more attractive takeover target. Their other properties would go to two newly created spincos. Should Denison’s offer succeed, the company would spin out its African assets along with Rockgate’s advanced-stage Mali project. That would leave Denison focused on the Athabasca Basin.

Read more about these proposals and other uranium M&A news.

(Update: On September 24 Rockgate terminated its proposed merger with Mega. Read more.)

PLS assay backlog grows as Fission/Alpha release more scintillometer results

Step-out drilling confirmed strong mineralization in Patterson Lake South’s newest zone, Alpha and Fission stated on September 16. The JV partners released scintillometer readings for two new holes on zone R945E, the fourth of four zones along a 1.02-kilometre southwest-northeast trend.

The hand-held device measures drill core gamma rays in counts per second, up to an off-scale reading above 9,999 cps. The results are no substitute for assays, which are pending.

Hole PLS13-092 was collared roughly 10 metres north of existing holes. It reached a total downhole depth of 377 metres, striking the basement unconformity at 59 metres without encountering sandstone. Some highlights include:

  • <300 to 1,400 cps over 3 metres, starting at 157.5 metres in downhole depth

  • <300 to >9,999 cps over 16 metres, starting at 163 metres

  • <300 to 1,800 cps over 11 metres, starting at 192.5 metres

  • 460 to 2,500 cps over 2.5 metres, starting at 238 metres

PLS13-096 was collared about 15 metres grid west of PLS-084, replacing it as the zone’s most southwesterly hole. It found no sandstone, hit the basement unconformity at 56.5 metres and stopped at 365 metres. Highlights include:

  • <300 to >9,999 cps over 42.5 metres, starting at 135.5 metres in downhole depth

  • 310 to >9,999 cps over 11.5 metres, starting at 185.5 metres

  • <300 to >9,999 cps over 10.5 metres, starting at 235.5 metres

  • <300 to >9,999 cps over 14.5 metres, starting at 249 metres

True widths weren’t available. The two holes were drilled at -88 and -89 degree angles respectively, making downhole depths close to vertical.

The $6.95-million program calls for 44 holes totalling 11,000 metres, along with geophysics. These results bring the summer’s drilling to 27 holes totalling 8,488 metres. So far just one of the holes has had lab assays released. Scintillometer readings have been reported for 18 holes this summer.

Denison files combined resources for Mutanga property in Zambia

Denison has filed a new NI 43-101 report to replace two previous reports for its Mutanga property in Zambia, the company announced on September 16. The New Mutanga Report follows an Ontario Securities Commission review of a resource filed in March 2012 for the property’s Dibwe East deposit. The OSC declared that report non-compliant because it didn’t include all resource estimates and material information for the property as a whole. Denison’s new report incorporates information covered in a 2009 report on the Mutanga and Dibwe deposits, as well as the 2012 info for Dibwe East.

Of the project’s six deposits, only Mutanga shows measured, indicated and inferred categories. Mutanga Extension, Mutanga East, Mutanga West, Dibwe and Dibwe East have inferred pounds only. Combined, the estimate shows:

  • a measured resource of 1.88 million tonnes averaging 0.048% for 2 million pounds uranium oxide (U3O8)

  • an indicated resource of 8.4 million tonnes averaging 0.031% for 5.8 million pounds

  • inferred resources totalling 65.2 million tonnes averaging 0.029% for 41.4 million pounds

The 457.3-square-kilometre property is about 200 kilometres south of the capital city of Lusaka, near the Zimbabwean border.

The previous week, Denison updated two Athabasca Basin projects with a new resource for Waterbury Lake and more high-grade assays from Wheeler River.

Lakeland Resources options gold project to focus on Athabasca uranium

Now a pure play uranium explorer, Lakeland Resources TSXV:LK optioned a north-central Ontario gold property to New Dimension Resources TSXV:NDR, the companies announced September 16. New Dimension may earn a 70% interest in the Midas project by paying $100,000, spending $1.2 million and issuing 1.5 million shares. New Dimension must spend $300,000 on exploration by December 31.

We’re maintaining our focus on uranium, yet we’re not giving away what could turn out to be a valuable asset in the end. In our view there’s no downside to our shareholders, only a potential upside.—Roger Leschuk, corporate communications manager for Lakeland Resources

The 2,112-hectare road-accessible property has already seen ground magnetics, induced polarization and 16 drill holes that partially defined two gold-bearing zones, with 14 holes showing gold mineralization. Among the assays was 5.92 grams per tonne gold over 4.7 metres, starting at 45.7 metres in depth and including 8.88 g/t over 2.6 metres.

“We get to maintain an interest in a property that looks very encouraging to say the least,” Lakeland corporate communications manager Roger Leschuk tells ResourceClips.com. “The people who are picking it up are a very good group and they see this as potentially becoming their flagship property. The great part about it for Lakeland is we retain a 30% interest all the way potentially to a new discovery. We’re maintaining our focus on uranium, yet we’re not giving away what could turn out to be a valuable asset in the end. In our view there’s no downside to our shareholders, only a potential upside.”

A fall drill program is expected to begin shortly, the companies stated.

Read more about Lakeland Resources.

Forum announces fall/winter plans for its PLS-adjacent Clearwater project

In a September 17 report, Forum Uranium TSXV:FDC updated its Clearwater project, which underwent ground radiometric prospecting, lake sediment geochemical surveys and soil radon surveys in late August and early September. The radon survey found anomalous zones immediately southwest of the adjacent PLS property, the company stated. Forum now plans further prospecting of radiometric anomalies, as well as an expanded radon survey to cover areas with electromagnetic conductors on strike with the PLS conductive trend. Autumn is scheduled for ground EM surveys and early winter for ground gravity work to identify drill targets for the 9,910-hectare property in late January.

One week earlier Forum said its private placement raised $2.59 million.

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Rating the risks

February 28th, 2013

A Fraser Institute survey shows how miners and explorers see the world they work in

by Greg Klein

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“Great mineral assets, highly corrupt government….” That’s sometimes the conundrum under which exploration and mining companies operate. And that was just one comment published by the Fraser Institute as it evaluated a world of challenges and opportunities in its annual Survey of Mining Companies released on February 28.

Between October 2012 and January 2013, 742 companies rated 96 jurisdictions which included countries and, in the case of Canada, Australia, the U.S. and Argentina, provinces, states and territories. Respondents considered 15 policy factors affecting investment decisions in those jurisdictions, for a possible maximum score of 100. Some factors included regulations, corruption, taxation, aboriginal land claims, infrastructure, the local workforce, political stability and physical security.

While the full report provides breakdowns by category, here are the top 10 jurisdictions for overall scores. The 2011-to-2012 rankings are in parentheses.

A Fraser Institute survey shows how miners and explorers see the world they work in

The Fraser Institute’s annual survey rates jurisdictional risk
for a number of factors concerning mining and exploration.

1. Finland (New Brunswick)
2. Sweden (Finland)
3. Alberta (Alberta)
4. New Brunswick (Wyoming)
5. Wyoming (Quebec)
6. Ireland (Saskatchewan)
7. Nevada (Sweden)
8. Yukon (Nevada)
9. Utah (Ireland)
10. Norway (Yukon)

Last but least, here are the bottom 10:

87. Greece (Vietnam)
88. Philippines (Indonesia)
89. Guatemala (Ecuador)
90. Bolivia (Kyrgyzstan)
91. Zimbabwe (Philippines)
92. Kyrgyzstan (India)
93. Democratic Republic of the Congo (Venezuela)
94. Venezuela (Bolivia)
95. Vietnam (Guatemala)
96. Indonesia (Honduras)

Utah and Norway knocked Saskatchewan and Quebec out of the top 10. Greece was added to the survey for the first time, only to join Zimbabwe and the Democratic Republic of the Congo for their bottom 10 debut. Another first-timer, French Guiana placed 27th overall, a fairly impressive ranking for a newcomer and non-First-World country.

Crisis-torn South Africa dropped to 64th place overall compared to 54th last year, retaining its fourth-from-last spot for “labour regulations, employment agreements and labour militancy or work disruptions.”

Of Canadian jurisdictions, Nunavut ranked worst at number 37.

Some anonymous concerns listed under “horror stories” ranged from uncertainty about native rights in Ontario to potential corruption in Quebec. One response stated that “endless ‘community consultation’” in the Northwest Territories costs the company more than exploration. Others noted confiscation of mining rights in Indonesia and expropriation in Bolivia.

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Spotlight on the juniors

January 21st, 2013

Companies, investors and pundits converge on the 2013 Vancouver Resource Investment Conference

by Greg Klein

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A marketplace of ideas about the market itself—that partly describes the 2013 Vancouver Resource Investment Conference. This year the Cambridge House event brings several hundred companies together with prospective investors. But the conference also features about 50 speakers with maybe 50 divergent (although often overlapping) perspectives on the state of the juniors.

Cambridge House calls this Vancouver event the world's largest investor-focused resource exploration conference

Cambridge House calls this Vancouver event “the world’s
largest investor-focused resource exploration conference.”

Among those on hand January 20 were Michael Berry speaking on Obamanomics, Rick Rule on his love for bear markets and Chris Berry on specific critical and strategic commodities for 2013.

Canadian-born Michael Berry, co-founder of Discovery Investing, fell just short of doom and gloom in his cautionary tale about the transformation of United States economics, culture and governance. More than ever before, he said, taxation, deficit spending and redistribution of wealth are firmly entrenched as government polices. The purpose, he stated, was to remake America. The program has disturbing implications for Canada and the rest of the world, he added.

“We have now turned the corner with the second administration of Barack Obama. Politics, not economics, is now the driving force—period, end of story.”

When it comes to boosting its power, U.S. government methods are myriad: Executive orders, challenges to the constitution, the appointment of czars who aren’t checked by the constitution, redistribution of wealth, repression of investment and market manipulation of gold, silver and currency. Outright confiscation, Berry warned, has happened historically and could happen again.

Helping rationalize government policies is a government belief that “anyone in government is smarter than anyone else.” Society, meanwhile, becomes ever more polarized. “It’s not violent yet but it could be violent at some point in the future,” he warned. “It’s happened before.”

The market of course went off the cliff in 1997, so there was the ’97-to-2002 bear market, a truly dismal bear market—when my net worth skyrocketed.—Rick Rule, chairman of Sprott Global Resource Investments

But just from an economic viewpoint, the future looks bleak indeed. “Sometime around 2030, which is not all that far in the future, we will have amassed 200% federal debt relative to GDP…. That’s exactly what the Obama administration wants to do…. When that happens, the current structure will not be sustainable and the government will have to step in and reorganize the economy.”

Massive, growing government debt “is the tool the government is using to socialize the economy,” Berry stated. “It’s not a legacy we want to leave to our children. But it is a legacy with great implications for gold and silver.”

To protect themselves, Berry suggested investors “must eschew the dollar and every fiat currency you can think of,” own precious metals and consider other investments including water and infrastructure.

“I think you need to be looking at risk, thinking about risk, and those ten-baggers that will help you tread water as the U.S. moves towards an ultimate socialist state,” he concluded.

Following with good-natured overstatement was Rick Rule, chairman of Sprott Global Resource Investments. “There’s basically nothing I could say that would depress you more,” he quipped. But ever the contrarian, Rule added, “It defines me well that when everyone else seems to be depressed, I’m on my way to being elated.”

He predicted the junior bear market—the “nice, ugly bear market,” as he called it—has another 18 to 24 months to go. And for anyone who wants to make money, “it’s an extremely good thing.” It’s time to do some bargain-hunting, he maintained.

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Week in review

December 7th, 2012

A mining and exploration retrospect for December 1 to 7, 2012

by Greg Klein

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Lawyer wants to cross-examine Bre-X wives

A lawyer representing Alberta investors wants to know what happened to $95 million that two families received from the Bre-X fraud. The multi-billion-dollar mining scam hit the fan in 1997 and the company filed for bankruptcy in 2002. On Tuesday class-action lawyer Clint Docken told media he wants to cross-examine Ingrid Felderhof, ex-wife of Bre-X chief geologist John Felderhof, and Jeannette Walsh, widow of founder David Walsh, about affidavits the women made concerning their financial situation.

According to Tuesday’s Calgary Sun, Docken told court that the company founder received $25 million from investors while the chief geologist got $70 million. Ingrid Felderhof lives in the Cayman Islands. Jeannette Walsh lives in the Bahamas.

A mining and exploration retrospect

Docken told the Calgary Herald he also wants an appraisal of a Cayman Islands mansion the Felderhofs bought 15 years ago for $3 million.

“It’s important to know what it’s worth now,” the Herald quoted him. “That’s an asset that should be taken into consideration. If this claim is successful, she may have to sell it.”

Lawyers representing bankruptcy trustees Deloitte & Touche want the suit dismissed, saying there’s no money left. The Calgary Court of Queen’s Bench adjourned the case to May 30. The Herald also stated that Ontario has a parallel class-action suit underway.

Darryl Stretch’s downfall

Solid Gold Resources TSXV:SLD announced on Monday that it replaced outspoken CEO Darryl Stretch. According to a company statement, the BOD appointed director/chief financial officer Alan Myers interim CEO.

Stretch courted controversy several times after coming into conflict with the Wahgoshig native band and the Ontario government. He said the Wahgoshig wanted him to fund a $100,000 archeological study prior to drilling claims near Lake Abitibi in northeastern Ontario. Saying the company couldn’t afford it, he told the Globe and Mail last March, “It’s not my obligation to go find arrowheads for those people, period…. If they don’t like you, you don’t work.” That outburst followed a January court injunction ordering him to suspend drilling and consult with the Wahgoshig band. The company filed for leave to appeal, arguing that consultation wasn’t a legal obligation.

The Wahgoshig, in turn, filed a claim in February against the province and Solid Gold. According to a company statement, “the claim states that ‘the mining act does not establish any requirement on the Crown or the holder of a prospectors licence to consult or accommodate aboriginal communities’ therefore the act ‘is unconstitutional and of no force and effect.’”

According to an August Solid Gold statement, “While the company was restricted from operating in the area, the [Wahgoshig First Nation] used information obtained from Solid Gold during the consultation process to stake mineral claims over an area approximately six kilometres long and 500 metres wide, bordering the Solid Gold property.”

By September, a judge granted Solid Gold leave to appeal the court-imposed drilling suspension. The judge, according to a company statement, wrote that he saw “no basis in the facts of this case for an imposition of a duty to consult on Solid Gold. If the Crown wishes to delegate operational aspects of its duty it must establish a legislative or regulatory scheme. The mining act does not presently contain such a scheme.”

Such a scheme was already underway. Under new rules to take full effect April 1, the province will require companies to consult native bands prior to early-stage exploration drilling on Crown land. The bands will have 30 days to express concerns, which could then block a permit.

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