Thursday 27th October 2016

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Posts tagged ‘Vale SA (VALE)’

Visual Capitalist: How precious metals streaming works

September 12th, 2016

by Jeff Desjardins | posted with permission of Visual Capitalist | September 12, 2016

Miners seeking new capital have always had a variety of options: They could issue new shares, take out a loan, enter into joint-venture agreements or divest non-core assets.

However, in the last decade, a new option has emerged called “precious metals streaming”—in which streaming companies essentially offer capital up front to mining companies in exchange for metal later. If properly executed, the result is a win for both parties that can ultimately provide value to investors.

Precious metals streaming

This infographic from Silver Wheaton TSX:SLW explains the precious metals streaming model and the arbitrage opportunity that creates value for both the streamer and the miner seeking to acquire capital:

How precious metals streaming works


The aforementioned arbitrage opportunity in precious metals streaming is key.

For a traditional base metal miner, the majority of forecasted mine revenue may come from a metal like copper or nickel. However, along with those “target” metals, smaller amounts of gold and silver may be produced from the deposit as well.

Investors would still value those byproduct precious metals in a base metal miner’s portfolio, but the metals may be typically valued at an even higher multiple in a precious metal streamer’s portfolio. This allows the base metal miner to transfer these future “streams” to the streamer in exchange for up-front capital, which can be a win-win scenario for both parties.

Streaming benefits

In other words, miners use streaming to acquire non-dilutive financing and to extract value from non-core assets. This allows them to deploy capital on purposes more central to their strategy. Major miners such as Teck Resources TSX:TCK.A and TCK.B, Barrick Gold TSX:ABX, Vale NYSE:VALE and Glencore all sold streams in 2015.

Meanwhile, streaming companies have been very successful since this model was first pioneered 12 years ago. They are getting gold and silver at a discount, and this has created significant value for investors over the last decade. Today there are many valuable streaming companies out there, including the major ones such as Silver Wheaton, Royal Gold and Franco-Nevada TSX:FNV.

Posted with permission of Visual Capitalist.

Rediscovering the planet

September 9th, 2016

Laurentian University and its partners hope to re-write the geoscientific Book of Genesis

by Greg Klein

Laurentian University and its partners hope to re-write the geoscientific Book of Genesis

Metal Earth puts some of the world’s best-exposed, best-known
rocks under additional scrutiny to unlock evolutionary secrets.


Looked at this way, the future of mineral exploration lies in the past—billions of years in the past. But with state-of-the-art tools, techniques and expertise, Precambrian mysteries can be solved, leading to another generation of discoveries. Researchers with Laurentian University’s Metal Earth project intend to do just that, confidently stating they will transform our understanding of how mineral deposits originated during the planet’s evolution.

What accounts for such boldness? “We are trying new techniques, doing research on a scale that has not been done before and I’m confident that we’re going to make discoveries,” Harold Gibson tells As director of the Mineral Exploration Research Centre at Laurentian’s Harquail School of Earth Sciences and head of the Metal Earth project, he can barely contain his enthusiasm.

Laurentian University and its partners hope to re-write the geoscientific Book of Genesis

An extensive, innovative, seven-year study makes
its headquarters at Sudbury’s Laurentian University.
(Photo: Laurentian University)

“It’s a fully integrated study of our Earth,” he continues. “We’re looking at producing MRI-like images through transects of known endowed areas and structures and compare them with structures that appear to be similar but not endowed. It’ll be backed up by a lot of geology, geochemistry, mantle xenolith geochemistry, geophysics. We’re going to apply the same scrutiny to the less endowed areas to determine the underlying processes and help guide industry to select areas. We’re going to peel back time, peel back the Earth’s crust, essentially. This has never been done before.”

Gibson’s hardly alone in his confidence. Barely a week into the project’s existence, Metal Earth has attracted cash and in-kind backing totalling over $104 million. That includes a very prestigious award of $49.27 million from the Canada First Research Excellence Fund.

With money sufficient for a seven-year run, Metal Earth will draw researchers from Laurentian and other schools, including over 35 post-doctoral fellows, research assistants, technicians and support staff, over 80 grad students, 100 undergrads and numerous subcontractors.

Industry partners so far include the looming Sudbury presence of Vale NYSE:VALE, TMAC Resources TSX:TMR, nearing production at Hope Bay in Nunavut, and Ring of Fire explorer Noront Resources TSXV:NOT. Mira Geoscience brings its world-class earth modelling expertise while the Centre for Excellence in Mining Innovation provides additional computational facilities. Several universities and geological surveys have also joined in partnership.

Gibson expects ground-breaking results, in more ways than one.

Metal Earth will surpass Lithoprobe as Canada’s most extensive earth science project, he says. Some experts consider the 1980s-to-’90s endeavour to be the world’s best project of its kind. “Metal Earth is building on that with much more detail, much better equipment. We have more tools now,” he points out.

“Some ore deposits were integrated into Lithoprobe, but not a lot.” Even so the project “revolutionized ideas of tectonics, the evolution of our Shield, as well as ore deposits. This is much more focused on ore deposits and large-scale systems, so I know we’re going to have new results that will be extremely interesting. If we’re only 20% successful we’ll still change a lot of ideas.”

We’re going to peel back time, peel back the Earth’s crust, essentially. This has never been done before.—Harold Gibson,
Metal Earth project lead

Probably starting in October, field work will begin with the Abitibi Greenstone Belt. That puts a number of familiar areas under additional scrutiny. Then boots hit the ground on a less prolific belt, northwestern Ontario’s Wabigoon. Hope Bay, the Sudbury area and Manitoba will also come under investigation.

“We focused on Canada because we have the best-exposed and best-known Shield in the world—and tons of expertise. We can do this research best here but we see the results applicable globally and to younger terrains.”

Some data provided by companies will be kept confidential, but the results “will all be open source,” Gibson says. “All the data that we collect, which will be enormous, will be open to the public.”

That’ll primarily be “spatial data, on maps, plotted in 3D, in formats need by industry, government and other researchers.” Some of it will even be 4D, with the fourth dimension being time.

“We want to understand how time fits into this equation. We want to look back at the geometry, the morphology, the tectonics of the Precambrian,” he explains. “We’re going to do that through geochronology and isotope geochemistry. We’ll be looking at zircons collected by researchers and at government surveys throughout the Superior and Slave provinces, analyze them and use them as surrogates for looking at the nature of the crust at that time…. We can start reconstructing our paleo shields and look into how and when deposits fit into that.”

The results will offer a multitude of uses for exploration companies, Gibson says. He anticipates they’ll begin by poring over “an incredible amount of new data. Then we’ll be interpreting that data, creating images, integrating it all and making that available. We’ll be generating new algorithms, new ways of treating the data to see patterns that haven’t been seen before.” Info will be accessible online through Laurentian and through government partners.

While his enthusiasm’s obvious, Gibson’s well aware of the enormous challenge ahead of his team.

“This is a tremendous opportunity for us, a tremendous opportunity for geoscience in Canada, but with that comes a tremendous responsibility to do it right,” he emphasizes. “And that’s what we’re going to do.”

Pay as you go

April 28th, 2016

New gold producer Equitas Resources sees revenue for incremental expansion

by Greg Klein

New gold producer Equitas Resources sees revenue for incremental expansion

Equitas Resources meets Alta Floresta during due diligence in Brazil.


Negotiations with minority shareholders dragged out longer than expected but on April 27 Equitas Resources TSXV:EQT officially made the transition from Labrador nickel explorer to Brazil gold producer. On closing its acquisition of Alta Floresta Gold, Equitas now takes over a modest gold operation with the intention of increasing production—and cash flow—incrementally. Should all go to plan, that would bring a step-by-step payback for each new stage of the operation, as well as funding for further exploration.

That certainly contrasts with the traditional exploration model, with which investors can be quick to show impatience. Equitas experienced that first hand after just one season of drilling its Garland project, despite its compelling nickel-cobalt-copper story south of Voisey’s Bay.

New gold producer Equitas Resources sees revenue for incremental expansion

In operation since June, the Cajueiro project holds potential
for greater recovery, as well as expansion of near-surface oxides.

Looking for alternative financing, then-president/now-chairperson Kyler Hardy learned about Alta Floresta’s Cajueiro project through a friend in the company. Hardy not only liked its potential. He also recognized a good fit between the two companies’ teams.

Alta Floresta brings to Equitas its 100% interest in six gold properties with four production licences, part of a portfolio covering more than 184,410 hectares in Brazil’s central states of Mato Grosso and Para. The flagship Cajueiro project’s Baldo zone has been in operation since June, producing around a kilogram of gold a month. That amounts to recovery of only about 30% to 35%, achieved by running alluvium and saprolite through a sluice box.

Equitas hopes to see considerable improvement within months by installing a gravity plant, then about 85% recovery with carbon-in-leach processing that could begin early next year. Full open pit production would be a longer-term goal.

We expect the payback for each stage in less than a year, much less for the gravity plant. We’re derisking it that way, by building in stages.—Chris Harris, president/CEO
of Equitas Resources

The plan is to “develop the project in stages and each stage has to pay for itself,” explains new president/CEO Chris Harris. “We expect the payback for each stage in less than a year, much less for the gravity plant. We’re derisking it that way, by building in stages. That could also provide cash flow for a sustaining exploration program which we hope would then beget further development.”

Of course these are perilous times for Brazil, now undergoing serious recession, a wide-ranging corruption scandal and impeachment proceedings against President Dilma Rousseff. Compounding the problems are their effect on the Brazilian real, which contrasts with currently high gold prices. “But what that’s doing to our project is creating huge cost compression,” Harris says. “That benefits both capex and opex.” The company has already selected a nearly new gravity plant in the region for purchase. Its price has sunk to less than half of what he projected last year.

Exploration will focus on near-surface oxides, where Equitas sees the greatest potential for resource expansion and low-cost extraction.

Except for one property slightly north, the entire portfolio sits on the Juruena gold belt, which has historic estimates of seven to 10 million ounces of artisanal output. Straddling the border between Para and Mato Grosso states, the 39,053-hectare Cajueiro property’s near-term agenda could include bulk sampling and trenching, as well as diamond and rotary air blast drilling. Exploration will focus on near-surface oxides, where Equitas sees the greatest potential for resource expansion and low-cost extraction.

A just-filed 43-101 technical report recalculates data from a 2013 resource estimate to allow for different gold price and opex numbers. The new study bases a cutoff of 0.25 grams per tonne on a near-surface deposit that can be processed by cyanidation or gravity processing. The report provides separate numbers for four zones of sulphides and oxides.

Total sulphide zones:

  • indicated: 8.64 million tonnes averaging 0.771 g/t for 214,100 gold ounces

  • inferred: 9.53 million tonnes averaging 0.664 g/t for 203,500 ounces

Total oxide zones:

  • inferred: 1.37 million tonnes averaging 1.775 g/t for 78,400 ounces

All four zones show near-surface oxide expansion potential, Equitas states. Five other anomalies offer additional encouragement.

The project has road access to the city of Alta Floresta, 95 kilometres north. A hydro dam now under development should bring electricity within two years, if not sooner.

The arrangement combines talent from both companies. Harris casts a close eye on the accounts, having 30 years’ experience in energy, commodity trading and mining finance with companies like Ernst & Young, CIBC, Enron UK and BHP Billiton NYSE:BHP.

Hardy, through 16 years as a resource sector entrepreneur and executive, demonstrates a facility for operating remote, logistically complex exploration projects. Director Alan Carter, who also sits on the board of Eric Friedland’s Peregrine Diamonds TSX:PGD, brings 30 years’ exploration experience with the likes of Rio Tinto NYSE:RIO, BHP, and ECI Exploration and Mining, among others.

Equitas Resources closes acquisition of Brazilian gold operation

Cajueiro’s alluvial lure suggests
expansion potential to Equitas.

Co-director David Hodge also serves as president of Zimtu Capital TSXV:ZC, a project generator that supports several juniors with acquisitions and advisory services. VP of exploration Everett Makela began his career with Inco, eventually retiring as Vale’s (NYSE:VALE) principal geologist for North America. His international experience includes Brazil.

Mike Bennett, a local resident and director of Equitas subsidiary Alta Floresta Mineração, has spent 23 of his 30 exploration years in South America where he took part in three gold discoveries, Puquio North in Bolivia, as well as Coringa and Cajueiro in Brazil.

Also residing locally, Portuguese/English-fluent Richard Crew acts as operations consultant for Alta Floresta Mineração. His 30 years of experience includes positions as operations manager and COO for numerous companies worldwide. Another nearby resident, project manager and exploration geologist Elvis Alves knows the community as well as the minerology.

The deal has Equitas issuing 103.65 million shares to former Alta Floresta shareholders and 5.28 million options, exercisable at $0.15 for three years, to former Alta Floresta option holders. A 1.75% NSR applies to licences acquired two years ago from a former minority shareholder of Alta Floresta.‎

Earlier this month Equitas closed the final tranche of a private placement that totalled $1.5 million from 30 million units. Insiders bought 10.4 million units.

“We’ll be talking about implementing the gravity plant very shortly,” Harris says. “We’ll also be talking about starting our drilling plan, the drill results and possibly a revised 43-101. We’ll have a steady news flow.”

Visual Capitalist: The Voisey’s Bay story part 3

December 16th, 2015

Presented by Equitas Resources TSXV:EQT | posted with permission of Visual Capitalist | December 16, 2015

The story of Voisey’s Bay: Today’s mine (Part 3 of 3)



The massive Voisey’s Bay nickel deposit was auctioned off to the highest bidder in early 1996 for $4.3 billion. We show the events leading up to the nickel discovery in Part 1: The discovery.
We highlight the bidding war for the rights to the deposit in Part 2: The auction.

Voisey’s Bay today

The discovery at Voisey’s Bay was ultimately significant for three reasons:

The ore was rich in content. In fact, the famed Ovoid zone had an average grade of 2.8% nickel.

Much of the ore was near surface. This would help minimize extraction costs.

The deposit was close to tidewater. This reduced the costs associated with transporting ore to ships.

The deposit

The Voisey’s Bay deposit is world class in terms of its grade and size. With 141 million tonnes of ore, the deposit has significant grades of nickel, copper and cobalt:

  • 1.63% nickel

  • 0.85% copper

  • 0.09% cobalt

The resource is located in three main zones: Ovoid, Eastern Deeps and Reid Brook. The Ovoid represents less than 23% of the total tonnage but more than 42% of the metal in the deposit.

Mining and transporting the ore

The open pit mine at Voisey’s Bay, now owned by Vale NYE:VALE, has been in operation since 2005. Recently, underground mining was approved at the site as well.

  • The ore from Voisey’s Bay is transported via the Umiak I—the world’s most powerful icebreaking cargo ship

  • The Umiak I makes 12 trips a year

  • The icebreaker rides over ice that can be 10 metres thick in places

  • It has a 30,000-horsepower engine, which is large enough to drive an oil tanker 10 times its size

  • The Umiak I can carry 30,000 tonnes of nickel-copper concentrate at once (worth $100 million per load)

The future

The Newfoundland and Labrador government estimated that the Voisey’s Bay project will add approximately $20.7 billion to the province’s gross domestic product during the mine’s estimated 30-year lifespan. Will more of these mines be found in Labrador in the future?

A well-known exploration proverb states that “the best place to find a new mine is next to an old mine.” That’s why, in a research report by the Newfoundland and Labrador government on Voisey’s Bay, it is noted that “this area remains highly favourable for future exploration.”

And as Robert Friedland has said himself: “Creative people shouldn’t be punished for failure, because in the exploration process we are in the business of drilling dry holes. You can’t keep drilling where you’ve looked.”

Posted with permission of Visual Capitalist.

Read about Equitas Resources.

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

August 10th, 2015

by Greg Klein | August 10, 2015

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

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

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

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

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

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

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

Western Potash slashes costs

July 2nd, 2015

Update: $80-million investment puts Milestone on the road to potash production

by Greg Klein

Update: On July 6 Western Potash announced an $80-million strategic investment from private equity firm Beijing Tairui Innovation Capital Management. Read more.


Showing a dramatic cut in capital and operating costs, Western Potash TSX:WPX revived its Milestone potash project with a preliminary economic assessment announced July 2. Taking advantage of improvements in horizontal drilling and selective mining, the company now proposes an initially smaller but upwardly scalable approach to solution mining for the southern Saskatchewan property. With an offtake agreement already in place and amid a backdrop of potash M&A activity, Western expects the new plan to attract a wider range of investor interest.

To be sure, the new PEA proposes a more modest project than originally envisioned. A December 2012 feasibility study projected 40 years of production, but at a capex of $2.44 billion. The following summer saw the Uralkali/Belaruskali breakup, ending a cartel-like partnership that kept prices around $450 a tonne. Obviously Milestone needed a re-think.

Western Potash slashes capex and opex with a new plan for Milestone

By providing a key ingredient for fertilizer, Western Potash’s
Milestone project could help feed a hungry world.

That came with a scoping study for a downsized but scalable pilot project. The new calculations assume a potash price of US$315 per tonne FOB Vancouver. Capex now comes to $80.6 million, opex to $80 per tonne and transportation costs to $70 per tonne (all prices Canadian, except where noted). Using a 10% discount rate, the PEA calculates a net present value of $56.7 million and a 25.2% internal rate of return after taxes and royalty.

Those streamlined numbers result from a different approach to solution mining. The new plan calls for simultaneous operation of three caverns. They’d be injected with a sodium chloride-saturated brine that would dissolve potassium chloride. Once brought to surface, it would be recovered through a simplified process that wouldn’t produce salt tailings. The result would be about 145,600 tonnes of standard grade muriate of potash (potassium chloride) per year over a 12-year lifespan.

“We looked around the world at what others were doing, not just in potash but in soluble salts and soda ash, and what other processes were being done,” project director Richard Lock tells “One of the key advantages was the advance of directional drilling. We could use that to establish the cavern and then focus only on selective mining or secondary mining. Instead of the conventional process of opening up a primary cavern and taking out both KCl [potassium chloride] and NaCl [sodium chloride], we just take out the KCl.”

“Obviously when you don’t have to bring the NaCl to surface and separate it from the solution, you have a major capital cost saving. That’s the real critical issue here—that by taking basically half the process plant away you get that major capital cost saving.”

With 25 years’ experience in mine development, Lock adds, “When we apply those technologies to the Saskatchewan resource it’s in some ways easier than other projects I’ve done around the world.”

Lock began his career with De Beers in South Africa before working with Rio Tinto NYE:RIO to take the Northwest Territories’ Diavik diamond mine into production. Lock also finished an Alberta oilsands project for Canadian Natural Resources and served as project director for Arizona’s Resolution project, an engineering marvel that could become North America’s largest copper mine.

Western’s 100%-owned Milestone has two continental railways cutting through its 35,420 hectares and a deal with the city of Regina, 30 kilometres away, to supply the mine with treated waste water.

Milestone’s PEA comes with a new resource using a 15.8% KCl cutoff to show:

  • measured: 7.17 million tonnes averaging 39.5% KCl

  • indicated: 11.56 million tonnes averaging 39% KCl

  • inferred: 1.77 million tonnes averaging 39% KCl

“We’d be starting with a small facility to prove up the technology,” Lock explains. “There’s no question there’ll be some fine-tuning of our methodology and processes as we develop these three test caverns, but we’re very confident that we can apply this technology to Saskatchewan. The endgame isn’t 150,000 tonnes, it’s a million tonnes plus. So once we’ve demonstrated this mining methodology we hope to quickly expand to a full-scale million-tonne-plus facility.”

The endgame isn’t 150,000 tonnes, it’s a million tonnes plus. So once we’ve demonstrated this mining methodology we hope to quickly expand to a full-scale million-tonne-plus facility.—Richard Lock, project director
for Western Potash

He sees the pilot project happening without a feasibility study. “Depending on raising the funds, we’d go straight into engineering and construction.”

Still in effect is a June 2013 offtake agreement with a joint venture of Benewood Holdings and China BlueChemical, the latter a majority-owned subsidiary of China National Offshore Oil Corp, China’s largest offshore oil and gas producer. With a 19.9% interest in Western, the JV has agreed to buy or designate a buyer to purchase the lesser of either 30% of Milestone’s production or one million tonnes of potash annually.

“Obviously we’ve shared everything we’ve done with them and they’re very excited by what this could mean,” Lock says.

The PEA comes amid heightened potash M&A activity, with the world’s largest producer, PotashCorp of Saskatchewan TSX:POT, trying to woo Germany’s K+S AG with a reported US$8.5-billion offer. A few weeks earlier Israel Chemicals Ltd NYE:ICL scooped up TSX-listed explorer Allana Potash for $137 million.

Milestone’s neighbours consist of K+S, BHP Billiton NYE:BHP, Vale NYE:VALE and a JV of Rio and North Atlantic Potash.

As for the revamped project, “We’re very confident we’ll be attractive to some mining investors who are looking for a good entry into the potash space,” Lock says. “I think this really opens up the field of investors to those who can see the game-changing advantage of what we’re proposing.”


Update: On July 6 Western Potash announced an $80-million strategic investment from private equity firm Beijing Tairui Innovation Capital Management. Read more.

Disclaimer: Western Potash Corp is a client of OnPage Media Corp, the publisher of The principals of OnPage Media may hold shares in Western Potash.

Strategies for success

June 2nd, 2015

Four junior explorers discuss their pursuit of diverse commodities

by Greg Klein

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Four junior explorers discuss their pursuit of diverse commodities

Chris Berry moderates as reps from Commerce Resources, Electra Stone,
Lakeland Resources and Equitas Resources talk about their Canadian projects.

Why do some juniors thrive despite depressed capital markets? Obvious answers would include the right commodities, projects and management. But how that plays out on a company-by-company basis came through in a May 31 Canvest ’15 panel discussion bringing together four explorers pursuing widely diverse minerals.

The quartet comes under the umbrella of Zimtu Capital TSXV:ZC, a prospect generator with several core holdings among junior explorers. Lakeland Resources TSXV:LK holds one of the Athabasca Basin region’s largest portfolios of uranium prospects. Equitas Resources TSXV:EQT brings modern exploration techniques to a surprisingly under-explored Labrador land package southeast of Voisey’s Bay. Electra Stone TSXV:ELT has made aggressive moves into British Columbia jade properties while producing industrial minerals. Commerce Resources TSXV:CCE continues to advance its Ashram rare earths deposit in Quebec towards pre-feasibility while also holding a tantalum-niobium project in southern B.C.

Four junior explorers discuss their pursuit of diverse commodities

Panel moderator Chris Berry, president of House Mountain Partners and co-editor of the Disruptive Discoveries Journal, opened the discussion by asking about each company’s competitive advantage.

Commerce president Chris Grove noted that Ashram is one of a “very, very small” number of comparable projects that survived the rare earths bubble. Meanwhile rare earths demand for electric vehicles and magnets “has actually increased since the highs in 2010, 2011 and arguably will increase.”

He suggests investors consider a rare earths deposit for its distribution of magnet materials. “In that regard our project is not only hosted by the three minerals that are processed every day basically all around the world but it also has a great distribution of those magnet materials.”

Electra president John Costigan related his company’s entry into the $20-billion global jade industry. “B.C. accounts for 75% of the world’s nephrite jade … and that market is worth about $400 million.” Coming from an industrial minerals perspective, Electra sees neglected potential in the province’s B-grade jade, which Costigan says is literally left behind in the quest for higher-grade stuff used in jewelry and carving.

Among Lakeland’s advantages is its location. “We’re in the Athabasca Basin where the world’s highest grades are,” said manager of corporate communications Roger Leschuk. Uranium deposits outside the Basin average 0.1% to 0.15% U3O8, he added. Pointing to Basin grades like McArthur River’s 22% to 24% and Cigar Lake’s 18% to 22%, he said, “These mines are essentially hundreds of times richer, so the cost per pound of pulling it out of the ground is lower. Even in a low-rate environment, the Athabasca Basin’s the only place that makes sense.”

Location also helps explain the optimism of Equitas president Kyler Hardy. His company’s flagship Garland project sits 30 kilometres southeast of Vale’s (NYE:VALE) Voisey’s Bay on a land package undergoing modern exploration techniques for the first time. Canadian sulphide-type nickel deposits are “considered some of the best mines in the world simply because they’re not laterites,” Hardy said. “The environmental destruction that can occur when you mine laterite is massive because you’re basically strip-mining.”

And markets for Canadian nickel are relatively close. While other countries might produce the metal for China, Canadian nickel goes mostly to the eastern U.S., Montreal and Europe.

Tough equity markets have failed to keep these four companies down. So Berry asked about their sustainability plans for the next 12 to 24 months.

Last year’s $11.1 million in financings testifies to Commerce’s stability, Grove replied. The money supported a 31-hole drill program and Phase I mini-pilot plant tests, with the second phase set to begin within weeks. “Sustainability in this industry goes back to the actual rocks,” he said. When a company finds the metals it’s looking for and understands the market for those metals, “then arguably you have both sides covered.”

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BHP, Australian government respond to Fortescue’s call for iron ore inquiry

May 19th, 2015

by Greg Klein | May 19, 2015

With a new website launched May 17, Fortescue Metals Group renewed its call for an Australian government inquiry into iron ore giants Rio Tinto NYE:RIO and BHP Billiton NYE:BHP. A strident critic of the two companies, Fortescue chairperson Andrew Forrest accuses them of ramping up low-cost production to lower prices and drive competitors out of business. As higher-cost mines close and government loses revenue, Fortescue says the Australian economy loses about AU$1 billion for every $1 dollar drop in iron ore’s price. That price fell to a decade low of $46.70 a tonne in April, before climbing to about $61 last week, according to figures provided by Reuters on May 18.

The budget papers reveal $90 billion in economic activity has been lost to the Australian economy as a result of the fall in the iron ore price.—Nev Power, CEO of
Fortescue Metals Group

The news agency quoted BHP CEO Andrew Mackenzie calling such an inquiry “an amazing gift to our major competitor, Brazil.” The country is headquarters for Vale NYE:VALE, the third member of iron ore’s Big Three. At least one Australian senator backs the proposed inquiry.

While Rio and BHP deny allegations, Fortescue CEO Nev Power wants their bosses grilled over statements that he says suggest otherwise. Fortescue’s May 17 statement quoted BHP iron ore CEO Jimmy Wilson saying, “Demand side in this business still remains good but what we’re doing is we’re oversupplying at the moment and we’ll oversupply in the medium term.”

Wilson was also quoted, “Do we see value in us pulling back our volume with the objective of increasing the price? The answer to that is absolutely no.”

As for Rio CEO Sam Walsh, Fortescue dug up this quote from last June: “A lot of my friendly competitors are going to disappear.”

Australian Prime Minister Tony Abbott said any inquiry couldn’t become “a witch hunt, it can’t be directed against any particular company or companies,” according to

Saying the market was “working well,” Abbott maintained his country’s resource sector “has become very, very successful and prosperous, it’s very good for all Australians and it has done all that because of the initiative and the creativity of business, of private business, of private individuals and the last thing we want to do is to crack down on people’s creativity.”

But Fortescue’s Power argued, “The budget papers reveal $90 billion in economic activity has been lost to the Australian economy as a result of the fall in the iron ore price.”

Update: On May 21 Australia’s finance minister announced the government would not hold an inquiry into iron ore prices.

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.

All 39 Vale miners surface after underground fire at Thompson

April 6th, 2015

by Greg Klein | April 6, 2015

No injuries were reported after the last of 39 miners returned following a fire at Vale’s (NYSE:VALE) Thompson, Manitoba nickel operation, the Winnipeg Free Press reported April 6. The blaze broke out in remote-controlled machinery 850 metres underground around 3:30 p.m. the previous day. Miners waited out the ordeal in refuge stations stocked with oxygen and supplies for an extended period.

All 39 Vale miners surface after underground fire at Thompson

A Vale file photo shows Thompson
employees in rescue gear.

Workers in an adjoining mine also took refuge but surfaced Sunday night. Others were stuck until early Monday afternoon, when air quality was deemed satisfactory.

Vale’s Manitoba operations consist of the Thompson and Birchtree mines, the Thompson mill, Thompson smelter and Thompson refinery. They employ about 1,500 people, the company states.

In November 2013, the Free Press reported Vale faced 10 charges under Manitoba’s Workplace Safety and Health Act resulting from the death of a Thompson miner in 2011.

Last week CBC reported three Sudbury employees of Vale face 17 charges under Ontario legislation following a fatality last year at the Copper Cliff smelter.

A September fire at PotashCorp’s (TSX:POT) Allan mine in Saskatchewan trapped 96 miners underground, some of them for more than 36 hours. Another fire the previous February kept more than 50 Agrium TSX:AGU workers in refuge stations overnight.