Thursday 8th December 2016

Resource Clips


Posts tagged ‘mexico’

Opportunism knocks

December 5th, 2016

First Mining Finance found bad times beneficial for good deals

by Greg Klein

Struggling junior? Not this company. Since its trading debut in April 2015, First Mining Finance TSXV:FF has compiled 25 projects covering some 300,000 hectares, from early stage to a PEA with 4.4 million gold ounces indicated. Just as aggressively, the company boosted its treasury to a current $35 million. Now First Mining looks forward to a $21-million exploration and development program for 2017 that includes 47,000 metres of drilling.

“We were able to execute on the vision of the company, which last year was to take advantage of the bear market and acquire projects,” VP of investor relations Derek Iwanaka explains. “I don’t know of any other company that was able to acquire as many projects, or projects as good as we got, during that period.”

First Mining Finance found bad times beneficial for good deals

Located in northwestern Ontario’s Birch-Uchi greenstone belt,
First Mining’s 32,448-hectare Springpole flagship has an
updated PEA scheduled for next year.

Certainly there were deals to be had for canny acquisitors. But that was while many other companies faced financing difficulties. First Mining bucked the trend last August by closing a $27-million private placement. How did they pull that off?

“Quite easily,” responds Iwanaka. “We were literally turning down millions of dollars. We had over $70 million in orders but we didn’t want that kind of dilution. So we just took the $27 million. That should carry us for at least the next few years, including all the drilling and overhead.”

First Mining seems to have something that eludes others.

“First of all we have Keith Neumeyer at the helm, who runs a multi-billion-dollar company as it stands,” says Iwanaka. “Keith has been adept at starting companies during very bad times and manoeuvring them so when times are good we can reap the rewards for our shareholders.”

Among companies founded by the First Mining director were First Quantum Minerals TSX:FM and First Majestic Silver TSX:FR, where Neumeyer’s president/CEO. First Majestic acts as a sort of mentor to First Mining, placing some FR directors in FF’s management and board, helping to get the new company started, lending it about $1 million, vending three Mexican properties and even providing office space.

Among considerations behind an acquisition are “size and quality of the project,” Iwanaka points out. “We look at projects with good grade, scalability, exploration upside. The jurisdiction’s quite important to us. We’re basically looking at North America, but not the North. We will look at South America as well. Quebec, Ontario and Newfoundland are our favourite places although we could go to other provinces too. In the U.S. we see Nevada and Arizona as fairly mining-friendly states. We could probably look at New Mexico as well. We do have some early-stage properties in Mexico, where First Majestic has its base, but we certainly focus on Canada.”

As for commodities, “we particularly like gold but silver, platinum and palladium are also attractive, as well as base metals—anything that’s exchange-tradeable.”

Other factors include “the price of the projects, the holding cost, the infrastructure. In many cases the projects we take already have roads and power lines going to them.”

If gold’s the company’s focus, the Springpole flagship explains why. Described as one of Canada’s largest undeveloped gold projects, the northwestern Ontario potential open pit came with the past owner’s 2013 PEA. Using a 0.4 g/t gold cutoff, the 2012 resource showed:

  • indicated: 128.2 million tonnes averaging 1.07 g/t gold and 5.7 g/t silver for 4.41 million ounces gold and 23.8 million ounces silver

  • inferred: 25.7 million tonnes averaging 0.83 g/t gold and 3.2 g/t silver for 690,000 ounces gold and 2.7 million ounces silver

First Mining has work underway to bring the resource and PEA up to date. But looking back at 2013, the report calculated a post-tax NPV of US$388 million using a 5% discount, with a 13.8% post-tax IRR. Initial capex came to US$438 million with payback in 35 months of an 11-year mine life.

First Mining Finance found bad times beneficial for good deals

Visible gold was one attraction of the Goldlund project,
which has another 27,000 metres of drilling planned.

“We expect the updated PEA will be even more robust,” Iwanaka says. “The U.S. dollar has appreciated since 2013, when it was at par. We’re also looking at increasing the recovery and the pit shell. Those three things could substantially improve the economics and we hope to have the new PEA out probably by the first half of next year.”

With assays pending, a four-hole, 1,712-metre fall program provided metallurgical fodder. Next summer’s agenda calls for another 6,000 metres of infill to upgrade the resource. In the meantime, pre-permitting environmental and baseline work will soon begin.

A newer acquisition gets even more rig attention next year. Goldlund, about 60 kilometres north of Dryden and roughly 200 klicks south of Springpole, has 27,000 metres planned to upgrade the resource and work towards an eventual PEA. The former open pit and underground operation came with an estimate that First Mining considers an historic non-43-101. Using a 0.4 g/t gold cutoff, it showed:

  • measured and indicated: 19.1 million tonnes averaging 1.94 g/t for 1.19 million ounces gold

  • inferred: 25.8 million tonnes averaging 2.51 g/t for 2.08 million ounces

Cameron, maybe another 100 kilometres south of Goldlund, gets up to 9,000 metres of infill to pump up the measured and indicated prior to PEA. Using a 0.5 g/t cutoff, a 2015 resource from Chalice Gold Mines TSX:CXN showed:

  • measured: 3.72 million tonnes averaging 2.64 g/t for 316,000 ounces gold

  • indicated: 4.1 million tonnes averaging 1.92 g/t for 253,000 ounces

  • inferred: 14.5 million tonnes averaging 1.92 g/t for 894,000 ounces

Moving to southwestern Newfoundland, Hope Brook will see 5,000 metres of exploration and infill. A high 3 g/t gold cutoff gives the current resource:

  • indicated: 5.5 million tonnes averaging 4.77 g/t for 844,000 ounces gold

  • inferred: 836,000 tonnes averaging 4.11 g/t for 110,000 ounces

Again, a resource upgrade precedes a PEA, this one slated for late 2017.

Back in Ontario and roughly 110 kilometres northeast of the Springpole flagship, autumn drilling has wrapped up at Pickle Crow. Assays from the nine-hole, 1,319-metre campaign are expected in early 2017. The former mine came with a 2011 inferred resource that used a 2.25 g/t gold cutoff for an underground deposit and a 0.35 g/t cutoff for an open pit deposit:

Underground

  • 6.52 million tonnes averaging 5.4 g/t for 1.14 million ounces gold

Open pit

  • 3.63 million tonnes averaging 1.1 g/t for 126,000 ounces

Total

  • 10.15 million tonnes averaging 3.9 g/t for 1.26 million ounces

With assays to come, drilling to do and announcements for other North American projects anticipated, First Mining plans a steady news flow, says Iwanaka.

Infographic: Countries of origin for raw materials

November 16th, 2016

Graphic by BullionVault | text by Jeff Desjardins | posted with permission of Visual Capitalist | November 16, 2016

Every “thing” comes from somewhere.

Whether we are talking about an iPhone or a battery, even the most complex technological device is made up of raw materials that originate in a mine, farm, well or forest somewhere in the world.

This infographic from BullionVault shows the top three producing countries of various commodities such as oil, gold, coffee and iron.

Infographic Countries of origin for raw materials

 

The many and the few

The origins of the world’s most important raw materials are interesting to examine because the production of certain commodities is much more concentrated than others.

Oil, for example, is extracted by many countries throughout the world because it forms in fairly universal circumstances. Oil is also a giant market and a strategic resource, so some countries are even willing to produce it at a loss. The largest three crude oil-producing countries are the United States, Saudi Arabia and Russia—but that only makes up 38% of the total market.

Contrast this with the market for some base metals such as iron or lead and the difference is clear. China consumes mind-boggling amounts of raw materials to feed its factories, so it tries to get them domestically. That’s why China alone produces 45% of the world’s iron and 52% of all lead. Nearby Australia also finds a way to take advantage of this: It is the second-largest producer for each of those commodities and ships much of its output to Chinese trading partners. A total of two-thirds of the world’s iron and lead comes from these two countries, making production extremely concentrated.

But even that pales in comparison with the market for platinum, which is so heavily concentrated that only a few countries are significant producers. South Africa extracts 71% of all platinum, while Russia and Zimbabwe combine for another 19% of global production. That means only one in every 10 ounces of platinum comes from a country other than those three sources.

Graphic by BullionVault | posted with permission of Visual Capitalist.

Canadian mining groups welcome Trans-Pacific Partnership

October 5th, 2015

by Greg Klein | October 5, 2015

In a deal supported by associations representing the country’s mining and exploration sector, Canada will become a founder of the 12-nation Trans-Pacific Partnership. Ottawa announced the agreement on October 5 as a federal election loomed two weeks in the future.

The Canadian government says the TPP will cut tariffs and other barriers, broadening markets for a range of Canadian industries that include metals and mining. The deal also offers Canadian investors in mining and other areas “transparent and predictable access to TPP markets,” the feds added.

Canada’s mining industry has been a strong advocate for liberalized trade and investment flows for many years…. TPP, representing such a massive trade bloc, including critical emerging markets, is a trading partnership Canada must not risk being left out of.—Pierre Gratton, president/CEO of the Mining Association of Canada

In a declaration of support six days previously, the Mining Association of Canada said the country’s metals and minerals exports to TPP members averaged $158.6 billion per year from 2012 to 2014. The group noted, however, pre-TPP tariffs of up to 5% in Australia, up to 7.9% in Japan, up to 10% in New Zealand, up to 20% in Brunei, up to 40% in Vietnam and up to 50% in Malaysia.

TPP negotiations also addressed “numerous challenges that companies currently face in getting products, people and services across borders on a day-to-day basis,” MAC added. “As one of Canada’s largest outward investing sectors—accounting for 10% ($81.5 billion) of the 2013 total—benefiting from the greater certainty, transparency and foreign investment protection that the TPP will enable is important for the mining industry to remain competitive on the global stage.”

The Prospectors and Developers Association of Canada stated its “8,000 members invest significant financial assets across the Asia-Pacific region to explore for and develop mineral deposits. PDAC is particularly supportive of aspects of the TPP that will facilitate two-way investment, including protection for investors that provides greater clarity, certainty and transparency.”

The world’s largest trading bloc, the TPP partners Canada with Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. Conspicuous for its absence is China, the world’s second-largest economy.

Even so, TPP membership represents nearly 800 million people and a combined GDP of $28.5 trillion, the Canadian government stated. The 12 include some of the world’s fastest-growing economies “and this is expected to continue to be the case” as the bloc’s expected to comprise two-thirds of the world’s middle class by 2030 and half of global GDP by 2050. Some 81% of Canada’s total exports already go to TPP countries.

Canada now has free trade agreements with 51 nations which “will give Canadian businesses preferential access to over 60% of the world’s economy and more than 1.3 billion consumers,” according to Ottawa.

A matter of necessity: Rob McEwen clarifies cartel comment

April 13th, 2015

by Greg Klein | April 13, 2015

McEwen Mining TSX:MUX CEO Rob McEwen wants to clear up any misunderstanding about any “relationship” with criminal cartels. In an April 9 BNN interview about the 7,000-ounce gold heist at his company’s El Gallo 1 mine in Mexico, he was asked if that part of the country is dangerous. McEwen responded: “It hasn’t been. I mean the cartels are active down there. Generally we have a good relationship with them.”

It is our policy to contact all property owners or impacted community members in an area to seek their permission and ascertain the appropriate timing to enter their properties to conduct mineral exploration. We respect their wishes as any good neighbour and responsible miner would.—Rob McEwen,
CEO of McEwen Mining

By April 13 McEwen found a clarification necessary. “My answer was related to gaining access to properties we wish to explore,” he stated. “It is our policy to contact all property owners or impacted community members in an area to seek their permission and ascertain the appropriate timing to enter their properties to conduct mineral exploration. We respect their wishes as any good neighbour and responsible miner would.

“Unfortunately, my use of the words ‘good relationship’ was careless and has created the entirely false impression with Mexican media that we have regular contact with criminal elements in their society. This is simply not true. I wish to apologize sincerely for any misunderstanding my words may have caused.”

McEwen had told BNN, “If you want to go explore somewhere you ask them, and they’ll tell you “no,” but then they’ll say come back in a couple of weeks [when] we finish what we’re doing.”

BNN’s Andrew Bell then asked, “What are they doing, transporting drugs or something?”

McEwen answered, “They might be harvesting them, or—a lot of the problems happen higher in the mountains and we’re in the foothills.”

While the word “relationship” might be misunderstood, the unfortunate necessity of consulting criminals isn’t unique to Mexico or McEwen. Nor is it new. In late 2011 Ian Ball, then senior VP for US Gold, McEwen’s predecessor company at El Gallo, told ResourceClips.com, “We have been very active there for three or four years and have been able to establish a pretty good relationship—and this might sound strange—with the cartel. You have to know who they are and inform them what you’re doing and where you’re moving to…. They don’t want you near their marijuana crops.”

US Gold was renamed McEwen Mining in January 2012.

Read more about Rob McEwen’s BNN interview.

Over three years later, the BCSC rules on geo’s tip-off, wife’s insider trading

April 13th, 2015

by Greg Klein | April 13, 2015

News from her geologist husband helped Amina Weicker swing a $40,000 profit through insider trading, the British Columbia Securities Commission found. On April 10 the BCSC stated the investor’s husband, Robert Weicker, “tipped his wife” and that she consequently “engaged in illegal insider trading.”

Over three years later, the BCSC rules on geo’s tip-off, wife’s insider trading

The circumstances go back to 2011, when Geo Minerals Ltd, then trading on the Venture, was in takeover talks with New Gold TSX:NGD. Between September 12 and October 11 of that year—while negotiations progressed, a non-binding letter of intent was received and lock-up agreements were signed—Amina Weicker bought a total of 729,945 shares at prices between $0.10 and $0.11. The two companies announced the takeover on October 17, 2011. Seven weeks later Amina Weicker sold at $0.16, realizing an approximately $40,000 profit.

During that time Robert Weicker was a consulting geologist for Geo.

A BCSC panel found “he informed his wife of material information that had not been generally disclosed regarding the acquisition of that company. Amina Weicker then used this information, prior to its public disclosure, to purchase securities of Geo Minerals.”

The panel concluded that Amina Weicker committed insider trading and Robert Weicker disclosed material facts by someone in a special relationship with an issuer.

An allegation of insider trading against Robert Weicker was dismissed.

The parties have until next month to make submissions on the sanctions to be levied by the commission.

Speaking to ResourceClips.com, BCSC media relations manager Richard Gilhooley said he can’t comment on how and when the commission learned about the case. As for the time it took to come before a panel, “These investigations tend to be quite complex and there are a lot of moving parts, particularly with an insider trading investigation,” he stated. “So I think it’s down to the complexity of these cases.”

The Geo acquisition and coinciding takeover of Silver Quest Resources expanded New Gold’s Blackwater claims in central B.C. The company, which operates mines in B.C., Mexico, California and New South Wales, took Blackwater to feasibility in December 2013.

Unflappably unfazed, Rob McEwen discusses the 7,000-ounce gold heist

April 10th, 2015

by Greg Klein | April 10, 2015

If you like your mining CEOs calm, confident, soft-spoken and even smiling in the face of calamity, Rob McEwen’s your man. Speaking with BNN’s Andrew Bell on April 9, the McEwen Mining TSX:MUX boss presented a model of poise, at times smiling broadly as he discussed the 7,000-ounce gold robbery two days earlier at his El Gallo 1 refinery in Sinaloa, Mexico. McEwen owns a 25% stake in the company, and therefore any loss.

Unflappably unfazed, Rob McEwen discusses the 7,000-ounce gold heist

McEwen: “Um, it’s not funny to laugh at.”

Bell told him, “Some people might say, ‘How could this happen?’ I mean, it’s $8 million worth of gold.”

McEwen laughed as he replied, “Yeah, I was saying that too.” Quickly regaining composure, he conceded, “Um, it’s not funny to laugh at.”

His demeanour might have sometimes suggested otherwise but McEwen’s statements did express concern. He assured Bell that no serious injuries were suffered, although security staff might have been emotionally scarred. McEwen also expressed confidence in state government and local police. Nor has he written off the loot. Insurance would cover some of it but, he said, “We hope we’re not going to lose anything because we hope to recover the gold.”

As for the facility’s future security arrangements, he said, “It’ll look like Fort Knox.”

Despite the robbery, the company has said El Gallo will maintain 2015 guidance of 50,000 ounces gold and 20,000 ounces silver.

 

China has likely reached peak graphite: Benchmark Mineral Intelligence

December 15th, 2014

by Greg Klein | December 15, 2014

Production from the world’s largest supplier of natural graphite dropped to a record low in 2014, according to a December note from Benchmark Mineral Intelligence. After hitting a high of 85% of global supply in 2013, China fell to 70% this year, writes Benchmark analyst Simon Moores. Over the next three to five years the country’s output will continue falling to about 50% or 60% of world production. That means “we have likely seen peak graphite supply in China.”

Although demand from the steelmaking industry should continue to grow between 1% and 3% a year, batteries will call for five to 10 times as much graphite, Moores adds. He asks whether consumers will turn to synthetic material to make up the shortfall.

But the market’s currently oversupplied with both natural and synthetic, according to Laura Syrett of Industrial Minerals. Reporting from the Graphite and Graphene Conference in Berlin on December 12, she attributed the glut to a three-year slowdown in steelmaking and slower-than-expected growth in the battery industry.

Still, “growth will come from the battery market,” she quoted Asbury Graphite Mills CEO Stephen Riddle. “This will be from batteries used in electric vehicles and energy storage—not cell phones or iPads. These don’t use enough graphite.”

Synthetic graphite could claim a larger share of the market despite its price, said Fabrizio Corti, senior VP for sales and business development at Imerys Graphite and Carbon. “Only a very small proportion of the graphite we have today is suitable for high-end markets and even this requires heavy processing.”

With natural graphite producers wasting about 60% of volume to create battery-grade material, natural and synthetic costs roughly the same, he told the conference.

Two former flake graphite mines re-opened in 2014, Syrett pointed out. Last April AIM-listed StratMin Global Resources began commercial production at its Loharano mine in Madagascar. In August Flinders Resources TSXV:FDR produced the first concentrate from its Woxna mine in central Sweden.

Flinders has signed a binding letter agreement to acquire Big North Graphite TSXV:NRT, which holds a number of projects in Canada and Mexico including Nuevo San Pedro in Sonora state, a joint venture in which the company test-mines and sells amorphous graphite.

November 17th, 2014

Osisko Gold to buy Virginia Mines for $476 million VantageWire
Gold demand declines to five-year low globally but rises in India NAI 500
Swiss regulator fines UBS for precious metals price manipulation SilverSeek
The emerging Guerrero Gold Belt of Mexico Geology for Investors
The Swiss gold initiative and why it may affect bullion prices Stockhouse
Gold, economic theory and reality: A conversation with Alan Greenspan Streetwise Reports
Selective financing to snag pace of mine development Industrial Minerals
The last resort when monetary policy fails Equedia

November 14th, 2014

Gold demand declines to five-year low globally but rises in India NAI 500
Swiss regulator fines UBS for precious metals price manipulation SilverSeek
The emerging Guerrero Gold Belt of Mexico Geology for Investors
The Swiss gold initiative and why it may affect bullion prices Stockhouse
Gold, economic theory and reality: A conversation with Alan Greenspan Streetwise Reports
Nobody mourns death of QE as treasuries prove insatiable VantageWire
Selective financing to snag pace of mine development Industrial Minerals
The last resort when monetary policy fails Equedia

November 13th, 2014

Swiss regulator fines UBS for precious metals price manipulation SilverSeek
The emerging Guerrero Gold Belt of Mexico Geology for Investors
China gold buying means price floor to Standard Chartered NAI 500
The Swiss gold initiative and why it may affect bullion prices Stockhouse
Gold, economic theory and reality: A conversation with Alan Greenspan Streetwise Reports
Nobody mourns death of QE as treasuries prove insatiable VantageWire
Selective financing to snag pace of mine development Industrial Minerals
The last resort when monetary policy fails Equedia