TABLE OF CONTENTS
PwC: Top 40 Mining Companies' 2010 Financial Results Spectacular
Ensurge Announces Agreement with Correia Mining Company of Guyana
Regal Resources Acquires Prospective Gold Project in Democratic Republic of Congo
Rio Tinto and Guinea Sign New Agreement for Simandou Iron Ore Project
Vale to Spend $12bn in Africa over the Next 5 Years
Cote d'Ivoire Gold Output to Double in 2 years
Arch Coal Completes Acquisition of International Coal Group
Cloud Peak Energy Successful Bidder for West Antelope II South Coal Tract
New Gold Targets Over 40,000 Metres of Drilling at Blackwater Project in 2nd Half 2011
St. Eugene Commences 2011 Drilling Program at Tartan Lake Gold Mine, Manitoba
Virginia Mines CA$10 Million Agreement with Quadra FNX on the Lac Gayot Project
Arkema Partners with Canada Fluorspar on Acidspar Mine
St. Elias Mines Ltd. announces Diamond Drilling, Tesoro Gold Project in Peru
Sulliden Gold Triples Gold Resources in Peru to 3 million ounces
Itochu to Invest $1.5 Bln in Drummond Colombia Coal Ops
OceanaGold Eyes 2013 Start to Copper Production
Tata Steel Sells Stake In Riversdale Mining To Rio Tinto For $1.13B
Indian Firms Eye Indonesian Coal
Yanzhou Coal Mining to Acquire Syntech Resources
Macarthur Minerals Expands Interests at Western Australia Iron Ore Project
The top 40 global mining companies are poised to break through the US$1 trillion asset mark this year, due to record levels of cash, property and equipment on balance sheets, says a new PwC report.
In their report Mine 2011: The game has changed, PwC called the financial results of the top 40 "spectacular" as total revenues increased 32% to US$435 billion, breaking the $400 billion mark for the first time.
Rio Tinto and Vale together accounted for 35% of the total increase in revenues in 2010.
Net profit rose 156% to $110 billion and operating cash flows grew by 59%, resulting in more than $100 billion cash-on-hand at year end 2010. Net debt was reduced to $46 billion.
PwC also determined the top 40's market cap increased 26%, driving up the market capitalization of the smallest company on the list from $6.5 billion in 2009 to $11 billion in 2010.
Coal, copper and iron ore account for 63% of the Top 40 revenue this year. Iron ore turned in records in 2010 with a 111% increase in average price.
Copper prices also reached record levels last year with the average up 46%. PwC said the copper and industrial metals required to rebuild Japan's damaged infrastructure with continued growth in the developing world is expected to contribute to continued high demand in the second half of this year.
The largest boost in global mining production last year came from potash, according to the report. Global 2010 mining production increased by 5% overall as emerging markets continue to change the face of the industry, PwC noted.
"One sign is the average Total Shareholder Return (TSR) of companies from emerging markets in the Top 40 more than doubling the return from traditional mining companies over the past four years."
PwC Global Mining Leader Mine Project Leader, Tim Goldsmith observed mining CEOs continue to believe in the power of emerging markets, "particularly the ongoing growth in China and the nation's ability to achieve or exceed the 7% growth target outlined in the 12th Five Year Plan."
Meanwhile, "With mining continuing to climb up the political priority list at a time of budget deficits and changing economic and social priorities, many governments are looking at reforms to their mining codes, grappling with sustainability issues and revisiting their approach to taxation and royalties," said Goldsmith.
In their research, PwC found most of global mining's remarkable accomplishments in 2010 were "achieved against a background of natural disasters, including the Chilean earthquake and floods in Australia. Political pressure increased with reviews of mining and taxation laws and government intervention influencing deals in a number of mining countries such as Australia, Canada and South Africa. The tensions in the Middle East and continuing concern about European sovereign debt have also weighed on markets."
With mega-mining deals proving difficult to execute, in-house greenfield and expansion capital projects have become a high priority for top ranked mining companies," said PwC. In recent months, the Top 40 miners have announced plans to invest $311 billion in capex, of which $120 billion is scheduled for this year.
"At the same time, there is the challenge of declining extraction grades, more geographically remote and/or politically challenging regions and the increasing scale of projects required to generate economic returns," said PwC.
In their analysis, PwC suggested mining companies should be wary of the emergence of non-commodity Sovereign Wealth Funds (SWFs) and their heavy investment of mining. "With operations becoming more geographically spread, often in locations with limited democracy and immature or involving government systems, SWFs may be seen to be leading the charge for foreign governments in securing resources. The game has indeed changed."
During the past 12 months since PwC last undertook mining CEO interviews, the consulting group noted "the greatest change to the thoughts of the CEOs is around resource nationalism."
While mining CEOs have focused more in their companies' relationships with stakeholders, PwC suggested the one stakeholder that some mining companies seem to take for granted is the customer. "Clearly, in a supply constrained world, the miner has the upper-hand and the customer has to take what it can. Many of the customers are not happy with this arrangement, particularly in bulk minerals as they sense their sector is far more fractured than the mining industry and they are unable to pass increased raw materials prices on to their customers."
The result is that some bulk mineral customers are making their move, "increasingly buying undeveloped tier two and three assets," said PwC. The dash to secure resource is on, and India and China are both up to their necks in it."
Vertical Integration
As the mining and metals industry has become less vertically integrated, mining customers have embraced the concept.
"The steel industry has seen considerable vertical integration as producers drive for greater self-sufficiency of raw materials, either due to increasingly tight supply or input or increasing frustration with the major miners' ability to dictate price and pricing terms," observed PwC.
One example of this is ArcelorMittal, which is significantly increasing its in-house iron ore and coal business as part of the strategy to double iron ore production to 100 million tonnes annually.
Tata Steel plans to achieve 100% iron ore and 50% coking coal self-sufficiency.
"Many power producers, including Huadian of China and Tata Power of India, have made major coal mining acquisitions," the report noted.
"Amongst zinc smelters, Nyrstar has been active in acquiring mining assets, including their 2011 deal for Canada's Farallon Mining, which increased its self-supplied zinc concentrate usage to 31%."
Meanwhile, in contrast to other miners, Vale has taken a 27% stake in the Brazilian steel production assets owned by ThyssenKrupp CSA. "This equity investment is combined with an exclusive iron ore supply agreement, solidifying a domestic buyer for Vale's Brazilian iron ore," said PwC.
The consulting firm does not expect traditional mining houses will vertically integrate downstream, but "many will likely continue to integrate into infrastructure."
Ensurge, Inc. recently announced an agreement with Correia Mining Company of Guyana under which Ensurge, and its partner, GlobalMin Guyana, Inc., will process tailings at currently operating and abandoned mining sites owned by Correia with the intention of recovering gold, platinum, palladium silver and potentially precious stones. A detailed operating agreement between Ensurge and Correai will be developed shortly.
Under terms of the agreement, Ensurge, acting on behalf of itself and GlobalMin Guyana, will design, construct and operate tailings processing facilities at Correia mines located along the Mazaruni River, a well-known source of alluvial gold. The first of these facilities will be located at Putareng and upon establishing successful operations there, a second facility will be constructed at Olive Creek, approximately 10 miles downriver. In exchange for granting Ensurge and GlobalMin access to tailings at its mining sites and providing logistical support and assistance with regulatory matters, Correia will earn a 14 percent royalty on the value of precious metals and stones recovered and sold from those mining sites.
Ensurge will need to raise additional capital to fund the construction and tailings processing facilities for this project.
Privately owned Correia Mining Company is part of the Correia Group of Companies that operates gold and diamond mines, a land based transportation business (buses), an airline (Trans Guyana Airways), an international aircraft maintenance business and a fuel distribution business, all in Guyana.
The Directors of Regal Resources Limited recently announced that it has completed its due diligence on the highly prospective South Kivu Project in the Democratic Republic of Congo, and with all the tenements in good standing, will be proceeding with the 70% acquisition of the tenements from Afrimines Resources SPRL. Amongst other factors, the Company was able to close out the due diligence on the project once it was satisfied with the results received from the geochem sampling, including a peak soil vale of 1.29g/t and rock chip sample of 4.48g/t Au and the identification of four significant soil geochemical gold targets.
South Kivu Project
The project consists of a group of 13 tenements which cover 3,650km2 of prospective ground in the South Kivu Province, east central Democratic Republic of Congo.
The tenements are located on the Kilo-Moto / Banro fold belt between two gold discoveries, being Lugushwa and Namoya, held by Banro Corporation. Banro’s Lugushwa and Namoya deposits border the project area to the north and south respectively. At the Lugushwa Project drilling is reported to have intercepted wide zones of gold mineralization which has an Inferred Mineral Resource of 2.7 million ounces and the Namoya Project is reported as hosting 1.14 million oz of Measured and Indicated Resources and 543,126 oz of Inferred Mineral Resources. The same gold bearing structures from both deposits potentially extend onto Regal’s project area.
The transaction
For the acquisition of 70% interest in the South Kivu Project, Regal will pay Afrimines US$600,000 and issue 75 million shares. The monetary payment and issue of the 75 million shares is subject to shareholder approval whereby a meeting of shareholders will be held on 28 April 2011. In addition, the Company will pay Afrimines USD$400,000 in six months and seek to hold another shareholder meeting to approve the issue of an additional number of shares equal to $750,000 based upon the five day VWAP.
Regal has the option to acquire a further 20% interest in the tenements at completion of a feasibility study by making a payment of an amount determined by an independent valuation.
Rio Tinto, its subsidiary Simfer S.A., and the Government of Guinea recently signed a Settlement Agreement in Conakry, Guinea, that secures Rio Tinto's mining title in Guinea and paves the way for first shipment of iron ore by mid-2015. Simfer will, however, make every reasonable effort to achieve first production by the end of 2014. This agreement relates to the southern concession of Simandou, known as blocks 3 and 4, which is the location of Rio Tinto's declared iron ore resources in Guinea.
In recognition of the resolution of all outstanding issues and finalization of new investment agreement terms, Simfer will pay US$700 million to the Guinean Public Treasury upon promulgation of Presidential Decrees granting its mining concession and the approval of the proposed Chalco and Rio Tinto Simandou joint venture.
The parties have agreed that the terms of the Settlement Agreement will not be affected by any changes introduced by the Government of Guinea as a result of its current review of the Mining Code or any future reviews.
A new rail line through Guinea and a new Guinean port will be constructed to transport ore from mine to ship. The infrastructure will be jointly owned by the Government of Guinea and the other Simfer partners, with the Government able to hold a maximum stake of 51 per cent. Participants in the infrastructure joint venture will be required to fully fund their proportion of the infrastructure capital cost.
The new infrastructure joint venture will appoint Simfer as operator for the rail and port. The rail line will be available for passenger and freight trains and Simfer, as operator of the joint venture, may haul other mineral producers' ore subject to commercial agreement. Simfer will have the status of a foundation customer, and will therefore retain priority use of the infrastructure..
The infrastructure will revert to Government ownership once it is fully amortised, after 25 and before 30 years. Simfer will retain its status as a foundation customer. On transfer of the project infrastructure to the Government, it will put the management of the infrastructure to international tender. Simfer will be one of the parties invited to tender. Any user charges for access to Simfer will reflect its status as a foundation customer.
Brazilian miner Vale SA plans to spend over $12 billion on investments in Africa over the next five years, a mining conference heard recently.
Brazilian companies, like their Chinese counterparts, are keen on African resources to fuel their growth and the sum involved underscores the continent's growing importance as an investment destination.
"Our current investment proposal in Africa is to expend more than $12 billion over the next five years, subject to board proposal," Ian Hart, Vale's exploration manager in Zambia, told the conference.
He did not give a breakdown by country but the peak is seen in 2012 when $3.3 billion is seen being invested in the continent.
Some of the company's biggest African projects are in Mozambique, where its Moatize coal mine is seen producing 8 million tonnes of hard cooking coal by 2013/14 and 4 million tonnes of thermal coal.
Ivory Coast can double gold output within two years from the current 7 tonnes per year as more miners seek to tap its estimated 200,000 tonnes of reserves, an industry association official said recently.
"We can double production very quickly within the next two years, because there are several companies carrying out exploration, and it is likely that new sites could start production," said Michel Mian, president of the Interprofessional Mining Group (GPMCI) and head of Australia's Newcrest (NCM.AX) Ivorian operations.
Miners including Newcrest, Africa-focused Randgold Resources, Cluff Gold and Canada's La Mancha have operations in the West African nation, best known as the world's top cocoa producer. Around 30 other companies are carrying out exploration across the country, Mian said.
Mian was speaking at the sidelines of an oil and mining conference, organised by Ivorian authorities to attract investment in the country following a four-month conflict that shattered its economy and halted some operations.
The Ivorian government, which plans to diversify its export earnings and grow other sectors of its economy, has said it plans to triple gold output within four to six years.
Mian said the industry was in discussion with the government on the types of incentives the government could offer investors to boost exploration and mining activity.
Arch Coal has completed its acquisition of International Coal Group through a merger, with ICG becoming a wholly owned subsidiary of Arch. The aggregate value of the transaction totaled $3.4 billion. The acquisition adds nearly 13 Mt of low-cost Appalachian thermal coal production to Arch’s vast domestic thermal coal portfolio, solidifying the company’s number two position among US-based coal miners. With expected metallurgical coal sales of 11 Mt in 2011, Arch also becomes the second largest US metallurgical coal producer and a top ten global supplier to steelmakers. By capitalizing on expansion opportunities, Arch expects to boost its metallurgical coal output to nearly 15 Mt by 2015.
The company stated that it expects to leverage its dedicated throughput capacity, logistics capabilities and strategic relationships to expand export shipments via the East Coast, West Coast and Gulf of Mexico to further penetrate and participate in the global growth markets. “We are pleased with the swift and successful completion of the ICG transaction, which will add tremendous value for Arch’s stakeholders in the coming years,” said Steven Leer, Arch’s Chairman and Chief Executive Officer. “This acquisition extends Arch’s reach into every major US coal supply basin, enhances our low-cost and leadership position in core operating regions and creates a world-class global thermal and metallurgical coal franchise poised for growth.”
Cloud Peak Energy Inc. (NYSE:CLD), one of the largest U.S. coal producers and the only pure-play Powder River Basin (PRB) coal company, recently announced its successful bid for the West Antelope II South Coal Tract, which was previously nominated by the company’s Antelope mine. The Bureau of Land Management (BLM) estimates this tract contains approximately 56 million tons of mineable coal. At year-end 2010, the company’s Antelope mine had an estimated 252 million tons of coal reserves, and Cloud Peak Energy had an estimated total reserve of 970 million tons of coal.
Cloud Peak Energy successfully won the lease sale with a bid of approximately $49.3 million, or $0.875 per ton, based on the BLM’s estimate of 56 million mineable tons. The company submitted a payment for approximately $9.8 million, which is the first of five equal payments for the federal coal lease. The BLM typically awards the lease within several months after selecting a winning bidder. As previously disclosed, the West Antelope II Lease by Application (LBA) is subject to pending legal challenges filed by certain environmental organizations against the BLM and the Secretary of the Interior.
On May 11, 2011, Cloud Peak Energy announced its successful bid for the West Antelope II North Coal Tract, which the BLM estimates contains approximately 350 million tons of mineable coal.
The company stated that together with their recent successful bid for the West Antelope II North Coal Tract, these tracts are expected to more than double the reserves at the Antelope mine and, along with the additional coal within an existing State of Wyoming lease near the Antelope mine, will add more than 12 years of production.
New Gold Inc. recently announced its plan for the continued exploration of the recently acquired Blackwater Project in central British Columbia. Following acquisition of the Blackwater Project on June 1, 2011, New Gold is now planning to significantly increase the exploration program at the project and is targeting 40,000 to 50,000 metres of drilling in the second half of 2011. New Gold is budgeting $20 million for this exploration program.
The previous owner and operator of the project, Richfield Ventures Corp, had targeted 30,000 metres of drilling for the full year 2011. From the beginning of 2011 through New Gold's acquisition of Richfield on June 1, 2011, approximately 20,000 metres of drilling had been completed. When combining the drilling completed prior to the transaction close with New Gold's targeted program for the second half of 2011, the total drilling on the project for the year should be over 60,000 metres, more than doubling Richfield's originally targeted program. Drilling in the second half of 2011 will target both the 100%-owned southern portion of the project and the 75%-owned northern portion, where Silver Quest Resources Ltd. Silver Quest owns the remaining 25%. Pursuant to the joint venture agreement with Silver Quest, the portion of the revised drilling program on the northern portion of the property requires majority approval by the joint venture management committee, where New Gold holds 75% of the votes.
New Gold intends to provide periodic updates on the progress being made at Blackwater and is targeting an updated resource estimate in early 2012. The Blackwater Project's initial mineral resource estimate was completed in March 2011 and was based upon results from 77 holes totaling approximately 25,000 metres of drilling completed in 2009 and 2010.
St. Eugene Mining Corporation Limited recently announced the commencement of its Phase 1 Drilling Program of up to 4,000 meters at its 100 percent owned Tartan Lake Gold Mine Project, located 25 km East of Flin Flon, Manitoba. Most of the historic exploration and drilling at the Tartan Lake Mine Project concentrated in the vicinity of the mine, however, new targets were recently identified throughout the property from the Company's airborne survey, some of which will be tested during this Phase I drilling campaign. The last core drilling on the property took place in 2005-2006,which was an 8-hole follow up drilling campaign on the west side of the deposit that resulted in gold mineralization in each hole.
The initial focus of this Phase I drilling campaign is expected to target the plunge and strike extensions of the Main, South and South-East Zone Trend. Additionally, conceptual step-out targets located on a network of shear structures known as the West-Baseline Zone and the East-Baseline Zone, situated 100 meters to 220 meters south of the South and South-East Zone shear structure, will be given priority.
The Company's objective for the step out drilling is to confirm the gold mineralization down plunge of shear zones within the West-Baseline Zone and the East-Baseline Zone. The historic results from the surface and underground drilling of the Main Zone suggest that the gold mineralization within the shear structures improves with depth.
St. Eugene also expects that this Phase I drilling campaign will test four of the new anomalies located north-east of the existing mine. Results from the recent airborne geophysical survey suggests a conjugate of 2 significant shear zones containing 10-12 conductors in a complexly folded and sheared package of intermediate and mafic rocks and metasediments, intersected by a series of potentially high-grade, gold bearing quartz vein systems.
In addition to this Phase I drilling campaign, the Company is preparing for the dewatering and rehabilitation of the Tartan Lake Gold Mine down to the bottom of the 6th level decline (340 meters). Mineral resources are outlined to a depth of 580 meters, which is 280 meters below the present mine development. The system remains open in all directions and shows strong similarities to the high grade mineralization that is characteristic of the Flin Flon Greenstone Belt, and accordingly, underground drilling from the 340 meter level will initiate Phase II of the exploration Program, designed to verify the high-grade gold mineralization at depth in the Main Zone.
Virginia Mines Inc. recently announced the signing of an agreement with Quadra FNX Mining Ltd. on the Lac Gayot property, located in the James Bay region, province of Quebec.
Under the terms of the agreement, Quadra FNX has the sole and exclusive right and option to earn an undivided 50% beneficial interest in the property in exchange for $10 million in exploration work over a 9-year period and cash payments totaling $100,000 on or before the 2nd anniversary of the agreement. Virginia will be the operator until the completion of a positive feasibility study. This agreement is subject to a 1% NSR in favor of Billiton Resources Canada.
The Lac Gayot property consists of 448 claims covering 21 788.52 hectares. The property covers entirely the Venus Achaean greenstone belt which consists dominantly of ultramafic MgO-rich sills and flows. This ultramafic sequence is host to twelve nickel-platinum-palladium mineralized zones distributed over a strike length of 25 kilometres. Values of 0.5-15% Ni and values of up to 17.2 g/t Pd-Pt were obtained at surface while drill intersections graded up to 9.03% Ni, 0.6% Cu, 9 g/t Pd-Pt over 2.55 metres and 2.20% Ni, 1.41% Cu, 2.29 g/t Pd-Pt over 11.4 metres.
Chemical company Arkema and Canada Fluorspar announced they signed a definitive agreement worth $84 million to fully fund and give a past-producing fluorspar mine in Newfoundland, Canada, a second life.
Just outside the town of St. Lawrence, various operators have taken a crack at bringing operations back online to produce acidspar, which is used for a variety of industrial purposes such as in hydrofluoric acid production. Canada Fluorpar's predecessor company, Burin Minerals, picked the concessions up in the mid-1990s.
The deal rolls the two principal fluorspar bearing veins of the project, the mill site, legacy infrastructure, and the tailings pond into a limited partnership in which both Canada Fluorspar and Arkema will hold 50-percent stakes. Arkema has promised to fund the partnership to the tune of $68 million, as well as buy $15 million worth of Canada Fluorspar's shares in a private placement. Arkema also gets a 10-year right to buy 20 percent of Canada Fluorspar's share of production at a price with a fixed margin over the cost to make the concentrate.
Meanwhile, Lindsay Gorrill, Canada Fluorspar president and CEO, stressed Canada Fluorspar gets to keep its other mineral assets, including additional fluorspar targets near the mine, which it is currently exploring for additional resources.
Construction is set to start in August, with planned commercial production beginning in the second quarter 2013 at an annual rate of 126,000 tonnes acidspar.
Canada Fluorspar's 2011 prefeasibility study delivered a strong economic justification, pegging production costs at $70.62 per milled tonne of concentrate over a 15-year mine life, and projected an $89 million net present value for the project, discounted at 8% and based on a $425 per tonne acidspar price.
Also, the prefeasibility study only used 68% of indicated resources identified so far, which stand at 9.1 million tonnes @ 42 percent CaF2.
In terms of logistics Gorrill singled out Canada Fluorspar's shipping advantage. The town of St. Lawrence is near the southern end extent of Newfoundland's Burin Peninsula that juts out into major trans-Atlantic shipping lanes on the North Atlantic. While other fluorspar mines around the world might have to charter a special ship to haul concentrate, Gorrill said, Canada Fluorspar can take advantage of shipping traffic in transit already, perhaps getting discounted rates.
St. Elias Mines Ltd. announced it has retained the Peruvian subsidiary of Energold Drilling Corp. to conduct the initial phase of the Company's 10,000-metre drilling program at the Tesoro Gold Project in Peru. Energold has a strong international presence with over 100 drill rigs providing surface, underground and conventional drilling services. Energold operates in 20 countries worldwide in South America, Africa and Asia.
Initial drill targets have been prioritized and laid out. The targets are subject to final adjustment as additional geological information is received and compiled from the ongoing mechanical trenching program currently underway on the Tesoro Gold Project.
As at May 31, 2011, 15 trenches totalling 1,200 linear metres have been completed with 215 samples collected over 5m sample intervals from the trenches at the Tesoro Project. The trenches were completed by a backhoe and a track-mounted excavator at Zona Central (Main Structural Corridor) and Zona Este(Parallel Structural Corridor).
Quantec Geoscience Ltd., through detailed analysis of its Titan 24 data, has recommended a total of 52 drill holes to test the first and second priority targets interpreted in the Property. Of these, 26 drill holes are recommended to test the first priority anomalous zones, and 26 drill holes are proposed to test the second priority target zones.
Additional interpretation of the Quantec geophysical data by in-house exploration personnel and McElhanney Engineering Group continues and results from these studies are being utilized to maximize exploration data and guide the drilling program.
With indicated ounces gold in oxides reaching two million ounces in a resource update, Sulliden Gold is on track to expand the scope of its Shahuindo, Peru gold-silver mining project to 150,000-gold equivalent ounces in production a year for an upcoming feasibility study.
Near-surface oxide resources, Sulliden's chief target at Shahuindo as it pursues an open-pit heap leach mine, grew 121 percent to 2 million ounces gold @ 0.51 g/t gold in the indicated category. Meanwhile inferred resources, primarily encompassing sulphide mineralization below the oxides, quadrupled to 1.4 million ounces gold @ 0.71 g/t Au.
The resources also contain significant amounts of silver, with some 28 million ounces @ 7.3 g/t silver in indicated oxides, and 38.6 million ounces @ 19.1 g/t in, mostly sulphide, inferred mineralization. However, at least in terms of the silver in oxides, recovery is expected to be low at 15 percent, as compared to about 90 percent for gold.
The upgraded resources will form the basis of an ongoing feasibility study, which Sulliden said last year would build on its 2009 scoping study. Back then Sulliden outlined a seven-year mine that would annually produce about 95,000 ounces gold and 350,000 ounces silver and cost about $90 million to build. That design, at $875 per ounce gold, delivered a $100 million net present value (NPV) discounted at eight percent, and $403 per ounce gold operating cash costs.
But since releasing the 2009 scoping study Sulliden's goal has been to expand resources to more than the two million mark in terms of gold equivalent ounces, and beef up projected precious metal output. The latest resource update easily meets the mark, mostly by adding girth to the extent of established mineralized zones at Shahuindo.
In the feasibility study Sulliden is looking to reduce cash costs, open-up gold equivalent production to 150,000 ounces - roughly 50 percent over the scoping study - and increase mine life to 10 years. Sulliden projects capital costs on the project will increase by around 25 to 35 percent, suggesting a $130 million or so initial price tag. At the same time with gold and silver prices respectively about 50 and 300 percent higher than they were when Sulliden last estimated cash flows from Shahuindo, project economics will undoubtedly improve, so long as precious metals prices stay aloft.
Meantime, Sulliden sees room to grow mineralization both beyond already defined areas and in a recently discovered trend that runs parallel to Shahuindo's main gold-silver zones.
Japan's Itochu Corp said recently it would take 20 percent of Drummond Co's Colombia coal operations for $1.5 billion, seeking to meet growing demand for high-quality thermal coal in Asia.
The nation's fourth-biggest trading house will gain the exclusive right to export the coal used to burn electricity generation, demand for which is expected to rise in Japan after the Fukushima nuclear power disaster in March.
It plans to start shipments this year.
Privately-held Drummond, the second-largest coal exporter in Colombia, had run an auction process on the assets at least twice, involving Brazilian mining giant Vale SA , Glencore and Xstrata , sources told Reuters last year.
But Itochu sealed the deal as Drummond wanted a minority partner and to strengthen shipments to Asia, Yoichi Kobayashi, an Itochu director, told a news conference.
The companies aim to increase production by 10 million tonnes to 35 million tonnes by 2014, and ship 70 percent of that 10 million to Asia, especially to China, India and Japan. The rest will be shipped to Europe, Latin America and other places.
Last year, Japan imported only 60,355 tonnes of thermal coal from Colombia, accounting for 0.06 percent of total imports of 101.65 million tonnes, the finance ministry data show.
OceanaGold recently said it has overcome obstacles to mining in the Philippines and will start producing copper in concentrate from its long-delayed Didipio mine project in 2013 at an annual rate of 18,000 tonnes.
Gold production from the mine, under construction in Luzon island, will ramp up to 100,000 ounces a year by the end of 2014, Mick Wilkes, OceanaGold's chief executive told Reuters.
Tata Steel, India’s largest steel company, has sold its entire 26.27 percent stake in Australian Securities Exchange-listed coal miner Riversdale Mining for $1.13 billion ($A1.06 billion), making two times its investment in four years. Tata Steel has sold its stake to British-Australian mining major Rio Tinto, which has already acquired 73.2 per cent stake in the firm and is in the process of de-listing it.
“Tata Steel has decided that it would not want to hold its equity investment in Riversdale Mining Ltd, which is proposed to be delisted, without any joint venture agreement with the majority shareholder in the unlisted company,” the company said in a statement. However, it will continue to hold 35 per cent stake in the subsidiary Riversdale Energy (Mauritius) Ltd, which owns coal assets in Mozambique, and will work with Rio Tinto in this venture. Tata Steel had entered into a venture with Riversdale to develop the Benga coal project in Mozambique.
The investment in Riversdale is currently held by Tata Steel Global Minerals Holding Pte Ltd, an indirect, wholly owned subsidiary of Tata Steel Ltd.
Rio Tinto had acquired a majority stake in Riversdale in April this year, after making a $4 billion takeover offer. Reports had suggested several suitors for the company, which specializes in coal mining in Africa, including a consortium of Indian state-run companies. Besides Tata Steel, Riversdale’s shareholders included players like Brazil’s third largest steel producer CSN and hedge fund Passport Capital.
A growing coal shortage in India has got major corporates worried. In a bid to feed India's burgeoning power demand, companies across the country are tying up with their foreign counterparts in Indonesia and Australia, Mineweb reports.
The shortage is likely to more than double over the next five years, say traders and analysts and the current 125 million tonnes is just not enough to feed India's power and heavy industries sectors to which the coal is supplied. The country is staring at a shortfall of around 250 to 300 million tonnes annually.
In a bid to shore up supply, the Indian state-owned company International Coal Ventures is all set to buy 59% in Minas de Revuboe from the Australian Talbot Group at an estimated cost of $1 billion. India's Essar Group has also set its eye on two coal-bed methane blocks in Indonesia. And Coal India, the world's largest coal producer, is to soon submit a final bid to buy a stake in Indonesia's PT Golden Energy Mines.
An analyst with a foreign brokerage firm said that India is set to surpass Japan to become the leading buyer of Indonesian coal this year, taking as much as 60 million tonnes to help meet rising demand from the domestic industry.
Indonesia's coal mining companies are already cranking up production to meet rising demand, for export purposes and also to feed domestic consumption too.
An analyst stated that earlier this year, the country had implemented a series of measures to ensure that a portion of production was allocated to the local industry. Indonesia's government was looking at banning exports of coal under the 5,600 kcal mark, which would have dramatically changed the dynamics of the global thermal coal market.
Low-quality coal, of between 4,800 and 5,800 kcal, constitutes a significant portion of exports out of Indonesia and with the country accounting for about 30% of the global thermal coal supply, an export ban could reduce worldwide supplies by at least 10 percent.
Earlier in May, India's coal minister Sriprakash Jaiswal said India might have to import 142 million tonnes of the fuel in the next financial year, up from the earlier estimates of 104 million tonnes.
It is for this reason that Indian firms have decided to hold considerable interest in Indonesia's coal sector. Tata Power holds a 30% stake in two of the country's largest coal mines and the Adani Group, India's biggest coal importer, last year committed $1.6 billion to build mining related infrastructure.
India's Essar Group too has set its eye on two coal-bed methane blocks in Indonesia. Last year, Essar bought coal mines, with mineable reserves of 64 million tonnes, in Kutai, East Kalimantan, to secure supplies for its power plants. Officials of the Mumbai-based company said the areas hold as much as 100 million metric tonnes of power-station coal.
The group has also submitted a bid for one coal bed and is conducting a joint study for the other. The two blocks are located in Kalimantan, which is in the Indonesian part of Borneo Island.
Similarly, state-run Coal India, in which the government sold a 10% stake last year for $3.4 billion, is said to be in the final stages of the due diligence for the assets of PT Golden Energy. The company owns 10 coal mining areas across Indonesia.
Similarly, the Steel Authority of India Limited and International Coal Ventures Private Limited (ICVL) have signed a memorandum of understanding with Indonesia for the development of mineral deposits, setting up of mineral processing facility, steel plant and required infrastructure in the province of Central Kalimantan, Indonesia.
ICVL also plans to buy 59% stake in Mozambique-based coal miner Minas de Revuboe for about $1 billion. The asset has been put up for sale by Australia's Talbot Group. Besides Australia's Talbot Group, South Korea's Posco, Japan's Nippon Steel and the Mozambique government hold stakes in Minas de Revuboe.
Meanwhile, Indonesia's coal miner PT Indika Energy is also set to push capacity by 25% in the next three years. Newswire reports have quoted Arsjad Rasjid, Indika's CEO and president director as saying the company plans to boost the capacity of the mines it controls through PT Kideco Jaya Angung to 50 million metric tonnes from 40 million tonnes.
The Jakarta-based company had revenues of $440 million last year, and has been seeking to keep up with rising demand for thermal coal to fuel the power plants of India and China.
Yanzhou Coal Mining to Acquire Syntech Resources
Yanzhou Coal Mining Co, China's third largest coal producer, is likely seeking to acquire privately-owned Australian coal miner Syntech Resources, which owns the 700 million-metric-ton Carnaby Downs thermal coal project in Queensland's Surat Basin, sources reported.
Surat Basin is a little-developed coal province to the south of the Bowen Basin, Australia's primary coal-producing region.
At present, the thermal coal project exports a small amount of coal through Brisbane port. Syntech Resources has plans to expand the output of the project to 15 million tons a year by 2013 if it obtains using rights of the port.
The acquisition is valued between several hundred million Australian dollars and more than A$1 billion, according to unnamed sources.
Yanzhou Coal Mining acquired Australia's Felix Resources Ltd for A$3.5 billion in 2009. The deal was China's biggest-ever takeover of an Australian company.
In April this year, Yanzhou Coal Mining proposed to acquire Australian coal miner Whitehaven Coal for A$3.5 billion as part of its effort to expand its presence in Australia.
Macarthur Minerals Expands Interests at Western Australia Iron Ore Project
Macarthur Minerals Limited recently announced that it will hold approximately 1,050sqkm of mining and exploration tenements in Western Australia, assuming completion of tenement acquisitions. Currently the Company has reported an Inferred Mineral Resource estimate for 1.3 billion tonnes of magnetite at 30.1%Fe and 18 million tonnes of Direct Shipping Ore (DSO) at 55.5%Fe over the tenements.
The Company has now drilled over 1,000 drill holes and currently has 3 drill rigs on site working 7 days a week. An exploration team consisting of 8 geologists, a mining engineer and an environmental manager are working to complete a pre-feasibly on the potential DSO project to enable production at a rate of 2 million tonnes per annum to commence in early 2013.
The Company has expanded its 100% owned tenement area from 784sqkm to 992sqkm following grant of exploration tenement E77/1299 by the Department of Mines and Petroleum (DMP) in Western Australia, providing additional area of 208sqkm.
E77/1299 borders the western boundary of the Company's 710mt at 30.6%Fe Moonshine magnetite deposit. The area has not been previously explored.
The Company has also entered into an option agreement to acquire exploration tenement E30/317, with an area of 29sqkm, and is also finalizing terms to acquire exploration tenements E30/410 and E30/411 with a total area of 29sqkm. Following completion of these acquisitions, the Company's total tenement area will expand to 1,050sqkm.
McIlvaine Company
Northfield, IL 60093-2743
Tel: 847-784-0012; Fax: 847-784-0061
E-mail: editor@mcilvainecompany.com
Web site: www.mcilvainecompany.com