Friday 21st October 2016

Resource Clips

Posts tagged ‘Thompson Creek Metals Company Inc (TCM)’

Earth science for everyone

July 29th, 2016

Geoscience B.C. puts extensive resource knowledge into the public domain

by Greg Klein

Geoscience B.C. puts extensive resource knowledge into the public domain

Outfitted with sensitive magnetometers, three Cessna Super Caravans
will fly the largest survey in Geoscience B.C.’s 11-year history.
(Photo: Geoscience B.C.)


It’s probably one of the biggest geophysical surveys underway anywhere. Pilots now have three magnetometer-equipped Cessnas criss-crossing an especially rugged 24,000-square-kilometre expanse of west-central British Columbia on tight, 250-metre linespacing. This is Search Phase II, part of an even bigger project that will make “a generational contribution to better understand the area’s geology and mineral potential,” says Bruce Madu, VP of minerals and mining for Geoscience B.C. But the results will hardly be limited to industry. The non-profit’s mission is to access “earth science for everyone.”

Data of this quality rarely finds its way to junior explorers, let alone prospectors. But proprietary software makes it available to anyone with an internet connection. Besides mineral opportunities, practical advantages include land use planning for regional districts, local communities and First Nations.

The grid extends from Fort Fraser to Smithers, building on two previous surveys. Last year’s Phase I flew over neighbouring terrain between Terrace, Kitimat and Smithers. The 2013 TREK program covered an area bounded by Vanderhoof, Fraser Lake and Quesnel, conducting sampling and mapping, as well as airborne mag. The three surveys combined will cover 55,500 square kilometres, about the size of Nova Scotia.

Geoscience B.C. puts extensive resource knowledge into the public domain

When combined with two previous surveys, this year’s program
will provide magnetic data for 55,500 square kilometres.
(Photo: Geoscience B.C.)

TREK’s inspiration came from the Blackwater discovery, now New Gold’s (TSX:NGD) proposed open pit mine with reserves of 8.2 million ounces gold and 61 million ounces silver. Yet “the surrounding geology is poorly understood,” Madu says.

The Phase II flyover includes another proposed mine, Pacific Booker Minerals’ (TSXV:PBM) Morrison copper-gold project, as well as Thompson Creek Metals’ (TSX:TCM) majority-held Endako molybdenum mine and the former Bell-Granisle copper-gold mines. The survey just bypasses Imperial Metals’ (TSX:III) 50%-held Huckleberry copper mine.

Low prices put Endako on care and maintenance, with Huckleberry slated to follow this summer. But Geoscience B.C. helped extend the latter mine’s life by about two years, Madu says. “We flew some geophysics, the company participated and ended up drilling new ore. A couple of hundred jobs were given a couple more years.”

The region “clearly has substantial mineral potential,” Madu points out. “Even more importantly it has excellent infrastructure, lots of road networks, there’s rail in the area and hydro nearby, so it can be quite a cost-effective place to discover and develop a mine.”

Having just reconnoitred with the Search Phase II crew, Madu waxes enthusiastically about the staff, the three Cessna Super Caravans especially suited for this survey’s challenges, the ultra-sensitive magnetometers and the preliminary data. “It excites me—the quality is superb.”

Phase II comprises one of 13 projects scheduled for this year, with a budget totalling $2.5 million. “They cover all sorts of perspectives,” Madu says. “We’ll be active in the Sheep Creek, Barkerville and Cassiar gold camps, the Toodoggone region, we’ve got a mapping crew south of Terrace working on last year’s geophysics, we’ll be east of the Penticton gold camp around the Boundary area. We have chemistry projects re-analyzing almost 5,000 archive samples from southeastern British Columbia as well as the Atlin area. And we’ve got a lot of value-added projects on the go this year, taking existing data and putting together a more complete picture combining geophysics, geochemistry and geology, which I think is a big advantage for the industry’s future, being able to have these super-sized data sets.”

Not limited to mineral exploration, Geoscience B.C. also conducts surveys related to areas such as oil and gas, geothermal energy and groundwater.

In addition to fundamental baseline data creation, we do a lot of innovative research as well.—Bruce Madu,
VP of minerals and
mining for Geoscience B.C.

“On the minerals side, during our 11 years of operation we surveyed a large portion of the province with geophysics, we re-analyzed almost the entire suite of geochemical samples for the province, we provided a lot of innovative research in glacial tills and tree-top sampling, we funded new geochemical methods using water in the field as well as capturing gases and sampling organic materials. So in addition to fundamental baseline data creation, we do a lot of innovative research as well.”

Next year’s plans call for Search Phase III extending northeast to the Quesnel copper belt and covering a region that hosts Imperial’s Mount Polley copper-gold-silver mine, the auriferous turf of Barkerville Gold Mines TSXV:BGM, Thompson Creek’s Mount Milligan copper-gold operation and AuRico Metals’ (TSX:AMI) gold-copper-silver deposits at Kemess.

Looking further ahead, Madu sees the organization “looking at the mining cycle instead of just exploration to see what we can do to help the development or efficiency of mining. We might look at research into subjects like water, tailings and metallurgy, for example.”

The group was founded in 2005 when the province put up money as an inducement to industry contributions. A lot of those contributions come from preferred rates or volunteer work supporting a small staff. Regional trusts have also contributed. Last May the province forked over $5 million.

The results of all that go online, available to everyone. Geoscience B.C.’s Earth Science Viewer opens with a satellite image of the province. Users can zoom in on a particular area, load a layer of data from the selections to the left, then overlay additional data. New info comes online as survey results are processed. Mineral tenures are updated daily, with links to the government’s database of claimholders.

“Viewers can put the tie-dyed geophysical charts on top of the geology layer to see how they agree or don’t agree,” says Madu. “I think that’s quite a powerful prospecting tool because one thing we want to do is challenge assumptions. If the geology and geophysics are telling different stories, we want people to research that and explore it.”

A planned upgrade, possibly within a year, will make the viewer three-dimensional, “something like Google Earth where you can tip it on its side and fly around valleys a bit,” he adds.

With a wealth of practical info for industry and communities alike, the viewer “puts the power of information into the hands of people who can use it.”

Kyrgyzstan gains B.C. foothold as Centerra hedges jurisdictions

July 5th, 2016

by Greg Klein | July 5, 2016

A “balanced geopolitical risk profile” would counter Centerra Gold’s (TSX:CG) Kyrgyzstan woes with a solid foundation in more favourable countries. But with Kyrgyzstan currently holding nearly a third of Centerra shares, that country retains a sizeable piece of the action. Late July 5 Centerra announced a definitive agreement to pick up Thompson Creek Metals TSX:TCM and its Mount Milligan copper-gold mine in British Columbia. Also included are Thompson Creek’s Endako molybdenum mine in B.C. and its Thompson Creek moly mine in Idaho, both on care and maintenance, as well as two development projects in B.C.

Kyrgyzstan gains B.C. foothold as Centerra hedges jurisdictions

Gold miner Centerra takes on Thompson
Creek’s debt to move into a safer jurisdiction.

Subject to approvals, the share swap values Thompson Creek at C$0.79, a 33% premium to the company’s 20-day volume-weighted average to July 4. The deal would leave Thompson Creek shareholders with about 8% of Centerra. The company also pays off Thompson Creek’s outstanding notes. The companies value the transaction at approximately US$1.1 billion.

Royal Gold’s Mount Milligan gold stream would drop from 52.25% to 35% in exchange for an 18.75% copper stream.

The deal gives Centerra “an operating base in Canada—one of the lowest-risk mining jurisdictions in the world—which will complement our [50%-held] Canadian-based Greenstone project and provide for further flexibility to expand into the Americas,” commented CEO Scott Perry.

In addition to its flagship Kumtor gold mine in Kyrgyzstan, Centerra holds Mongolia’s Boroo gold mine, currently on care and maintenance, and two advanced-stage gold projects in Mongolia and Turkey.

At the company’s May AGM the CEO reportedly acknowledged that Kyrgyzstan is “not viewed as a top-tier jurisdiction”—a considerable understatement. Out of 109 countries ranked by the Fraser Institute’s annual mining survey, Kyrgyzstan ranks 19th from last on the Investment Attractiveness Index and eighth from last on the Policy Perception Index. B.C., although no paradise itself for miners, ranks 18th from top on the IAI and 41st on the PPI.

Centerra’s Kyrgyzstan adversities have included a police raid on the company’s office, a US$220-million pollution fine, a US$9-billion claim by the country’s Green Party, criminal investigations against the company’s executives, a ban on executives leaving the country, the arrest of a former CEO in Bulgaria reportedly at Kyrgyzstan’s behest, illegal roadblocks, violent mobs, and the arrest and deportation of a Centerra welder after he posted a Facebook remark comparing a local sausage to “horse penis.”

Centerra holds a 100% interest in Kumtor but Kyrgyzstan holds 32.7% of Centerra. In December the company offered to trade a 50% stake in the mine for the country’s shares. But now Kyrgyzstan faces dilution through the C$170-million bought deal Centerra also announced on July 5.

The company expects to close the offer around July 20 and the acquisition in autumn.

Geoscience B.C. gets $5-million grant, plans “new generation” of airborne mag

May 18th, 2016

by Greg Klein | May 18, 2016

A non-profit organization that puts geophysical results in the public domain, Geoscience B.C. announced another $5 million in provincial funding on May 18. The group now plans its largest airborne magnetic survey ever, with the Search Phase II project on a 24,000-square-kilometre grid over west-central British Columbia.

Geoscience B.C. gets $5-million grant, plans “new generation” of airborne mag

The region hosts the former Bell-Granisle porphyry copper-gold mines and one of North America’s largest molybdenum mines, Thompson Creek Metals’ (TSX:TCM) majority-held Endako, now on care and maintenance. Just outside the survey area sits Imperial Metals’ (TSX:III) 50%-held Huckleberry operation and New Gold’s (TSX:NGD) proposed Blackwater gold-silver open pit.

Calling the project “a new generation of airborne magnetic survey,” Geoscience B.C. VP of minerals and mining Bruce Madu said, “The line spacing we will fly will be much tighter than in previous surveys of this scale, providing a data resolution that is much more detailed and accurate.

“The Search Phase II survey is a key piece of the puzzle that will bridge the gap between the Search Phase I geophysical survey completed last year and the TREK survey in 2013,” he added. “Together, these three adjoining projects will provide a continuous modern survey of high-quality magnetic data covering a 55,500-square-kilometre area—equivalent to the size of Nova Scotia.”

Results will be posted next year on the organization’s data release page and its Earth Science viewer. Beneficiaries will include not only the mineral exploration industry but also local communities and land use planners.

“Usually only the largest companies have access to this kind of data,” said Rob Maurer of the Smithers Exploration Group, which supports mineral exploration and mining in the province’s northwest. “But in B.C., the innovative work conducted by Geoscience B.C. puts tools in the hands of any individual who wants to go out and prospect for minerals.”

B.C. Minister of Natural Gas Development Rich Coleman credited the organization with helping strengthen his sector’s regulation. “They have done outstanding work identifying deeper saline aquifers appropriate for industry use, which goes a long way towards better protecting ground- and surface-water needed to sustain First Nations and other communities in northeast B.C.”

The organization released its previous airborne mag findings in January. Last month it announced results from an innovative program of helicopter-borne tree-top geochemical sampling.

The stuff of life

March 23rd, 2015

Little-known but essential commodities can offer near-term potential, says MGX Minerals


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Without them, modern life wouldn’t be very modern. A wide range of industrial minerals make possible so much of what we take for granted, from luxuries to conveniences to necessities. Although few of the commodities are familiar to investors, CEO Jared Lazerson of MGX Minerals CSE:XMG believes he’s found opportunities for potentially near-term domestic production to supply North American markets.

Since its trading debut last October, MGX has been busy acquiring properties in British Columbia, mostly with a goal of producing magnesite. In fact the company has tracked down and claimed most of B.C.’s significant magnesite occurrences. The province currently hosts one of the only two magnesite mines in North America.

Little-known but essential commodities can offer near-term potential, says MGX Minerals

Driftwood Creek drilling confirmed near-surface magnesite mineralization.

As a source of magnesium, magnesite—not to be confused with magnetite—meets a number of agricultural, pharmaceutical, environmental and industrial applications. Exceptionally light for a structural metal, magnesium is used to manufacture cars and planes, among other uses. As part of an alloy, it helps make more rigid metals suitable for shaping into manufactured products.

Magnesium can be mined from magnesite or dolomite and can also be extracted from seawater or natural brines, which accounted for about 69% of American domestic magnesium compounds production in 2014, according to the U.S. Geological Survey.

USGS data shows about 52% of magnesium compounds consumed in that country last year went to agricultural, chemical, construction, environmental and industrial applications. The remaining 48% was used for refractories.

As for magnesium metal, USGS numbers show 35% of American consumption in 2014 went to aluminum-based alloys used largely in packaging and transportation. Another 30% was used as a reducing agent in the production of titanium and other metals, 15% for structural purposes, 10% for desulfurization of iron and steel, and 10% for other applications.

By far the largest global supplier, China accounted for about 89% of the world’s magnesium metal production last year, according to the USGS. Israel and Russia managed to make up about 3.3% and 3.1% respectively.

As for magnesium compounds, China again dominated world production with about 70% last year. Russia came up with about 5.7% and Turkey 4.3%.

A new North American producer, especially one that’s close to existing transportation infrastructure, could offer the continent’s market considerable advantages, says Zimtu Capital TSXV:ZC president Dave Hodge.

“MGX is a fairly unique story,” he points out. “It’s had a very recent IPO but it’s already in the permitting process. Magnesium comes in a variety of forms and one of the things they’re working on now is determining what form they would produce at what cost, versus the size of the market for that specific commodity. Those markets take different grades and different grades are produced at different costs. The opportunity here is to determine what’s the best product to produce and create value for their shareholders.”

Hodge adds, “In many respects this is not so much a mining story but more of a business story.”

Last July Lazerson signed a three-year cash, share and expenditure deal that would give the company a 100% interest in the 326-hectare Driftwood Creek project. Now MGX’s flagship, it’s located in southwestern B.C.’s Kootenays, a region that also hosts Baymag Inc’s Mount Brussilof magnesite mine. With logging roads on the property itself, Driftwood sits about 15 kilometres from highway, power and a CP spur line.

Lazerson sees near-term potential for a relatively simple quarry operation with a low strip ratio.

MGX also gained considerable expertise in CFO Michael Reimann and VP of exploration Andris Kikauka. Reimann, with a PhD in physics, has served over 45 years in senior corporate management positions, most recently with Skana Capital and PNG Gold TSXV:PGK. Kikauka’s 30-year background includes service as project geologist for the exploration and geotechnical consulting firm Rio Minerals. He’s currently a director of American Manganese TSXV:AMY.

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How fares Canada in the Fraser Institute’s global mining survey?

February 25th, 2015

by Greg Klein | February 25, 2015

Saskatchewan’s number two worldwide, Quebec’s back in the top 10 and Manitoba climbed 17 notches. But Alberta, Ontario and British Columbia took a beating in the latest Fraser Institute survey of mining jurisdictions. Released February 24, the study rates 122 jurisdictions (including provinces and states in Canada, the United States, Australia and Argentina) based on 485 returned questionnaires. Drawing on their 2014 experience, mining and exploration companies provided numerical ratings for a number of factors, which the institute tracked on separate indexes.

Most important is the Investment Attractiveness Index, which combines two other indexes—Best Practices Mineral Potential (geology) and Policy Perception (government attitudes). The institute weighs the IAI 60% for geology and 40% for public policy, roughly the same consideration companies reported for their investment decisions.

Here’s the top 10 IAI globally, with 2013 rankings in brackets:

1 Finland (4)
2 Saskatchewan (7)
3 Nevada (2)
4 Manitoba (13)
5 Western Australia (1)
6 Quebec (18)
7 Wyoming (11)
8 Newfoundland and Labrador (3)
9 Yukon (8)
10 Alaska (5)

Here are the Canadian runner-ups:

15 Northwest Territories (25)
21 New Brunswick (23)
22 Alberta (10)
23 Ontario (14)
28 British Columbia (16)
29 Nunavut (27)
42 Nova Scotia (47)

Prince Edward Island wasn’t included.

As for the bottom 10:

113 Sudan
114 Nigeria
115 Bulgaria
116 Guatemala
117 Egypt
118 Solomon Islands
119 Honduras
120 Kenya
121 Hungary
122 Malaysia

The 122 jurisdictions totalled 10 more than in 2013. For inclusion, the institute requires a minimum of 10 responses per jurisdiction.

The anonymous replies also included comments which, for Canadian provinces and territories, note serious but unsurprising concerns.

But for some people, the rankings rankled. B.C.’s 10th-place finish out of 12 Canadian jurisdictions doesn’t jibe with the province’s second-place status for mining investment, according to the Association for Mineral Exploration British Columbia. Citing data from Natural Resources Canada, AME BC credited Ontario as Canada’s favourite for attracting investment. Fraser Institute respondents stuck that province with ninth place in Canada.

“Furthermore, one of the best indicators of success in exploration is seeing discoveries move through to mine development,” said AME BC president/CEO Gavin Dirom. “In recent years, we have seen a number of new major metal mines constructed in our province, including Copper Mountain in 2011, New Afton in 2012 and Mount Milligan in 2013. Also, Red Chris is being readied for commercial operations, and the KSM and Kitsault mine development projects have received environmental assessment certificates.”

The NWT and Nunavut Chamber of Mines noted the Northwest Territories’ considerable improvement and its breakaway territory’s slight slump. The organization vowed to continue working with federal and territorial governments “to improve the investment climate for exploration and mining in the two territories.”

Download the Fraser Institute Survey of Mining Companies 2014.

It all starts with prospecting

January 23rd, 2013

AME BC’s Roundup addresses the strengths and challenges of mineral exploration

by Greg Klein

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Following so closely on the Vancouver Resource Investment Conference, a somewhat related Vancouver event might suggest overkill. But it more likely indicates the unflagging enthusiasm, despite tough times, that draws people to the world’s mining capital. On that note, AME BC presents the Mineral Exploration Roundup Conference 2013, “the world’s premier technical conference for mineral exploration development,” from January 28 to 31.

Prospector Craig Lynes searches for another British Columbia discovery

Prospector Craig Lynes searches for another British Columbia discovery.
(Photo: Teresa Lynes, courtesy AME BC)

Unlike VRIC’s investor focus, Roundup attracts industry insiders, particularly from the geosciences and occupations derived from their work. But this year’s overall theme, Resources for Life: Digging Deeper, is directed at the public.

“‘Resources for life’ addresses a disconnect, a lack of understanding about the materials we use in our daily lives and where they come from,” explains Gavin Dirom, president/CEO of the Association for Mineral Exploration British Columbia. “We’re trying to help people draw the connection. So much of our society depends on mineral resources—they’re vital to our standard of living, our life.”

That doesn’t just mean the economy, he emphasizes. Energy, technology and any number of necessities as well as consumer goods depend on mineral resources.

To fulfil those needs, “prospectors and explorers are literally digging deeper and exploring further, using new methods and techniques to make the next discovery, find the next mineable deposit,” Dirom adds. “It’s imperative we do that because we need those resources.”

This year’s Roundup features trade show exhibits from over 240 companies, short courses of half a day to two days’ duration, technical forums and site visits. Some focal points include the Map Tent, where exploration boffins can study each other’s charts, the Core Shack, featuring rock from various projects around the world, and the Prospectors’ Tent, with maps, samples and photos from very early-stage work.

Roundup Rockhounds brings together geologists with high school students. The Aboriginal Pavilion, new this year, features speeches and group discussions involving representatives of native communities and mining companies.

This year’s Roundup is the 30th annual event and the first since AME BC celebrated its centennial. As such, it’s a time for Dirom to reflect on the industry’s future hopes and challenges.

B.C., he says, “is not perfect by any stretch. But it’s leading the way in showing the world how government, first nations and industry can work together for mutual benefit. That helps create support and certainty, and drives further investment. I think B.C.’s implementing cutting-edge public policy.”

As examples, he points to revenue-sharing agreements involving native communities with Thompson Creek Metals’ TSX:TCM Mount Milligan mine and New Gold’s TSX:NGD New Afton mine. Another such agreement will be announced during Roundup, he says, with more expected this year. “This is an ongoing implementation of a very progressive policy that a lot of people say is world-leading. People are looking to B.C. for positive examples of how to develop mutually beneficial relationships.”

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In With Zijin

January 3rd, 2012

Chinese Giant Backs Equitas BC Copper-Gold Project

By Greg Klein

“Climb the mountain”—for Equitas Resources TSXV:EQT the challenge is both metaphorical and literal. While his drill crew thinks nothing of a late autumn scramble up a northern BC mountainside, President/Director Jay Roberge is more likely to scale figurative obstacles in the boardrooms of Hong Kong. As a result, the company’s Day Copper-Gold Porphyry Project now has the backing of Zijin Mining Group, China’s biggest gold producer.

“Most companies would not have tried to drill in that neck of the woods in October,” Roberge says. “But that reflects the kind of company we’re building here at Equitas. I wasn’t going to make the decision from Vancouver. So I told the guys to go up there and make the call from the mountain.”

Chinese Giant Backs Equitas BC Copper-Gold Project

Once mobilized, the crew hit a brief spell of clear weather and “climbed like goats” for 1,300 snow-covered metres to drill a 285-metre hole, “which is a great accomplishment under the circumstances,” Roberge says. “That indicates the type of company we are—very aggressive.”

Aggressive in the financial world too, as Roberge showed by snagging Zijin as Equitas’ largest shareholder. He points out the Asian giant is “the number 1 producer of gold in China, the number 3 of copper, the number 6 in zinc, [and] they have ambitions to be one of the top five miners in the world. Their current market cap is about $15 billion on the Hong Kong exchange. They’ve invested around a billion dollars in projects around the world. I was able to get their support for investing in early exploration.”

That support, Roberge emphasizes, allows for a unique business model. “Our company is being set up as an exploration company for Zijin,” he explains. “Other companies take their projects to a certain stage and then look for a joint-venture partner. We’ll be doing the same, but we already have our partner. We’ll be joint-venturing everything back to Zijin.

“So our model is to get six to eight projects and prove them out or disprove them as fast as possible,” he continues. “The ones that graduate, we’ll joint-venture. We’ll take capital from that joint venture and do more projects. It’s quite unique. It’s not at all common to see a company of our size hitching its wagon to a major. We have the backing and support of a multibillion-dollar company.”

Last October’s quick but intrepid mountainside adventure brought the following assay, released December 15:

  • 0.64 grams per tonne gold and 0.11% copper over 123 metres
  • (including 0.81 g/t gold and 0.13% copper over 53.1 metres)

“We know we’re in a porphyry system; the hole was mineralized throughout with some decent results; we’re very close to the source of the porphyry; and we’ll continue to explore on our first opportunity to get back up there,” Roberge says.

The result follows surveying, mapping and sampling that includes 211 rock and soil samples and nearly 400 historic drill cores that have been sent for assaying.

It was the historic drilling that really attracted Zijin, Roberge says. Falconbridge (acquired by Xstrata in 2006) drilled the property in 1974, followed by Skeena Resources TSXV:SKE in 1994.

It’s not at all common to see a company of our size hitching its wagon to a major. We have the backing and support of a multibillion-dollar company —Jay Roberge

Other companies also like the Toodoggone region, Roberge points out. “There’s the Kemess South Mine, which shut down in March, the Kemess Underground or Kemess North [AuRico Gold Inc TSX:AUQ], and Mount Milligan [Thompson Creek Metals TSXV:TCM] is being built to the south. Between us and Mount Milligan there’s Serengeti’s TSXV:SIR Kwanika Project. So we’re in the right area. With this historic drilling and the one hole we have now, we’re very, very optimistic about our chances up there.”

Among his company’s other advantages, Roberge includes its relationship with shareholder Zimtu Capital TSXV:ZC. “We work out of Zimtu’s office and share back-end resources with a number of other companies. That’s administrative, accounting, an in-house geo who we can all tap into, marketing and so on. So there’s a lot of expertise we can rely on to cut down on costs.”

Zijin, however, holds the largest chunk of Equitas, now about 19.9% with an option to reach 31%. Last November, geologist Richard Yu, general director of Zijin’s International Exploration Division, joined the Equitas board of directors.

Although the Day Project is very much early stage, Roberge sees an extremely busy 2012 on a number of fronts. Fundamental Research will release its initial report on Equitas. Roberge plans to spend more time in Hong Kong, including an appearance at the Mines and Money event, to recruit additional backers. “Quite frankly, the Asian market understands the value of our partnership with Zijin better than the market here,” he says. “Nobody here knows what Zijin is.” With more capital, Roberge hopes to acquire more projects—and to do so quickly. His optimism can take on the tone of urgency.

“With the markets the way they are, good opportunities are presenting themselves on the asset side. So we’re looking at a number of opportunities in British Columbia, Arizona, New Mexico and South America. The priority would probably lean towards BC and Arizona. We’d like to see a couple of acquisitions and maybe get some drilling done in Arizona before we get back to the Day property.”

Very optimistic indeed, especially given the company’s press-time share price of $0.095. With 51.33 million shares outstanding, that comes to a very modest market cap of $4.9 million.

That hardly deters Roberge. “People are going to realize Zijin Mining had good reason to invest in a little junior on the TSX Venture,” he says. “We think that’s going to bode well for our company and our shareholders.”

Streaming Through Difficulties

November 30th, 2011

Thompson Creek Sees 3Q 2013 Copper-Gold Production

By Ted Niles

Thompson Creek Metals Company Inc TSX:TCM derived two advantages from its acquisition of Terrane Metals in October 2010. An outstanding asset in the Mt Milligan copper-gold project, due to begin production 3Q 2013, and an opportunity to broaden the company’s focus from pure molybdenum producer. Nevertheless, 2011′s growing pains have been sharp, and shares of Thompson Creek have lost half their value. “We’re living in an inflationary world in terms of building these mines,” Chairman and CEO Kevin Loughrey remarks. “It’s just something we have to live with.”

A number of factors have conspired against the company, including the recent drop in value of the Canadian dollar, but the main culprit is the recent increase to capital expenditures at the Mt Milligan project. Located 90 kilometres north of Prince George, BC, it has NI 43-101 proven and probable mineral reserves of an impressive 6.02 million ounces gold and 2.12 billion pounds copper. A 2009 feasibility study estimated a 22-year mine life with annual production of 194,500 ounces gold and 81 million pounds copper. Capex for the project was originally set at $915 million, but Thompson Creek announced May 6 that this had risen to $1.27 billion, due to increases in the cost of labour and material as well as the exchange rate.

Thompson Creek Sees 3Q 2013 Copper-Gold Production

A lacklustre 3Q performance from the company’s two molybdenum mines—Idaho’s Thompson Creek and BC’s Endako—has only exacerbated the problem. “Looking at it in a vacuum,” Loughrey says, “it was a tough quarter with production down and costs up.” Delays in the mill-expansion program at Endako have resulted in a 15% capital-cost increase from the original estimate of $550 million. However, Loughrey argues that setbacks at the Thompson Creek mine are more appearance than reality. “We sequenced things at Thompson Creek differently primarily for safety. And the mining engineers would say that, from an efficiency standpoint, this is the best way to do it. In other words, at the end of the year, we’ll have spent less money doing it that way. If you step back from the results a little bit and look at the entire year, it’s exactly where we thought we would be.”

These increased costs have left Thompson Creek with a funding problem. According to the company’s 3Q investor report, estimated capital expenditures exceed its cash resources by $83.3 million. Furthermore, the company’s depressed share price prevented it recently from exercising $220 million in warrants.

“As a result of not getting the warrants and the capital projects inflating a little bit, we’re kind of close financially,” explains Loughrey. “If the molybdenum price rebounded strongly enough for a while, we probably wouldn’t need the financing. Not wanting to count on that, we think it’s appropriate that we do some additional financing. So we’ll be out looking to see what we can do with the gold in terms of assuring that we have enough cash in hand to get those projects built.”

So Thompson Creek will likely enter into another gold-streaming arrangement, similar to the one it made with Royal Gold Inc TSX:RGL when it acquired Mt Milligan in 2010. For total consideration of $311.5 million, Royal Gold acquired the right to 25% of the payable gold from the project. Given that gold is much more valuable than 13 months ago, Thompson Creek would likely pull off another streaming financing—estimated by RBC Capital Markets analyst Fraser Phillips at between $100 million and $300 million—with a smaller stream.

Seeking Alpha’s Vince Martin maintained November 23 that while the company’s funding issue is very real, the gold-streaming option presents “a very clear solution,” adding, “When the concern over the funding gap finally disappears, what will remain is a vastly undervalued company.”

Funding shortfall aside, Loughrey is pleased with progress at Mt Milligan. “We’re very much on schedule, maybe even a tad ahead of schedule in most respects there,” he reports. “The engineering work is about 75% done, which is huge because everything else follows engineering. We did a study of every major mine plan that we could find over the past year, and not one of them had come in on budget. Over half of the material that we need for Mt Milligan has been purchased, and over half of the cost of that $1.27 billion is committed. The price is firm, so that leaves less than half subject to inflationary pressures.”

We’re quite pleased with where we are strategically. We have some tactical issues to deal with but that’s why they call it work —Kevin Loughrey

Loughrey is confident that next year’s production projections for the Thompson Creek and Endako molybdenum mines, 26 to 28 million pounds at $8 a pound, will be met. “We can already see that we’re starting on our way back, and 2012 will be a more typically sequenced year,” he says.

Regarding the market for molybdenum generally, Loughrey adds, “It has apparently bottomed out and has started to move back up. We think it’ll continue, but we see caution in the marketplace. I always point out that the difference from this and 2008 was that then the actual demand dropped off the table. There was no demand; we had lots of inventory; and so we were in this destocking phenomenon. But we don’t have any inventory now, so that’s much different.”

“If this is uncertainty and weak economic activity,” Loughrey concludes, “then we can withstand this. We won’t do great, but we’ll do okay. But I believe there’s more upside potential now than down frankly. We’re quite pleased with where we are strategically. We have some tactical issues to deal with, but that’s why they call it work. I think we’ll emerge really nicely.”

At press time, Thompson Creek had 167.9 million shares trading at $7.15 for a market cap of $1.2 billion. Third-quarter financials released November 7 revealed 3Q revenue of $154.8 million (compared to $161.8 million for 3Q 2010). The company sold 9.6 million pounds of molybdenum (10.3 million pounds in 3Q 2010) and produced 3.7 million pounds (8 million pounds in 3Q 2010). Foreign exchange losses were $23.9 million. Net income was $45.6 million, $0.27 per share ($31.1 million in 3Q 2010). The company had $365.4 million cash and equivalents September 30 and total debt of $368 million, compared to debt of $22 million December 31, 2010.

Prosperity For Whom?

October 31st, 2011

Taseko’s BC Mine Hangs in the Balance

By Greg Klein

Read part 2 of the Taseko New Prosperity Mine Story

Read part 3 of the Taseko New Prosperity Mine Story

“The message is simple,” the Vancouver Sun quoted Grand Chief Edward John of B.C.’s First Nations Summit last August. “If you’re going to develop a mine or oil and gas, you need to ensure First Nations people are involved.”

That’s been the guiding principle of resource development in British Columbia for several years now. But a proposal by Taseko Mines Ltd TSX:TKO shows how the extraordinary rights—and additional potential rights—of a few thousand aboriginals might block a project that could provide jobs for themselves and many thousands of others.

Taseko's BC Mine Hangs in the Balance

Taseko’s gold-copper mine proposed for south-central BC is back before the Canadian Environmental Assessment Authority. On October 19, BC aboriginal leaders held an Ottawa press conference calling on the federal government to reject the New Prosperity project without even studying it. One year earlier, native concerns prompted the feds to reject Taseko’s earlier Prosperity proposal. Now the CEAA has until November 7 to decide whether to accept the company’s revised plan as is, allowing the proposal to move further into the permitting stage for construction, or spend up to 12 months on another study. Taseko has spent over $110 million on the project, which first entered the environmental review process in 1993.

A November 2010 CEAA study killed the previous proposal. The report’s conclusions expressed relatively little concern about the environmental impact but had surprisingly much to say about aboriginal rights, potential rights and spirituality. The three-person CEAA panel’s mandate did not include making recommendations, but its report nevertheless persuaded Canada’s Minister of the Environment, then Jim Prentice, to reject the proposal.

Now Taseko is back with a $300-million alteration, bringing the adjusted cost to $1.1 billion. The extra expense is the cost of preserving Fish Lake, a 118-hectare body of water that was originally considered for a tailings dump. That was a primary focus of CEAA concern. Rising metal prices, Taseko says, now make it possible to relocate the tailings two kilometres away, saving the lake and, the company hopes, the mine.

New Prosperity would be one of Canada’s largest gold-copper mines, an open-pit project with a measured and indicated resource estimated at 5.3 billion pounds copper and 13.3 million ounces gold, including proven and probable reserves of 2.4 billion pounds copper and 7.7 million ounces gold. Its 2007 feasibility study projects a 20-year mine life producing an annual average 300,000 ounces gold and 130 million pounds copper for the first five years.

Its economic impact would be massive, according to a Taseko-commissioned report by the Centre for Spatial Economics—71,000 direct and indirect jobs, $4.3 billion in federal taxes, $5.52 billion in provincial taxes, an $11-billion increase in Real GDP and a 5,400-person increase in BC’s population.

To emphasize the industry’s importance overall, on October 25 the Mining Association of BC released a report commissioned from PricewaterhouseCoopers. It says the mining sector spent $5.2 billion in BC last year for a total output of $8.9 billion, attributing for each dollar spent $1.73 in direct, indirect and induced total impact. Taxes paid by this sector in 2010 were $449.2 million at the federal level, $414.8 million provincial and $74.6 million municipal, with an additional $364 million in royalties and land taxes. The industry provided 45,703 jobs direct, indirect and induced. The report also notes that BC has “the world’s largest concentration of exploration firms and mining professionals.”

For all that, BC ranks surprisingly low as a mining-friendly location. The Fraser Institute’s 2010-2011 survey rates the province 36th out of 79 jurisdictions internationally. That’s a slight improvement over 2009-2010, but the score still lags behind the three previous annual studies.

“We’ve studied British Columbia since the 1990s, and things have improved a lot,” says Fraser Institute spokesperson Jean-Francois Minardi. “But the mining community believes there are still problems. There seems to be a lack of trust in the government. The main reason is the uncertainty, the sudden policy changes, especially with recent decisions concerning uranium, the Prosperity mine and Flathead.”

In February 2010, after years of protests from environmentalists in Canada and the US, the BC government banned mining in the Flathead Valley in the province’s southeastern corner. About 10% of the region had already been staked. One of the companies effectively expropriated was Max Resource TSX:MXR, which had spent $750,000 on its Crowsnest gold project. “The reason to kick them out was arbitrary,” Minardi says. As a result the industry now fears “the possibility that official land use plans will be overturned without due consultation.”

In March 2009, the BC government banned uranium and thorium exploration “even though Canada is the world’s largest exporter of uranium and has the most stringent regulations and safeguards,” Minardi says. “Metals and minerals do not occur in isolation,” he adds, “so a ban on uranium could affect other types of mining, like rare earths.”

There seems to be a lack of trust in the government. The main reason is the uncertainty, the sudden policy changes, especially with recent decisions concerning uranium, the Prosperity mine and Flathead —Jean-Francois Minardi

Once again, on October 21, the uranium ban hit the fan. The Vancouver Sun reported that Boss Power Corp TSXV:BPU received a $30-million out-of-court settlement, considerably more than its estimated sunk costs of $4 million to $5 million. Court documents show the BC government admitted that its deputy minister of mines ordered his chief inspector to ignore the company’s application for an exploration permit, an order that contradicted advice from the attorney-general’s department. The ban on uranium mining came three days later.

A week after reporting the Boss payout, the province’s media learned that BC Hydro, the Crown electrical utility, has an undisclosed $2.2 billion in deferred debt, an amount expected to hit $5 billion by 2017. Richard Stout, spokesperson for the Association of Major Power Customers of BC, said the problem exacerbates concerns about future rate increases that could hinder large-scale industrial development.

The Prosperity project, Minardi says, creates further uncertainty. The proposal passed the BC environmental assessment only to be rejected at the federal level, largely because it would destroy the 118-hectare Fish Lake. The region’s aboriginal groups had turned down a revenue-sharing plan (see below). “The lack of aboriginal treaties is a big problem with [its concomitant] lack of clarity.” Minardi declares. He doesn’t, however, see any solution.

Mining Association President/CEO Karina Briño says BC’s mining outlook has improved during the last year, emphasizing that the province’s revenue-sharing program for aboriginals is “a policy that’s making a difference.” She adds, however, that miners would like “one environmental assessment process that meets the requirements of both federal and provincial levels of government.”

She emphasizes, “We need more clarity in the scope of the assessment and the requirements expected of proponents.”

The provincial government extended the revenue-sharing policy from forestry to mining in August 2010, with two agreements that will transfer nearly one-third of the provincial mineral tax royalty from two mines to local aboriginals.

One of the deals concerns Thompson Creek Metals’ TSX:TCM Mount Milligan Copper-Gold Mine. The McLeod Lake Indian Band will get $35 million to $40 million over the mine’s 15-year life. The band’s population is currently estimated at 491.

Provincial revenue from New Gold’s Inc TSX:NGD New Afton Copper-Gold Mine will bring the Tk’emlups and Skeetchestn Indian Bands, currently estimated to have a combined population of about 1,500 people, about $30 million over 12 years.

As the deal was announced, Black Press quoted Tk’emlups Chief Shane Gottfriedson as saying his band expected more money to come. “While this agreement is specifically for the mine tax for the New Afton mine located on our territory, we look forward to a more comprehensive agreement on all revenues generated by such projects.”

But the Tsilhqot’in National Government, representing five bands totalling about 3,100 people, steadfastly spurns any such benefits from the New Prosperity proposal. They won’t even talk to Taseko. And so the $1.1-billion proposal remains at an impasse.

Read part 2 of the Taseko New Prosperity Mine Story

Read part 3 of the Taseko New Prosperity Mine Story