Sunday 25th August 2019

Resource Clips


Posts tagged ‘Newmont Mining Corp (NEM)’

Voters approved the takeover by Newmont Mining despite criticism from the non-profit Shareholders’ Gold Council

April 16th, 2019

…Read more

Philanthropist Ian Telfer said he’ll give it all away. But first…

March 15th, 2019

by Greg Klein | March 15, 2019

The news hardly went unnoticed, despite being buried on page 88 of a 249-page management information circular. Goldcorp TSX:G and its chairperson Ian Telfer decided to nearly triple his retirement allowance, from about US$4.5 million to around US$12 million.

The payout depends on shareholders approving the company’s takeover by Newmont Mining NYSE:NEM.

Philanthropist Ian Telfer said he’d give it all away. But first …

At a public event in July, Goldcorp chairperson
Ian Telfer vowed to put all his money
into worthy causes.

The rationale? When Telfer took over the board he “relinquished entitlement to benefits he would have otherwise been entitled to receive as an executive, including participation in the various executive incentive plans, other than a retirement allowance,” the disclosure stated. “The retirement allowance approved in 2006 did not contain any indexing to reflect inflation, and other than his annual salary and annual Goldcorp RSU grants made at the same value as other Goldcorp directors, Mr. Telfer did not receive any other benefits from Goldcorp since that time.”

But condemnation came quickly. Telfer had already been “lining his pockets” with about US$11.8 million of shareholders’ money while heading a board whose “stock price has collapsed by nearly 60%,” argued the Shareholders’ Gold Council. “In Mr. Telfer’s role as a ‘strategic leader’ at Goldcorp, he has presided over one of the most disastrous and egregious examples of shareholder value destruction in the mining industry.”

The non-profit research group also attacked other Goldcorp figures, most notably CEO David Garofalo, who’d get “an outrageous change of control package of up to C$11 million, despite his role in destroying over C$3.7 billion in shareholder value…. While Goldcorp is telling its shareholders to sell their shares close to a 13-year low, Goldcorp management stands to reap over US$33 million in potential change of control payments.”

“I’m appalled by it,” Bloomberg quoted Joe Foster of VanEck, Goldcorp’s second-largest shareholder. “They put the current management in place three years ago, and they’ve done a very poor job of operating the company, and it shows in their results,” the portfolio manager added. “To reward that poor performance with these huge payouts is a crime in my view.”

Goldcorp stock “has plummeted almost 75% since its 2011 high and the company fell short of almost every target when it last reported earnings,” the news agency stated. “Meanwhile, Telfer has collected $900,000 in average annual compensation since becoming chairman in 2006 and reaped at least $35 million from exercising stock options, according to data compiled by Bloomberg.”

Telfer’s “getting paid for destroying a ton of value over his tenure then selling at a low,” analyst John Qian of the T. Rowe Price Group told the news agency. “In what world is that worthy of a massive payout?”

Even Rick Rule spoke out against his “long-time friend.” He told Bloomberg that Telfer’s “combination of this special bonus, his prior special bonus, stepping down as CEO and his continuing role appears excessive.”

But then there’s Ian Telfer, philanthropist.

Having already donated millions of his money, last summer he publicly vowed to give it all away on his death. He stated his intention to emulate Peter Munk, who “gave away his complete net worth to charity. And while a lot of successful people say they’re going to do that, most of them don’t…. Peter Munk’s comment was that all the good that came to him came from society, and it should go back. And so that will be my legacy.”

Then what are Telfer’s plans for that extra US$7.5 million—add it to family assets? Go on a late-life binge? Or donate it to charities in a redistribution of wealth from shareholders?

And as for that legacy, which will prevail—company builder, destroyer of shareholder value or generous benefactor?

Frank Holmes comments on how mining mergers can affect the Canadian industry

March 5th, 2019

…Read more

Getting Frank

January 23rd, 2019

Frank Holmes discusses tips, disruptors, M&A, what drives HIVE, and more

by Greg Klein

Frank Holmes discusses tips, cryptos, disruptors, peak gold, M&A and more

With over 7,000 attendees, VRIC 2019’s numbers and enthusiasm suggested a buoyant market mood.

 

Definitely one of the busiest people at this year’s Vancouver Resource Investment Conference, Frank Holmes kicked off the event with a keynote speech to a capacity crowd, one of a number of times he took the stage during the two-day event. Even so, the CEO and chief investment officer of U.S. Global Investors found time to sit down with Resource Clips and discuss some wide-ranging issues.

A new feature at this year’s VRIC was the Top Picks Competition, which pitted three companies he chose against three selected by Marin Katusa. The fast pace had the rivals briefly introduce each of his three picks, followed by a company rep giving a concise six-minute presentation. The packed audience rated each company from one to 10. While waiting for results to appear on the big screen, Katusa said, “Man, I’ll be depressed if I lose to Frank.”

Frank Holmes discusses cryptos, disruptors, peak gold, M&A and more

The mainstay of this year’s VRIC, Holmes
tackled issues ranging from peak gold to data mining.

But the chart showed no definite winner, at least not to those who struggle with mental math. Katusa pronounced the results a tie but Holmes confidently told Resource Clips: “I won.”

As for the format, “that model of 20 seconds per slide, capped at 20 slides, 6.4 minutes, that model is working in 900 cities,” he explained, adding that it began in 2003 with the Tokyo-based Klein-Dytham architectural firm. “The PechaKucha model will drive more interest to a company’s booth than anything else.”

But isn’t there a danger that stock tips from influential people can affect share prices more than company performance does?

“I’ve invested in all six of those companies so I’m not getting up there with anyone I haven’t vetted.”

Are they long-term holds? “They have been.”

Katusa stuck with miners but Holmes’ list included two disruptors—a soon-to-be-listed company that creates gold and platinum jewelry as tradable investments, and another company that applies machine learning to mineral exploration as well as combining quantitative and fundamental analyses of mining investment.

Frank Holmes discusses cryptos, disruptors, peak gold, M&A and more

Investors heard first-hand pitches from company reps.

Disruption seems to increasingly command Holmes’ attention, but not at the expense of good old-fashioned gold. He sees peak gold as one application for AI and machine learning.

“There are fundamental supply-demand issues, there has to be a new way to replace it. The world’s GDP per capita for China, India and America is so strong and when you look at China and India, their GDP per capita is highly correlated to gold demand for love.

“When I first got in the business there was a four-year cycle from exploration to discovery to production. Now it’s a minimum eight to 12 years. We have declining reserves and each year the mines are getting deeper and deeper, the grades are getting lower and lower, and there’s also a falloff in exploration success. The timeline for getting projects on stream is getting longer and longer. We do have peak supply.”

With the Newmont-Goldcorp buyout following closely on the Barrick-Rangold merger, M&A has returned to prominence. When asked whether the activity could have a trickle-down effect on junior explorers, the Toronto native brought up a nationalist perspective.

A locally headquartered major means “a junior explorer or mid-cap developer can knock on their door, pitch them a story and maybe they’re your partner. But now you’d have to go to Denver, and the process of what they look at is very different from what Canadians look at. So I think there’s a vacuum being created and it’s not helping the Canadian mining industry.”

Additionally, “I think Canada will be hurt because the geological brain trust that was with Barrick in Toronto will go to Europe or South Africa. With Newmont, the brain trust will go to Denver.”

Frank Holmes discusses cryptos, disruptors, peak gold, M&A and more

Attendees gleaned intel from speakers, exhibitors and each other.

He suggested gold might attract more M&A than other metals because it’s “more bullish.” Elsewhere in metals, he expects to see further shareholder activism as seen by Waterton Global Resource Management with Hudbay Minerals and Paulson & Co with Detour Gold. “I’m surprised there isn’t more in the mid-cap space,” he noted.

He considers the activism constructive—“anything that keeps people accountable.” As chairperson of cryptocurrency miner HIVE Blockchain Technologies, however, he has to account for a share price that’s plunged about 78% over the last year.

“All of us are down, but it’s only because of the Bitcoin and Ethereum prices,” he said. “With gold stocks, most of them rise or fall as gold rises or falls that day. They correlate. What HIVE has done is become a proxy [for buying cryptos]. So HIVE has become incredibly liquid and moves every day with the price action of Bitcoin and Ethereum. Bitcoin and Ethereum have a volatility such that if gold’s daily volatility is 1%, their daily volatility is 6% to 8%. So that’s what drives HIVE. If Bitcoin goes this quarter to $10,000, we’ll go to a dollar. And if Bitcoin falls, we’ll go down with it. We’re at the mercy of where the cryptocurrencies are going. But the positive part for an investor or trader is that you can call up during market hours and use that as a proxy.”

One indication of continuing crypto enthusiasm, he added, was a very strong turnout at the previous week’s North American Bitcoin Conference in Miami, despite a hefty admission fee.

As for VRIC, he likes the event for “energy—it’s the vibe, what people are talking about. Are they skewing to optimism, or to doubt and fear and pessimism? I get the energy and vibrations here, and whether there’s an appetite for risk. This is all venture capital. Most of these companies are speculation. As I said at the opening, I’m so happy people came here and didn’t go to the casino or buy a lottery ticket to speculate.”

Watch for videos of VRIC presentations to be posted in the coming weeks by Cambridge House International.

Frank Holmes discusses cryptos, disruptors, peak gold, M&A and more

Moderated by Daniela Cambone, the Ultimate Gold Panel
included Holmes, Peter Hug, Roy Sebag and Peter Schiff.

 

Frank Holmes discusses tips, disruptors, M&A, what drives HIVE, and more

Although soliciting was strictly prohibited,
a hint of hustle might have been evident.

VRIC returns

January 9th, 2019

The Vancouver Resource Investment Conference turns opportunity into an event

by Greg Klein

The Vancouver Resource Investment Conference turns opportunity into an event

Capacity crowds packed keynote speeches at VRIC 2018.

 

Described as the bellwether of junior mining for 25 years, the Vancouver Resource Investment Conference maintains that reputation by adapting its content to ever-changing times. The event returns January 20 to 21 with a busy agenda and new features to keep the Convention Centre buzzing with insights, perspectives and the always anticipated tips. With about 360 exhibitors and nearly 70 speakers signed so far, Jay Martin expects to see 8,000 to 9,000 attendees, a number that bodes well for the sector overall.

The Vancouver Resource Investment Conference turns opportunity into an event

Impromptu discussion brought together speakers,
company reps and investors at last year’s conference.

“I’m really happy with the advance registration—it’s above last year even though the market hasn’t been fantastic,” says the president/CEO of Cambridge House International. “But Q4 was really strong for gold compared to the Dow and the S&P, and gold stocks did relatively well.”

Although just one of many commodities to come under VRIC scrutiny, gold has regained its importance to market watchers. But Martin’s also excited about some new events scheduled this year, among them a competition that pits two of the best-known stock pickers against each other. Audience participation promises to make the contest even more unpredictable.

“When you walk into the Main Speaker Hall on Sunday morning, you’ll be handed a little electronic voting device, kind of like a cellphone but much simpler. Frank Holmes will open up with a 20-minute keynote and then we get into a battle between Frank Holmes and Marin Katusa with their top three stock picks. The companies get up and give a really quick six-minute pitch. Then we ask the audience to vote in real time on their top pick. The results go live on the big screen.

“Then we ask the audience a second question: ‘Which fund manager, Marin or Frank, would you trust with your money?’ That’ll really put some pressure on these guys.”

The Vancouver Resource Investment Conference turns opportunity into an event

Of course the ultimate test will be the stocks’ subsequent performance. But another first for VRIC will be the iconoclastic Rex Murphy. Far beyond the narrow pale of Canadian journalism, the social and political commentator nevertheless is tolerated by the National Post and CBC, probably because he delivers his scathing pronouncements with such entertaining wit.

“He’s kind of an ambassador for the Canadian resource sector, he’s always been very outspoken in its defence,” Martin points out. “He’ll do a keynote and also sit on a panel to discuss the future of Canada’s resource economy and the junior mining sector. Rex has strong views on the resource sector although he doesn’t come from the industry. He’ll have a different perspective on how things work and how things will turn out.”

More iconoclasm, on the geopolitical front, will likely come from Jayant Bhandari who joins a roster of speakers including Katusa, Holmes, Gianni Kovacevic, Daniela Cambone and Brent Cook among other mining commentators, portfolio managers, newsletter writers, commodities analysts and company executives.

The Vancouver Resource Investment Conference turns opportunity into an event

The latter category will be out in force at the Exhibit Hall too, representing 360 or more firms and ready to discuss their projects in person. Attendees can also sign up to meet CEOs over coffee in the Deal Room.

An exciting VRIC agenda and impressive pre-registration has Martin buoyant about the market’s prospects.

“I’ve been cautiously optimistic for a couple of years but there’s a lot going on right now that could suggest there’s going to be a rally,” he explains. “There’s a lot of uncertainty in the U.S. markets, more than we’ve seen since 2008, bigger corrections than we’ve seen since 2008, and historically we’ve seen investors trend towards hard assets and conservative investments, and that’s gold and gold stocks. We’re seeing that boost already. If you look at Kirkland, Newmont, the big gold producers, they had a great fourth quarter. No other big stocks did. That’s classic behaviour. If you look at the gold price in Q4, we haven’t seen that in a long time. I look at investor registration at gold conferences, public company treasuries and marketing spend, and I see an increase in all three of those. I’m seeing all the right things.”

As a result, he expects yellow metal to regain prominence. “At our last three or four events, energy metals were the biggest draw. What we’re seeing leading up to this show is that gold is taking that position. We’re getting more interest in our gold companies, speakers and features. I expect the gold topics, conversations and panels to be the best-attended of this event.”

The Vancouver Resource Investment Conference turns opportunity into an event

The Vancouver Resource Investment Conference 2019 takes place January 20 to 21 at the
Vancouver Convention Centre West. To avoid the $30 admission fee, click here for free registration.

Visual Capitalist: Nine reasons mining investors are looking at Yukon companies

September 18th, 2018

by Jeff Desjardins | posted with permission of Visual Capitalist | September 18, 2018

In the mining industry, location is paramount.

Invest your capital in a jurisdiction that doesn’t respect that investment, or in a place with little geological potential, and it’s possible that it will end up going to waste.

That’s why, when there’s a place on the map that has world-class geology and also a plan for working with miners and new explorers, the money begins to flow to take advantage of that potential.

Why investors are looking at the Yukon

This infographic comes to us from the Yukon Mining Alliance and it shows nine reasons why people are investing in Yukon mining and exploration companies today.

 

Nine reasons mining investors are looking at Yukon companies

 

For resource investors, it is rare to see variables like government investment, jurisdiction, geological potential and investment from major mining companies all aligning.

However, in the Yukon, it seems this may be the case. Here are nine reasons the Yukon is starting to attract more investment capital:

1. Rich history
Mining was central to the Yukon even over a century ago, when over 100,000 fortune-seekers stampeded into the Yukon with the goal of striking it rich in the famous Klondike Gold Rush.

2. Geological profile
In the last decade, there have been major discoveries of gold, silver, copper, zinc and lead in the Yukon—but perhaps most interestingly, only 12% of the Yukon has been staked, making the region highly under-explored. Spending on exploration and development rose from $93 million to $158 million from 2015 to 2017.

3. Major investment
Major mining companies now have a stake in the polymetallic rush. Recent companies to foray into the Yukon include Agnico Eagle Mines TSX:AEM, Barrick Gold TSX:ABX, Coeur Mining NYSE:CDE, Goldcorp TSX:G, Kinross Gold TSX:K and Newmont Mining NYSE:NEM.

4. Leaders in exploration and mining
Juniors in the region are working on new geological ideas as well as new technology to unlock the vast potential of the region.

5. Progressive partnerships
First Nations and the government of Yukon have recently championed a new government-to-government relationship that enables them to be on the exact same page when it comes to mineral projects.

6. Government investment
The Yukon government is investing in new infrastructure via the Resource Gateway project. It also offers the Yukon Mineral Exploration Program, which provides a portion of risk capital to explore and develop mineral projects to an advanced stage.

7. Made in Yukon process
The Yukon government also tries to foster regulatory certainty to create clarity for companies and investors through its customized tri-party process.

8. Infrastructure
The jurisdiction has 5,000 kilometres of government-maintained roads, receives 95% of power from clean hydro, has international and local airports, and has access to three deep-water, ice-free ports.

9. Geopolitical stability
Canada offers geopolitical stability to start with—but with unprecedented cooperation between the territorial government and First Nations, the Yukon is arguably a step above the rest of the country.

Posted with permission of Visual Capitalist.

Caution steadies the hand for Canada’s top miners: PwC

March 1st, 2018

by Greg Klein | March 1, 2018

Last year saw “few eye-popping deals and only limited financing activity” as TSX-listed mining companies responded cautiously to improved markets, according to a new PricewaterhouseCoopers report. Like many of their peers internationally, the big board’s top 25 miners focused on “paying down debt, improving balance sheets and judiciously investing in capital projects as commodity prices largely stabilized.”

The findings come from Preparing for Growth: Capitalizing on a Period of Progress and Stability, released March 1.

Gold, the raison d’être for most of the miners, fell 3% during the year ending September 30. During that period the 225 TSX-listed miners (down from 230 the previous year) lost 4% of their aggregate value, compared with a 10% combined improvement for other sectors. Miners slipped to a 9% share of the entire TSX market, compared with 11% the previous year, holding ninth place among industries on the exchange. (Financial services came in first.)

Barrick Gold TSX:ABX, still the world’s top gold producer despite Newmont Mining’s (NYSE:NEM) challenge, held top place among TSX mining market caps as of September 30. The top stock was Kirkland Lake Gold TSX:KL, with a 175% price increase over the full year, following its billion-dollar takeout of Newmarket Gold. The acquisition represented part of a trend of “mid-market, intermediate gold companies looking to build scale and gain efficiencies through consolidation,” said John Matheson of PwC Canada.

Two since-merged companies, Potash Corp of Saskatchewan and Agrium, followed Barrick with second and third place among TSX mining valuations. Currently at about $41 billion, the potash combination Nutrien Ltd TSX:NTR has far surpassed Barrick’s $16.8-billion market cap.

Nearly half of the 225 companies had valuations of $150 million or less. But the category between $150 million and $1 billion boasted 74 companies, compared with 59 the previous year.

Nineteen of the top 25 had exposure to gold, 10 to copper, seven to zinc, six to silver and four to nickel, PwC stated. The report noted increasingly bullish sentiment for copper, zinc, cobalt and lithium. The latter mineral did especially well for five companies, with an approximately 39% total increase in valuations over nine months to September 30 for Orocobre TSX:ORL, Lithium Americas TSX:LAC, Nemaska Lithium TSX:NMX, Avalon Advanced Materials TSX:AVL and Globex Mining Enterprises TSX:GMX.

But overall, TSX miners “raised only half the equity capital in 2017 that they did the previous year. And for the second consecutive year, there were no mining initial public offerings on the TSX.”

That contrasts with a more buoyant, although still cautious mood among Venture-listed junior miners reported in November by PwC, which found a substantial increase in market caps, financings, M&A and IPOs for TSXV explorers.

Download Preparing for Growth: Capitalizing on a Period of Progress and Stability.

‘Everyone’s hiring again’

May 24th, 2017

Mining headhunter Andrew Pollard says executive recruiting presages a wave of M&A

by Greg Klein

As an executive search firm, the Mining Recruitment Group might serve as a bellwether for the industry. Founder and self-described mining headhunter Andrew Pollard says, “I put together management teams for companies, I connect people with opportunities and opportunities with people.” In that role, he experienced the upturn well before many industry players did.

To most of them, the long-awaited resurgence arrived late last year. Pollard saw it several months earlier.

Mining headhunter Andrew Pollard says executive recruiting could presage a wave of M&A

“The market came back in a huge way, at least in the hiring side, early last year when my phone started ringing a hell of a lot more,” he explains. “There was a huge volume. And what I’ve found is that the available talent pool for executives shrank in a period of about six months. In January 2016, for example, I was working on a search and there was almost a lineup out the door of some really big-name people. What I’m finding now, a year and a half later, is that the available talent has almost evaporated. It’s much harder to recruit for senior positions.”

Lately his work suggests another industry development. “The major upturn I’m seeing in the market now is a huge demand for corporate development people who can do technical due diligence on projects. Over the last few years large mining companies and investment banks cut staff almost to the bone in that regard because no one was interested in doing deals or looking at acquisitions.”

Just completed, his most recent placement was for Sprott. “They had me looking for someone with a technical background who can do due diligence for their investments. In doing so I spoke with everyone on the street, from investment banks to some big name corporate development people and they all said the same thing: Everyone’s hiring again. These are people who couldn’t get job offers a year ago, now every single candidate on the short list for this last search has multiple offers from companies looking to get them. I haven’t seen that in five years.

“So that leads me to believe companies have been staffing up their corporate development teams. I see that as a major sign that you’re going to see M&A pick up in a huge, huge way, probably over the next three to six months.”

An early example would be last week’s Eldorado Gold TSX:ELD buyout of Integra Gold TSXV:ICG—“one of my best clients over the years”—in a deal valued at $590 million.

Mining headhunter Andrew Pollard says executive recruiting could presage a wave of M&A

Andrew Pollard: Executive recruiting “leads me to believe companies have been staffing up their corporate development teams.”

“I think there’s leverage for other companies to start pulling the trigger faster because they’re adding the expertise to get these things done.”

Having founded the Mining Recruitment Group over a decade ago at the age of 20, “a snotty kid” with only a single year of related experience, he’s placed people in companies with market caps ranging from $5 million to well over $200 million. Now in a position to pick and choose his assignments, Pollard’s business concentrates on “the roles that will have the most impact on a company’s future.” That tends to be CEO, president, COO and board appointments.

Last year he placed five CEOs, as well as other positions. Among those assignments, Pollard worked with Frank Giustra on a CEO search for Fiore Exploration TSXV:F and filled another vacancy for Treasury Metals TSX:TML as it advances Goliath toward production.

But the hiring surge coincides with an industry-wide recruitment challenge. Pollard attributes that to a demographic predicament complicated by mining’s notorious cyclicality.

During the 1990s, he points out, fewer people chose mining careers, resulting in a shortage of staffers who’d now be in their 40s and 50s. Greater numbers joined up during the more promising mid-2000s, only to “get spat out” when markets went south. Now Pollard gets a lot of calls to replace baby boomers who want to retire. Too many of those retirements are coming around the same time, he says, because stock losses during the downturn had forced executives to postpone their exit.

Now, with a wave of retirements coinciding with a demographic gap, Pollard sees a “perfect storm to identify the next batch of young leaders.”

But he also sees promise in a new generation. That inspired him to assemble Young Leaders, one of two panel discussions he’ll present at the International Metal Writers Conference in Vancouver on May 28 and 29.

“By talking with some very successful executives age 35 and under, I want to show that we need to look at people one generation younger, and foster and develop this talent.”

By talking with some very successful executives age 35 and under, I want to show that we need to look at people one generation younger, and foster and develop this talent.

Well, it’s either talent or a precocious Midas touch that distinguishes these panel members. Maverix Metals TSXV:MMX CEO Dan O’Flaherty co-founded the royalty/streaming company just last year, already accumulating assets in 10 countries and a $200-million market cap.

As president/CEO of Skyharbour Resources TSXV:SYH, Jordan Trimble proved adept at fundraising and deal-making while building a 250,000-hectare uranium-thorium exploration portfolio in Saskatchewan’s Athabasca Basin. Integra president/CEO Steve de Jong raised the company from a $10-million market cap in 2012 to last week’s $590-million takeout.

And, demographic gap notwithstanding, Pollard’s second panel features three other success stories, just a bit older but with lots of potential left after guiding three of last year’s biggest M&A deals. They’ll take part in the Vision to Exit discussion, which closes the conference on May 29.

Eira Thomas burst into prominence at the Lac de Gras diamond fields where she discovered Diavik at age 24. Her most recent major coup took place last year on the Klondike gold fields with Goldcorp’s (TSX:G) $520-million buyout of Kaminak Gold.

Featherstone Capital president/CEO Doug Forster founded and led Newmarket Gold, producing over 225,000 ounces a year from three Australian mines and enticing Kirkland Lake Gold’s (TSX:KL) billion-dollar offer.

Now chairperson of Liberty Gold TSX:LGD and a director of NexGen Energy TSX:NXE, Mark O’Dea co-founded and chaired True Gold Mining, acquired in April 2016 by Endeavour Mining TSX:EDV. Three other companies that O’Dea co-founded, led and sold were Fronteer Gold, picked up by Newmont Mining NYSE:NEM in 2011; Aurora Energy, sold to Paladin Energy TSX:PDN in 2011; and True North Nickel, in which Royal Nickel TSX:RNX bought a majority interest in 2014.

“We’ll be looking at how they go into deals, what their philosophy is, what’s their current reading of the market and what they’re going to do next. They each have a big future ahead of them.”

Pollard’s two panel discussions take place at the International Metal Writers Conference on May 28 and 29 at the Vancouver Convention Centre East. Pre-register for free or pay $20 at the door.

In all, the conference brings generations of talent, expertise and insight to an audience of industry insiders and investors alike.

Read more about the International Metal Writers Conference.

Athabasca Basin and beyond

March 15th, 2014

Uranium news from Saskatchewan and elsewhere for March 8 to 14, 2014

by Greg Klein

Next Page 1 | 2

Innovation overcomes epic struggle to put Cameco’s Cigar Lake into production

 

 

With an ore grade 100 times the world average, Cameco Corp TSX:CCO overcame tremendous challenges to put Cigar Lake into production. Indeed the project’s first ore shipment on March 13 suggests that high grade is the mother of invention.

Among other tribulations, flooding in 2006 and 2008 stalled the eastern Athabasca Basin mine, which dates back to a 1981 discovery and began construction in 2005. Last year’s planned start-up hit another delay with leaks from tanks built to hold the run-of-mine slurry. Around the same time the McClean Lake mill faced delays of its own with modifications to the leaching circuit.

Cameco devised innovative techniques of bulk freezing and jet boring to extract the deposit lying 410 to 450 metres below surface, “where water-saturated Athabasca sandstone meets the underlying basement rocks.”

Uranium news from Saskatchewan and elsewhere for March 8 to 14, 2014

The jet boring tunnel at Cigar Lake, which Cameco calls “among
the most technically challenging mining projects in the world.”

To prevent flooding, the company freezes the ore and surrounding rock “by circulating a brine solution through freeze holes drilled from both surface and underground.”

To extract the ore, Cameco developed a method of high-pressure water jet boring “after many years of test mining” that keeps operators safely distant from the enormously high-grade deposit.

The company’s targeting 18 million pounds a year at full production, making it the world’s largest high-grade uranium mine after the Cameco/AREVA (70%/30%) McArthur River operation. But even 33 years after Cigar Lake’s discovery, the company anticipates further difficulties: “As we ramp up production, there may be some technical challenges which could affect our production plans.”

As of December 31, Cigar Lake capital expenditures came to $2.6 billion. Over 600 people will staff the mine.

Milling will take place at McClean Lake, 70 kilometres northeast. Operator AREVA Resources Canada says the plant “is expected to produce 770 to 1,100 tonnes of uranium concentrate from Cigar Lake ore in 2014. Its annual production rate will ramp up to 8,100 tonnes as early as 2018.”

Cigar Lake shows proven and probable reserves averaging 18.3% for 216.7 million pounds U3O8. Measured and indicated resources average 2.27% for 2.2 million pounds. The inferred resource averages 12.01% for 98.9 million pounds.

Cigar Lake is a joint venture of Cameco (50.025%), AREVA (37.1%), Idemitsu Canada Resources (7.875%) and TEPCO Resources (5%).

The McClean Lake JV consists of AREVA (70% ), Denison Mines TSX:DML (22.5%) and OURD Canada (7.5%).

Read more about Cigar Lake here and here.

Fission Uranium reports Patterson Lake South’s second-best radiometric results, $25-million bought deal

Patterson Lake South’s momentum continued on March 10 as Fission Uranium TSXV:FCU released its third batch of radiometric readings in five days—this time boasting one hole with “the second strongest off-scale results recorded at PLS to date, placing it amongst the best holes drilled in the Athabasca Basin.” The four new holes also continue the winter program’s 100% hit rate and further encourage the company’s quest to connect the six zones along a 1.78-kilometre potential strike.

Fission Uranium reports Patterson Lake South’s second-best radiometric results

Fission uses a hand-held scintillometer to measure
radiation from drill core prior to receiving lab assays.

The most recent star hole is PLS14-164, whose intervals showed a total of 30.08 metres of off-scale readings at 9,999 counts per second, the maximum amount of gamma radiation that the hand-held scintillometer can measure. The readings, taken from drill core, are no substitute for assays, which will follow.

Another hole showed a composite 2.1 metres of off-scale radioactivity. Of the four holes, the mineralized intercept closest to surface started at 56 metres, while the deepest stopped at 380.5 metres.

Oddly enough, Fission Uranium’s March 10 release says one of the new holes “has narrowed the distance between zones R390E and R585E to approximately 60 metres.” That’s the same distance between the same zones reported by the company on March 7.

Already 40 holes have been completed in the $12-million winter campaign that began in mid-January. The company plans about 85 or 90 holes totalling around 30,000 metres on the ice-bound lake before spring. While one rig explores outside the mineralized area, Fission Uranium hopes its four other drills will fill the gaps between the project’s six zones.

Just before the March 10 closing bell Fission Uranium announced a $25-million bought deal. A syndicate of underwriters led by Dundee Securities agreed to buy 15.65 million warrants, exercisable for one share each, at $1.60. The company expects to close the private placement by April 1. The underwriters may buy an additional 15%.

Fission Uranium surpassed its 52-week high March 10, opening three cents above its previous close, reaching $1.71 and then settling on $1.67 when trading was halted at the company’s request minutes before the $25-million announcement.

Trading resumed the following day. The company closed March 14 on $1.59. With 330.12 million shares outstanding, Fission Uranium had a market cap of $524.89 million.

NexGen repeats success with second hole at Rook 1’s new area

NexGen repeats success with second hole at Rook 1’s new area

Core from RK-14-27 shows pitchblende within
brecciated shear at 253.8 metres in downhole depth.

With radiometric results from a second hole on Rook 1’s Arrow prospect, NexGen Energy TSXV:NXE repeated last month’s success. On March 13 the company released dozens of tiny intervals ranging from 0.05 to 0.45 metres that showed “significant” readings over 500 counts per second. One intercept of 15.05 metres (not true width) showed almost continuous significant results.

The measurements, which are no substitute for assays, were obtained by scanning drill core with a hand-held radiation detector.

Significant intervals for RK-14-27 started at 224.45 metres in downhole depth and ended at 435.9 metres. Drilling stopped at 576 metres. About a dozen small intervals hit the device’s maximum possible reading of 10,000 cps. Arrow’s mineralization now extends at least 32 metres down dip across two holes, NexGen stated.

Three other holes failed to find significant radiation but “analysis of structures in these holes meant that hole 27 was successfully planned to intersect the interpreted mineralized zones both along strike and down dip.” The company plans to sink RK-14-29 40 metres southwest along strike. Now in progress, RK-14-28 is testing a gravity low roughly 200 metres west of RK-14-27.

The company has two drills working the Arrow area, now the focus of the PLS-adjacent Rook 1 project. A third rig will join by summer.

On March 10 NexGen stated it filed a preliminary short form prospectus regarding the previously announced $10-million bought deal, which the company expects to close on or about March 26.

Fission 3.0 stakes 42,000 additional hectares in and around the Basin

Three acquisitions and one property expansion add nearly 42,000 hectares to Fission 3.0’s (TSXV:FUU) portfolio. Announced March 13, the newly staked properties indicate “there remain many under-explored areas of the Athabasca Basin,” according to COO and chief geologist Ross McElroy.

Not all the new turf actually lies within the Basin. But neither does PLS. The 20,826-hectare Perron Lake property is about 20 kilometres north of the Basin and has benefited from regional lake sediment sampling that showed strong uranium anomalies.

The 9,168-hectare Cree Bay property sits within the northeastern Basin, where historic airborne geophysics suggest potential for hydrothermal and structure-related deposits.

Within the southeastern Basin, the 4,354-hectare Grey Island property is located about 70 kilometres from Key Lake, the world’s largest high-grade uranium mill.

Manitou Falls enlarges by 7,589 hectares to a total of 10,529 hectares. The northeastern Basin property was originally staked last May when the spinco was just a gleam in Fission Uranium’s eye. Historic data shows six radiometric anomalies and multiple basement electromagnetic conductors.

Fission 3.0’s portfolio now numbers nine Saskatchewan and Alberta properties in and around the Basin and one in Peru’s Macusani uranium district.

Purepoint finds new zone at Hook Lake JV

March 10 news from Purepoint Uranium TSXV:PTU heralded a new zone of mineralization at its Hook Lake joint venture five kilometres northeast of PLS. Although two of four holes failed to find mineralization, the other two prompted the company to move its second rig to the new Spitfire zone.

The single interval released from hole HK14-09 showed:

  • 0.32% uranium oxide (U3O8) over 6.2 metres, starting at 208.9 metres in downhole depth
  • (including 1.1% over 0.5 metres)

Thirty metres northwest, HK14-11 showed:

  • 0.11% over 2 metres, starting at 197.9 metres

  • 0.05% over 3 metres, starting at 201.9 metres

  • 0.57% over 0.9 metres, starting at 210.6 metres

True widths weren’t provided. These holes were drilled at a -70 degree dip.

All four holes targeted the 2.9-kilometre D2 electromagnetic conductor, which features “a large magnetic low, possibly indicative of hydrothermal alteration,” said VP of exploration Scott Frostad. “Now that the D2 conductor has been shown to be associated with uranium mineralization, we will increase our drilling efforts towards the northeast where geophysics suggests there is a more structurally complex setting.”

Purepoint stated D2 comprises part of the Patterson Lake conductive corridor, the same conductive trend targeted by Fission at PLS.

Purepoint holds a 21% interest in the 28,683-hectare project and acts as operator for partners Cameco (39.5%) and AREVA Resources Canada (39.5%). The work is part of a $2.5-million, 5,000-metre campaign that began in late January.

In early February Rio Tinto NYE:RIO began drilling Purepoint’s Red Willow project as part of Rio’s 51% earn-in.

Next Page 1 | 2

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