Archive for the ‘MINING’ Category

Company Investors going wild for world no 1 commodities player

Friday, December 11th, 2015

Copper-Smelter-Altonorte-Glencore-333-300x250

At the end of trading in London on Thursday shares in Glencore plc (LON:GLEN) was priced at 89p, up 7.4% in colossal volumes of more than 134 million shares traded.

In New York Glencore’s (GLCNY) over the counter stock advanced by more than 10% in equally busy trade bringing the company’s market value back to within shouting distance of $20 billion.

The reason behind the surge is the Swiss mining and commodities trading giant’s announcement that it has increased its debt reduction target and cut spending plans. Again.

That these type of corporate initiatives (which are now a common feature of the industry) can inspire such a frenzy is a good indication of just how much turmoil and uncertainty there is in the mining sector.

The Baar-based company said it now aims to reduce its debt load by $13 billion from the previous target of just over $10 billion. Some $8.7 billion has been cut under the plan. By the end of next year Glencore wants the pile down to $18 billion to $19 billion.

Down 70% just this year despite today’s bump, Glencore is now worth $15 billion less than before the Xstrata takeover

Glencore CEO Ivan Glasenberg also announced its capital expenditure for 2015 will come in at $5.7 billion, $300 million below previous targets while next year’s outlays will be cut to $3.8 billion from $5 billion.

Apart from idling copper mines in central Africa, cutting coal production in Australia, reduce lead and zinc production in central Asia and inking streaming deals for its precious metals byproducts in South America, Glencore is also putting up assets for sale to cut costs and raise money.

In October, Glencore said it began the sales process for its Australian copper mine New South Wales and its Lomas Bayas copper mine in the Atacama desert in Chile. The company expects initial bids by mid-December and completion some time during the first half of 2016. Glencore has the same timeline to sell a stake in its agriculture business.

Glencore was first floated in May 2011 and two years later the company acquired coal giant Xstrata, turning it into the world’s fourth largest miner. Down 70% just this year despite today’s bump, Glencore is now worth $15 billion less than before the Xstrata takeover.

Image supplied by Glencore show Anibal Contreras clearing slag at the company’s Altonorte metallurgical facility, northern Chile.

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Henry Sapiecha

 

WORLDS LARGEST ZINC MINER MAY EXIT THE MINING INDUSTRY

Wednesday, November 11th, 2015

Mexico’s Campo Morado zinc mine image www.www-globalcommodities.com

Debt-laden European zinc producer Nyrstar (EBR:NYR) said Monday it plans to raise up to $296 million (€275m) through a share offering to pay down debt and has appointed bankers to explore a total exit from mining.

The Belgian company, which is the world’s No.1 zinc producer, laid out a package of measures it is putting in place to try repaying a $447 million bond that matures in 2016 and also address ongoing problems with it mining division.

Nyrstar also announced a number of commercial supply agreements with Trafigura, the world’s second-largest metals trader and its main shareholder.

Nyrstar also announced a number of commercial supply agreements with Trafigura, the world’s second-largest metals trader and its main shareholder.

The commodity trader has agreed to buy as much as $135 million (€125m) of shares in a first-quarter rights offer totalling $270m to $296m. As part of the deal, Trafigura won’t raise its stake to more than 49% from over 20%, according to Nyrstar. Should the rights offer boost Trafigura’s holding above 30%, it won’t be obliged to make an offer for the rest of the stock, the company added.

Nyrstar shares jumped up as much as 9.4% in Brussels on the news and were trading 5.5% higher at €1.62 mid-afternoon.

They took a huge dip on Oct. 22, falling 27% in a matter of hours, after new chief executive Bill Scotting said the company was considering selling stock to meet its debt obligations.

On Monday, Scotting noted Trafigura’s involvement in the refinancing was not a “takeover by stealth”.

Nyrstar has been hit quite hard by the rout in commodities, with zinc down 24% this year on declining demand from top consumer China. The company said it’s mulling reducing zinc production from its mines by as much as 400,000 metric tons if prices stay depressed. That would almost match the 500,000 tonnes that Glencore, another leading zinc producer, recently cut.

The company has already suspended operations at its Mexico’s Campo Morado and Canada’s Myra Falls mines.

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Henry Sapiecha

Adani Carmichael: Australia’s largest coal mine free to proceed after Greg Hunt gives approval

Friday, October 16th, 2015

The nation’s largest coal mine has passed a significant hurdle after Environment Minister Greg Hunt approved it with “the strictest conditions in Australian history”, in a decision environment groups have declared “a disaster”.

Mr Hunt on Thursday said the Carmichael coal mine proposed by Indian mining giant Adani has been given the green light after the Federal Court in August set aside the previous approval.

Abbot Point coal terminal image www.www-globalcommodities.com

The project, which will produce up to 60 million tonnes of coal for export a year, has faced staunch opposition because its Abbot Point terminals are located close to the Great Barrier Reef.

Opponents have already flagged an intention to launch a legal challenge to the latest approval.

The government decision clears a regulatory hurdle, yet there are still questions over how the $16 billion project will be financed. National Australia Bank has said it will not fund the mine and other banks are being pressured to follow suit.

The approval will require $1 million funding for research programs to improve conservation of threatened species over 10 years, and strict groundwater monitoring and action triggers would protect Doongmabulla Springs, Mr Hunt said.

The Department of the Environment will monitor the mine and Adani must provide a groundwater management and monitoring plan.

Federal Labor resources spokesman Gary Gray welcomed the decision and said the project was of “great importance to Queensland and to Australia”.

Australian Environment Minister Greg Hunt, with Prime Minister Malcolm Turnbull image www.www-globalcommodities.com

Environment Minister Greg Hunt, with Prime Minister Malcolm Turnbull, announced on Thursday the mine would proceed. Photo: Alex Ellinghausen

The project still requires federal dredging approval and some state-based approvals.

The Mackay Conservation Group launched its Federal Court challenge in January, alleging greenhouse gas emissions from the mine, vulnerable species and Adani’s environmental track record had not been taken into account.

Mr Hunt said the court set aside the mine’s earlier approval at the request of the government.

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The case prompted the government to propose new laws that would prevent “vigilante” environment groups from challenging large developments in court.

Mackay Conservation Group coordinator Ellen Roberts said the approval “risks threatened species, precious ground water, the global climate and taxpayers’ money”.

“[Mr] Hunt is sacrificing threatened species … and precious ground water resources for the sake of a mine that simply does not stack up economically,” Ms Roberts said, adding the black throated finch would probably be pushed to extinction.

Equipment at the Abbot Point coal terminal in Queensland image www.www-globalcommodities.com

Equipment at the Abbot Point coal terminal in Queensland. Photo: Glenn Hunt

She said the conditions set by Mr Hunt did not adequately deal with the serious implications of the mine, which “can’t be offset”.

Greenpeace Australia Pacific campaigner Shani Tager said the mine would be “a complete disaster for the climate and the Great Barrier Reef”.”This project means more dredging in the Great Barrier Reef, more ships through its waters and more carbon emissions,” she said.

Adani welcomed the decision, saying the initial legal hurdle was a “technicality” prompted by a mistake by the Department of the Environment. In a statement, the company said it was always “confident in the soundness of the broader approvals, that the species involved had been protected by conditions, and that the technical error would be promptly rectified”. “Today’s announcement … makes clear that these concerns have been addressed, reflected in rigorous and painstaking conditions,” it said. The company intended to deliver mine, rail and port projects in Queensland creating 10,000 direct and indirect jobs, and $22 billion in taxes and royalties to be reinvested into community services, Adani said. The jobs figure has been disputed.

Former prime minister Tony Abbott with mining magnate Gautum Adani image www.www-globalcommodities.com

Former prime minister Tony Abbott with mining magnate Gautum Adani. Photo: Andrew Meares

Lobby group GetUp! on Thursday said its members had already helped fund legal action against the mine, and the organisation was “exploring the legal opportunities available to us” in light of the latest decision.

“This coal mine is the dumbest, most dangerous and uneconomic development in Australia,” senior campaigner Sam Regester said.

“We are calling on GetUp! members and the community to stand up and fight this mine again. We’ve beaten it before and we can beat it again.”

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Henry Sapiecha

 

China launches massive military manhunt for coal mine killers of almost 100 people

Thursday, October 15th, 2015

china_workers_quarters_room_coal image www.www-globalcommodities.com

An area double the size of Manhattan has been cordoned off as authorities pursue suspects following a coordinated knife attack that killed 60 workers at a northwestern Chinese coal mine, reports the FT.

The incident, first reported by Radio Free Asia, occurred on September 18 in the Xinjiang Uyghur Autonomous Region. After overtaking security guards, the attackers killed the workers while they were asleep in bunkhouses at the Sogan colliery in the city of Aksu. The attackers are alleged to be Uyghur separatists.

The nine suspects, are said to be hiding in  nearby mountains  where a massive military-led operation is now underway:

The helicopters and drones are operating out of the airport at Aksu, the largest city in the area. Police have established checkpoints on all roads leading to Baicheng, which covers an area of about 16,000 sq km. Heavily armed police are posted behind sandbag bunkers at each road block, providing cover for their colleagues who perform identification and weapons checks on all people entering the area.”

Most of the victims were Han Chinese migrant workers, but according to locals five police officers who responded to the attack were also killed. Aksu residents fear the death toll could be as high as 100.

The Xinjiang Uyghur Autonomous Region suffers from discord due to ethnic fault lines. Uyghurs identify more closely with Central Asian nations.

The FT reports that Xinjiang “has long been a strategic priority for the Chinese government because of its natural resources, including the country’s largest coal reserves, and its proximity to even bigger energy sources in Central Asia.”:

“It is also a key component of President Xi Jinping’s “New Silk Road” strategy, aimed at enhancing Eurasian infrastructure links.”

The area was independent up to 1949 when it became part of China. China has been asserting is control over the area with more westward migration and a heavier military presence.

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Henry Sapiecha

True giants of mining: World’s top 10 iron ore mines

Saturday, September 19th, 2015

Vladimir Basov | September 17, 2015

The price of iron ore  on Thursday turned positive amid new signs that China, which dominates the seaborne trade in the steel making raw material, will be pushing ahead with stimulus programs to boost its slowing economy.

The benchmark 62% Fe import price including freight and insurance at the Chinese port of Tianjin added 1.4% to $56.80 a tonne. Iron ore reached a 10-week high last week according to data provided by The SteelIndex and is trading up some 28% from record lows for the spot market hit early July 8.

While today’s price is nowhere near record highs above $190 a tonne reached in February 2011, it is worth noting that iron ore traded for less than $20 a tonne for 40 years before China’s rapid expansion transformed the industry at the turn of the century and made iron the second most traded commodity after crude oil.

Due to rapid global urbanization the world steel consumption nearly doubled over the past decade, from about 800 million tonnes in 2000 to more than 1,500 million tonnes in 2014. China is the leader in both steel production (50% of world total) and iron ore mining (47% of global output in terms of tonnage). China is also the biggest iron ore importer and, as of April 2015, consumed more than 80% of the 1.3 billion tonne seaborne trade.

Steel-consumption-in-China-and-the-world-graph image www.www-globalcommodities.com

Steel consumption in China and the world. Source: LKAB Annual Report

Given that iron is the fourth most abundant element on Earth, comprising about 5% of the Earth’s crust by weight, global iron ore market is highly competitive.

These factors led to a significant increase in the supply of iron ore from new mines in recent years, with a number of lowest-cost production centers commissioned mainly in Australia.

Iron-ore-supply-and-demand-graph image www.www-globalcommodities.com

Iron ore supply and demand relationship. Source: LKAB Annual Report

An oversupply of iron ore combined with China  adding more steel-making capacity than it needed, resulted in a slump in the iron ore spot prices over the past two years, including a staggering 47% decline in 2014 and a further 18% retreat so far this year.

Spot-market-iron-ore-price-indiex-fines-graph image www.www-globalcommodities.com

Spot iron ore prices. Source: Vale’s website.

As a result, a number of high-cost iron ore mines have been closed and suspended throughout the world in 2014, with up to 30% of low-grade iron mines shut down in China in 2014 alone.

Some experts argued that higher-cost producers, mainly from China, are falling victim to a strategy pursued by the biggest producers of iron ore, namely BHP Billiton, Rio Tinto and Vale.

Along with Fortescue, these companies account for more than 60% of global iron-ore exports.  Those iron behemoths have been relentlessly increasing lowest-cost production output.

Cumulative-Mt-we-as-delivered-graph image www.www-globalcommodities.com

China’s 2015 Iron Ore Supply CFR Costs (including royalties & ocean freight). Published in Fortescue’s investor presentation

As can be seen from this chart, nearly all iron ore production in China is uneconomic under current market conditions, and many local mines have been recently closed / suspended.

Because of the massive scale of closures of iron ore mines, current supply growth is lower than expected. This, combined with recently announced infrastructure spending boost in China, are believed to be the main reasons behind a revived iron ore market.

Our iron ore ranking is based on data from IntelligenceMine:
Search, organize and map a global database of more than 45,000 mining company and property profiles

Having driven out smaller inefficient producers, the world’s giant iron ore centers are best positioned to capitalize on a rising price environment.

Who are those global leaders in iron ore mining?

The following analysis covers those iron ore production centers that have two main distinctive features: disclosure of production numbers by the owner/operator and separate production units running as a single operation. Therefore the iron ore operations ranked here be individual mines or a complex of clustered mines.

The top 10 iron ore mining centers, ranked by ore mined in 2014 calendar year

Top-10-iron-ore-mining-centers-raned-by-iron-ore-mined-in-2014-calendar-year-table.2 image www.www-globalcommodities.com

Source: IntelligenceMine

  1. Hamersley.

The biggest iron ore mining center is the Rio Tinto’s Hamersley Mines that incorporates nine mines in Western Australia. These assets are run as a single operation managed and maintained by Pilbara Iron, and produced a total of 163Mt iron ore. Being the biggest iron ore production center in the world, Hamersley is also the lowest-cost operation.

Mount-Tom-Price-mine-part-of-Hamersley-mine-complex-Rio-Tinto image www.www-globalcommodities.com

Mount Tom Price mine, part of Hamersley mine complex, Rio Tinto. Photo: Wikimedia commons.

  1. Carajas

Vale’s Carajas Mine Complex is the second biggest iron ore production center, which consists of three open-pit mines, namely Carajas N4E, N4W and N5, and operated as the Serra Norte Mining Center. In 2014, Carajas mines produced 120Mt of iron ore. With an average iron ore grade in reserves of about 66%, this is believed to be the highest grade iron ore center in the world.

Ponta-de-Madeira-Terminal-Carajas-Mine-Complex-image www.www-globalcommodities.com

Ponta de Madeira Terminal – Carajas Mine Complex. Reclaimers and stackers can be seen. Photo courtesy of Vale.

  1. Chichester Hub

Fortescue’s Chichester Hub consists of Christmas Creek and Cloudbreak iron ore mines. In 2014, it is believed that Chichester Hub has achieved its annual production capacity of 90Mt of iron ore. For only five years since its commissioning in 2008, Chichester Hub became one of the biggest iron ore producing centers globally.

Christmas-Creek-mine-Chichester-Hub-image www.www-globalcommodities.com

Christmas Creek mine – Chichester Hub. Image courtesy of Fortescue Metals Group.

  1. Yandi

BHP Billiton’s Yandi mine, located in Western Australia, is the biggest single-pit open-cut iron ore in the world in terms of annual production. In 2014, 80Mt of iron ore were produced there.

Yandi-iron-ore-mine-image www.www-globalcommodities.com

Yandi iron ore mine. Image courtesy of Flickr.

  1. Mt Whaleback

Another BHP Billiton’s operation, the massive Mt Whaleback mine, is the biggest single-pit open-cut iron ore mine in the world in terms of pit size. This mine is more than 5 kilometres long and nearly 1.5 kilometres wide. 77Mt of iron ore mined here in 2014.

Mt.-Whaleback-iron-ore-mine-image www.www-globalcommodities.com

Mount Whaleback iron ore mine. Photo courtesy of Flickr.

  1. Solomon Hub

Fortescue’s Solomon Hub that comprises Firetail and Kings producing mines. Together, Firetail and Kings have an annual production capacity in excess of 70Mt.  In 2014, Solomon Hub is believed to produce about 58Mt of iron ore.

Solomon-Hub-operations-image www.www-globalcommodities.com

Solomon Hub operations. Photo: Fortescue’s website.

  1. Area C

The Western Australia’s Area C mine, led by POSMAC JV with major BHP Billiton’s ownership, is seventh with 57Mt of iron ore produced in 2014.

Area-C-mine-image www.www-globalcommodities.com

Area C mine. Source: fastjv.com.au.

  1. Hope Downs

Eighth biggest operation is Hope Downs mine in Western Australia, operated by the Hope Downs Joint Venture, a 50 / 50 joint venture between Hope Downs Iron Ore, led by Australia’s richest person and iron ore tycoon Gina Rinehart, and Rio Tinto Iron Ore.  In 2014, iron ore output at this mine achieved 43Mt.

Hope-Downs-Mine-stockyard-machines-image www.www-globalcommodities.com

Hope Downs Mine. Stockyard Machines. Photo courtesy of P&J Project Services.

  1. Mariana Hub

Vale’s Mariana mining hub in Brazil consists of three mines, and produced roughly 39Mt of iron ore in 2014.

Alegria-Mine-Mariana-Hub-image www.www-globalcommodities.com

Alegria mine – Mariana Hub. Photo courtesy of International Mining

  1. Sishen

Anglo American’s flagship’s Sishen iron ore mine in South Africa is tenth in terms of iron ore output with 36Mt of iron ore mined out in 2014. Being some 14km long, Sishen mine is one of the largest open pit mines in the world.

Sishen-Mine-image www.www-globalcommodities.com

Sishen mine. Photo courtesy of Anglo American.

Seven out of the top 10 biggest iron production centers are located in Western Australia, and with whopping 697Mt of iron ore produced in 2014. This Australian state is believed to be the biggest jurisdiction in the world in terms of iron ore output.

IntelligenceMine is global mining market intelligence for Researchers, Investors and Suppliers. Get access to more than 45,000 company and property profiles, a powerful multi-faceted search with comparative result grids, sorting and download capabilities, an online interactive mapper and much more. Find out more at www.IntelligenceMine.com.

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Henry Sapiecha

Petra Diamonds losing some sparkle, net profit down 33 pct

Saturday, September 19th, 2015

petra-diamonds-sunset image www.worldwidediamonds.info

Petra Diamonds (LON:PDL) reported Friday a sharp in fall profits as declining demand from China has hit rough diamond prices quite hard this year.

The miner, known for major findings in recent months, saw its sales drop, causing an almost $40 million dent in the company’s pre-tax profits in the year to June, a 33% drop from the same period last year.

The company said results were negatively impacted by “underground production being reliant on mature, diluted mining areas, as well as the weaker diamond market, though partially offset by the favourable impact of the weakening in the Rand for the year.”

Petra also said it was on track to reach its longer-term target of about 5 million carats of diamond production a year by 2019.

Petra also said it was on track to reach its longer-term target of about 5 million carats of diamond production a year by 2019.

The company owns and operates the Cullinan diamond mine, which produced the First Star of Africa, a diamond mounted at the top of the Sovereign’s Sceptre on display in the crown jewels.

Last year, the UK miner found three major diamonds at the mine, which sold at record prices. One of those rocks, the “Blue Moon” may become the world’s most expensive diamond if it fetches the expected $55 million when it goes under Sotheby’s hammer on Nov. 11, in Geneva

*But on the bright side THE BLUE MOON DIAMOND HAS BEEN FOUND AT PETRA  >> SEE HERE

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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.

ooo

Henry Sapiecha

Romania opens door to new gold, copper project with Canadians at the forefront

Saturday, May 30th, 2015

 romania-opens-door-to-new-gold-copper-project-led-by-canadians image www.www-g;obalcommodities.com

Romania’s National Agency for Mineral Resources has granted Canadian explorer Carpathian Gold Inc. (TSX:CPN) a 20-year mining license for its Rovina Valley gold and copper project, strategically located about 20 km west of Gabriel Resources’ (TSX:GBU) debated Rosia Montana.

This is first time Romania grants a mining license without the involvement of a state-owned enterprise.

Carpathian’s stock soared on the news. It was up 200% to 0.0150 at 11:00 am ET.

The Toronto based company, through its wholly-owned subsidiary, Samax Romania S.R.L., will now work on updating the Preliminary Economic Assessment of 2010, to provide revised project costs and evaluate scalability options, Carpathian said in a statement.

The Rovina License lies within the Metalliferi Mountains, in the southern part of the Apuseni Mountains, in the area known as the Golden Quadrilateral, one of Europe’s most prolific mining districts for over 2,000 years.

romanian-golden-quadrilateral mines map image www.www-globalcommodities.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Henry Sapiecha

The Lunar Gold Rush: How Moon Mining Could Work [infographic]

Tuesday, May 26th, 2015

Humans are already going to extremes to get natural resources. Gold and platinum mines in South Africa go as deep as almost 4 km into the Earth’s crust, which is about twice the depth of the Grand Canyon.

Meanwhile, up high in the Andes are some of the biggest copper and gold operations in the world. In Peru, La Rinconada is the world’s highest permanent settlement at 5,100 m, and it is situated strategically between many artisanal gold deposits in the mountains.

However, there are two frontiers that humans are still exploring in their early stages: the deep sea and spacial bodies such as asteroids, planets, and the moon. Today’s infographic covers the prospect of moon mining.

While we often think of the moon as a pretty barren landscape, it turns out moon mining could take advantage of many natural resources present on the lunar surface.

moon mining image www.www-globalcommodities.com

Water is vital in space for a multitude of reasons, such as for use in human consumption, agriculture, or hydrogen fuel. It’s also cost prohibitive to transport water to space anytime we may need it from earth. Scientists are now confident that the moon has a variety of water sources, including water locked up in minerals, scattered through the broken-up surface, and potentially in blocks or sheets at depth.

Helium-3 is a rare isotope of helium. Currently the United States produces only 8kg of it per year for various purposes. Helium-3 is a sought-after resource for fusion energy and energy research.

Lastly, rare earth elements (REEs) are also at high concentrations on the moon. KREEP (Potassium, REEs, and Phosphorus) is a geochemical mixture of some lunar impact breccia rocks and is expected to be extremely common on the moon. This mix also has other important substances embedded, such as uranium, thorium, fluorine, and chlorine.

If a lunar colony is indeed in our future, moon mining operations may be an important component of it.

ooo

Henry Sapiecha

moon mining infographic image www.www-globalcommodities.com

 

 

 

 

 

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