Archive for the ‘COUNTRIES’ Category

WORLDS MOST NORTHERNMOST MINES IN FOCUS

Tuesday, January 12th, 2016

bluemarble_globe_west image www.spy-drones.com

The world’s northernmost mines are all located in just three countries; on Norway’s Svalbard archipelago in the Arctic Ocean you’ll find four of them. All are underground coal mines, operating in the rugged, frigid terrain between continental Norway and the North Pole.

Further south, in Russia, you’ll find Alrosa’s diamond mines. Nizhne-Lenskoye, in the Sakha Republic, is the fifth northernmost mine in the world.

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Data provided by IntelligenceMine.com

#1 Gruve 7
Location: Norway
Owner: Store Norske Spitsbergen Kulkompani
Type: Underground coal mine


#2 Barentsburg
Location: Norway
Owner: Arctic Ugol
Type: Underground coal mine


#3 Lunckefjell
Location: Norway
Owner: Store Norske Spitsbergen Kulkompani
Type: Underground coal mine


#4 Svea Nord
Location: Norway
Owner: Store Norske Spitsbergen Kulkompani
Type: Underground coal mine


#5 Nizhne-Lenskoye
Location: Russia
Owner: Alrosa
Type: Placer diamond mine


#6 Mary River
Location: Canada
Owner: Baffinland Iron Mines
Type: Open-pit iron ore mine


#7 Almazy Anabara
Location: Russia
Owner: Alrosa
Type: Placer diamond mine


#8 Sydvaranger
Location: Norway
Owner: Sydvaranger Gruve AS
Type: Open-pit iron ore mine


#9 Taimyrsky
Location: Russia
Owner: Polar Division (Mine Complex)
Type: Open-pit/underground cobalt, copper, gold, iridium, nickel, palladium, platinum, rhodium, and ruthenium mine


#10 Oktyabrsky
Location: Russia
Owner: Polar Division (Mine Complex)
Type: Underground cobalt, copper, gold, nickel, palladium, and platinum

OOO

Henry Sapiecha

Watch Turkey for world’s next top gold projects –mining law, people, and infrastructure are improving: Han Ilhan, Aldridge Minerals

Thursday, June 18th, 2015

Village-and-core-shed-near-Yenipazar-deposit-Turkey.image www.www-globalcommodities.com

To make new discoveries, companies often look in “fringe” areas – countries in Africa, Southeast Asia, or South America for instance.

These areas may contain more un-discovered deposits than other well-trodden mining regions.

But in the last few years, investors have recoiled towards “safe” places like the US, Canada, and Australia.

“Fringe” jurisdictions come with additional risks and costs.

Mining laws can change rapidly. In one example, Ecuador has nearly killed investment in its mining sector with new tax demands.

Miners and explorers also lack services, equipment, skilled labor, and infrastructure in these locations.

It could be years before investors begin to return to “fringe” mining jurisdictions, despite their potential.

But there’s one country that could be back in favor much sooner – Turkey.

Turkey is partially located on a geological structure that may yield gold discoveries (Steve Todoruk, at Sprott Global Resource Investments, recently brought one project to our attention).

And over the last 15 years, the country has remained relatively stable and welcoming of gold mining.

I spoke with Han Ilhan, CEO of Aldridge Minerals, about the prospects for mining in Turkey, and whether the country would break out of “fringe” status. He’s currently working to bring the Yenipazar deposit into production.

Henry Bonner: Many investors view Turkey as a fringe jurisdiction.

Han Ilhan: Yes, yes.

We’ve seen some projects get held up in Turkey…

Yeah, OK.

turkey-city-lush-setting-and-floral-flag-image www.www-globalcommodities.com

Many investors still have concerns about the country and my question is, “What has changed?”

OK. Look, I think you need to look at the bigger picture. So let me present it to you.

Year 2000 — Turkey produces no gold. Year 2015 — Turkey is now the number one gold producer in Europe, in just 15 years.

It produced around 31 tonnes of gold in 20141 (and projects 50 tonnes of production in 2015, according to the Turkish Gold Miners Association).

Over the past 15 years, just in the gold sector, seven mines have been built, all by Turkish construction companies.

There are foreign mining companies, as well as Turkish mining companies. Some foreign companies are in partnership with a Turkish mining company. Some are not, such as Eldorado Gold.

Compared to other jurisdictions, that report card speaks for itself — seven mines built in the last 15 years, and going from no gold production to becoming the number one in Europe.2

On the other hand, Turkey’s mining industry, particularly the gold mining industry, is still in its infancy. 15 years is nothing.

What Turkey has accomplished in 15 years is remarkable but still, the mining law was revised in 2010. It has become extremely foreign-friendly. A foreign company in Turkey has the same rights as a Turkish mining company, with no differences.

But Turkey is still in its infancy in mining. And of course, like any other country, Turkey is looking at ways to increase State income from natural resources.

The economy has been extremely stable over the past crises that we have had globally, particularly in Europe, but it has a soft spot, which is the current account deficit. The current account deficit is fairly large and in order to balance that deficit, Turkey focuses on foreign direct investment (FDI).

FDI is key to the Turkish economy. In order to attract that FDI, which happens in a global competitive environment, Turkey has to put forth investment incentives. In our mining business, corporate taxes have gone from 20 percent to 6 percent because of those incentives.

So in order to attract more foreign investment, they are offering special tax advantages for mining?

Well, this is not just for mining. This is for any type of investment.

They have separated the country into different regions. Certain regions have additional advantages, but mining is considered a strategic investment and therefore mining investment is provided the most incentives, regardless of the region.

That means you will be able to deduct part of your CAPEX (the upfront costs of developing a project before revenues can be generated) from your future revenues up to a certain amount. That’s a great advantage.

If you look at the royalty regime in Turkey, Turkey just passed a law that has royalties adjusted with respect to the commodity prices (meaning the percentage may rise or fall with metals prices).

Based on the commodity prices that we have today, the royalty on gold is about 2%. The royalty on base metals is about 1% (for comparison, the government of Quebec charges companies a 1% royalty on the metals produced from a mine, a figure which jumps to 4% above C$80 million in production3).

Well, that’s an attractive element in the global competitive environment.

Are there other advantages that are specific to Turkey?

Turkey is also a manufacturing country. It’s not going to be able to manufacture everything for us but most of the things that we need can be manufactured in Turkey.

The US put tariffs on Turkish steel not too long ago. Well that Turkish steel is still available to capital projects in Turkey.

Half of the population in Turkey is below age 30. Every city in Turkey has a university, so you have a group of individuals that are highly energetic, young and educated. In fact Turkey is one of those countries in the world that has the highest number of mining-related graduates in the world.

So from a “people” perspective, it’s the right place.

So the project, the place, and the people — those are the ingredients to be able to build a project successfully and to build a company in Turkey.

Does the government help you acquire and hold onto mining property?

If you look at the history of Turkey in the last particularly 12 to 15 years, the country has been going through a major rebuild and the construction industry is a key driver in that rebuild, building a lot of roads, highways, ports, railroads, airports. This is referred to as “mega construction.”

We’re constructing a third bridge over the Bosphorus, which is going to be the widest suspension bridge in the world. The airport that is under construction is going to be the largest airport in the world.

So these are mega projects that are driven by the construction industry. You have State land but you also have private land, and there’s a compulsory land acquisition process that the State is using to assist projects that are key to the country.

We will go through that process and we’re confident that we will finish that by the first quarter of 2016. It’s a compulsory process.

So the government will compel someone to sell their land if it’s needed for a large infrastructure or mining project?

Yes. When the state determines that the project is economically beneficial to the public at the national, as well as the local, level then that becomes the basis for a compulsory land acquisition.

The only part left to determine is the price. In our case, we’re offering the landowners three to four times their current value.

That current value is determined objectively. There are certain formulas that you apply depending on the character of the land and what it’s used for and its proximity to highways as well as local communities, because the social license to operate is quite important to us.

In fact, social license to operate in Turkey is I think one of the key elements of a mine development that one needs to focus on. Turkey is a pretty densely populated country and it’s not very uncommon to have multiple villages surrounding a development area. In fact I know some villages where there will be, say, five houses. Another one will have 200 houses and is one kilometer away.

You would wonder: “why would there be two villages?” Well there are reasons for that. There are differences. There are alliances that have formed two separate entities. Now imagine there are not two but thirty villages.

So a social license to operate in Turkey is one of the key areas where any capital project needs to focus, and particularly mining.

It is complex. You need to understand the cultures. You need to understand the people. You need to understand their way of living, what they’re comfortable with, and then present them with an alternative that they need to embrace. When you do that, you have a social license and you have to maintain it for the life of the mine.

To be able to do that, it is very important to understand the place. Formulas that have worked elsewhere likely are not going to fit Turkey.

Where are the investments coming from to develop mines in Turkey? Are they mostly from foreign investors?

Most of them come from foreign investors, particularly with a foreign company. There are Turkish companies that have invested in mining using their own capital too.

The business culture in Turkey is very similar to India, if you’re familiar with that. There are large holding companies.

They start with one business. Often times, it’s construction. Sometimes it’s textiles. And then they gradually expand into other industries like energy, like communications, port management, airport management, and mining.

As they expand into those areas, they often invest their own money into these new capital projects.

The Istanbul stock exchange is still in its infancy. One of the key requirements of the Istanbul exchange is to show three years of revenue, if not profit, in order to be listed on the stock exchange.

That doesn’t allow investors to invest in ideas or upside potential or risky investments.

The Turkish business culture is also a family-oriented culture where they have built businesses with their own hands and fingers and have grown them into multi-billion dollar businesses. They don’t want to lose control of that business by listing all or most of it on a stock exchange.

They sometimes list 30 or 40 percent of it. So that kind of limits us to how much money we can generate from the stock exchange in Turkey. But at the same time the desire (to fund public companies) is not really there. The Turkish business culture is basically: “if you have the money, you invest it out of your own pocket.”

Obviously, the foreign business culture is a bit different. There are the mechanisms of the stock market and the capital markets, where capital is available to you. Foreign companies, when they come to Turkey, come with that foreign capital.

I know that you go back and forth a lot between Canada and Turkey. Why do you need to be in both places to advance your project?

Well, one of the key requirements for my employment on my side was that I would be located in Turkey.

My background is Turkish-American. I spent 30 years of my life in the US, leading the global mining business of a large engineering and construction company with operationsall around the world.

I understand the Turkish business culture and I obviously know Turkey. With a start-up company, particularly in the mining business where you have no margin of error, you have to do it right the first time. These types of things cannot be controlled remotely. You have to be on-location. So that was important for me.

A key thing in Turkey is that the differentiators that I mentioned (mature construction and manufacturing industries, presence of infrastructure, contract miners, tax incentives, and a labor force) have to be leveraged and that’s what I’m assisting with – again, you have to be in the place to do that.

But at the same time, I have to have a foot in the North American and European markets for the purposes of raising capital and promoting the company in the capital markets.

We find ourselves in a very pleasing position to have five term sheets from major Europeans banks, as a well as a North American bank. They’re willing to provide capital to us for the construction. In these markets, particularly in North America, that speaks loudly to the value of our project.

But also it requires marketing the company. I found that the Aldridge story was not as well-known as others and what was known was outdated. A lot has happened in the last two years, even before I came onboard, and projects with these financial metrics (relatively low upfront capital expenditures and potentially attractive returns) are unique. So we continuously and persistently convey our story.

We do that in the North American and in European markets.

Thank you Mr. Ilhan and I look forward to speaking with you again about what’s happening in Turkey.

OK. Thanks for your time.

P.S.: Our in-house exploration geologist, Andy Jackson, keeps on eye on projects in these unproven or new jurisdictions, like Turkey. In fact, we’ve recently had boots on the ground there. Andy’s most recent visit was to Burkina Faso, a jurisdiction that is rich in gold deposits, but is under-developed. See his site visit photos here.

This information is for information purposes only and is not intended to be an offer or solicitation for the sale of any financial product or service or a recommendation or determination by Sprott Global Resource Investments Ltd. that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on the objectives of the investor, financial situation, investment horizon, and their particular needs. This information is not intended to provide financial, tax, legal, accounting or other professional advice since such advice always requires consideration of individual circumstances. The products discussed herein are not insured by the FDIC or any other governmental agency, are subject to risks, including a possible loss of the principal amount invested.

Generally, natural resources investments are more volatile on a daily basis and have higher headline risk than other sectors as they tend to be more sensitive to economic data, political and regulatory events as well as underlying commodity prices. Natural resource investments are influenced by the price of underlying commodities like oil, gas, metals, coal, etc.; several of which trade on various exchanges and have price fluctuations based on short-term dynamics partly driven by demand/supply and nowadays also by investment flows. Natural resource investments tend to react more sensitively to global events and economic data than other sectors, whether it is a natural disaster like an earthquake, political upheaval in the Middle East or release of employment data in the U.S. Low priced securities can be very risky and may result in the loss of part or all of your investment. Because of significant volatility, large dealer spreads and very limited market liquidity, typically you will not be able to sell a low priced security immediately back to the dealer at the same price it sold the stock to you. In some cases, the stock may fall quickly in value. Investing in foreign markets may entail greater risks than those normally associated with domestic markets, such as political, currency, economic and market risks. You should carefully consider whether trading in low priced and international securities is suitable for you in light of your circumstances and financial resources. Past performance is no guarantee of future returns. Sprott Global, entities that it controls, family, friends, employees, associates, and others may hold positions in the securities it recommends to clients, and may sell the same at any time.

By Henry Bonner

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Henry Sapiecha

Chile about to be China’s next competitor in the rare earths mineral market

Tuesday, June 9th, 2015

chile-may-be-chinas-next-competitor-in-the-rare-earths-market map image www.ww-globalcommodities.com

The rare earths industry is about to experience a clean-versus-dirty battle until now only seen among fuel producers, as a Chilean company is stepping up efforts to grab some of that market in a much greener way than China, the world’s top producer of such elements.

Mineria Activa’s project aims to develop the market for rare earths in the copper producing country, based on a recent survey that showed there are major concentrations of elements such as neodymium and dysprosium, south of capital Santiago. What’s even better: those deposits are quite similar to the ones found in southern China.

The firm’s project, named Biolantánidos, will dig out the clay, put it through a tank-leaching process with biodegradable chemicals and return it cleaned to the ground, replanting pine and eucalyptus trees. In China, operators pump ammonium sulfate into the ground and wait for the chemical to seep out with the minerals.

“It may be laborious,” Arturo Albornoz, who heads the project told Bloomberg, but he believes that soon firms such as ThyssenKrupp AG, Apple Inc. and Tomahawk cruise missile maker Raytheon Co. will choose to pay a bit more for supplies extracted in a way that doesn’t destroy the planet. “It’s our big bet on green mining,” he added.

rare-earth-graph image www.www-globalcommodities.com

Currently China continues to dominate the rare earth market, producing about 90% of the elements that are vital in the creation of a big variety of electronic technologies including lithium car batteries, solar panels, wind turbines, flat-screen television, compact fluorescent light bulbs, petroleum-to-gasoline catalytic cracking, and military defence components such as missile guidance systems.

Crumbling monopoly

The Asian giant did not always enjoy a virtual monopoly on REE production. The majority of the 17 rare earth elements were sourced from placer deposits in India and Brazil in the late 1940s.

During the 1950s, South Africa mined the majority of the world’s REEs from large veins of rare earth-bearing monazite.

From the 1960s to 1980s, rare earths were supplied mainly from the US, mostly from the massive Mountain Pass mine in California, which was eventually mothballed in 2002.

China then took over the industry completely, producing more than 95% of the world’s REEs centred in Inner Mongolia and also becoming the top consumer ahead of Japan and South Korea.

Worries about Beijing’s monopoly of production sent prices for all rare earths into the stratosphere from 2008 onwards with some REEs going up in price twenty-fold or more.

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China applied export quotas and raised export tariffs on rare earths in 2010 to protect natural resources, ending the export restrictions in 2015 and scrapping the tariffs from May 1, in line with a ruling from the WTO.

Despite the quotas and tariffs removal, rare earth companies, especially smaller ones, will continue suffering this year, analysts agree, as prices for some of the elements have dropped significantly in recent years.

The challenging environment doesn’t seem to bother the Chilean firm, which expects that its project, still in a pilot stage, will start producing rare earths by the end of 2016.

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Henry Sapiecha

Over 240 mining and energy projects waiting for investors in Cuba

Wednesday, April 22nd, 2015

cuba waiting for investors image www.www-globalcommodities.com

Cuba, the world’s sixth largest nickel producers and one of the top 10 nickel mining countries, is experiencing a sudden, but still modest, investment rush triggered by an ongoing reconciliation between the Caribbean nation and the U.S.

The country, which also holds significant deposits of other minerals as well as oil, has 246 projects hoping to attract capital and be developed, according to a new U.S. Geological Survey report published earlier this month.

“Cuba’s geology is complex, and the country has a variety of mineral commodity and energy resources,” said Steven Fortier, Director of the USGS National Minerals Information Centre.

While mineral production is largely state-controlled, the government has taken steps to change its old mining laws.

As a result, Canadians companies already have a presence in Cuba’s mining sector. One of them is Calgary-based miner Sherritt International (TSX: S), the Latin American country’s largest foreign investor, with nickel mining, oil-and-gas and electricity interests.

The ore the Toronto-based firm extracts there — under a joint venture with the country’s government — is refined in Fort Saskatchewan, Alberta, but because of the U.S. embargo, none of that refined nickel is allowed south of the border. Nickel remains one of the country’s main sources of foreign income, along with tourism.

Despite such barrier, the USGS report shows that nickel remains one of the country’s main sources of foreign income, along with tourism.

It also highlights a value increase for the country’s industrial manufacturing sector, which jumped 88% between 1993 and 2013. However, the sector’s share in the GDP decreased by 3% percent during the same period reflecting economic growth in other sectors of the economy.

Oil and industrial minerals

Industrial minerals and manufactured industrial mineral products produced in Cuba include ammonia and ammonia by-products, bentonite, cement, feldspar, high-purity zeolite minerals, gypsum, kaolin (a type of clay), lime, high-grade limestone, marble, sand, sulphuric acid, steel and urea. In 2013, an estimated 4,500 metric tons of zeolites was exported neighbouring Latin American countries and Europe. Last year Cuba exported the majority of its ammonium nitrate, the USGS report shows.

In terms of oil reserves, the body released an assessment in 2004 that estimated the total amount of undiscovered technically recoverable resources at 9.8 trillion cubic feet of undiscovered natural gas, 4.6 billion barrels of crude oil, and 0.9 billion barrels of natural gas liquids.

The full report “Recent trends in Cuba’s mining and petroleum extraction industries” is available here.

Figure from the U.S. Geological Survey report.

Indian billionaire wants to buy Australian gold mines

Friday, April 3rd, 2015

Indian billionaire wants to buy Aussie gold mines

Indian jewellery billionaire, Rajesh Mehta, is said to looking for Australian gold assets as several miners are in the process of shedding non-core operations to survive the current squeeze on the industry.

According to Financial Review, the tycoon said his company is ready to spend up to US$700 million on growing its presence Down Under, with mines being the primary focus.

Bangalore-based Rajesh Exports, India’s biggest jewellery maker, is already setting up a subsidiary in Melbourne, which will drive the hunt for stakes in the local gold sector, Mehta said.

Earlier this year, the company announced it would create a new division for offering gold loans. If it goes ahead Rajesh Exports would become the first large jewellery firm to provide bullion-backed loans in India

Russian potash mine disaster in pictures

Friday, March 6th, 2015

Insane pictures of Russian potash mine disaster

Solikamsk-2 accident first implications: situation could worsen

After a statement made by one of the world’s largest potash producers and exporters Uralkali (MCX:URKA)(LON:URALL), first visual implications of Solikamsk-2 potash mine accident have been revealed.

Insane pictures of Russian potash mine disaster

30-40 meters diameter sinkhole near the Solikamsk-2 potash mine (source: V-kurse.ru).

A sinkhole with a diameter of 30-40 meters has been detected to the east of the Solikamsk-2 production site, at the area packed with summer cottages. There were no casualties reported so far.

Insane pictures of Russian potash mine disaster

ooo

Henry Sapiecha

Russia stashes 55 tonnes of gold in Switzerland

Friday, March 6th, 2015

Russia stashed 55 tonnes of gold in Switzerland last year

While calming down considerably from the torrid pace of previous years, the movement of physical gold and silver from West to East continues unabated.

The process playing itself out goes roughly like this:

ETF investors in the US and other developed markets offload their gold holdings allocated to them and held in the UK, where most of the world’s gold vaults are to be found.

From the UK the bullion is exported to Switzerland. A staggering 70% of global gold is processed by just four big Swiss refineries: Valcambi, Argor Heraeus, Pamp and Metalor. Raw gold, often of low purity, is refined, melted down and recast into smaller bars in the country.

Are they stored in the high security vaults in the Swiss Massif Central?

Then the bullion is shipped to China and India and other growing gold consuming nations in Asia led by Vietnam and Indonesia.

Evidence of the dramatic slowdown in these flows come from new export statistics from Swiss customs officials which show the European nation’s gold exports falling 37% in last year compared to 2013, according to Goldreporter.de.

According to Swiss trade statistics published this week, Switzerland exported 1,746 tonnes of gold worth $65 billion Francs (just over $70 billion). The decline is also due to the fact that 2013 was a banner year for Swiss refiners – exports topped 2,777 tonnes, worth a whopping $132 billion.

The decline in the average price of the metal in 2014 and the strong franc, meant that the Swiss also received less for their bars – with the average price per kilogram pegged at $40,334 versus last year’s $47,459.

Russia is the world’s second largest producer of gold behind China

Roughly a third of Switzerland’s imports came from the UK, followed by the US with 211.5 tonnes. As expected India was the top importer with 471.2 tonnes, followed by Hong Kong and China which combined topped the subcontinent with 590 tonnes. Singapore was third with 134 tonnes.
The flows of Russian gold raises questions (if not eyebrows): Russia exported 58.3 tonnes to Switzerland, but only 2.6 tonnes made its way back into the country.

The 55 tonnes of Russian gold that stayed behind is worth some $2.3 billion. Goldreporter asks the question: “Are they stored in the high security vaults in the Swiss Massif Central?”

Russia is the world’s second largest producer of gold behind China, with an estimated 272 tonnes mined last year – an increase of 9% from the year before.

Switzerland produces no gold itself. In 2012 an Alpine village turned down a $1.2 billion project which would’ve been the country’s first and only gold mine.

Goldreporter.de is the go-to place for European gold news. Click here for the German version and here for a selection of English articles.

Image of one of Stalin’s 16 goddesses representing Russia in the park of VDNH in Moscow by Boris SV.

ooo

Henry Sapiecha

Large coal and iron ore reserves found & proved up in Iran

Wednesday, March 4th, 2015

vintage map showing the Middle East, including Iran

Two large coal and iron ore reserves have been discovered in Iran, according to a top official.

The claim by Mehdi Karbasian, Deputy Minister of Industry, Mines and Trade, was reported on Tuesday in the country’s state media, Islamic Republic News Agency (IRNA). Karbasian, who is also chairman of the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) told IRNA that 200 million tons of iron ore reserves and 120 million tons of coal reserves respectively were discovered in the Sangan mine, in the eastern province of Khorasan Razavi, during the first half of the current Iranian calendar year, which begins within a day after March 21 of the Gregorian calendar.

The discovery adds to “huge reserves of high-quality iron ore in the country’s central Lut Desert” found last year, according to IRNA.

More detail was provided on Sangan in a paper given at a tailings waste conference in Vancouver, Canada, in 2011, which studied tailings disposal options at the mine:

The Sangan iron ore deposits form part of the east-west trending Kuh-e-Taleb mountain range, and in the Khorasan-Razavi Province in north-eastern Iran (Figure 1). The deposits lie approximately 300 km south of the city of Mashhad, 30 km west of the Afghanistan border and some 18 km north-east of the Sangan town. The deposits can be accessed from Mashhad via two separate ways, one via Torbat Heydariyeh and the other via Torbat Jam.

Iran was the 10th largest iron ore producer in 2012, according to the USGS, when it extracted 28 million tons of the steelmaking ingredient. MINING.com reported the same year that while there is no formal ban on the iron ore trade with Iran, ranking sixth in terms of exports, shipping firms and traders in Europe nevertheless are balking at the financial and political risks in dealing with the country, considering US-led sanctions over its nuclear program.

Canadian miners the world’s top asset buyers in 2014

Tuesday, March 3rd, 2015

Canadian miners the world’s top buyers of assets in 2014

Canada led the acquisition of mining and metals assets in terms of volume last year, and it was a close contender in terms of value, a study released Monday shows.

Despite the deals boom, overall mergers and acquisitions globally continued to decline on both a volume and value basis in the sector compared to 2013, according to EY’s Mergers, acquisitions and capital raising in mining and metals: 2014 trends, 2015 outlook.

“A few big deals in Canada in 2014 put us at the top in terms of deal volume,” says Bruce Sprague, EY’s Canadian Mining & Metals Leader. “But the reality is that the majority of the deals were junior-level strategic mergers aimed at conserving cash.”

Canada scored the top gold deal in 2014, with the joint acquisition of Osisko Mining Corp by Yamana Gold and Agnico Eagle Mines for $3.6 billion. The next largest gold deal was the UK’s Polymetal International’s acquisition of Kazakhstan’s Altynalmas Gold (Kyzyl gold project) for $619m.

“Gold remains the most-targeted commodity by volume,” says Sprague. “We saw that play out right here in Canada. The majority (88%) of gold deals, however, were valued at less than $50m, reflecting distress among gold juniors on the back of squeezed margins.”

e-and-y-deals1

EY says current market conditions are putting mining companies in a quandary – investing for the next stage of growth is potentially unpopular with shareholders, but it could prove to be a masterstroke if they want to fully capitalize on the next uplift in the cycle.

“For the past few years, companies have been focused on cost-reduction programs, internal capital allocation and productivity measures,” notes Sprague. “Moving forward, they need to have a broader focus on total shareholder return and make capital decisions that will support long-term value creation.”

Companies in a quandary

Still, in its outlook EY says long-awaited funding from private capital funds should begin to deploy across the sector as sellers align their value expectations with the market, and assets continue to be sold by the large cap producers in search of optimum portfolios.

“The deals we’re seeing now are a lot of mergers between equals and consolidation opportunities benefiting both parties,” explains Sprague. “The large cap producers are more focused on looking to either sell or spin off non-core assets.”

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Henry Sapiecha

The full report is available here.

American mining junior finds rare earth deposit on old gold concession

Tuesday, March 3rd, 2015

American junior finds rare earth deposit on old gold concessions

Rare earth prices are on an uptrend in 2015 as market participants hold a widely held upbeat outlook for China’s rare earth industry.

New World Gold Corporation (OTC Pink: NWGC), a gold mining and milling junior with existing operations in Ecuador and Peru, may diversify its business after discovering a rare earth deposit in one of its old gold concessions.

While the Florida-based company has not disclosed the location of the finding it says that since the discovery several companies, including a Chinese group, have approached them with offers.

Independent analysis results indicate that the rare earth mineral discovered is Antimony. Preliminary testing results indicate that there are significant economic reserves present on the concession.

Since discovery of the antimony deposit, the Company has had significant interest in the deposit. The Company is negotiating with several companies including a Chinese group to option and then develop the deposit. The British Geological Survey reported in 2005, The Peoples Republic of China was the top producer of antimony with approximately 84% of the worlds share followed at a distance by South Africa and Bolivia. Roskill Consulting estimates that primary production of Antimony shows that in 2010, China held 76.75% of the world’s supply of antimony followed by Russia with 4.14%. Antimony was identified as one of 12 critical raw materials for the EU in a report published in 2011, primarily due to this lack of supply outside China.

Processed antimony is used as an alloy to strengthen tin and steel. Antimony compounds contain fire retardants found in many commercial and domestic products like stoves and refrigerators. There is an emerging application for the use of antimony in microelectronics

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Henry Sapiecha

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