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Posts tagged ‘Plan Nord’

Quebec’s distinction

May 8th, 2015

Both interventionist and capitalist, the province’s mining-friendly policies defy ideology

by Greg Klein

Quebec’s provincial government might buy rail and port facilities that serve Bloom Lake, as well as invest taxpayers’ money in the iron ore mine. Economy Minister Jacques Daoust didn’t commit to anything, but Bloomberg reported he’s open to the idea. Even that shows Quebec’s distinctive approach to mining, a strategy that eludes political stereotypes but suggests long-term vision based on confidence that commodities markets will improve.

Making that confidence all the more remarkable is the iron ore collapse which shut down so much Labrador Trough activity. Rio Tinto NYE:RIO so far shows no sign of relenting on its price-slashing tactics, although Axis of Iron fellow travellers BHP Billiton NYE:BHP and Vale NYE:VALE are reportedly backing off.

Both interventionist and capitalist, the province’s mining-friendly policies defy ideology

But not after driving prices down and mines out of business. Some of the casualties have littered both the Quebec and Newfoundland sides of the Trough. Last year Labrador Iron Mines TSX:LIM didn’t bother resuming seasonal operations at Schefferfield. Later that year Cliffs Natural Resources announced impending closures of its Wabush and Bloom Lake mines. Then the Iron Ore Company of Canada announced plans to lay off part of its Labrador City workforce, in keeping with majority-owner Rio’s cost-cutting craze. But at least the mine’s surviving, as is ArcelorMittal’s Mont-Wright operation, although that company has alluded to some kind of future “restructuring.”

Cliffs’ exit from eastern Canada will “end the flawed expansion that has cost Cliffs and its shareholders billions of dollars,” president/CEO Lourenco Goncalves said in January. Handed the job after activist hedge fund Casablanca Capital gained control of Cliffs’ board, Goncalves takes a dim view of other operations as well.

“I can’t wait to get out of Australia,” the Sydney Morning Herald quoted him last month. “As soon as I get to the end of life of mine in Australia, I’m out of there … I can’t wait to get out of the seaborne trade and let the Australians take that horrible business on their own hands.”

Yet Bloom Lake, with “its high-quality ore,” still has hope, Goncalves suggested back in January. But “the potential investment is not achievable within a time frame acceptable to Cliffs.” Talks with Investissement Québec had already been underway for several months, he stated.

A government-run investment and financing agency, Investissement Québec’s subsidiary Ressources Québec has taken positions that include, for example, nearly $600,000 in an April private placement with Quest Rare Minerals TSX:QRM. A $3-million injection into Matamec Explorations TSXV:MAT last January brought Ressources Québec a 28% interest and joint venture partnership in the Kipawa rare earths deposit.

A much bigger Investissement Québec outlay was the $50-million stake in an estimated $118-million plan to increase Gaz Métro’s liquefied natural gas production. The government sees Plan Nord synergies, with the LNG fuelling transportation and operations in remote areas.

Quebec government investment is hardly new, although the previous Parti Québécois government shelved some resource-friendly policies.

I am not in a subsidy mode, I am in a partnership mode.—Quebec Economy Minister Jacques Daoust, quoted in
the Montreal Gazette

Now a branch of Ressources Québec but dating back to 1965, SOQUEM Inc has participated in over 350 Quebec exploration projects. Among its success stories is Renard, where Stornoway Diamond TSX:SWY plans 2017 production. In 2011 the company issued shares to acquire the 50% held by a SOQUEM subsidiary.

Outside of equity investments, Quebec last month announced $1.3 billion in government spending for Plan Nord over five years, part of an envisioned $50 billion to come from public and private sources for infrastructure and project development over 20 years.

It’s not a program to put off, the province maintains. As Energy and Natural Resources Minister Pierre Arcand told Canadian Press in December, Quebec “cannot wait until there is a mining boom and everything becomes uncontrollable.”

Quebec’s Bloom Lake investment, should it happen, could reach 20% of the operation, Bloomberg reported. “We’re trying to ensure the survival of the mine,” the news agency quoted Daoust. “If the last 20% is a problem, I will fix it.”

Last month the Montreal Gazette quoted him, “In a [typical] mining project, the bill is at least $1 billion. The problem you have in a mining project is financing the last 10%. If we invest $100 million in a mining project worth $1 billion we’re okay and we can close the deal…. We can go up to $200 million, but normally we should not invest more than 10 or 15%.”

Daoust added, “The kind of return we would get is the same as for any other shareholder. I am not in a subsidy mode, I am in a partnership mode.”

Government ownership of Bloom Lake’s rail link and port facilities, however, could lower the mine’s operating costs by as much as $20 a ton, he told Bloomberg.

Regardless, policies like these have helped raise the province’s once-faltering reputation. As a mining jurisdiction the province leaped from 18th place globally to number six on the Fraser Institute’s Investment Attractiveness Index, part of the annual survey of mining companies released in February.

Quebec’s policies aren’t without controversy, though. Following the April announcement of a scaled-down Plan Nord, the Parti Québécois opposition noted that Ressources Québec planned to guarantee a $100-million mortgage for the Nunavik nickel mine, held by Jilin Jien Nickel Industry Co. As reported by the Nunatsiaq News, the opposition pointed out that Quebec Premier Philippe Couillard formerly held a board position with project operator Canadian Royalties, which was acquired by Jilin Jien in 2010.

And there’s further controversy from another angle. In December Strateco Resources TSX:RSC launched a nearly $190-million lawsuit after Quebec refused to issue an exploration permit for the company’s Matoush uranium project. With a moratorium on uranium activity now in place, the province is considering an outright ban.

Plan Nord progresses as companies team up with Quebec on rail feasibility

October 21st, 2014

by Greg Klein | October 21, 2014

A feasibility study into a third Quebec railway to the Labrador Trough is back on track, according to October 21 announcements from Champion Iron TSX:CIA and Adriana Resources TSXV:ADI. The companies have joined the Quebec government in a new entity called la Société ferroviaire du Nord québécois, société en commandite (SFNQ) to oversee the technical and economic report.

Champion Iron, Adriana Resources team up with Quebec on railway feasibility

The news follows a bill tabled by the provincial Liberals on September 30 to revive Plan Nord, the massive infrastructure program that had been sidelined by the former Parti Quebecois government. The province now intends to create la Société du Plan Nord to co-ordinate development beyond the 49th Parallel, with $63 million budgeted for this year and up to $2 billion by 2035. The bill allocates a $50-million investment in Gaz Métro LNG to expand production and storage of liquefied natural gas, which would be trucked to Stornoway Diamond’s (TSX:SWY) Renard mine, scheduled to open in 2016. LNG transport to other projects would follow.

Quebec will provide up to $20 million for the feasibility. But the companies’ contributions are less clear. Adriana’s late afternoon announcement didn’t specify a contribution. The company takes part through its Lac Otelnuk joint venture, held 40% by Adriana and 60% by Hong Kong-based WISCO International Resources Development & Investment. Champion listed its share as sunk costs valued up to $6 million. That company takes part through its now wholly owned subsidiary, Champion Iron Mines Ltd.

As a separate company in 2013, Champion Iron Mines failed to find private and public backers for a 310-kilometre rail connection between the southern Trough and the deep sea port of Sept-Iles that was expected to cost $1.33 billion. Earlier that year CN TSX:CNR suspended its feasibility study on an estimated $5-billion, 800-kilometre link to the same port.

Currently two railways connect Sept-Iles with the resource-rich region straddling the Labrador border. The Quebec North Shore and Labrador Railway runs a 415-kilometre route to Labrador City. A private line operated by an ArcelorMittal subsidiary serves its Mont-Wright operation.

Other companies have been invited to take part in the feasibility study, which would envision a common carrier.

Among noteworthy aspects of Plan Nord is the government’s confidence that future commodity markets will justify large-scale investment—and that Quebec sometimes prefers to invest in, rather than subsidize, industry. Apart from Gaz Métro, the government’s Investissement Québec unit sees opportunities in a number of ventures including Stornoway, in which the province is acquiring an approximately 29% stake.

Labrador Trough derailed

February 12th, 2013

CN suspends feasibility for rail link to Quebec/Labrador iron ore range

by Greg Klein

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The Labrador Trough might hold some of the world’s largest undeveloped iron ore resources. But is the market ready? That’s a question some people are asking as CN TSX:CNR shelves a feasibility study to build what might have been a $5-billion, 800-kilometre rail line to the isolated Quebec/Labrador iron ore range.

CN formally announced the decision February 12, citing “current market realities.” The rail giant added that “mine construction schedules and diverging needs for each specific individual project will make it difficult to obtain the critical volumes of iron ore necessary.” Also a factor was “the decision by some miners in the region not to join the group of mining companies supporting the CN infrastructure project.” The study was originally scheduled for release in May.

CN suspends feasibility for link to Quebec/Labrador iron ore range

This Adriana Resources map shows the company’s Lac Otelnuk project,
the Labrador Trough and two existing railways, Cartier to the west and
QNS&L to the east. The latter route now terminates at Labrador City,
not Schefferville.

It began last August under a partnership of the continental railway, pension/insurance fund manager Caisse de depot et placement du Quebec and a group of mining companies.

In separate February 12 announcements, two of those companies announced they were unaffected by the suspension. Referring to its Taconite project straddling the Quebec/Labrador border, New Millennium Iron TSX:NML stated the “base case for product transportation is through a ferroduct and does not depend on a new rail line.”

The project’s KeMag deposit pre-feas suggests pumping concentrate along a 700-kilometre slurry ferroduct to the St. Lawrence port of Sept-Iles. “Slurry transportation is being used in many iron ore projects located in Brazil, India and Australia because of its low-cost advantage compared to rail transportation,” the company states. “This has the potential to make KeMag the lowest-cost pellet producer in North America.”

Another CN partner, Alderon Iron Ore TSX:ADV stated its Kami project “feasibility study capital and operating cost projections are based on using the [Quebec North Shore and Labrador] Railway.”

The region also has a second, private rail line operated by the Cartier Railway Company, a subsidiary of ArcelorMittal. The 420-kilometre route connects the company’s Mont-Wright operation with Sept-Iles.

The 415-kilometre QNS&L Railway links Labrador City with Sept-Iles. Although it’s owned by the Iron Ore Company of Canada (itself owned 58.7% by Rio Tinto and 26.2% by Mitsubishi), Alderon president/CEO Tayfun Eldem emphasized that the QNS&L is “a common carrier that operates with the legal obligation to accommodate third-party traffic. It currently has ample surplus capacity and runs within 15 kilometres of the Kami property.”

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Week in review

November 30th, 2012

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

by Greg Klein

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

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

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

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

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

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

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

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

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

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

A mining and exploration retrospect

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

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

Richmont closes Francoeur Mine, suspends Wasamac exploration

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

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

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

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Week in review

November 23rd, 2012

A mining and exploration retrospect for November 17 to 23, 2012

by Greg Klein

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Quebec’s new royalty regimen “in a matter of months”

The new Parti Quebecois government unveiled its first budget this week without changing the royalty or tax code for miners. But, the Globe and Mail reported Wednesday, that could change early next year. The PQ wants to extract another $388 million from the industry. “We started working on a new framework and this regime will come into force in a matter of months,” the G&M quoted Finance Minister Nicolas Marceau.

During last summer’s election campaign, Marceau’s party talked of imposing a 5% royalty on all minerals extracted, regardless of a company’s profit. The PQ also proposed a 30% tax on all mining profits above 8%, to rake in the $388 million over five years.

A mining and exploration retrospect

Jean-Marc Lulin, president/CEO of Azimut Exploration TSXV:AZM and outgoing president of the Quebec Mineral Exploration Association, told the G&M, “Our competitive advantage in the world lies in our legal, political and fiscal regime. You can’t toy with that without putting investments at risk.”

The government said it will consult with the industry prior to implementing changes.

The PQ also campaigned on revisions to the previous Liberal government’s Plan Nord infrastructure program. Last week’s news about how the government and Stornoway Diamond TSX:SWY will divide costs to built a road to the company’s Renard project, however, shows no real change to the plan so far.

Nuclear defence

“More people die from coal pollution each day than have been killed by 50 years of nuclear power operations—and that’s just from lung disease. If you include future deaths from global warming due to burning fossil fuels, closing down nuclear power stations is sheer madness.”

So concluded Gwynne Dyer’s column in Wednesday’s Georgia Straight, a left-wing Vancouver weekly. Nuclear energy, he said, “is a kind of witchcraft” that scares people “at least in the developed countries. [The Greens’ anti-nuclear campaign] cannot be logically reconciled with their concern for the environment, given that abandoning nuclear will lead to a big rise in fossil fuel use, but they have never managed to make a clear distinction between the nuclear weapons they feared and the peaceful use of nuclear power…. Fortunately, their superstitious fears are largely absent in more sophisticated parts of the world. Only four new nuclear reactors are under construction in the European Union, and only one in the United States, but there are 61 being built elsewhere. Over two-thirds of them are being built in the BRICs (Brazil, Russia, India and China), where economies are growing fast and governments are increasingly concerned about both pollution and climate change.”

Read more about nuclear energy, and uranium supply and demand, here.

Yet coal continues its breathtaking expansion

Nearly 1,200 new coal plants worldwide are in the planning stages, MarketWatch reported on Wednesday. China and India account for about 76%. The global top five coal burners are China, U.S., India, Germany and Japan.

MarketWatch cited a report from the World Resources Institute that listed Japan, China and South Korea as the world’s biggest importers. “In Japan, as pressure mounts to phase out nuclear power after the 2011 Fukushima Daiichi disaster, coal imports are likely to continue to grow.”

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Week in review

November 16th, 2012

A mining and exploration retrospect for November 10 to 16, 2012

by Greg Klein

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Three dead in Mexican mining accidents

Three people died in two accidents at Canadian projects in Mexico this week. On Tuesday two contractors at AuRico Gold’s TSX:AUQ El Chanate open pit gold mine in Sonora state lost their lives “when a pressure vessel in one of the three separate ADR [adsorption, desorption and recovery] processing plants ruptured,” the company stated.

President/CEO Scott Perry said the accident “is incredibly distressing as the safety of our employees and contractors is the company’s highest priority and this incident is a tragic shock to everyone.”

On Thursday a construction contractor died at Baja Mining’s TSX:BAJ Boleo project in Baja California. Baja holds a 49% interest in the project, with a Korean consortium holding the remainder.

Investigations are underway into both accidents.

Quebec’s Plan Nord: Who pays how much?

That question was hotly debated in last summer’s provincial election. The victorious Parti Quebecois argued that resource companies should pay significantly more for the huge infrastructure program that the previous Liberal government envisioned. But a Thursday announcement by Stornoway Diamond TSX:SWY suggests Quebec’s minority government doesn’t intend to stray far from its predecessor’s plan—at least not for the time being.

A mining and exploration retrospect

Stornoway’s framework agreement and letter of intent with the province sees the government building a 143-kilometre extension from Route 167 in Quebec’s James Bay region. The company will use a government loan to build 97 kilometres of road from there to its Renard Diamond Project.

According to a Montreal Gazette article by Robert Gibbens, the deal differs little from a previous arrangement worked out with the previous government.

“Parti Quebecois Finance Minister Nicolas Manseau said the renegotiated road access pact will lead to $124 million of savings for Quebec taxpayers with Stornoway’s takeover of the final 97 kilometres,” Gibbens reported. “In fact, Stornoway is borrowing $77 million from the province to cover the single-lane road’s cost, amortized over 15 years at 3.35% interest. Total cost will be comparable with the old pact when Stornoway would have contributed $44 million.”

With its all-season road slated for completion in Q4 2013, the Route 167 extension would make Renard Canada’s first road-accessible diamond mine. Mine construction is scheduled to begin next year.

Relative calm, but uncertainty prevails in South Africa

The country’s major mining strikes have ended, Reuters stated on Thursday. “Around 80,000 South African miners or 15% of the workforce had been off the job at one point,” the news agency reported.

Doubt continues, however, regarding the viability of some mining operations. Additionally the National Union of Mineworkers, “which has delivered above-inflation wage hikes but contained militancy, has lost control over much of its rank and file, a source of concern to the ruling African National Congress and corporate bosses alike.”

Kitco News provided another Friday recap of the major companies affected. Strike-related violence has killed over 50 people so far.

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Week in review

October 19th, 2012

A mining and exploration retrospect for October 13 to 19, 2012

by Greg Klein

Unhappy birthday. Many unhappy returns

With Friday marking Black Monday’s 25th anniversary, pundits around the world reflected on the calamity, its causes and whether it helped set off the financial crises that followed. Among the not-reassuring news for the future was this headline from Thursday’s Der Spiegel: “Euro Exit by Southern Nations Could Cost 17 Trillion Euros.”

Referring to a study by an economic research group called Prognos, the German weekly stated, “The researchers arrived at a particularly bleak assessment because they didn’t just calculate the losses of creditors who had lent money to the crisis-hit nations. They also analysed the possible impact of a euro collapse on economic growth in the 42 most important industrial and emerging economies that make up more than 90% of the world economy.”

Prognos predicated that result on a chain reaction set off by Greece reverting to the drachma. But keeping Greece also has its costs, as another headline from Thursday’s Der Spiegel stated: “Corruption Continues Virtually Unchecked in Greece.”

Chinese companies bring Canada investment, skills, controversy

Revelations continued this week about a plan by Chinese interests to import Chinese workers to staff four proposed British Columbia coal mines. The first 200 are expected to arrive any time now, with possibly 2,000 more to come.

A mining and exploration retrospect for October 13 to 19, 2012

On Monday Mark Olsen, President of the Bargaining Council of B.C. Building Trade Unions, called the plan “simply a strategy to employ lower-paid workers who are compliant with the culture of coal mining in China … a culture which leads them to accept the possibility of death as a cost of having a job.”

Also on Monday, Vancouver Sun columnist Daphne Bramham noted that the workers will be “indentured” to one employer, “dependent on staying in the company’s good graces in order to hold their jobs [and] in a remote area fully reliant on [their employer] for help in getting housing, health care and ensuring their safety.”

The companies’ rationale was partly based on insufficient response to job ads posted in Canada. But another story in Monday’s Vancouver Sun stated that the ads offered wages far below Canadian standards. “Chances are they won’t find an underground miner (in Canada) who will work for $25 an hour,” said the manager of one mining personnel agency. “I mean, they’re putting their lives at risk.”

Additionally, Olsen stated that neither the federal nor provincial government “has a mechanism in place to verify the wages these foreign workers actually receive.”

More news hit the fan on Tuesday when the United Steelworkers revealed that at least four of those Canadian job ads, for approximately 70 positions, required applicants to speak Mandarin.

According to a Tuesday Vancouver Province column by Michael Smyth, B.C. Minister of Jobs, Tourism and Skills Training Pat Bell claimed, “This is a unique situation for the next six to eight months. Once those mines go into full production, I expect those jobs will be filled by British Columbians first and Canadians second.”

On October 11, however, HD Mining International spokesperson Jody Shimkus told ResourceClips that the first of the four proposals, the Murray River Project, will probably rely on Chinese underground workers for 10 years after its projected 2015 start date.

On Thursday a labour-sponsored online journal called the Tyee stated that two companies recruiting miners in China were charging exorbitant fees. A reporter who responded to ads on a Chinese Web site was told applicants pay about $4,700 in advance, approximately two and a half years’ salary for a Chinese miner. Once working in Canada, the miner would pay another $7,800 in $400 monthly instalments.

The fees are illegal in B.C. The wages offered by the recruiter were $22 to $25 an hour, the Tyee stated, below the minimum $25 that the company claimed in Canadian job ads.

But two solid weeks of wide-ranging controversy haven’t stopped Canadian Dehua International Mining Inc from picking up another acquisition. On Friday Lions Gate Metals TSXV:LGM announced a $15-million LOI in which Canadian Dehua may option 100% of the 77,705-hectare Poplar Copper-Gold-Silver Project in west-central B.C. The agreement is subject to shareholder and regulatory approval.

A big-time B.C. operator Canadian Dehua may be, but its Web site reads like a parody of broken English. Here’s just one example, about the Murray River Project:

Proved and inferred reserves the coal seam area is 17 square kilometers.

That would be an especially interesting use of NI 43-101-ish terminology were the Vancouver-headquartered company a reporting issuer in any Canadian jurisdiction. B.C. Securities Commission spokesperson Richard Gilhooley would only tell ResourceClips that Canadian Dehua is “not currently listed on SEDAR, which is where issuers typically are.”

Plan Nord not dead, just modified

Following dismissive comments by her mining minister, Quebec Premier Pauline Marois saw fit to reassure French investors that Plan Nord will go ahead after all. Prior to the province’s September 4 election, Marois had spoken of altering the former government’s proposed $2.1-billion in public funding for an infrastructure program. On October 1 La Press reported that Quebec Natural Resources Minister Martine Ouellet said Plan Nord was merely a “marketing” strategy for projects that were already underway or in planning. But on Wednesday the Nunatsiaq News reported that a modified Plan Nord “could involve companies chipping in financially or giving Quebec shares if Quebec built a road or a port in northern Quebec, and the company benefitted from this infrastructure. These changes will be made ‘in the coming months,’ Marois said. ‘But we remain focused on the development of the North.’”

Iron ore an indulgence or a strategic asset?

In a Thursday story picked up by media including the Globe and Mail, the Financial Times reported that the world’s largest steelmaker is considering selling a chunk of its Canadian assets. Sources told the FT that ArcelorMittal might put 30% of its Canadian operations, which total some $8 billion to $10 billion, up for grabs.

ArcelorMittal Mines Canada produces about 15 million tonnes of iron ore concentrate and 9 million tonnes of iron oxide pellets annually, accounting for approximately 60% of Canada’s total production. The company’s Mont-Wright and Fire Lake mines in Quebec’s Labrador Trough region were slated for $2.1 billion in upgrades by 2013. But according to the FT, “One sector specialist described ownership of iron ore assets as an ‘indulgence’ in the current environment.”

Iron ore prices plummeted in August due to a situation in China variously described as over-supply, slumping demand or a buyers’ strike. China is the world’s largest importer of iron ore.

In July 2011 Forbes reported China’s intention to “break the grip” of its three main suppliers, Vale, Rio Tinto and BHP Billiton, which together provide 62% of China’s imports. Li Xinchuang, Deputy Secretary-General of the China Iron & Steel Association, told media his country should get more than half its supply from Chinese-invested mines overseas.

The FT stated that “Chinese companies and commodities trading houses had expressed an interest” in ArcelorMittal’s Canadian operations.

South Africa updates

Junk status looms for AngloGold Ashanti and Gold Fields as Standard & Poor’s considers lowering the companies’ debt ratings, Bloomberg reported on Thursday.

On Friday Kitco.com provided another weekly update of 12 major companies operating in South Africa.

[The plan to staff Canadian mines with Chinese workers is] simply a strategy to employ lower-paid workers who are compliant with the culture of coal mining in China … a culture which leads them to accept the possibility of death as a cost of having a job.—Mark Olsen, President of the Bargaining Council of B.C. Building Trade Unions

E-Caddy shows EV commitment

The bankruptcy of an e-car battery manufacturer reported on Tuesday might have reflected negatively on prospects for graphite and lithium, not to mention the environment. But the same day General Motors got a jolt of publicity for its 2013 electric Cadillac.

Battery builder A123 Systems filed for bankruptcy protection after a US$249.1-million government grant failed to save the company. In a Tuesday press release A123 stated that Johnson Controls plans to acquire A123’s automotive business assets in a $125-million transaction.

GM’s new model shows an EV commitment despite disappointing sales for its better-known Chevy Volt. Sales never lived up to the company’s initial expectations, although steep discounts have more recently given it the middling distinction of “outselling about half of all cars marketed in the U.S.

American projections are just part of a much bigger market. According to a TechSci research report published in August, the “global electric vehicle industry clocked a turnover close to US$54 billion in 2011, while electric two-wheelers became the dominating vehicle category for the whole segment.” The study predicts “phenomenal” EV demand worldwide due to “overall consumer spending, growth in population, increasing demand for environment-friendly vehicles and growing government support.”

They seek safe haven

“Forget gold: Here’s where die-hard skeptics are stashing their wealth,” declared Tuesday’s Financial Post. High yellow metal prices have pushed some discerning pessimists into a range of commodities, collectibles and other presumably secure assets.

Scandinavian and Canadian bonds are proving popular, as are rare coins, stamps and watches. Farmland offers obvious practical value. The finer things in life, from art to liquor, might also bring security. The same might be said, with far more chilling connotations, for guns and ammo. But the FP conceded that its list isn’t exhaustive. That might explain why it didn’t include canned food.

Week in review

October 12th, 2012

A mining and exploration retrospect for October 6 to 12, 2012

by Greg Klein

«Le Plan Nord est enterré»

Plan Nord was nothing more than “marketing” for projects that were already in the pipeline. So says Quebec’s new natural resources minister, according to Sunday’s Montreal Gazette. But industry observers still don’t know how the newly elected Parti Quebecois will treat the mining sector.

Prior to the province’s September 4 election, then-premier Jean Charest vowed his Liberal government would spend $2.1 billion on a massive infrastructure program to develop Quebec north of the 49th parallel. Over a 25-year period, Plan Nord would attract $80 billion in private and public investment, he said. During the election campaign, however, PQ leader Pauline Marois called the Liberals’ planned expenditure a $2.1-billion giveaway to the private sector.

A mining and exploration retrospect

Marois also talked of imposing a 5% royalty on all minerals extracted and a 30% tax on all mining profits above 8%. Her election victory raised obvious concerns throughout the sector.

“People involved in the Plan Nord are very anxious to know the position of the government,” Nochane Rousseau, a partner in PricewaterhouseCoopers’ Montreal office, told the Gazette. He pronounced the Plan Nord “brand” dead but added, “In order to create wealth, we absolutely will have to develop our natural resources, and northern Quebec is overflowing with them.”

Natural Resources Minister Martine Ouellet made her dismissive comment in a meeting with the editorial board of La Presse. She refused the Gazette’s requests for an interview.

New regulations disappoint Ontario explorers

Ontario’s exploration sector suffered a setback with a new mining law that takes full effect April 1. Probably the industry’s biggest chagrin is the requirement 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, according to a Tuesday dispatch from Bloomberg. “It’s going to cost a lot more now and there are going to be a lot more delays,” the news agency quoted Mistango River CEO Robert Kasner.

Solid Gold Resources TSXV:SLD CEO Darryl Stretch told Bloomberg, “It should be the government’s duty to consult with first nations, not the mining industry’s.”

Stretch was a vocal member of Miners United, a group representing about 60 companies that surfaced at last spring’s Toronto PDAC convention to express concern about native relations. In a March 27 Globe and Mail story about the group, Ontario Prospectors Association Executive Director Garry Clark said that native bands charge companies for exploration drilling in confidential deals that often surpass $100,000.

Bullish, but …

Among those predicting more merger-and-acquisition activity are the three principals of NewGen Asset Management, which was written up in Friday’s Financial Post. “Our strategy is to identify those [most] likely M&A candidates,” said Manager David Dattels. The FP explained that one of the company’s portfolios “typically has about 20 core holdings, with others used as trading positions, including short positions that usually represent 5% to 20% of the portfolio.”

Dattels’ enthusiasm for the industry has its limits. “Mining has traditionally been a poorly managed industry. Corporate governance is probably the worst relative to other industries. Investors are smartening up to that.”

Consumers acquire critical commodity companies

Increasing demand and a 15% Chinese export tax have put another EU-designated critical mineral in the spotlight. Fluorspar “is used throughout the world, primarily by the chemical industry, for refrigerants and foam products and in the manufacturing of aluminum, Teflon, refined petroleum products, glass and medicine,” the Gold Report quoted Jennings Capital Analyst Ken Chernin on Tuesday. “There are virtually no substitutes for many of its uses and it is an essential ingredient in hydrofluoric acid.”

Chernin added that companies with deposits outside China are candidates for acquisition—and not necessarily by other miners. “In February 2012, the aluminum company RUSAL acquired the remaining 50% of Russia’s only fluorspar producer, [Yaroslavsk Mining Company], from Russkaya Gornorudnaya Kompaniya,” he said. “Fluorspar is used to produce aluminum fluoride, which is used in the production of aluminum. And in January 2012, the chemical group Solvay announced it acquired a 30,000 tonne-per-year fluorspar mine in Bulgaria from Italy’s M&M Group. DuPont and Honeywell are also big consumers of fluorspar.”

More of the same for Venezuela

Hugo Chavez “gets six more years to squeeze industries.” That’s how the Globe and Mail commemorated the results of Venezuela’s Sunday election. His 54% vote gives Chavez another six years in office, which would extend his presidency to 20 years. The Reuters commentary notes that “the nationalization campaign Mr. Chavez launched in 2007 has saddled the state with scores of loss-making companies.” Nevertheless he plans to continue nationalizing companies and confiscating mining operations.

Sad SAC

“Vehement” was South American Silver’s TSX:SAC denial of the latest allegations from the Bolivian government. The company’s Tuesday statement responded to an October 5 threat of legal action from Minister of Mines Mario Virreira, who claimed South American Silver had been working in Bolivia illegally.

The accusations “are patently false and have no factual basis,” the company said, repeating its intention to seek international arbitration “to obtain full compensation, including the fair market value of the Malku Khota Project.” Bolivia confiscated the silver-indium project in July, after SAC had sunk over $16 million building a resource. On October 3 Virreira stated the company would get zero compensation.

Cry the troubled country

Reports from South Africa said two more people died in labour-related violence early Thursday, while on Friday the three-week truck drivers’ strike ended. Also on Friday Atlatsa Resources TSXV:ATL announced that 2,161 fired employees would be reinstated provided they return to work at the company’s Bokoni Platinum Mines by October 15.

An attempt at reassurance came from Platinum Group Metals TSX:PTM. On Friday the company stated that progress continues on its application for a $260-million loan to build the WBJV Project 1 Platinum Mine in South Africa. Phase I development “has been progressing steadily and well…. There are approximately 325 people on site and the project has completed 880,000 man hours with a single minor lost-time incident.”

Not surprisingly the news was buried by allegations that surfaced on Thursday. South African President Jacob Zuma reportedly spent $23 million of public money renovating his home.

On Monday Kitco News summarized the situation for 10 major companies recently affected by South African strikes.

Canadian juniors explore the world. But beyond?

It’s twice the size of earth, mostly diamond with some graphite thrown in—but credit for the discovery goes to astronomers, not geologists. Apparently not the first diamond planet ever discovered, 55 Cancri e, as it’s unhelpfully named, “is the first time one has been seen orbiting a sun-like star and studied in such detail,” according to a Thursday report from Reuters.

And, as the news agency pointed out, “any fortune-hunter not dissuaded by The Diamond as Big as the Ritz, F. Scott Fitzgerald’s jazz age morality tale of thwarted greed, will find Cancri e about 40 light years, or 230 trillion miles, from Park Avenue.”

The Quebec election

September 5th, 2012

Does the new regime signal a new regimen for mining?

by Greg Klein

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Providence and politics have made Quebec one of the world’s most favourable mining jurisdictions. But yesterday’s provincial election might cause concern to industry players and investors alike. The new Parti Quebecois government wants to scale back a northern infrastructure program, curtail foreign takeovers and introduce an Australian-style royalty scheme.

The big question is whether the PQ can gain needed support for its agenda. The separatist party won 54 seats, nine shy of a majority government. The Liberals came close with 50 seats but lost their nine-year hold on power. A new party, Coalition Avenir Quebec (Coalition for Quebec’s Future), took the spoiler’s slot with 19 seats while Quebec Solidaire picked up just two seats.

Outside the province, media campaign coverage focused on the PQ’s dream of forming an independent country. Election night was marred by a man in a housecoat who shot two people at the PQ victory celebration, killing one of them.

Does the new regime signal a new regimen for mining?

Does the new regime signal a new regimen for mining?

Mineral exploration and mining figured strongly in the month-long election campaign.

The separatist issue, always present in Quebec, doesn’t look especially prominent now. During the campaign PQ leader Pauline Marois stated she won’t call a sovereignty referendum unless she’s sure of success. Two August polls showed support for separatism dropping from 40% to 28%, a far cry from the 49.4% who voted to leave Canada in a 1995 referendum. But Marois, a political veteran with 31 years’ experience who held 14 cabinet posts in the PQ government that ruled from 1994 to 2003, has other means of pushing the party’s left-wing nationalist policies.

She wants to “redo” Plan Nord. The massive northern infrastructure program was intended to be former Liberal premier Jean Charest’s legacy. Charest talked of spending $2.1 billion of public money on an economic dynamo that would attract a total of $80 billion in private and public investment over 25 years, creating 20,000 jobs in mining, hydro-electricity, forestry and tourism above the 49th parallel, an area covering 72% of Quebec’s territory. Marois, while not opposing Plan Nord, says $2.1 billion constitutes a giveaway to private companies.

If there were giveaways in Charest’s plan, however, they flowed in different directions. The Liberals’ Bill 65 would have designated 12% of the land north of 49 exempt from development by 2015. That percentage would have increased to 20% by 2020 and 50% by 2036. Quebec’s National Assembly didn’t find time to vote on the bill before the election.

A key economic plank of the PQ platform is Marois’ tax and royalty regimen. She wants a 5% royalty on all minerals extracted, regardless of a company’s profit. And speaking of profits, she’s following the Down Under example by proposing a 30% tax on all mining profits above 8%, which she estimates would extract an additional $388 million from miners over five years.

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