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Posts tagged ‘Xstrata plc (XSRAF)’

Week in review

April 5th, 2013

A mining and exploration retrospect for March 29 to April 5, 2013

by Greg Klein

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Tibetan tragedy draws attention to the world’s deadliest mines

By Wednesday 66 bodies had been recovered from the Good Friday landslide that buried a tent camp for miners in Tibet. Seventeen more people were missing and presumed dead. Weather was to blame, according to a Tibetan government official cited by the New York Times. But the Economist quoted a Chinese government official who called it a “natural geological disaster.”

A mining and exploration retrospect

China has reportedly barred foreign media from the site, ordered its own media to limit their coverage to that of the state-run Xinhua news agency and censored social media. Apart from the carnage, the landslide poses a disaster for Chinese-Tibetan relations, as well as the image of Chinese mining and resource imperialism. The camp housed workers for the Gyama copper-polymetallic mine (a.k.a. the Jiama mine), which belongs to a wholly-owned subsidiary of China Gold International Resources TSX:CGG. The Vancouver-headquartered company’s “controlling shareholder is the China National Gold Group Corp, a state-owned enterprise and China’s largest gold producer,” reported the National Post.

Only two of the 83 dead are Tibetans. The rest came from distant parts of China. “Managers at big state-owned firms are usually Han Chinese, who in turn tend to regard their own ethnic kin as easier to control and communicate with than Tibetans,” stated the Economist. The magazine quoted a 2012 China Daily story saying that 35% of the mine’s workers were non-Han, which the state-run paper called “the highest percentage among mining companies in China.”

As Bloomberg reported, “China’s history of mining incidents includes the world’s worst safety record at its coal mines, which saw 1,973 people killed in accidents in 2011 and 2,433 the year before that, according to the State Administration of Work Safety.”

Several hours after the Tibetan landslide, a coal mine blast in northeastern China left at least 28 dead and 13 injured. A second explosion on Monday killed at least seven rescuers, said CCTV.com. “The mine is a state-owned colliery,” Xinhua added.

On March 14 NBC reported that a coal mine accident in southern China killed at least 21 people.

A Tuesday news release from China Gold International Resources stated its Tibetan mine, about 10 kilometres from “the geological disaster site,” was not damaged. Production continues.

Will private equity lead investors back to mining?

“The only people who want to lend to this industry right now—and a lot of executives call them the mafia of the mining industry—are the royalty trusts, and they really extract a lot.” In an Equedia interview posted on Wednesday, Kenneth Hoffman of Bloomberg Industries Global Metals and Mining Research said private equity could be the miners’ salvation. And the miners are clamouring for it.

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Fortnight in review

January 4th, 2013

A mining and exploration retrospect for December 22, 2012, to January 4, 2013

by Greg Klein

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To accommodate the Christmas/New Year publishing schedule, this review covers two weeks.

From risk to risk

“Although some companies and the province laud Ontario as being one of the best mining-friendly jurisdictions in the world,” that reputation is changing, according to a Thunder Bay-based drilling contractor. In the January 2 edition of Northern Ontario Business, Barb Courte, president of Cobra Drilling and North Star Drilling, said the province is facing a downturn in early-stage exploration.

The article stated, “In conversation with her industry colleagues, Ontario is considered a ‘risk area’ for investment, based on some high-profile First Nations-industry conflicts, along with the uncertainty of how the new Mining Act plans and permits regulations will play out.”

Regulations that take full effect in April will give native bands more power to block drilling on Crown land.

A mining and exploration retrospect

Courte told Northern Ontario Business her companies did well in 2012 but business has now dropped by about 50%.

A supplier dates the drilling downturn to last April. Hugh Paxton, GM of Wire Rope Industries Distribution, told the paper, “It’s the lowest numbers we’ve seen for drilling supplies since we’ve been [in] it for the last four years.”

Courte, meanwhile, hopes to make up for lost business in the Caribbean. Unigold TSXV:UGD has contracted her to send four drills to the Dominican Republic in autumn and she’s getting inquiries from other companies operating in the country, the story stated.

Unigold calls the country a “premier mining destination.” The company’s most recent (November 28) news release stated the government “supports development and exploration in the mining sector. In addition, the country has well-established mining laws and environmental laws.”

Two days later, however, Mining Weekly offered a different perspective. A spokesperson for the Xstrata Nickel subsidiary Falcondo told the publication, “Security in the country has seen a gradual deterioration, which has forced us to significantly increase our security costs. They have tripled in the past few years.”

Mining Weekly added, “Dominican President Danilo Medina has acknowledged the problems and promised in a televised speech to the nation on [November 27] to improve security and reform the country’s police force. According to the World Economic Forum’s latest Global Competitiveness Index released in October, the Dominican Republic ranked 143rd out of 144 countries worldwide in reliability of its police force.”

New mega-company consolidating China’s rare earths production

A planned 12-company takeover could mark the first step in creating “a massive rare earth enterprise that will integrate light rare earth resources” in northern China. According to a December 28 China Daily article, newly signed framework agreements would have the companies and their shareholders hand over a combined 51% interest for free to the Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co (REHT). In return, REHT would provide management, technology and funding, while setting production and export quotas. The agreement allows one year for the deals to be consummated.

“If the first step goes well, REHT will eventually team up with major rare earth producers in Gansu, Sichuan and Shandong provinces to form the China North Rare Earth Hi-Tech Co,” China Daily reported. “Authorities expect bigger enterprises to churn out products with higher added value and shoulder more responsibility in environmental protection.”

With just 23% of the world’s rare earths reserves, China supplies over 90% of global demand, the paper added.

Can placer miners meet B.C.’s environmental code?

An enduring legacy of the Fraser and Cariboo gold rushes, placer mining remains a British Columbian institution. But now that a forgotten 2011 environmental report has come to light, the miners are worried.

An audit from B.C.’s Ministry of the Environment found 74% of 23 placer operations inspected in 2010 didn’t comply with land restoration requirements and 43% of miners “were also working in streams without authorization,” the Vancouver Sun reported on December 26.

“The placer mines range from one-person operations to larger operations that employ dozens of people and use heavy equipment to extract gold from sand and gravel,” said the story.

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Two Strategic Minerals

February 29th, 2012

Energizer Fast-tracks Vanadium and Graphite in Madagascar

By Greg Klein

According to Brent Nykoliation, Energizer Resources TSX:EGZ faces a question of identity. “Are we a vanadium company with a graphite credit or a graphite company with a vanadium credit?” the VP of Business Development asks. “The answer is, we don’t know yet.”

A January 2011 resource estimate had already established Energizer’s Green Giant Property in Madagascar as one of the world’s largest known vanadium deposits. On that note, a PEA was initiated. Then the discovery of graphite put a whole new perspective on the project. Further exploration identified five graphitic trends apart from the vanadium zones. Those findings prompted the company to negotiate a joint venture with Malagasy Minerals MGY, in which Energizer holds a 75% interest and acts as project operator on a property that surrounds Green Giant on three sides.

Energizer Fast-tracks Vanadium and Graphite in Madagascar

Although they are rarely found together, Energizer’s Madagascar properties host both graphite and vanadium.

“The JV Property is significant for two reasons,” Nykoliation says. “First, we knew the vanadium was going to travel south of our border, so we made the deal to secure the extension of the vanadium. But second, we also found that graphite was in our vanadium trend. So in our 100%-owned property we have about 3.8% graphitic carbon with the vanadium. At that point, we understood that we had graphite on the property and much higher grades in areas that were exclusively graphite and no vanadium.

“Our property went from 21 kilometres to 120 kilometres long, and we have tied up about 75% to 80% of a very significant zone in southern Madagascar which is known for very rich graphite and vanadium. There’s no other company and no other place we know of that has a graphite discovery of this magnitude—a cumulative 320 kilometres. As our VP of Exploration Craig Scherba says, it’s very rare to find those two together. So we have two strategic minerals in one source.”

Traditionally associated with the steel industry, both vanadium and graphite are considered crucial to a cleaner, greener future. A 2009 report from investment banker Piper Jaffray predicts energy storage to be a $600-billion industry by 2020, with 51% of that devoted to battery technologies. Among the contenders are lithium vanadium phosphate batteries for electric vehicles and vanadium flow batteries for power grid storage. VFBs require vanadium over 98.4%, an especially costly grade. Energizer says its deposit, “one of the largest and purest in the world,” is especially well-suited to make the grade.

Graphite’s share of the green economy inspires even headier projections. Predicted demand from lithium-ion batteries, pebble-bed nuclear reactors, fuel cells, solar panels and other new technologies has triggered an exploration boom. Graphene, an ultra-thin, flexible derivative 200 times stronger than steel, inspires a whole new world of technological marvels. These new uses call for high-purity flake graphite. While metallurgical analysis continues on Energizer’s graphite, the company states that it is “comfortable in identifying the graphite as flake, based on visual observation and cursory testing.”

Green Giant has a January 2011 vanadium resource estimate of 49.5 million tonnes grading 0.69% for 756.3 million pounds vanadium pentoxide indicated and 9.7 million tonnes grading 0.63% for 134.5 million pounds vanadium pentoxide inferred.

The resource, Nykoliation explains, “was in our original property of 21 kilometres and that vanadium represents only about 20% of our 21-kilometre trend. Then on top of that we increased our vanadium trend by about 50 kilometres.”

Energizer released Green Giant drill and trench graphite carbon assays. Results from the Fondrana Zone include

  • 7.01% carbon over 41.5 metres
  • 5.63% over 24 metres
  • 5.18% over 18 metres
  • 4.73% over 12 metres
  • 5.88% over 5.9 metres

Fotsy Zone results include

  • 5% carbon over 15 metres
  • 4.39% over 11 metres
  • 4.64% over 8 metres
  • 5.18% over 5 metres

With the JV Property included, Energizer has identified 17 distinct graphitic zones, supporting its belief that the property constitutes a graphite camp. “We’ve drilled seven of those zones, and the assays will be coming back over the next few weeks,” Nykoliation adds.

In 18 to 24 months, assuming we hit all our timelines, we could have a mine —Brent Nykoliation

“We’re moving very quickly to delineate a 43-101 resource on the graphite,” he says. “We need to determine where in the 17 zones we’ll delineate that resource…. We expect to have a 43-101 resource by July or August of this year. We expect to have a PEA completed probably by September or October, and then we’ll be in a position to have a bankable feasibility, along with a pilot plant project that would start earlier, by December of this year.”

Nykoliation explains, “The reason we can fast track this is our partnership with DRA Mineral Projects, Africa’s leading mine development firm. DRA runs 29 mines around the world. They run mines for Xstrata XSRAF, Rio Tinto RIO, Vale VALE, and now they’re partnering with us. They’re the ones who’ll do our PEA and our bankable. In 18 to 24 months, assuming we hit all our timelines, we could have a mine open up. DRA could be our total engineering, construction, procurement and management solution for mines.”

Getting back to the question of identity, it’s a matter of economics. “The capex on a graphite mine is much lower than on a vanadium mine. So graphite might be the springboard to get the mine open. Then the revenue from that would help fund our vanadium operation,” Nykoliation says.

Offtake discussions are already underway, and the suitors could come from a number of countries. “We’re close to the Chinese market,” he says. “We’re perfectly situated for South Africa, one of the largest vanadium consumers in the world. We are ideally situated for Europe. Madagascar is an extremely mining-friendly jurisdiction. But it also has location, location, location.”

It’s well-positioned in other ways as well. Nykoliation concludes, “We have a dual offering—two strategic minerals, one source. We have a very large project, and we’re fast-tracking it. We have a great partner in DRA and a great location in Madagascar. We’re uniquely situated.”

At press time, Energizer had 153.7 million shares outstanding at $0.29 a share for a market cap of $44.6 million.

Read previous feature on Energizer Resources.

Read feature story about graphite.

North Of 60

September 7th, 2011

Sabina Faces a Huge Challenge in Nunavut

By Ted Niles

The Canadian Arctic contains the largest reserve of unexploited natural resources in the world. But they have remained unexploited for good reasons: savage weather and nominal infrastructure. Even as talk of climbing temperatures and Prime Minister Stephen Harper’s commitment to the region excite interest, the cost of development remains a dauntingly high barrier to entry for such as Sabina Gold & Silver.

In response to this challenge, Sabina announced June 2 that it had sold its Nunavut Hackett River Project and some Wishbone Greenbelt Belt claims to Swiss mining giant Xstrata for $50 million and a silver production royalty equal to 22.5% of the first 190 million ounces of payable silver and 12.5% thereafter. President/CEO Tony Walsh explained that the deal “transforms Sabina into a purely precious metals company… Our goal is to become a mid-tier gold company producing between 300K to 400K ounces of gold per year from Back River, a project scope we believe we can expedite.”

Sabina Faces a Huge Challenge in Nunavut

The Back River gold project, located about 60 kilometres from Hackett River (and 70 kilometres south of the Arctic Circle), consists of seven claim blocks, the most important of which are the Goose Lake and George properties. Since acquiring the project from Dundee Precious Metals in 2009, drilling has focussed largely on Goose, and the discovery of the Llama and Umwelt deposits there have considerably increased the project’s resources. In March 2011 Sabina announced a new resource estimate for Back River of 2.66 million ounces gold indicated—more than doubling the existing indicated resource—and 1.56 million ounces gold inferred.

The objective of Sabina’s 2011 drill campaign is to add at least another 700,000 ounces of gold to the resource. VP Exploration Manojlovic tells Resource Clips, “We’re still drilling up there right now, and we will be until the end of September. We have nine drills currently turning. We have five drills working on the Umwelt itself—we’re expanding that deposit. Last year we drilled about 550 metres at the top end of that deposit, brought it to a resource, and this year we’re drilling to get the additional mineralization to the south. Once we’re done at the end of September, we’ll be working on doing the resource from that 550 metres down to however deep we take it by the end of September. We would hope to get [the updated resource] out by 4Q.”

Umwelt assays reported September 1 include 14.62 grams per tonne gold over 13.9 metres (including 27.56 g/t over 5 metres), 7.32 g/t over 24.4 metres, 5.47 g/t over 29 metres and 7.28 g/t over 18.4 metres. August 25 results included 10.19 g/t over 33 metres (including 27.16 g/t over 9 metres), 5.64 g/t over 6.7 metres, 3.35 g/t over 19.2 metres, 4.79 g/t over 20.8 metres, 15.42 g/t over 6 metres and 13.43 g/t over 24.4 metres (including 72.8 g/t over 3 metres).

We have very high confidence that we will continue to increase resources and bring the project to the mining stage —Peter Manojlovic

Manojlovic comments, “We’re quite excited about the results that we’ve released. Certainly the highlight was the hole that returned 13 g/t over 24 metres. The deposit now extends from, basically, near surface at the north down to about 650 metres at the south end, which is where that hole is. It demonstrates the incredible continuity of the deposit over 1.4 kilometres. The thickness is very consistent as well.”

He continues, “We hope to complete our drilling and get those resources and begin a preliminary economic assessment of the project this fall. We see that as having a high likelihood of being positive. We would progress as rapidly as we can once we reach that stage.”

Sabina believes that Ontario’s Timmins and Kirkland Lake mining districts presented similar challenges to what the Far North faces today, and as awareness of Nunavut increases infrastructure will follow. Prime Minister Harper made a step in this direction August 24 with the investment of $230,000 in the establishment of an Iqaluit office for the Northwest Territories and Nunavut Chamber of Mines. More important, perhaps, is the investment in Nunavut by other miners. Apart from numerous juniors exploring there, majors include Agnico-Eagle—whose Meadowbank gold mine began production June 2011—as well as ArcelorMittal, Areva, Newmont, BHP Billiton and Xstrata.

However, according to an August 31 Reuters story, Agnico-Eagle has invested $1.5 billion in Meadowbank, while “Newmont has spent $2 billion so far on its Hope Bay gold deposits in western Nunavut, and there is no guarantee a mine will ever be built.”

Nevertheless, Manojlovic concludes, “We’re extremely excited about Back River. Sabina has been working on the project for about two years, and in those two years we’ve made a number of new discoveries, the most significant of which are the Umwelt deposit and the Llama deposit. We’ve increased resources there quite substantially, so we have very high confidence that we will continue to increase resources and bring the project to the mining stage.”

Sabina Gold & Silver currently has 160.3 million shares trading at $4.88 for a $782.2 million market cap. Sabina also has three early-stage exploration projects in Ontario’s Red Lake mining district.