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Gold hovers around $1 640/oz, eyes on Fed meeting Gold fell 1% last week, in tandem with equities and other commodities, as resurfaced fear about Spain's debt crisis raised concerns about global economic growth and dented risk appetite. China's factories stabilised in April as output ticked higher, new business rose from multi-month lows and export orders perked up, the HSBC Flash Purchasing Managers Index said, in line with expectations. "Gold doesn't seem to be trading on anything other than externally derived sentiment," said Nick Trevethan, senior commodity strategist at ANZ in Singapore. "There is still pressure for gold prices. The market has been trying to push the support level at $1 630/oz to $1 640/oz, although the push is rather half-hearted right now." The Fed's attitude towards monetary easing has been a key factor behind the fluctuation of gold prices in recent months. If the Fed drops any hint on more monetary easing at the meeting Tuesday and Wednesday, gold prices will jump quickly. Spot gold was little changed at $1 642.04/oz by 03:11 GMT. Prices have moved in a range of $3 in early Asian hours. US gold traded nearly flat at $1 ,643.20. Investors remain concerned about Europe's fiscal health. Spanish and Italian bond yields were still near dangerously high levels, while the prospect of a Socialist candidate winning the French presidential election added to worries whether the powerful Franco-German ally that has helped set tones in the region's battle against its debt problems will remain intact. Over the weekend the International Monetary Fund managed to more than double its lending power in a bid to protect the world economy from the euro zone debt crisis, which is now in its third year. TRADE INTEREST SLUGGISH Gold has moved in a range between $1 630/oz and $1 660/oz since the beginning of last week, and trading volumes were light in absence of conviction from investors. Money managers raised their net long positions in US gold futures and options in the week ended April 17 to 112 275 contracts, from 109 511 contracts a week earlier - its lowest in more than three years. While the net length in gold had fallen more than 40 percent from this year's peak hit in early March, the total open interest edged lower from a week earlier to 640 791 contracts, down 13% from March and near a two-year low hit earlier in the month. Gold traders in India, the world's top gold consumer, stayed away from gold purchases despite the upcoming Akshaya Tritiya festival on Tuesday, traditionally a key gold-buying day, as the weakness in rupee made imported bullion more expensive. Canada unveils plan to streamline environmental reviews Natural Resources Minister Joe Oliver said demand from emerging economies in Asia and around the world provided the potential to create even more jobs and growth in Canada. He cited Canadian natural resource sectors having employed more than 760 000 workers in communities throughout the country in 2010, with the mining and energy sectors alone representing 10% of the Canadian economy and 40% of its exports. The plan called for a move toward a “one project, one review” system for reviews of significant projects by recognising provincial processes as substitutes or equivalents to federal ones, as long as they meet the requirements under the Canadian Environmental Assessment Act. Oliver said the number of organisations responsible for these reviews would be consolidated from more than 40, to only three, comprising the Canadian Environmental Assessment Agency (CEAA), the National Energy Board (NEB) and the Canadian Nuclear Safety Commission. Oliver said government’s ‘Responsible Resource Development’ plan would create good, skilled, well-paying jobs in cities and communities across Canada. “The potential for job creation and economic growth is enormous. In the next ten years, more than 500 projects representing over $500-billion in new investments are proposed across Canada,” he said. While the review process would be accelerated, Oliver stressed that the highest-possible standards for protecting the environment would still be maintained. The plan received broad, strong support from Canadian business and labour leaders, including the Federation of Canadian Municipalities, the Prospectors and Developers Association of Canada (PDAC), Canadian Manufacturers & Exporters, Conseil du patronat du Québec and the Canadian Building Trades. PDAC executive director Ross Gallinger said the association supported a system that provided predictable and timely reviews, reduced duplication, strengthened environmental protection and enhanced Aboriginal consultation. “The mineral exploration and development industry needs an efficient regulatory regime that encourages investment by providing certainty and predictability for resource development projects,” he stated. ENVIRONMENTAL CONTENTION But while industry groups supported Oliver’s announcement, Ottawa’s resource development plan did not gain the same support from environmentalists. Environmental activist The Pembina Institute policy director Simon Dyer believed Canadians would get weaker, less-informed decision-making, sloppy environmental protection by resource developers, and an increased likelihood of environmental impacts. Independent observers like the Royal Society of Canada have stated that Canada needs to strengthen its environmental assessment procedures in the oil sands sector, but that the federal government’s plan takes Canada in the opposite direction. “At a time when the level of proposed resource development – particularly in the oil sands – is increasing, the federal government needs to enhance its oversight of these projects. The government may say it is committed to more efficient and effective decision-making, but its plans to cut the budget of the agency charged with making those decisions by 40% undermines the government’s ability to deliver on that commitment,” Dyer said in a statement. “These changes make it clear that powerful oil interests are running the show with the federal government bending over backwards to do their bidding,” Environmental Defence’s Gillian McEachern said in Ottawa. She added that Tuesday’s announcement “weakened that key environmental protection measure at the same time as offices that deal with oil spills are being closed across the country”. McEachern pointed to energy provider Enbridge’s proposed Northern Gateway tar sands pipeline that would cross 800 streams and rivers, many important salmon habitats, and send supertankers along the pristine British Columbia coast, raising fears of repeat accidents such as the Exxon Valdez in Prince William Sound, Alaska, on March 24, 1989. However, the plan for the first time also provided for the use of administrative monetary penalties for violations of applicable laws, while providing more than $35-million over two years for marine safety and $13.5-million over two years to strengthen pipeline safety. This included regulations to strengthen the tanker safety regime and increasing the number of oil and gas pipeline inspections each year by 50%, from 100 to 150 inspections. REDUCED TIMELINES Further, the Responsible Resource Development plan would reduce the sometimes-lengthy review process by restricting it to set timelines, to ensure decisions by the CEAA on whether a federal environmental assessment is required are made within 45 days. The legally binding timelines would include projects for regulatory permitting process assessments under the Fisheries Act, the Species at Risk Act, the Navigable Waters Protection Act, the Canadian Environmental Protection Act and the Nuclear Safety and Control Act. The timelines for hearings and assessments were pinned to 24 months for panel reviews, 18 months for NEB hearings and 12 months for standard environmental assessments. The announcement means the government is stripping key veto powers from the National Energy Board, Canada's federal energy regulator, which currently decides whether pipeline plans should go ahead. An official document said Ottawa would "establish clearer accountability for decisions on major pipeline projects in the national interest by giving government authority to make the 'go/no go' decisions, based on the recommendations of the National Energy Board". The Conservative government is keen to expand pipeline capacity from the oil-rich tar sands of northern Alberta to the Pacific Coast. Kinder Morgan Energy Partners LP and Enbridge Inc are both proposing such projects but the plans have met major resistance from environmental and aboriginal groups. Under the current system, Ottawa can stop a pipeline that the NEB has approved but cannot overrule a decision by the NEB to veto a project. The NEB rarely vetoes projects but sometimes attaches conditions to approvals that it grants. Harry Winston says Diavik production up 19% The mine, which Harry Winston owns with Rio Tinto, produced 1.6-million carats from 500 000 t of ore in the first quarter. The year-on-year improvement in production was attributable to higher grades, which improved to an average of 3 ct/t from 2.8 ct/t a year ago, as well as higher throughput and ramping up of underground operations. The Diavik mine was expected to produce about 8.3-million carats from two-million tons of mined ore and processing of 2.2-million tons of ore this year. The operation produced 6.7-million carats in 2011. Harry Winston owns 40% of the Diavik mine. Rio Tinto announced last month it would review its diamond assets, which include 60% of Diavik. A full merger of Glencore and Xstrata, now before shareholders, will make the group the world's biggest zinc producer, with a controlled output of about 1.6-million tons and a 16% share of global zinc ore production. But in 2013, the Xstrata-owned Brunswick and Perseverance mines in Canada will run dry, removing about half a million tons of zinc from the global system. "We are trying to make that up with expansion in ore mines," Emilio Tamargo, general manager for business development and research at Xstrata's zinc unit, told Reuters on the sidelines of a conference organised by Metal Bulletin. "I think total capacity we are working on is about half a million tonnes which more or less will compensate what we are losing," Tamargo said. Xstrata expects to complete expansion of its Mount Isa mining operations and start up Lady Loretta mine in Australia next year, he said. Lady Loretta is expected to have an annual production of 126 000 t, according to Xstrata website. The group is also looking at organic growth in zinc mining in other geographic areas as well as possible acquisitions but has no definite projects on the table at the moment, he said. Xstrata plans to start up the Bracemac-McLeod zinc mine in Canada, with a 90 000 t output, next year. Timmins Gold Q1 output hits record 21 532 oz The miner, which owns the San Francisco gold mine in Mexico, produced 18 395 oz of gold in the previous corresponding period. The first stage of the company’s capacity improvement programme was the replacement in March of an existing tertiary crusher for a higher-capacity unit, as well as improvements in the blasting process at the pit. Further, an increased pumping capacity has allowed for a higher rate of slurry flow to the leach pads to fully leach the newly stacked ore. The company expected these improvements to be reflected in second-quarter results, when still higher gold and silver production is expected. The second stage of the capacity improvement programme entails the installation of a rock scalping system to increase the capacity of the existing crushing circuit to between 22 000 t/d to 25 000 t/d of processed ore, as well as refurbishing and increasing the capacity of the gold plant. “Stage 2 is scheduled for completion by the end of the third quarter,” Timmins said in a statement. The third stage comprises the installation of a new 10 000 t/d portable crushing system, of which 80% is already on site, to process ore from the La Chicharra pit, located 1.5 km from the San Francisco pit. The company has acquired sufficient land and water and is fully permitted to carry out the improvements at La Chicharra, which were expected to be complete by the fourth quarter. The completion of the three stages of capacity improvements were designed to take the mine to a throughput of 32 000 t/d of processed ore and yearly production of 130 000 oz of gold by the beginning of 2013. The total cost of these improvements was budgeted for at about $18-million, of which $5-million was already paid. Cash generated by current operations would pay for all capital expenses. The recovery ratio is defined as the ratio of gold ounces produced, divided by the number of contained gold ounces stacked over a specific period. Timmins also produced 11 740 oz of silver during the quarter. SGX Resources acquires Ontario mineral claims The company bought the claims near the Hutt and Halliday townships from Yvan Verroneau and paid with 17 778 common shares in SGX. “Following a re-evaluation of prior work, SGX intends to actively explore the mineral claims for gold mineralisation,” the company said in a statement. The transaction was subject to final approval of the TSX-V. SGX had acquired a number of properties, totalling about 2 500 ha along the prolific gold-producing belt of Timmins, in Ontario. These properties lie along splays or cross-faults of the Porcupine-Destor fault, which is considered to be the controlling structure in the camp. The company is conducting exploration programmes including diamond drilling, on these properties. SGX said on its website it had also recently acquired a large 5 000 ha property 60 km south of Timmins, along the western extension of the Kirkland Lake break. TSX-V-listed SilverCrest sold 666 303 oz of silver equivalent during the last three months of the year, compared with 70 168 oz a year ago. “We have made significant progress on all fronts and achieved or bettered our targets in all major measures of performance,” president Scott Drever said in a statement. SilverCrest aims to produce around two-million silver equivalent ounces this year, increasing to over five-million ounces in 2015 as it doubles milling capacity at its flagship Santa Elena mine. The company ended the year with $25.9-million in cash. Spokesperson Sven Lunsche said Canada was one of many countries that Gold Fields was looking at in terms of greenfield gold exploration. “It has the advantage of being a low-risk political jurisdiction,” he told Mining Weekly Online. However, Lunsche added that it was too early to state how much copper/gold the company would be targeting from Canada in the coming years as the projects were still in the early exploration and development phase. Under the latest Canada agreement, the South Africa-based Gold Fields, led by CEO Nick Holland, could earn 60% of several Bear Lake Gold properties, in Ontario, by spending $40-million on exploration and development. The projects covered under the agreement included Bear Lake, Cheminis and Fernland, as well as the 75%-held Swansea property, which together form part of the Larder Lake gold project. Gold Fields could earn an initial 51% interest by spending $25-million on the projects over a period of 36 months, including a firm commitment of $5-million during the first 12 months. Following this, Gold Fields can earn an additional 9% interest by spending a further $15-million over a period of 24 months following the initial term. If a development decision is made, Bear Lake will have the option to finance its share of the development costs through a loan arranged by Gold Fields, with Gold Fields receiving an additional 5% interest in the project against the payment of a nominal strike price. If Bear Lake arranges its own financing, it will retain its 40% interest in the projects. Gold Fields will manage all fieldwork during the option period, while a steering committee, including two representatives each from Bear Lake and Gold Fields, will be formed. If Gold Fields exercises the option, it will be the operator of the resulting JV. The transaction is subject to Gold Fields completing due diligence enquiries by May 21 and Bear Lake obtaining all necessary regulatory approvals including the TSX-V approval. Gold Fields, which is targeting 60% of its production outside South Africa by 2015, already entered into two other JV agreements in British Columbia. It could earn a 70% interest of the Consolidated Woodjam Copper projects and up to 75% of Cascadero Copper’s Toodoggone copper/gold project. Subsidiary Gold Fields Horsefly Exploration in February delivered exercise notices on the Woodjam North and Woodjam South properties, indicating that it had vested its 51% earn-in interest under the option and JV agreements dated July 29, 2009 and May 20, 2010. Gold Fields had committed to expenditure totalling about $14.6-million on the two properties during the past two-and-a-half years to earn its 51% interest. Further, Gold Fields also gave notice that it will exercise its right to earn a further 19% interest in each of the Woodjam North and Woodjam South properties. To earn this additional interest, Gold Fields will be required to spend $12-million on Woodjam North and $8-million on Woodjam South over the next four years. Gold Fields was also required to complete a comprehensive feasibility study on the Woodjam South property. In 2011, Gold Fields completed a 20-km drilling programme on the south-east zone porphyry copper/gold/molybdenum targets, resulting in the development of a South African Mineral Resource Committee-compliant inferred resource of 1.06-million pounds of copper. A conceptual mining study was expected by mid-year. A decision on the way forward for the Cascadero Copper JV was expected later this year. In 2011, a 2 248 m diamond drilling programme tested high-priority geochemical and geophysical anomalies on the Mex porphyry copper/gold target, which successfully intersected mineralisation. Lake Shore to reopen Timmins mine in 'next day or so' after fatality “Our focus over the last two days has been to support Trevor's family and our employees,” he added. The mine’s stoppage would not have a material impact on production for the quarter, Lake Shore said. Shares in the company closed 13.8% down on Tuesday at C$1.00, the lowest level since December 2008 Full details of the accident were unknown, and the Ontario Provincial Police, the Ministry of Labour and the company’s management were investigating the incident, the Toronto-based firm said. “We are concentrating our efforts on supporting the family and our employees at the mine site and on investigating the incident to understand exactly what occurred,” Lake Shore CEO Tony Makuch said in a media release late on Monday. The company said it had notified the victim’s immediate family, but was withholding the name of the worker “pending completion of the notification process”. “Our focus has always been and will remain on the health and safety of our people,” Makuch said. Lake Shore had earlier on Monday reported a new reserve at the Timmins West operation, located 18 km from the town of Timmins, of 823 848 oz, grading 5.21 g/t of gold. That was enough to sustain the mine for five years of production, the company said. That news had sent the company’s share price 12.6% higher on the TSX to close at C$1.16, with 48-million shares changing hands, making it the most heavily traded stock on the Toronto bourse for the day. Russia's Acron may sell some potash areas in Canada "We have two projects (in Canada) where we would like to stay... and there are several other areas which are up for sale," Popov said in the Russian town of Velikiy Novgorod in remarks cleared for publication on Monday. North Atlantic sold eight potash licences to the Yankuang Group Corporation Limited of China for $110-million last October. It still holds 18 permits in the Prairie Evaporite potash deposit in Saskatchewan province in Canada, of which 9 permits are included into a joint venture agreement with mining giant Rio Tinto . Popov did not specify whether Acron wants to sell permits, which are a part of the agreement with Rio Tinto. Chairman added that Acron may boost its output in the first quarter despite production cuts at rivals' assets as it expects the demand for mineral fertilisers to revive in the second half of 2012. The market had been braced for a gloomy outlook after larger rivals Uralkali of Russia and P otash Corp of Canada warned of weak demand. Popov expects the demand for nitrogen fertilisers to rise by 1.5% per year during the next several years and believes that high prices for food products will support global fertiliser prices in the second half of this year. Acron holds a 2.7% share of Russian potash miner Uralkali with current market value of about $634-million and can sell these shares as a single package if it needs money, Popov added. Earlier Acron promised to sell these shares by parts during three years. Australia, Canada and Chile seen as top mining destinations Behre Dolbear reported that the top and lowest ranked countries saw little movement during the year, however, there was substantial movement in the middle of the ranks. China and Mongolia fell by three and two points respectively, which resulted in China dropping from thirteenth place last year, to seventeenth this year. Mongolia fell from tenth place to a twelfth place. Other countries which fell included Mexico, India and Peru – each down by one point. On a positive note, three African countries – Ghana, Namibia and Zambia – all saw a ratings increase of two points. Ghana moved to tie with Peru for the ninth place, while Namibia’s ranking improved to eleventh. The advisory firm said that the improved stability of these, and other African countries’ governments, was leading to a revival in long-term African mineral investment, which in turn was improving infrastructure, as well as the lives of citizens, which when combined with its mineral wealth was making these countries a more desirous location for mineral investment. It noted, however, that Zimbabwe and South Africa “prove challenging for foreign and domestic investors as an uncertain political atmosphere detracts from mineral development”. South Africa is rated twentieth, out of 25 countries, while Zimbabwe does not feature on the list, owing to its inherently low rating. Behre Dolbear rates countries on their economic and political systems, social issues, permitting delays, corruption, currency stability and tax regime. Meanwhile, the advisory firm stated that the initial resurgence in mineral consumption during the first half of 2011 appeared to have abated, with mineral prices and demand both retreating from recent highs. However, producers were still cautiously expanding capacity to meet the expected growing demand from the emerging market consumers, Behre Dolbear said. It added that the competition for mineral resources would make those countries perceived to have the lowest political risk able to attract a significant portion of global mineral investment, as well as receive a premium for their resources over countries where perceived instability exists. The outlook for 2012 remained uncertain, mostly owing to the “band-aid” approach the European Union was using to resolve the debt problems in Greece, Portugal, Spain and Italy. Behre Dolbear noted that this uncertainty had impacted commodity prices since austerity measures or a collapse of the euro as a currency would have potentially serious impacts on the marginal global demand for minerals. Similarly, should fears of a “hard landing” come true in China, that would also devastate global commodity demand, the firm said. China fund targets nickel in resource deals Chinese firms have been snapping up copper, uranium, iron ore and coking coal assets around the world, but have yet to make a big splash in nickel. In China's latest deal, China Guangdong Nuclear Power Corp (CGNPC) and the China-Africa Development Fund are about to take over Kalahari Minerals and Extract Resources in which it holds a 42.7 percent stake for $2.3 billion together, gaining control of the Husab uranium project in Namibia, which could become the world's second-largest uranium mine. "I think we do have a small group of targeted commodity products which are pretty much beneficial to Chinese clients...for example copper...and also uranium," China Development Bank International executive director Lei Mu said at a mining conference in Hong Kong. "China is right now one of the very few countries in the world that is still keen on developing nuclear power plants after the Fukushima crisis," he said. He added that China Development Bank International is interested in buying iron ore and coking coal assets and is also targeting nickel. "Everyone's talking about iron ore, and we are kind of keen on iron ore as well. Coking coal's definitely one of the things we're looking at." "Because we are the largest shareholder in one of Asia's largest nickel companies, we have been very actively seeking similar assets for this company for our future investment," he said. China Development Bank International, backed by more than $1 trillion in lending capacity from CDB, looks for assets or businesses that have Chinese ties, either directly through a Chinese company or through supplying into China. "We look at the future value upside of the asset and we pay a lot of attention to the quality of the team, and we also look at the potential country risk and the political risk of the regions where the assets are located," Mu said. The approval, from Canada's Nuclear Safety Commission, allows the utility to power up the refurbished reactor to complete final safety and operations tests. The next step will be to link the reactor, located on the eastern shore of Lake Huron, to Ontario's power grid. Unit 2 is one of four reactors at Bruce Power's Bruce A plant. The 750-megawatt Candu reactor is expected to produce enough electricity to power 500,000 homes. Bruce Power expects to have approval to bring Bruce A's Unit 1, also being refurbished, online in the coming months. Unit 1 and Unit 2 have been shut down since 1997 and 1995 respectively. Once the two reactors are online, the Bruce A and Bruce B plants will be generating a combined 6,300 megawatts of power from eight reactors. Bruce Power currently generates about 4,700 megawatts from four units at Bruce B and two units at Bruce A. Candu reactors are unique in that they are fueled with natural uranium instead of enriched uranium. Cameco Corp , Canada's top uranium producer, makes the fuel bundles for all the Bruce reactors. The miner holds a 31.6 percent stake in Bruce B, but no stake in Bruce A. The Bruce Power partners also include TransCanada Corporation, the Power Workers' Union, the Society of Energy Professionals and Borealis Infrastructure, an investment firm backed by a retirement trust. The resources-focused investment firm said it intends to exercise the warrants before NovaGold spins out its NovaCopper unit, the plans for which it announced in November. NovaCopper will house NovaGold’s 100% stake in the Ambler copper project, also in Alaska. As part of the unbundling, NovaGold shareholders will get one NovaCopper share for each NovaGold security they own. The deal is expected to close around April 30, with shareholders set to vote on the transaction on March 28. Electrum, headed by renowned gold bull Thomas Kaplan, said it would immediately seek the regulatory approvals it needs to increase its ownership in NovaGold. Barrick Gold, the world’s biggest producer, owns the other 50% of Donlin, which is forecast to produce around 1.5-million ounces of the metal yearly once production starts later this decade. “The next time that gold really starts to make a run, it’s got nothing to stop it,” he said on a conference call. Coxe reasons that the amount of money governments in the US, Europe and Japan are printing has led to the highest ratio of gold production versus fiat currencies since paper money was invented. In the March issue of his Basic Points bulletin, he goes on to say that it is only a matter of time before shares in “the great mining companies” start to outperform the price of their product, echoing his previous view that investors should buy the producers' stock instead of the metal. Much ink has been spilled over the past couple of years regarding the dramatic underperformance of gold mining stocks compared with gold prices, as investors gravitate towards the less risky exchange-traded funds. “Governments are running deficits beyond the forecasts of all but the hardiest gold bugs five years ago; central banks are printing money and creating liquidity beyond the forecasts of all but the most paranoid gold bugs a year ago,” Coxe wrote. Having topped a record $1 900/oz in August last year, the yellow metal has had a highly volatile ride, plunging to as low as $1 540/oz in late January. Gold, seen as a place for fearful investors to park their money, has suffered most recently after Greece managed to avoid defaulting on its debt, and the US Federal Reserve signalled another round of quantitative easing is not immediately around the corner. Also, last week, Aurizon Gold CEO George Paspalas expressed similar sentiments to Coxe. Speaking in an interview, he commented that things had "not changed overnight in Europe". "There is so much uncertainty out there...there's nothing that anyone is really willing to hang their hat on," he said when asked for an opinion on the recent weakness in the gold price. "I'm pretty bullish on gold." The TSX- and NYSE-listed firm also said it held around one-third of its $78.8-million treasury in bullion, betting that prices will rise. CEO Rob McEwen followed a similar practice when he headed up Canada’s Goldcorp, and repeatedly forecast that gold prices would hit $5 000/oz by the middle of the decade, and silver $200/oz. Last year, Canadian fund manager Eric Sprott called on silver producers to hold some of their treasuries in the metal itself. McEwen Mining said it expected San Jose, which US-based Hochschild Mining owns 51% of, to produce 5.7-million ounces of silver and 85 000 oz of gold in 2012. The company said it was on track to complete construction at its El Gallo Phase 1 project in Mexico by the middle of the year, which was set to produce 10 000 oz of gold during the second half. McEwen owns 25% of the company, and receives no salary. Seabridge options BC project to minnow To get 100% of Red Mountain, Banks Island must pay Seabridge a total of four-million shares and $11.9-million in cash by February 2015. Of this, $900 000 and the scrip portion are payable once a definitive agreement is signed – Thursday’s announcement was made on the basis of a letter of intent. Red Mountain has measured and indicated resources of 400 000 oz, compared with the hefty 49-million ounces Seabridge has at its Flagship KSM project, also in British Columbia, or the nearly eight-million at the Courageous Lake deposit in the Northwest Territories. Banks Island, which debuted on the TSX-V in October, owns two projects in the north-west coastal region of British Columbia. With 17-million shares in total, Seabridge will own nearly 20% of the company. Great Western CEO’s exit all part of the plan – analyst “My stated objective was to position the company for rapid growth with an integrated model and on a fully funded basis. This has now been achieved,” said Engdahl, who has served in the role since March 2006. Speaking in an interview, Engdahl said he will likely remain president and a director of the company, and that Great Western had set no firm timeline to find a new CEO. The funds raised from the secured convertible bonds, which bear interest at 8%, will allow the company to complete construction at the Steenkampskraal mine it is refurbishing in South Africa, as well as a chloride and separation plant. Great Western aims to have all this up and running in the first half of 2013, which would make it the third non-Chinese rare earths producer to come into production this decade, after US-based Molycorp and Australia’s Lynas. An analyst, who spoke on condition of anonymity, said he expected the bond sale would take the company through to production, which Engdahl concurred with, as a "best guess". Great Western has previously estimated the mine refurbishment and plant construction in South Africa would carry a price tag of $60-million, but the analyst believes the final figure will be closer to $80-million. The company has yet to publish a compliant resource estimate or assessment of the project’s economics, and anticipates doing so in the first half of this year – likely around April or May. Altogether, Great Western has raised around $107-million in recent financings, including the bond issue, which should comfortably take the company through to first production, the analyst said. The bonds become due in five years and are convertible at C$0.66 a share – a 20% premium to the closing price of the stock on the TSX-V on March 14, when the company announced it would sell convertible bonds. The analyst said Engdahl’s stepping down was always a likelihood at some point, given the history of the company. Great Western started out as an outfit of former uranium explorers, which bought the Steenkampskraal operation through its purchase of RareCo last year. “The team is based in Regina, and they are not large capital-markets savvy people. They want a more market-savvy face as CEO as Great Western becomes an operational company,” the analyst commented. Engdahl told Mining Weekly Online that health reasons had also played a role in his desire to "step back a little". Molycorp’s C$1.3-billion buyout of rare earths processing company Neo Material Technology, announced earlier in March, could provide some potential candidates to replace Engdahl. The analyst said some senior officers of the TSX-listed firm may seek to leave. What does the Molycorp-Neo tie-up mean for companies such as Great Western? The analyst said it bodes well, proving that the integrated model the Saskatchewan-based firm has adopted is the right one, calling it a “smaller version” of the Neo-Molycorp combination. “They are already in that enviable position [of being integrated],” he commented. Great Western’s Lesser Common Metals facilities in the UK already produce products, similar to what Neo Materials do in China, which are used to make the permanent magnets that go into technologies such as hybrid cars, smart phones and wind turbines. Great Western has an advantage that the Steenkampskraal mine will likely produce a significant portion of “heavy” rare earths such as europium, which are forecast to be in a supply shortfall by 2016. Many of the light rare earths that Molycorp and Lynas will mainly produce will be in oversupply by that stage, Industrial Minerals Company of Australia director Dudley Kingsnorth said in February. Engdahl said it was mainly the strategic importance of heavy rare earths that led US president Barack Obama to take China to the World Trade Organisation, along with the EU and Japan, for restricting exports of the group of 17 elements. The heavy rare earths are used in defence technology such as guided missiles. China produces around 95% of the world's rare earths, but only has up to 40% of known global resources. "There is an imbalanced equation there," said Engdahl, adding that the WTO would have a "tough time" in finding China guilty of protectionism in the rare earths case. Last year, companies exprted less than 50% of the 30 184 t allowed under the quota system, as soaring prices and economic uncertainty cut demand. Capstone expects to produce 80-million pounds of contained copper in 2012. It produced 78.3-million pounds of copper in concentrates last year. Net income for the fourth quarter was $4.9-million, or 1 cent per share, compared with $8.5-million, or 4 cents per share, a year ago. Gross sales revenue rose 24% to $65.6-million. Cash flow from operations halved to $11.1-million. Analysts, on average, were expecting earnings of 3 cents per share on revenue of $64.3-million, according to Thomson Reuters I/B/E/S. Capstone said fourth quarter profit was hit by a loss on foreign exchange of $4.7-million and income taxes of $6.4 million, along with share-based compensation of $1.3-million and general expenses of $3.9-million. Shares of the company closed at C$2.93 on Wednesday on the Toronto Stock Exchange. La Mancha puts up for sale sign Its 63% shareholder said earlier this year it aimed to sell around $1.56-billion worth of assets by 2013, in an effort to shore up its balance sheet. La Mancha, which owns a 40% stake in the Hassai gold mine in Sudan, Ity in Côte d'Ivoire and the Frog’s Leg operation in Australia, said it hired BMO Nesbitt Burns and Fasken Martineau to assist in the auction process. “BMO has begun speaking with a number of prospective acquirers and the company has already received several verbal expressions of interest,” the TSX-listed company said, adding that it had opened a data room to prospective buyers. La Mancha said it established a special committee to conduct the auction process at the request of the French nuclear giant. While Areva's sale of La Mancha might have been inevitable, given the noncore nature of the business, finding a buyer at this point might be difficult. Talks with the Sudanese government over potentially increasing the company's ownership of Hassai to a majority position were stalled after the country split in two in July. One of the options for funding the government's share of the $187-million Phase 1 expansion at the operation would be to cede some of its 60% ownership to La Mancha, with other potential levers being taxation and royalty changes. A lack of closure on the ownership level of its flagship asset might dampen the interest of potential buyers, as well as the price they would be willing to pay. Companies that may be interested in buying La Mancha include Nevsun, African Barrick and Iamgold. La Mancha produced 121 446 oz of the precious metal in 2011, slightly less than the previous year. It aims to produce between 110 000 oz and 130 000 oz in 2012 at an estimated average cash cost of $659/oz. The stock fell 7.9% on the TSX to close at C$3.26 on a day when investors fled gold equities, giving La Mancha a C$465-million market capitalisation. The firm announced the auction process after markets closed. Search for coal leads to Canada's high Arctic “I firmly believe we have what could be a world-class deposit up there,” commented CEO Braam Jonker, who was Western Coal CFO until Walter Energy bought the company for $3.3-billion in April 2011. Canada Coal, which listed on the TSX-V at the end of February, boasts a 53-billion-ton historic resource at Ellesmere. Though not yet compliant with Canada’s NI 43-101 requirements, the coal deposit could ultimately be the country's biggest. Oil companies such as Petro-Canada and Gulf Canada Resources did some early exploration of the properties in the early 1980s, but halted work after the oil price crash in 1983. A shortage of new metallurgical deposits globally, and the potential magnitude of Ellesmere Island’s resources caused Canada Coal to dust off the old properties. “The sheer size of what’s there really drew my attention to it,” Jonker told Mining Weekly Online. It is still early days for the company, though. While the historic resources show massive coal deposits exist at Canada Coal’s Fosheim property – located 36 km east of Canada’s most northerly weather station at Eureka – the bulk of this is so-called lignite, the lowest-quality variety of the fuel. Some of the lower seams indicate the presence of bituminous coal, with quality increasing with depth. Bituminous coal is worth more than lignite, but not as much as the steelmaking – or coking – types that Canada Coal is hoping to uncover there. “Even if we find a very small percentage of metallurgical coal...1% or 2% [of the total resource] would be 200-million tons to 400-million tons,” said Jonker. The company plans to carry out sampling and mapping work, in preparation to start drilling in the summer of 2013. Depending on the results of this, along with a detailed logistics study, Canada Coal may move straight into the feasibility stage next year, he added in a telephone interview. COSTS ARE KEY One of the top factors in determining whether any mining project proceeds is whether it can produce at a competitive cost, and Canada Coal’s Ellesmere Island projects will be no exception. “That would be the big question,” said an analyst that covers North American coal producers. It would be difficult to provide an answer, as Canada Coal does not know that it has metallurgical coal at its projects yet, never mind what the production costs might be. The analyst, who asked to remain anonymous as he does not cover the company, said there was space in the market for new coking coal producers. “A lot of the traditional coal basins are well understood and fully developed,” he said. Another analyst, also asking not to be named, agreed. “Probably now is a pretty good time to be looking at a project like that. There’s scarcity of supply, and people are scouring the world for new deposits.” What will have a big impact on costs is the fact that Canada Coal’s deposits are located in the high Arctic. Although Jonker believes the company will be able to mine year-round, icy seas will constrain shipping to around nine months of the year. Other companies have proved that mining is possible in extreme cold environments. Norway’s Store Norske, for example, has been mining coal at Svalbard since 1916 – at the same latitude as where Canada Coal hopes to build mines. ArcelorMittal is building a giant iron-ore mine and railway line at the Mary River project on Baffin Island. “Mining under severe weather conditions is really not that big a challenge anymore,” said Jonker. He points to the scepticism that many investors viewed the Mary River project with, before the world’s biggest steelmaker bought it in 2011. “When these guys started up a few years ago, some people were thinking that it will never get off the ground. Those views are changing; they’re proving these people wrong.” Less than 150 people live on Ellesmere Island, twice the size of Newfoundland, making it one of the most isolated places in the world. Jonker has already visited the local communities to start consulting them early, with additional trips planned this year. “We’re going to do things the right way,” he said. In addition to the minute human population, Ellesmere Island is home to polar bears, caribou, musk ox and various bird species. How far down the road might first output come? Jonker said that would be least five years away. Canada Coal, which has a market capitalisation of just over C$10-million, will likely have to partner with a larger company to develop a mine at its properties, assuming it can prove one viable. One of the analysts Mining Weekly Online spoke to said the most likely candidates in that regard would be a steelmaker such as ArcelorMittal, seeking to diversify its supply. It could also leverage expertise it will gain in building a giant iron-ore mine on Baffin Island. Centerra's Lang to take over as chair Global exploration VP Ian Atkinson, who has worked for the company since 2005, will step into the CEO’s role effective May 17. Centerra said its board planned to name a lead independent director after its May annual general meeting, given that Lang would not be considered independent for three years. Director Ian Austin, who joined the board at Centerra’s 2004 Toronto initial public offering, will also retire after the meeting, with the company yet to name a replacement. Centerra, which reported a 47% drop in fourth-quarter net earnings to $79.4-million last month, has forecast 2012 output of between 635 000 oz and 685 000 oz from its Kumtor mine in Kyrgyzstan and Boroo in Mongolia. The company said David Groves would take up the job of global exploration VP. Threatened ferrochrome eyeing Canada’s potash turnaround model The stricken ferrochrome industry says that Canada in 1972 faced a similar situation in potash to what South Africa is facing in chrome – a long-term potash price depression. It was then that Canada formed Canpotex, a marketing and logistics company that sells and delivers Saskatchewan potash to international markets as a wholly owned entity of potash producers. “The Canadian potash industry provides an excellent case study,” says the South African ferrochrome industry in the nine-page handout to analysts, investors and journalists at the presentation of the results of the black-controlled Merafe Resources, which is part of a chrome-to-ferrochrome venture with the London-listed and South African-led Xstrata, the world’s biggest ferrochrome producer. It says that forecast chrome supply growth, triggered by innovation and use of upper group two (UG2) by-products in ferrochrome, will outpace demand growth. "Accordingly, optimising the benefit to South Africa from its chrome endowment could be accomplished through bringing stability to the ore export market through a marketing arm similar to Canpotex in Canada," the industry adds. The South African ferrochrome business, which employs more than 200 000 people and which contributes R42-billion to gross domestic product, is rapidly losing market share to China and has been forced to shut 30% of its furnace capacity. Once the proud holder of a 50% share of the global ferrochrome market, the local industry now finds that China is stealing the show – ironically, with the help of surplus South African raw ore. China hosts no chromite deposits of its own, but imports the ore it needs from a string of countries. South Africa, which has an oversupply because of the chrome stream coming out of the mining of UG2 reef by platinum miners, is now filling the gap India left. This is taking the bread out of the mouths of South African ferrochrome producers, who are now hoping that the South African government will give them two forms of help – the first quick and temporary and the second long-term and permanent. In the short term, ferrochrome producers are calling for the imposition of a $100/t duty on the export of raw chrome ore, but in the long term, they are proposing a Canpotex solution for ferrochrome. The extraordinary growth in ore supply from UG2 tailings will result in a potential six-million-ton oversupply of metallurgical-grade ore by 2014. That will lead to lower ore prices and, consequently, lower ferrochrome margins, with negative implications across the South African chrome value chain, which earns R36-billion a year in foreign exchange, invests capital of R3.5-billion a year and pays R2.5-billion a year in taxes. Including UG2 sources, South Africa has 82% of the world’s chrome reserves. Exporting chrome ore in unbeneficiated form creates 5.7 jobs per 1 000 t of ore and exporting ferrochrome creates 17.3 jobs per 1 000 t of ferrochrome. While R1 660 is added to the GDP every time a ton of ore is exported, R9 109 is added every time a ton of ferrochrome is exported. South Africa also has technologically advanced smelting capacity, which is currently considerably underused. The local ferrochrome industry is hoping that the South African government will opt to maximise South Africa’s chrome ore endowment to drive sustainable growth. Commenting on the threat facing the ferrochrome industry, metallurgical engineer Nic Barcza said that South Africa should work with the Chinese markets to seek cooperation in the building of power stations to supply the electricity needed to grow the South African ferrochrome industry. Chinese investment would help to secure more competitive ferrochrome than producing it in China where there was no natural competitive advantage. As it required 2.5 t of chrome ore to produce one ton of ferrochrome, it did not make sense to export chromite to China unless South Africa's power cost was high and there was a shortage of power, which was currently the case. “So one can't blame China for its approach under these circumstances, however, in the longer term it may not be sustainable, as happened in Japan, Europe and North America in the 80s,” Barcza recalled to Mining Weekly Online. He also found the statement that exporting chrome ore in unbeneficiated form created 5.7 jobs per 1 000 t of ore and exporting ferrochrome created 17.3 jobs per 1 000 t of ferrochrome to be misleading on the basis that it required 2.5 t of chrome ore to produce one ton of ferrochrome. The number of equivalent jobs, according to his calculation, was thus 14 for ore compared with 17 for ferrochrome. The main employment benefit in his view was that the ferrochrome jobs were on average jobs that required skill and which were higher paid, which was what South Africa was targeting in its employment-creation endeavours. Gold falls 2% as Fed easing hopes fade The metal has fallen 7% since late February as some funds might have exited the bullion trade on fears central banks could be done with quantitative easing or asset purchases by the Fed after an encouraging US employment recovery. Quantitative easing, or major asset purchases by the Fed, keeps interest rates and borrowing costs low, which makes gold more attractive compared with yield- or dividend-bearing assets such as bonds or stocks. Gold's biggest one-day drop in a week has erased its unusual premium to platinum. Platinum, which is mainly used by the auto industry, has recently outperformed bullion due to supply fears out of top producer South Africa. Also weighing heavily on gold was a Wall Street rally after JPMorgan Chase (JPM.N) announced a dividend increase and major share repurchase. The S&P 500 .SPX rallied nearly 2% on optimism related to a successful stress test on US banks. "The FOMC, plus the Bernanke statement, plus the good data are wringing QE3 out of the market and the extra QE3 premium built into gold," said James Steel, chief commodity analyst at HSBC. Spot gold was down 2.1% at $1 663.99/oz by 3:47 p.m. EDT (19:47 GMT), having earlier hit a seven-week low of $1 661.99/oz. Gold fell nearly $100 or 5% on February 29 when Fed Chairman Bernanke did not mention another round of easing in a statement in his testimony to the US Congress. The metal's losses quickened on Tuesday after bullion again broke below chart support at its 200-day moving average. US gold futures for April delivery settled down $5.60 at $1 694.20/oz ahead of the FOMC statement. Trading volume was about 25% above its 30-day average, preliminary Reuters data showed. In a statement after its policy meeting, the Fed offered just a slight upgrade to its economic outlook, saying it expects "moderate" growth over coming quarters with the unemployment rate declining gradually. "This just reaffirms that the Fed is looking...to try to keep interest rates as low as possible and to keep monetary policy as accommodative as possible, and that's a plus for gold in the medium term," said Axel Merk, chief investment officer of Merk Funds with about $700-million in assets. Some analysts, however, said the Fed's comment about a spike in energy costs could temporarily push up inflation also raised speculation the central bank could tighten monetary policy to battle rising prices. Gold has more than doubled in price since the Fed unveiled its first round of QE in late 2008, and a $600-billion stimulus package in 2010 gave a major boost to commodity prices. Even with the prospect of no more QE to sustain any major gold rallies, investors have maintained their interest in the metal, as evidenced by the rise in global holdings of gold in exchange-traded products to record highs this week. PLATINUM REGAINS PREMIUM TO GOLD With platinum back in pole position for the first time since September, pressure on gold may intensify, traders said. "The platinum players are jumping on to the buy platinum, sell gold theme, now that the traditional relationship is falling," said Donald Selkin, chief market strategist with National Securities Corp. in New York. Much of the boost to the platinum price this year has come from a month-long stoppage at the world's second-largest producer Impala Platinum's (IMPJ.J) largest facility at Rustenburg, which the company said cost nearly 200 000 oz in production and would probably cut deliveries in April by as much as 50%. Spot platinum turned negative in last session. It eased 0.5% to $1 680.43/oz, eking out a small premium to gold and ending for now the rare trend of the last six months. In other precious metals, silver dropped 1.5% to $33.70/oz, while palladium gained 0.7% to $700.83/oz. The gold miner in October wrote Goldex off at an after-tax cost of $161.5-million, after water seeping into the orebody raised safety concerns. At the time, the company said it made the decision having received an opinion from a second rock mechanics consulting firm, which recommended that underground mining operations be halted. Siskinds said the proposed class action lawsuit included investors that bought shares in Agnico-Eagle from March 26, 2010 to October 19, 2011 and alleged the company “failed to disclose the specific risks regarding ongoing water inflow at Goldex”. An Agnico-Eagle spokesperson declined to comment, as it was a legal matter. Siskinds partner Michael Robb said the the notice of action requests global damages of $250-million, but this might change. "As in any case, this is only an initial request and is subject to amendment as the action proceeds," he added in an email. Last month, at least four law firms said they were investigating class action suits against Toronto-based Kinross Gold, after that company was forced to write down $2.9-billion in value at its Tasiast operation in Mauritania. Kinross said it would vigorously defend against the claims. Large asset write-downs emerged as a theme to the recent fourth-quarter earnings announcements for the large gold miners, as higher production costs bit. Shares in Agnico-Eagle ended the day down 3% on the TSX at C$35.02. Caledonia finds near-surface copper at Zambian prospect Caledonia said while the estimated grade at the deposit, averaging 0.47% copper, was lower than nearby operating mines, it was shallow, and early indications were that processing would be low cost. CEO Stefan Hayden said the company’s 2011 drilling programme had found a mineralisation style unlike other properties in the region. “A sufficiently large, near-surface resource depth may therefore provide the basis for a future openpit mining operation,” he commented in a statement. Caledonia, which operates the Blanket gold mine in Zimbabwe, owns over 800 km2 of prospective ground in the Copperbelt, located in northern Zambia. Next door to the Nama deposit, Brazilian diversified mining giant Vale is building a $400-million mine at Konkola North, set to start commercial output in 2015. Caledonia said the estimated average thickness of the deposit was 41 m, with the intersections at depths of between 280 m and 450 m. That was from four holes the company drilled in 2011, with a three-phase plan targeted for 2012, including a 2 400 m programme to explore for potential shallower up-dip continuation of the new mineralised zone to surface, a 6 000 m drill programme to explore for potential deeper down-dip continuation, and a potential resource drilling programme, depending on the results of the first two stages. Shares in the company closed 4.8% higher on the TSX at C$0.11, having earlier gained more than 10%, with 1.4-million securities changing hands. The stock also trades on London’s Aim. The company is aiming for mid-year completion of a feasibility study at the Pitarrilla project, which operations and development VP Joe Phillips touted on a Monday conference call as having the potential to become one of Mexico’s largest silver mines. Earnings for the fourth quarter came in at $0.06 a share, compared with $4.64 for the last quarter in 2010. Silver Standard’s flagship Pirquitas mine, located in northern Argentina, produced 7.1-million ounces of silver in 2011, after the company suffered two months of downtime at the mill, causing it to miss previous guidance. The company has since rebuilt the mill’s gearbox, and a spare gearbox from Europe arrived in March. Silver Standard has given production guidance of 8.2-million to 8.5-million ounces of silver for 2012. The company at the end of 2010 spun out its British Columbia gold assets into Pretium Resources, which floated its shares on the TSX-V. Silved Standard said it sold one-third of its shareholding in Pretium for $130-million, leaving it with a some-21% stake worth more that $400-million. CEO John Smith said that the plan had always been to convert its Pretium ownership into cash that will go towards funding Silver Standard’s growth projects. “Having a nonoperating equity interest like that is not a long-term position for us,” he commented. Silver Standard also announced it had adopted a shareholder rights plan to protect its owners in the case of a hostile takeover bid, though it added the move was not in response to any known takeover offer. In November, UBS analyst Chris Lichtenheldt said in a research note the company may become a target following a sharp decline in its share price. The company’s stock was trading flat at C$15.34 a share on Monday afternoon. Paladin holds five deposits within the Labrador Inuit Lands, through its subsidiary Aurora Energy. The deposits are estimated to host some 15.1-million pounds of uranium oxide measured resources and 68.7-million pounds of inferred resources across six deposits. Drilling was expected to start in the third quarter of the 2012 calendar year, and would focus on infill and extension drilling of the Michelin uranium deposit. Expansion of the current resource base was expected both by drilling and within the current deposit perimeter, where significant areas remained untested and extensions along strike. Paladin said in a statement that clearance would also be sought for the reopening of the Michelin adit, constructed by British Newfoundland Exploration (Brinex), in order to obtain samples for metallurgical purposes and to better understand the continuity of the mineralisation and the geological setting of the deposit. Previous exploration by Brinex and Aurora demonstrated the high prospectivity of the claim package beyond the Michelin area, Paladin said, adding that there were several high priority areas that required ground-based geophysical surveys and geological mapping, as well as reassessment of existing drilling data in order to identify new drill targets. This work would be carried out in tandem with the drilling at Michelin. Natural coloured diamonds make up only 1% of global production, which gives them "unquestionable value," said Bruno Scarselli, who represents the third generation of US-based coloured diamond specialist Scarselli Diamonds. "There is a tremendous demand for yellow diamonds, but also blue and pink," Scarselli told Reuters at the Baselworld watch and jewellery show. "There are not enough diamonds to satisfy one-tenth of the new billionaires that every month are created in China," he said as he handled a $9-million ring featuring a 2.5-carat internally flawless blue diamond and two smaller pink stones. Scarselli said he expects financial institutions to be increasingly attracted to the diamond industry, which has traditionally been in the hands of family businesses. "This is associated with the fact that currency is losing its value, government bonds are a risk, and nations are losing wealth." Coloured diamonds are piquing investors' interest because they are more difficult to find in nature than white diamonds, industry spokesmen said. Simon Zion, whose father founded Hong Kong-based diamond company Dehres Ltd, said blue diamonds are coveted not because they are the rarest but because there are not many left after a boom in demand. Investors' relationship with diamonds has been rocky. The first diamond investment trust, set up by investment firm Thomson McKinnon in the 1980s, was wound up after a slump in the market. The first publicly traded fund to invest in diamonds, Diamond Circle Capital Plc, has lost more than half of its value since it started trading in 2008. At the beginning of 2011, investors seeking shelter from a weakening dollar were drawn back to the diamond market, expecting diamonds to go the same way as gold, said Martin Rapaport, whose diamond indexes are used as a reference by the diamond industry. "In fact, the dollar went up and the store-of-value investment argument became weaker," he said. Excess liquidity in India, one of the biggest diamond players, pushed up the price of diamonds in the first half of 2011, triggering a wave a panic among Chinese buyers who stocked up on diamonds fearing the price would keep rising. "Then when credit became tighter in India, the thing that was fuelling the fire settled down," said Rapaport. He expects the diamond market to be stable for the first half of 2012 as overstocking works itself out, before starting to rise in the second half. Frédéric de Narp, president and chief executive of US diamond miner and jeweler Harry Winston, said he will increase prices as he anticipates diamonds will go up again. A Chinese love affair with diamonds has fueled a growing trend for watchmakers to decorate their timepieces with the gems. Diamonds of all shapes and colours sparkled in the crystal windows of the Basel fair, mainly aimed at buyers from China, the Middle East and the United States. Swiss jeweler Shawish unveiled a 150-carat ring entirely made of diamond for an indicated 70-million Swiss francs. A diamond-encrusted gun - even the bullets carried their fair share of carats - sparkled at Diasqua, a privately-owned Indian company based in Hong Kong. Areva's head of mining resigns over UraMin "He handed in his resignation to the board of directors which accepted it, in the interest of the group and to put an end to the trouble caused by the UraMin affair," an Areva spokeswoman said. She made the comments after state-controlled Areva said in a statement Montessus had decided to leave the group and would be replaced by Olivier Wantz from March 31. Wantz, who joined Areva in 2005, has been senior executive vice president, operations support, since June 2011. The departure of Montessus follows his controversial role in the commissioning of at least one of two private investigation reports into the UraMin acquisition in 2007. UraMin is at the center of a dispute between ousted Areva Chief Executive Anne Lauvergeon, known as "Atomic Anne," who oversaw the UraMin acquisition, and Areva, which has withheld Lauvergeon's 1.5 million euro severance pay. Areva, the world's biggest nuclear reactor maker, bought UraMin to meet buoyant demand for uranium and as the price of the radioactive heavy metal peaked at $135 per pound. Getting UraMin's three African mines to produce, however, proved to be tougher and costlier than expected. Areva's new CEO Luc Oursel said in December he was writing down nearly their entire value, along with a wider group restructuring to reflect a slowdown in demand after March's nuclear disaster in Fukushima, Japan. Lauvergeon, ousted by the French government in June, found in her mail late last year an anonymously sent report, dubbed Pomerol 4 and carried out by ALP Services in 2011, revealing her spouse Olivier Fric had been spied upon to see whether he had "illegally benefited" from the UraMin deal. The discovery led to Lauvergeon filing a legal complaint with a Paris court against unidentified persons and the surfacing of another report written in 2010 by small French intelligence firm Apic, which suggested that UraMin may have been a scam. Both reports, obtained by Reuters, were commissioned by Areva's security offices; but the later ALP one was under the responsibility of mining chief Montessus, who said in a newspaper interview that the "serious" conclusions of the Apic study led him to launch a counter-investigation. Earlier this week, a parliamentary probe said that Areva had mishandled the UraMin acquisition, sharing the conclusion of an earlier internal company inquiry. The parliamentary report's authors, like those of Areva's internal investigation, did not uncover any fraud, as some had feared, and did not make recommendations for how Areva could prevent the same mistakes from happening again. ## The company has consistently failed to meet production targets at the mine, located near Balfour in Mpumalanga, putting strain on its balance sheet. “The company has reviewed its cash flow forecast and based on the significant amount of progress and underground development already completed and under way, the resolution of the water issues affecting the mine, and development rates at target levels, we believe the fundraising is sufficient to fund working capital until the third quarter when we expect the mine to be cash-flow positive,” Great Basin CEO Ferdi Dippenaar said in a statement. At 23 361 oz of production in 2011, the mine fell 6 000 oz short of its revised guidance. Great Basin, which trades on the Toronto and Johannesburg stock exchanges, had $6.5-million in cash at the end of September last year. It is set to announce its 2011 full-year financial results at the end of March. RBC Capital Markets is leading the syndicate of underwriters buying the shares in the C$50-million equity financing, with the option to take up an additional 15% The C$0.82-a-share price was at a discount to the C$0.90 the stock closed at on Thursday. Great Basin raised C$86-million through selling shares a year ago. Mandalay Resources says ops resume at Chile mine The protestors have begun negotiations with the local government, Mandalay said in a statement, adding that the fortnight-long disruption had minimal impact on production. Last month, protestors in the Aysen Province of Chile closed the port and several roads reacting against the government's move to reduce fuel subsidies. The company said it is going ahead with its ramp up plans for the project and working to return to normal production levels. Shares of the company, which also has assets in Australia, closed at 85 Canadian cents on Thursday on the Toronto Stock Exchange. ## The original plan was to look at the merits of a four-million-pound-a-year operation by the end of March, but the miner has decided to up the bar to a preliminary economic assessment on a five-million-pound-a-year mine, CEO Peter Hooper said in an interview. Snapping up Southern Andes gives Toronto-based Macusani 900 km2 of exploration ground, making it the biggest landholder in a highly prospective uranium district. In fact, speaking to Mining Weekly Online at the 2012 Prospectors and Developers Association of Canada convention in Toronto, Hooper said that Queens University professor emeritus Alan Clark, who has studied the district for around three decades, is of the opinion there is more uranium contained in the Macusani plateau than there is in the Athabasca basin. Clark, who is an adviser to the company, could not immediately be reached for comment. Macusani’s plan is to prove a 55-million to 65-million pound resource by the end of this year (it already has measured and indicated resources of 10.4-million pounds). Following that, the target is to lift the resource to as much as 100-million in 2013, said Hooper. He said he also sees potential for further consolidation in the district, potentially with Fission Energy’s adjacent properties. TSX-V-listed Fission’s flagship asset is the Waterbury Lake deposit in Saskatchewan, located next to Rio Tinto’s Roughrider deposit. ## Sukunka, which is contiguous to Xstrata Coal’s other tenements in the area, hosts a coal resource of 236-million tons in the measured and indicated categories. “Based on our due diligence and technical analysis, Sukunka has the potential to be a high-quality metallurgical coal mine,” said Xstrata Coal CEO Peter Freyberg. “Once developed, Sukunka would meaningfully increase our exposure to hard coking coal, while unlocking synergies with our neighbouring assets in the Peace River coalfield and providing additional regional scale.” The Sukunka project was previously the subject of a prefeasibility study for a longwall mine producing hard coking coal. Xstrata Coal’s technical studies have indicated the potential to realise further value from the resource. ## Sukunka, which is contiguous to Xstrata Coal’s other tenements in the area, hosts a coal resource of 236-million tons in the measured and indicated categories. “Based on our due diligence and technical analysis, Sukunka has the potential to be a high-quality metallurgical coal mine,” said Xstrata Coal CEO Peter Freyberg. “Once developed, Sukunka would meaningfully increase our exposure to hard coking coal, while unlocking synergies with our neighbouring assets in the Peace River coalfield and providing additional regional scale.” The Sukunka project was previously the subject of a prefeasibility study for a longwall mine producing hard coking coal. Xstrata Coal’s technical studies have indicated the potential to realise further value from the resource. ## “The ones that have financed themselves and have enough runway to continue their exploration programmes are happy going down that path. The ones that have not done that may be more interested in having talks with us,” US Silver chairperson Gordon Pridham said this week. His company, which owns the Galena mine in Idaho, is on the lookout for deals at the Prospectors and Developers Association of Canada’s 2012 convention currently being held in Toronto. “There’s no doubt that the markets are tougher than they were, and that could be a good opportunity for us,” said Pridham. The droves of junior mining companies flooding the floors of the Metro Toronto Convention Centre are notoriously cup-half-full people, and this year is no different as the now clichéd “cautiously optimistic” phrase gets thrown about. Though prices and sentiment have picked up significantly for mining firms since the eurozone crisis dragged markets down sharply in the second half of 2011, it does not take much to remind the industry of how fragile the world economy is. As the convention was entering its third day, the TSX plunged 1.8% to the lowest level since mid-January as fears resurfaced over Greece’s bailout, and China lowered its growth forecasts. The bourse’s metals and mining counter shed around 4.7% of its value. And while this environment might put deals on the table that might not otherwise occur, Pridham said US Silver aims to grow too as investors might favour the company more. “We would observe that the market gives higher ratings to companies that have multiple mining assets,” he said, adding the company was keen on buying additional assets in North America, but more so Canada and the US than Mexico. TSX-listed US Silver is already building the Coeur project, where it hopes will be producing at a rate of 500 000 oz from the end of the year. It is also drilling a nearby deposit that Pridham believed might add another 500 000 oz/y of production by late 2014. The company produced around 2.4-million ounces of silver in 2011. ## The European debt jitters that spooked investors last year put most initial public offerings on the backburner, and KPMG Canada mining industry leader Lee Hodgkinson said there are at least three or four companies with listings “in the hopper”, waiting for conditions to improve. Unsurprisingly, these are mainly gold firms, but coal features too. “When markets come back there will be a slew of companies” looking to float their shares on the TSX, Hodgkinson said in an interview on the sidelines of the Prospectors and Developers Association of Canada's 2012 convention. One of these is seeking to raise up to C$300-million, by no means a small amount. What will it take for new companies to brave the markets? In short – investor confidence. As the Greek debt crisis ebbs and flows, sending markets sharply up or down on any given day – and sometimes opposite directions in consecutive trading sessions, investors steer clear of mining juniors, which are risky plays. Another aspect that Hodgkinson said was deterring investors was the recent capital blowouts that many mining projects were suffering. If the big companies were struggling to contain their capital costs, juniors would likely too, and markets do not like it when firms have to return for large funding top-ups to complete their mines. ## Mike White, chief executive at investment bank IBK Capital, says due diligence is the key, and IBK offers a list of success stories to prove his point. "I always get very upset when people call investing in junior exploration akin to buying a lottery ticket because that couldn't be further from the truth," said White, whose Toronto-based company is a major sponsor of the annual Prospectors and Developers Association of Canada conference. "You are buying into a management team, you're buying into a number of projects whose merit is based on the work that's been done in the past and on the work that a management team is doing." Bankers expect aggressive deal-making at this year's PDAC as junior explorers seek to take advantage of new optimism in equity markets after a near-drought in the second half of 2011. A small player in the world of multibillion-dollar mine finance, IBK is one of the more successful independent financing firms in Toronto. Created by a group of investment bankers from Merrill Lynch in 1989, it has helped raise early-stage development capital for some of Canada's largest mining companies. Top of the list of successes is Goldcorp Inc, now Canada's No. 2 gold miner, which grew from humble roots as a closed-end fund to its current market cap of some C$40 billion. A wall of plaques in IBK's Toronto offices commemorates other companies IBK has helped turn into full-blown miners, including Western Goldfields, Capital Gold, US Gold and Detour Gold. The original investors in Detour Gold bought into the company, then called Pelangio, in a 2000 private placement at 10 cents a share, meaning they would have made a 270-fold profit on their investments at today's stock price of about C$27 a share. Shareholders who got in at the 2007 IPO price of C$3 a share would be up nine-fold on their original investment. "If you are dealing with a good management team, they'll stick with it, they'll figure it out," said White, who took over IBK from his father in October 2010. At age 40, he is one of the youngest CEOs among Bay Street's mining industry bankers. Among the teams IBK is betting on these days is the one at RX Exploration, a Toronto venture exchange-listed company that owns the Drumlummon Mine in Montana. Once owned by the Rothschild family but abandoned by them amid a legal dispute a century ago, the gold mine was mostly forgotten until a group of miners started pulling the leases back together in recent years. "They came to us just after they had accumulated all the claims," said White, who also invests in the companies he raises capital for. RX plans to use Drumlummon to build a much larger mining company, with production of 300,000 oz of gold a year by 2015. "Will they achieve that? Well they are a great team to make that happen," said White. "Let's give them time. I'll give them time. And I'll buy when I think the stock is cheap, and maybe I'll sell a little bit when it runs." Don't discount diamond recycling, Even-Zohar warns While his tongue-in-cheek remark runs counter-intuitively to the legendary marketing coup De Beers pulled off when it convinced people to buy the stones for their longevity, the Tacy Ltd MD is referring to the often overlooked segment of diamond supply – recycling. While Even-Zohar conceded he had more anecdotal evidence than hard facts to back up his argument, he presented a strong case for the impact diamonds returning from fingers back to jewellery store counters might have on the market. Businesses in India were buying “hundreds of millions of dollars” worth of diamond jewellery from consumers selling their sparklers – along with gold jewellery – to raise quick cash. The biggest source was women in the US, he suggested. How many carats might be landing up on the counters of pawn shops and jewellers? “It can be a hell of a lot,” Even-Zohar told a Toronto audience at the Prospectors and Developers Association of Canada 2012 convention – the biggest mining pow wow globally. People simply do not throw diamonds away, no matter how much the industry might wish they would. As with gold, unwanted jewellery often gets converted to cash. Even-Zohar – the author of the authoritive book 'From Mine to Mistress' – pointed out that in 2009, gold from recycled jewellery was 60% of new mine supply. In fact, more jewellery was scrapped than produced in the first half of that year. Though 2009 might offer a skewed view of the situation, given the liquidity crisis that might have forced debt-laden consumers to rush to sell their assets, it shows that recycling is by no means insignificant in the jewellery market. Even-Zohar calculated that going back as far as ancient times diamond mines have collectively produced about 5.2-billion carats, which multiplied by $80/ct gives a value of some $420-billion of rough diamonds above ground. At today’s equivalent prices, that would be worth about $1-trillion dollars, he said. “Just see what happens if just 1% gets into the market,” Even-Zohar warned, “...and it’s happening”. PRICES Diamonds bounced back strongly in 2010 and 2011, as the battered industry dusted itself off from the malaise of the 2008/09 financial calamity. But 2011 saw rough prices falling by around 30% in the second half, as the European debt crisis spooked buyers and gems from Zimbabwe started to flood the market. While this still resulted in a net gain, Even-Zohar is not overly optimistic for this year. He predicted prices would dip by between 10% and 13%, with supply and demand reaching relative equilibrium. The controversial Marange fields in Zimbabwe loom large in the equation. According to Even-Zohar, the country has the potential to produce one-quarter of the world’s rough supply by value, or 30% on a volume basis. “It’s going to have a major impact,” he said. Botswana is the biggest diamond producer, accounting for 25% of output by value. Canada in 2010 produced 23% of the world’s diamonds by value, slightly less than Russia. ## While other gold-mining executives have attributed the low valuations of their shares to low expectations for future gold prices among analysts, Harquail said the blame lies squarely on their own shoulders. The recent gold miners’ earnings announcements had highlighted some “spectacular multibillion-dollar mistakes” on the part of some management teams, and investors respond to this. While he did not mention any names, companies like Canada’s Kinross Gold announced massive write-downs last month, sending stock prices sharply south. It is well know within the gold sector that ETFs have been vacuuming up a lot of investors’ money that may otherwise have gone into the producers of the metal. While miners have struggled to contain capital and operating costs, while also struggling with governments seeking greater shares of profits, exchange traded products are essentially only exposed to pricing risk. Even soaring gold prices, which should provide producers greater profit leverage, have failed to attract investors to their stocks. Harquail noted that since the summer of 2010 gold stocks have remained flat, despite the gold price rising by $400/oz. While mining executives, such as Barrick Gold’s Aaron Regent, have said stocks have lagged gold price improvements as analysts have factored much lower bullion prices into their financial models, Harquail does not buy this. “The reality is no-one buys a gold stock assuming $1 200/oz gold in the future,” he said. “The math is there – it’s not because people expect lower gold prices. I think people in general are optimistic or they wouldn’t be buying other [gold] products.” He calculates gold miners are trading at a 30%-plus discount to the ETFs that buy their product. Were the money in these gold-backed investments to instead flow into the producers themselves, share prices would be 42% higher, Harquail told an audience at the Prospectors and Developers Association of Canada 2012 commodity outlook lunch in Toronto. But therein lies the Faustian bargain. The ETFs – which have a value of $135-billion – are partly to thank for a higher gold price, as well as for putting the yellow metal on the radar for a wider investment audience. And dealing with the devil often has its pitfalls. “The scary thing is, what happens if these ETFs start becoming net sellers of gold? Then we’re going to have a huge hangover in the future,” Harquail commented. How can mining companies improve their rating with investors? Find a great discovery in the vein of Newmont’s massive Yanacocha mine, in Peru, one of the biggest gold mines globally. “Those things drive the industry because then we get exploration optionality back in our stocks,” said Harquail. In absence of that, gold producers need to earn the trust of investors, taking up the old mantra of under-promising and over-delivering. “It’s great to have stretched goals, but if you don’t hit them, it’s a huge disappointment to investors,” he pointed out. On top of this, companies should be focusing on bringing greater technical prowess to the bargaining table with governments looking for a bigger piece of the profit pie. Toronto- and New York-listed Franco Nevada is a gold-focused royalty and stream company, which funds projects in return for future royalty payments or production at a set cost. ## "We agreed on a 15% pay rise but we have differed on the tenure. The management is saying it should run for two years and we are saying it should not exceed 12 months," acting Mine Workers' Union of Zambia President Charles Mukuka told Reuters. Workers at the Kansanshi mine, Zambia's largest copper mine, which produced 231 000 t of the red metal in 2010, downed tools to demand a 17% pay increase on Thursday. Production at the mine ground to a halt because of the strike, prompting Zambia's Vice-President Guy Scott to call for talks mediated by his office to try and end the work stoppage. After a weekend of negotiations, the talks deadlocked on Sunday and the union called on the president to intervene. "They keep on changing goal posts and this has made negotiations very difficult. We need the intervention of the head of state to quickly resolve this matter," Mukuka said. Kansanshi mine company spokesman Godfrey Msiska separately said work at the mine was still halted. Glencore International Plc's Mopani Copper Mines in Zambia agreed a 17% pay rise with unions in February, almost triple the rate of inflation. Konkola Copper Mines, part of London-listed Vedanta Resources, awarded a similar pay increase to its workers in January. ## A strike at the world’s biggest platinum mine, Impala Platinum’s Rustenburg operation, could remove at least 125 00 oz to 130 000 oz of supply this year, he said. Around 5 000 rock drill operators downed tools at the company’s Rustenburg mine in January, in a dispute over pay levels. The situation degenerated, and all 17 000 workers at the operation embarked on an illegal work stoppage that lasted up until early March, and saw three workers killed in related violence. Prices for platinum rose from around $1 550/oz on January 23 to $1 729/oz a month later, as the strike caused fears over supply of the metal, used to cut vehicle exhaust emissions, and to make jewellery. Car makers have been substituting platinum for its cheaper sister metal, palladium, as a result of high prices, leading to shrinking difference in how much an ounce of each costs. Palladium was trading at $709/oz on Friday, and Tankard told Mining Weekly Online the metal may reach $1 000/oz “over the next couple of years”. The price will likely continue to converge on platinum’s, he said. “We think it’s set up where the gap closes significantly probably in the latter half of this decade,” Tankard commented on the sidelines of the Prospectors and Developers Associatuion of Canada conference in Toronto. While a number of factors were providing short-term support to the platinum price, including electricity supply problems, strikes, and safety shutdowns in South Africa, “it doesn’t fundamentally change the long-term picture” for the metal, he said. Platinum is mainly used as an auto-catalyst in diesel engines, which are popular in European cars, while palladium mostly goes into petroleum-powered vehicles. Increasingly, palladium has gone into diesel auto-catalysts as a substitute for platinum, as a result of the price difference between the two precious metals, Tankard said in an earlier presentation. ## “There was a news item [this weekend] that Iran thinks the price of oil would go over $400/barrel if they did that, because they’d close the Strait of Hormuz. If oil goes to over $400 we’re looking at gold well over $2 000/oz,” Murenbeeld said in response to a question. Speaking to reporters, he said the speculation was a “pure guess”, but that such a move would not be as dramatic as oil surging from the current price around $124 a barrel. Gold closed on Friday at $1 713/oz. Murenbeeld in an earlier presentation at the Prospectors and Developers Association of Canada convention in Toronto said that factors such as monetary “reflation” and geopolitical tensions could lead to higher gold prices, with a potential global recession and the possibility of rising US interest rates after 2013 tempering the outlook. He forecast the precious metal would average at $1 942/oz in 2012, closing the year at around $1 950/oz. Israel has been threatening to pre-emptively strike at Iran’s nuclear sites, where Prime Minister Benjamin Netanyahu argues the country is developing nuclear weapons. Tehran has maintained it is developing nuclear technologies only for civilian purposes. ## “The TSX is one of the most active markets in the world for resource companies and particularly for gold producers. A secondary listing offers Newcrest greater exposure to the global investment community and an opportunity to attract a new group of investors,” said CEO Greg Robinson. The gold miner would be the seventeenth-largest company listed on the ASX by market capitalisation, and the fourth-largest mining company on the exchange. The company’s shares have been listed under the symbol NM. It should come as no surprise then that Halifax, Nova Scotia-based Metals Economics Group (MEG) found in a study announced Thursday that the dollar value of junior financings fell by nearly one-quarter in 2011 to $21.5-billion. Perhaps equally predictably, not all metals took uniform hits. No prizes for those guessing gold suffered less – juniors hunting for the yellow metal managed to tap markets for just 16% less than in 2010, as bullion prices continued their now 11-years-in-a-row upwards march. Gold financings actually increased for half of the months in 2011. “As gold prices increased through most of 2011, so did investor interest, and after a slow start to the year, financings increased in number and size,” MEG said. Base metals got caught on the wrong side of the European debt crisis, however. Financings for this sector plunged 32% compared to 2010, as investors stood on the sidelines amidst wobbly copper, nickel and aluminium prices. Junior mining companies are seen as risky places to put money into, given the high-risk, high-return nature of the game. Although the findings of MEG’s survey paint something of a bleak picture for small companies hunting for new base metals mines, it could be worse. Though the overall amount of money raised was lower last year, there were 410 financings of $2-million or more – a slight increase on the 395 number for 2010. This shows “a sustained recovery from the low numbers and dollar amounts seen in 2008 and 2009”, MEG pointed out. That does not mean that there are going to be any fewer junior mining executives desperately trying to catch the attention of investors with their pitches at the Prospectors and Developers Association of Canada’s convention that kicks off on Sunday. Though markets have improved since the start of the year, promoters decked in their best suits are going to have to scrap for the little cash that’s going around. Analogies of hoardes of hungry hyenas battling for the carcass of a skinny rat spring to mind. And Mining Weekly Online will be at the Metro Toronto Convention Centre to tell the story, and then some. Follow us on Twitter at @MiningWeeklyCA to receive our up-to-the-minute updates. You won’t need to follow anyone else to keep up to speed on the deal making and other goings on of what is the biggest mining get-together globally. If you find the time inbetween collecting the free pens and memory sticks, come pay us a visit. After all, in a wireless world, who needs such archaic instruments anyway? ## “The TSX is one of the most active markets in the world for resource companies and particularly for gold producers. A secondary listing offers Newcrest greater exposure to the global investment community and an opportunity to attract a new group of investors,” said CEO Greg Robinson. The gold miner would be the seventeenth-largest company listed on the ASX by market capitalisation, and the fourth-largest mining company on the exchange. The company’s shares have been listed under the symbol NM. Lake Shore gets upbeat PEA for Timmins West The preliminary economic assessment (PEA) envisages production averaging 140 000 oz/y for a decade, at grades above 5.2 g/t, and at average costs of $625/oz. Using current gold prices – which stood above $1 780/oz on Tuesday, the project would have a pretax net present value (NPV) of $880-million at a 5% discount rate, and would pay for itself in one year and three months. Of course, gold companies cannot assume prices will remain at these elevated levels when crunching their numbers (no matter how bullish bosses might be), and Toronto-based Lake Shore showed the pretax NPV slipped to $570-million using analyst consensus gold prices. Interestingly, though, the pay-back period remained the same. The TSX-listed company had previously done a prefeasibility study at the Timmins deposit, comprising part of the Timmins West project, but decided to do a new study on a mine that would include that deposit as well as the nearby Thunder Creek. “The study sets a benchmark for the Timmins West mine and there are many opportunities to improve the economics,” Lake Shore CEO Tony Makuch said in a statement. The PEA said a mine at Timmins West could cost $160-million to build, including an expansion at the existing nearby Bell Creek mill, where the ore from Timmins West will go for processing. Shares in Lake Shore closed 5% higher on the TSX at C$1.67 apiece. KGHM clears Canada's net benefit test for Quadra bid The target firm’s shareholders voted in favour of the C$3-billion bid last week, putting to rest any speculation of a potential counterbid. Quadra said on Wednesday it received approval under the Investment Canada Act, which requries buyers of large firms is the country to prove the deals will be of benefit to Canada. At the start of February, Institutional Shareholder Services, which advises pension funds, recommended Quadra’s shareholders accept the offer, first announced in December. Buying the TSX-listed miner bags KGHM the big Sierra Gorda copper project, in Chile, as well as mines in Canada and the US. The Polish company’s C$15.00-a-share cash offer represented a 41.3% premium to the 20 day volume-weighted average price up to the day before the announcement. Some analysts had called the bid cheap, as Quadra’s stock had suffered the effects of the eurozone debt crisis in the weeks before the bid. High-grade drill results send Volta's stock skywards One of the drill holes intersected 19 m at 5.53g/t of gold. “Most impressive is that these high-grade results are near surface, near existing resources, and that the mineralization remains open at depth,” Volta CEO Kevin Bullock said in a statement. “The close proximity of this new discovery to the existing deposit means that any significant mineralization will become part of the mine planning.” The company said the new mineralization was located some 700 m south-west of the Kiaka central area. Shares in the company rocketed by 33.9% to end the day at C$1.50 apiece. The stock was one of the most heavily traded on the Toronto bourse, with nearly six-million shares changing hands. St Andrews Goldfields takes off on Trapeze valuation comments The stock leapt 14.3% higher on Wednesday alone, responding to Trapeze Asset Management CEO Randall Abramson’s comments the previous day on Canada’s Business News Network channel. “At current gold prices, St Andrews would have cash [per share] equal to their current share price in about three years time,” he said. “It’s trading at 3.5 times earnings, it’s utterly ridiculous to me.” Toronto-based Tapeze and the Abramson family collectively own around 55% of St Andrews. One of the reasons for St Andrew’s poor valuation is that it investors punished it after it suffered production delays at its Holt mine in the second quarter. The third quarter showed improvement, with the TSX-listed firm producing 20 000 oz, climbing to 22 350 oz in the fourth quarter. “The market has been waiting to see two good quarters of turnaround,” a spokesperson for St Andrews said. Casimir Capital analyst Steven Willis said the company was also expected to announce updated reserves and resources for a number of its projects, as well as the prefeasibility study results for the Taylor project. The study was originally scheduled for completion at the end of 2011. Taylor “could plausibly be the next asset that will enter production” for St Andrews, the spokesperson said. In January, the company forecast 2012 gold production to come in at between 90 000 oz and 100 000 oz, compared with the 74 022 oz it said it produced in 2011. The company ended Wednesday with its stock price 9.9% higher at C$0.50, having traded as high as C$0.53 a share earlier in the day. Trading volume for the day was 4.2-million shares. Lake Shore outlines new resource estimate at Timmins The Toronto-based gold miner, which was hit hard by production cuts last year, spent some eight months redrilling the deposits that make up its Timmins West project. The new estimate, to be followed with a reserve update later this quarter, combines the Thunder Creek and Timmins deposits into a single 1.9-million ounce indicated and inferred resource. The move comes as Lake Shore is expanding its Bell Creek mill, located in Northern Ontario. "Our vision is now, with the Timmins West area, we think we've got a mine plan to support well over 10 years of mining and that will produce in excess of 150 000 oz/y," said chief executive Tony Makuch. He added that he expects per ounce cash costs in the mid to low $600 range. Lake Shore produced 86 565 oz of gold in 2011. The company owns the Timmins West and Bell Creek mines in the Timmins region north of Toronto. Lake Shore is in the process of expanding its Bell Creek mill to boost capacity by 50%, with the project on track to be completed in late 2012. Xstrata considers partner for Wandoan coal project LONDON – Xstrata, one of the world's largest thermal coal exporters, is considering bringing an additional partner into its giant Wandoan coal project in Queensland, Australia, already part-owned by Japan's Itochu and Sumitomo. Xstrata, which last week agreed to be taken over by commodities trader Glencore, owns 75% of the project. Wandoan is expected to produce a thermal coal output of 22-million tons per year initially, expanding to 63-million tons. Itochu and Sumitomo each own 12.5%. "As part of the ongoing feasibility process for the project, Xstrata Coal and our partners Itochu and Sumitomo are investigating options for the project's development, including the potential to introduce an additional partner," a spokeswoman for the miner said. Earlier on Tuesday the Wall Street Journal reported Xstrata had appointed Macquarie to advise on the sale of a 20% interest in the project. A coal industry source told Reuters there was a lot of interest from Indian and Chinese buyers in coal mining assets in the region and a deal would allow Xstrata to secure a buyer for the hard coal output from Wandoan, which could become Australia's largest coal mine. Slow start, but Canada diamond ice road operators not panicking The road services Rio Tinto and Harry Winston’s Diavik mine, De Beers’ Snap Lake operation and BHP Billiton’s Ekati, and the companies build the route each winter, usually operating from February 1 to around the third week of March. “We are a little bit behind where we were last year at this time. It’s not a reason to panic yet, it’s just a matter of getting some colder and more consistent temperatures,” said Ron Near, winter road operations director. On Tuesday, the road’s ice thickness stood at 35 inches, compared with the 39 inch thickness it had reached by this time in 2011. To send fully loaded trucks over the surface, the ice needs to be 41 inches thick. “Overall, the road is in good shape, and it is handling the traffic we’re putting on it now well,” said Near, the former Royal Canadian Mounted Police officer who took up the job last year. The sections where the road traverses land, or portages, had started to soften slightly at the start of the month, when temperatures reached 3 ºC on February 3 and a record high of 3.9 ºC the next day. This caused the road to temporarily suspend operations for a “couple of partial days, as more of a preventative measure than anything else”, said Near. Around 87% of the road stretches over frozen lakes. The joint owners of road, Diavik, De Beers and BHP Billiton, had aimed to transport between 63 000 to 65 000 truckloads up to the mines this year, in line with the number for last year, when the cold temperatures led to the thickest ice the route has seen. On a tonnage basis, trucks winding their way northward at an average speed of 25 km/h are set to haul 207 000 t this year, compared with 239 000 t for 2011. “This is still a normal year for traffic and tonnage,” Near told Mining Weekly Online, pointing out that the numbers fluctuate from year to year as the mining companies’ needs for supplies such as cement, fuel and tires change. While last year was a good one for the operation, 2010 saw record high temperatures for Canada, and the road only managed to carry 121 000 t in 3 406 loads. Rio Tinto will also be sending four wind turbine towers up the route this year, Northern News Services said in November. While it is still early days, and much depends on the weather, maximum temperatures colder than -10 ºC over the past week, and Environment Canada forecasting the mercury to remain below that level at least until February 20 bodes well for ice thicknesses and the road, which featured on the History Channel’s series Ice Road Truckers. Vale confirms no production impact from Sudbury work stoppage On February 9, spokesperson Cory McPhee said most of the mines would be up and running by the end of this week, with the Creighton operation restarting later on in February while Brazilian company did shaft maintenance. “We do not foresee any impacts on the finished nickel annual production as a result of the temporary stoppage,” Vale commented in a statement. Stephen Perry was killed deep underground at Vale's Coleman mine near Sudbury, after he was struck by falling debris, prompting the Brazilian mining giant to halt production at all five of its mines in the area as it undertook safety and risk management programmes with workers. Perry was the fourth worker to have died on the job at Vale’s Canadian operations in 12 months. Canada Lithium gets C$75m loan TORONTO (miningweekly.com) – Canada Lithium Corp’s stock rose by over 8% on Monday morning, after the company, which is building a mine in Quebec, said it secured a C$75-million loan to advance the project. Scotiabank and Caterpillar Financial Services are providing the loan, and Investissement Québec, the province’s economic development agency, has agreed to partially guarantee the financing. Further, Cat Financial has agreed to provide up to $17-million in lease financing for the mobile mining equipment at Canada Lithium’s mine, located near Val d'Or. At the start of February, the company had C$100-million in the bank. It started building the $207-million Quebec lithium mine in August last year, and has completed 75% of the process plant’s construction, with commissioning set for late 2012. The some C$92-million in funding the company unveiled on Monday, coupled with the C$26-million it has already spent on the mine, and the money in the bank, leaves Canada Lithium with about C$4-million more than the anticipated capital cost of the mine. Given the cost inflation that has forced many mining companies to hike their capital estimates a number of times, the funding situation for Canada Lithium might get too close for comfort. CEO Peter Secker will not confirm whether or not the company aims to raise more money, only saying in an interview “we monitor our cash on a weekly basis, and at the moment we’re looking good.” TSX-listed Canada Lithium is in advanced talks with potential customers for offtake agreements, and the company might receive what he calls “pre-offtake payments”, whereby customers would pay a small amount up front, and the rest on delivery of the product. Secker said the company also discussed potential partnerships with the companies. Canada Lithium currently plans to produce 20 000 t/y of lithium carbonate, as well as around 20 000 t/y of spodumene – a rawer type of lithium concentrate. In an earlier presentation, Secker outlined how the company was also investigating the viability of building a lithium hydroxide plant and a lithium metal plant in Quebec, which would produce higher-value products. For example, spodumene sells for between $400/t and $500/t, while lithium carbonate is worth $6 300/t to $6 400/t. Pure lithium metal, meanwhile, is worth around $60 000/t. “Tertiary processing is the way we would like to go,” said Secker. Canada Lithium chairperson Kerry Knoll showed in a presentation how three large producers currently account for more than 80% of global lithium supply, operating out of Chile, Argentina and Australia. China is also a major producer, accounting for around 11% of world supplies. Knoll said that demand from sectors including electric vehicles, electricity grid stabilisation, and backup power, were set to grow significantly over the next few years, particularly in Asia. TSX-listed Talison Metals, which owns a mine in Australia, is the biggest lithium producer, but currently only produces the metal in concentrate. Last week, it said it selected the Kwinana industrial area in Western Australia to host its planned lithium carbonate plant. Shares in Canada Lithium climbed 8.7% to close the day at C$0.75. BHP restarts Pinto Valley operations BHP’s base metals North American asset president Wayne Isaacs said that the company was pleased to be resuming mining operations at Pinto Valley, given the robust investment case and the potential for extension to current reserves. “We will be hiring more than 600 new team members and look forward to working with the local communities to safely restart the mine,” Isaacs said. The operation would produce some 60 000 t/y of copper concentrate, and was expected to create 650 new jobs, with mining expected to resume at the end of 2012. “The $195-million investment at Pinto Valley will add valuable copper production to our base metals portfolio. As we look forward, our business is particularly well placed, given strong growth anticipated at both Escondida and Antamina in the short to medium term,” said BHP’s base metals president Peter Beavan. Vale Sudbury mines to restart output this weekend “We have set out a plan to begin to ramp up production, starting with Copper Cliff Mine this weekend,” spokesperson Cory McPhee said in an email. “We expect by the end of next week, most of our mines will be back into production.” Stephen Perry was killed deep underground at Vale's Coleman mine near Sudbury, after he was struck by falling debris, prompting the Brazilian mining giant to halt production at all five of its mines in the area as it undertook safety and risk management programmes with workers. The company first began calling its underground crews to return on February 3, but the focus was on safety programmes. One of the mines, Creighton, will only start producing by the last week of February, as the company is carrying out maintenance on the shaft, McPhee said. Perry was the fourth worker to have died on the job at Vale’s Canadian operations in 12 months. The temporary closures were not expected to have any impact on final metal production, as the company had stockpiles to feed its smelters, Vale said previously. De Beers profit up on strong rough diamond sales The London-listed company’s distribution arm, the Diamond Trading Company (DTC), increased its sales of rough diamonds by 27% to $6.5-billion during the year ended December 2011. While the second half of the year experienced an increasingly uncertain economic environment, the 12 months ended with 29% DTC price growth and healthy demand for diamond jewellery at consumer level, said CEO Philippe Mellier. Consumer demand growth, driven by China, India and the US, reached between 11% and 13% in 2011. De Beers reported gross profit of $1.3-billion, up from $894-million in 2010, and operating profit of $784-million, from $478-million in 2010. Earnings before interest, taxes, depreciation, and amortisation increased 21% to $1.7-billion, while underlying earnings increased 62% to $968-million. However, production fell 5% to 31.3-million carats during 2011, compared with 33-million carats in 2010. The company, which owns mining operations in Botswana, Namibia, South Africa and Canada, attributed this, in part, to the many challenges it faced during the year, including heavy rainfall in Southern Africa, maintenance backlogs, poor contractor performance, skills shortages and protracted labour negotiations. De Beers took advantage of the slowdown during the second half of the year to focus on maintenance and waste stripping backlogs to enable an increase in the rate of production across its operations. This was likely to continue for a number of months into 2012, the miner said, adding that carat production would not increase materially this year. “This focus, which began in the second half and will continue during the first quarter of 2012, will position De Beers to ramp-up profitable carat production as sightholder demand dictates.” Meanwhile, De Beers remained cautiously optimistic in the short term, as the markets were difficult to predict. Mellier pointed out that, when more economic certainty was seen, demand would improve. In the medium to long term, the industry fundamentals remained positive with consumer demand driven by China and India, improving sentiment in the US, the overall strength of the luxury goods market and the positive impact of the 2011 polished price growth on retail jewellery prices. Avion Gold's West Africa underground mine starts The West Africa-focused company, which holds 80% of the Tabakoto and Segala gold projects in Mali, said the Tabakoto underground mine is scheduled to produce about 470 000 t of ore in 2012. "It (commencement of production) is an important step in the company's goal of achieving 4 000 t per day of process plant capacity in 2012," Chief Operating Officer Andrew Bradfield said in a statement. The increase in capacity is expected to achieve a run-rate of 200 000 oz of gold per annum by the fourth quarter, Bradfield said. Ore is currently being extracted from the stope, a steplike excavation made in a mine. The entire stope is estimated to contain 10 600 t of ore at an average diluted grade of 4.11 g/t of gold, the company said. Avion Gold shares closed at C$1.48 on Friday on the Toronto Stock Exchange. 100 000 people needed by 2020 to meet anticipated production levels MiHR executive director Ryan Montpellier explains that, during the global econo- mic downturn, students struggled to find employment and turned to other programmes. “However, by the time they graduate, the recruitment cycle has progressed and jobs are often available. Labour market intelli- gence is, therefore, a key source of information that needs to be communicated to prospective students and postsecondary educational institutions,” he says. Other factors contributing to low student enrolment in mining programmes include the rural and remote nature of mining, and negative stereotypes and dated misconceptions about mining – something that the council has been working on for years to change. Further, he says there are thousands of graduates each year from a number of mining-related postsecondary disciplines in Canada, which include professional occupations, technicians and technologists, as well as skilled trades and mine operators. However, the number of graduates is not sufficient to meet the needs of the mining sector. In 2005, the Canadian mining industry identified the need for 80 000 new workers by 2015. The MiHR’s most recent labour market forecast, which is now updated yearly, is based on a moderate growth scenario and estimates that the industry needs over 100 000 workers by 2020 to solve the skills shortage. “Advisory firm Ernst & Young’s yearly report on risks facing the global mining sector identified labour shortages as the number two issue facing mining companies globally, second only to access to capital. The Canadian mining industry has an aging workforce, with 50% eligible for retirement in the next ten years, which is quite serious,” notes Montpellier. Consequently, he says, the challenge is finding midcareer managers and supervisors to mentor the significant number of new recruits entering the industry. Employment in the mining sector has increased by almost 15% in the past year, at a time when the first of the so-called ‘baby-boomers’ are approaching retirement age. This has created a competitive labour market and rising pressure on wage costs. “If this growth pace continues, the skills shortage will become more acute and will undoubtedly affect the implementation of new projects and current production levels in Canada. “Further, research shows that highly qualified people drive innovation and economic growth. There is a strong relationship between the proportion of knowledgeable workers and the rapid development and adoption of technology. This has a direct impact on productivity and performance, and ultimately drives economic growth,” Montpellier adds. Solving the Shortage The MiHR has been leading a collaborative effort among industry members for a number of years to tackle the skills shortage. The council’s board of directors and hundreds of industry volunteers participate in various project advisory committees or council programmes. “These stakeholders represent mining employers, exploration companies, organ- ised labour, educators, associations, various levels of governments and aboriginal groups,” says Montpellier. There are a number of different sources of skilled labour, including graduates from Canadian schools, while increasing the representation of women, aboriginal peoples, transitioning workers from other sectors and recruiting foreign-trained workers are also options. The mining industry is global and, in many cases, the workforce is mobile. “The industry recognises that one potential source of talent is immigration; therefore, the MiHR has produced a mining immigration reference guide to help employers navigate this lengthy process. But it is important to remember that immigration alone cannot solve the skills shortage,” notes Montpellier. Further, the MiHR works with educators across Canada to help alleviate the skills shortage, with representatives from a number of mining-related colleges and universities involved in the council. “Midprogramme attrition can be reduced by employers engaging students through internships, summer work programmes, cooperative education and apprenticeships. “Mining companies can supply speakers for the MiHR’s Speakers Bureau, a resource to provide educators with speakers that focus on careers in mining. The council also offers a virtual MineMentor programme that pairs enthusiastic mining industry professionals with postsecondary students or career seekers to foster the development of a network,” Montpellier concludes. Vale Sudbury mines to restart output this weekend
“We have set out a plan to begin to ramp up production, starting with Copper Cliff Mine this weekend,” spokesperson Cory McPhee said in an email. “We expect by the end of next week, most of our mines will be back into production.” Stephen Perry was killed deep underground at Vale's Coleman mine near Sudbury, after he was struck by falling debris, prompting the Brazilian mining giant to halt production at all five of its mines in the area as it undertook safety and risk management programmes with workers. The company first began calling its underground crews to return on February 3, but the focus was on safety programmes. One of the mines, Creighton, will only start producing by the last week of February, as the company is carrying out maintenance on the shaft, McPhee said. Perry was the fourth worker to have died on the job at Vale’s Canadian operations in 12 months. The temporary closures were not expected to have any impact on final metal production, as the company had stockpiles to feed its smelters, Vale said previously. De Beers profit up on strong rough diamond sales
The London-listed company’s distribution arm, the Diamond Trading Company (DTC), increased its sales of rough diamonds by 27% to $6.5-billion during the year ended December 2011. While the second half of the year experienced an increasingly uncertain economic environment, the 12 months ended with 29% DTC price growth and healthy demand for diamond jewellery at consumer level, said CEO Philippe Mellier. Consumer demand growth, driven by China, India and the US, reached between 11% and 13% in 2011. De Beers reported gross profit of $1.3-billion, up from $894-million in 2010, and operating profit of $784-million, from $478-million in 2010. Earnings before interest, taxes, depreciation, and amortisation increased 21% to $1.7-billion, while underlying earnings increased 62% to $968-million. However, production fell 5% to 31.3-million carats during 2011, compared with 33-million carats in 2010. The company, which owns mining operations in Botswana, Namibia, South Africa and Canada, attributed this, in part, to the many challenges it faced during the year, including heavy rainfall in Southern Africa, maintenance backlogs, poor contractor performance, skills shortages and protracted labour negotiations. De Beers took advantage of the slowdown during the second half of the year to focus on maintenance and waste stripping backlogs to enable an increase in the rate of production across its operations. This was likely to continue for a number of months into 2012, the miner said, adding that carat production would not increase materially this year. “This focus, which began in the second half and will continue during the first quarter of 2012, will position De Beers to ramp-up profitable carat production as sightholder demand dictates.” Meanwhile, De Beers remained cautiously optimistic in the short term, as the markets were difficult to predict. Mellier pointed out that, when more economic certainty was seen, demand would improve. In the medium to long term, the industry fundamentals remained positive with consumer demand driven by China and India, improving sentiment in the US, the overall strength of the luxury goods market and the positive impact of the 2011 polished price growth on retail jewellery prices. Grande Cache gets Ottawa's nod for sale TORONTO (miningweekly.com) – Canada’s Ministry of Industry has cleared the proposed C$1-billion buyout of Grande Cache Coal, which owns mines in Alberta, by a Chinese and Japanese consortium, the TSX-listed company said on Wednesday. Teck quarterly profit lifted by coal business Net income rose to C$637-million, or C$1.08 a share, from C$325 million, or 55 Canadian cents a share, a year earlier, when a one-time financing item weighed down results. Excluding one-time items, earnings increased to C$1.04 a share from 87 Canadian cents. Vancouver, British Columbia-based Teck is one of the world's top exporters of metallurgical coal, which is used to produce steel. The company, which owns mines spread across Canada, the United States, Chile and Peru, is also a large producer of copper and zinc. Quarterly revenue rose 9.4% to C$2.97-billion, as a 27% increase in coal prices helped offset declines in the prices of copper, zinc and lead. Gross profit from Teck's coal business rose 42% to C$781-million, even though prices have pulled back from record levels hit earlier in 2011. The company said it had realized an average coal price of US$253 per tonne in the fourth quarter. Teck said it had already reached agreements with its customers to sell 5.3-million tonnes of coal in the first quarter at an average price of US$230 per tonne. The company expects to conclude additional sales over the course of the quarter. CAUTIOUS OUTLOOK Teck said it was still experiencing volatile markets for its products, as the uncertainty over economic conditions in Europe continues to have an effect on the global economy. The company noted that while both copper and zinc prices are roughly the same as the averages for 2011, coal market conditions weakened in the third quarter and remained so through the fourth quarter. Given operational improvements, Teck forecast its 2012 copper output rising to between 350 000 t and 375 000 t. This compares with 322 000 t produced in 2011. It expects zinc in concentrate production in 2012 to be in the range of 580 000 to 610 000 t, compared with 646 000 t in 2011. The decline is primarily due to lower expected output from its huge Red Dog mine in Alaska. Teck forecast 2012 coal production of between 24.5-million and 25.5-million tonnes, up from about 22.8-million tonnes in 2011. "Our actual production will depend upon improvements in customer demand for deliveries of steelmaking coal," the company said. "Should deliveries not improve, we may adjust our production plans, depending on market conditions." Central banks buying gold – David Hale
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