TABLE OF CONTENTS
Uranium Market Will Right Itself by Year’s End: Resource Capital Research
Rio Tinto Forecasts Surge in World Demand for Refined Copper
Rio Tinto and Anglo to Sell Palabora Mining Co.
Compliance Energy Receives Exploration Permit for Canadian Project
Barrick Gold’s Pierina Mine May Operate Until 2018
VINCI to Build Tunnels for Chilean Mine
Lundin Mining Announces Feasibility Study Results for the Lombador Phase I Project
Rio Tinto Eyes India's Thermal Coal Market
Eramet to Invest $6bn in Indonesian Nickel Project
Rio Tinto Invests US$310 Million for Pilbara Coastal Water Project
Resource Capital Research, which posted its September Quarter RCR Uranium Sector Review, says that buying opportunities will emerge in the uranium sector in the fourth quarter of 2011 and early 2012.
“Despite the ongoing short term market impacts from Fukushima, the long term uranium market fundamentals are considered sound with expected strong and increasing demand for new nuclear power reactors, especially from China, USA, Russia, Ukraine and India,” writes the report authors.
Resource Capital Research notes that 84 new nuclear power reactors are expected to be commissioned globally by 2017, and currently almost 500 plants are being considered.
Resource Capital Research, based in Australia, provides equity research for junior and developing resource companies.
The Australian reported that global demand for refined copper is forecast to rise by more than 40% to 27 million tonnes by 2020 and the massive Mongolian gold and copper Oyu Tolgoi project is strategically positioned to capitalize on that increase as it grows to become a top five global copper producer.
Cameron McRae, CEO of Oyu Tolgoi project, said in a presentation that can be found on Rio Tinto’s website that there is significant scope for demand growth over the medium to long term as India and China continue to grow.
McRae noted that China's 2010 gross domestic product per capita was only USD 7000 compared to USD 43,000 for the US. China is forecast to build between 4 million and 5 million new buildings between 2005 and 2025 as it continues to undergo fast paced urbanization.
Rio Tinto is the operator of the Oyu Tolgoi project and its indirect owner through its 48.5% stake in Canada based Ivanhoe Mines. Ivanhoe owns a 66% stake in Oyu Tolgoi while the Mongolian government owns the remaining 34%.
Rio Tinto said that the Oyu Tolgoi project alone would boost Mongolia's economy by 35% by 2020 and account for a third of the country's economy. It will boost the country's average economic growth rate to 12.7% between 2013 and 2020, versus 7.7% without the project.
Analysts said that copper supply is expected to lag demand in the near term as mining companies seek to expand production capacity and develop new mines. The presentation didn't reveal McRae's views on supply growth but it noted that 14% of reported global copper resources are in Asia and 13% of the world's deposits account for 77% of the those resources.
According to Rio Tinto, Oyu Tolgoi is seen as one of those large deposits and is forecast to become a top 5 copper producer which cited Brook Hunt's 2013 mine production data and Oyu Tolgoi's full production design capacity. The Oyu Tolgoi project is forecast to start commercial production in the H1 of 2013 and is expected to be able to produce 450,000 tonnes of copper and 330,000 troy ounces of gold annually.
The Peruvian mining sector looks set to grow by 8.3% in real terms to reach US$19bn in 2011, which will mark a slowdown in growth from 15.7% registered in 2010 according to Business Monitor International 's "Canada Peru Mining Report Q3 2011”. This can be attributed to declining grades across the country's largest mines due to underinvestment, which explains modest growth production forecasts for mined copper, tin, silver and gold in 2011. Despite falling grades across Peru's mining sector in 2011, the report forecasts the value of the Peruvian mining industry will grow by an average of 8.5% per annum from 2011 to 2015 in light of major expansions across the sector.
Despite growing challenges to Peru's business environment in recent months - mainly the possible imposition of a mining tax - Peru will remain business friendly to ensure continuing investment in the sector. Indeed, given that many other mineral rich countries, such as Australia, Chile and Brazil, have implemented or suggested tax increases on the mining sector, its competitive advantage is unlikely to be damaged should it decide to go through with the tax. That said, note the looming threat of strikes and the government's recent efforts to tackle longstanding environmental issues.
Peru's mining sector has been amenable to foreign investment since the 1990s as successive governments have taken a pro-business stance. At present, the vast majority of mining companies operating in Peru are foreign-owned and there has been little indication that the government is seeking to reverse this trend in the future. Peru's mineral royalty tax is relatively low at between 1% and 3%. However, many large-scale ongoing operations remain unaffected by the royalty due to previous contracts with the government, although the government's new tax proposal is seeking change this.
BHP Billiton delivered a record second-half profit driven largely by soaring prices for iron ore, allowing it to award investors a big hike in dividends on top of its hefty expansion plans.
The world's biggest miner, however, sounded a warning over rising costs and disappointed some investors who had hoped it would undertake another small buyback after achieving Australia's biggest ever annual profit of $21.7 billion (7.9 billion pounds).
BHP, the last of the major miners to report results, was cautious on the near-term outlook for commodity prices, expecting weak growth in Europe and the United States. But it continued to see a strong outlook longer term, underpinned by rapidly growing developing countries.
"This coupled with shortages of labour and equipment on the supply side, which continue to constrain the industry's ability to bring on new production, give us a favourable outlook," Chief Executive Marius Kloppers told reporters.
BHP joined its peers in warning about escalating costs, saying rising costs for labour and equipment cut earnings by $1.2 billion in the year to June.
Kloppers said the company would review its plan to spend $80 billion over five years on development projects following its takeover of Petrohawk, as it expects to allocate $5 billion a year on developing Petrohawk's shale gas resources.
Soaring prices for iron ore, copper and oil boosted attributable profit before exceptional items to $10.98 billion for the six months to June from $6.77 billion a year ago.
Earnings from iron ore, its biggest division, jumped 122 percent to $13.3 billion, while earnings for base metals soared 47 percent and petroleum earnings grew 38 percent.
It said inflation and the falling U.S. dollar cut underlying earnings by $3.2 billion, beyond the impact of rising labour and equipment costs.
Rio Tinto and Anglo American are planning to sell their stakes in Palabora Mining Company Limited and have initiated a commercial process to sell its shareholding.
Anglo American currently holds a 16.8% interest in Palabora Mining, while Rio Tinto holds a 57.7% interest.
Palabora Mining's assets include a copper mine in South Africa, with a mine life until 2016 and a magnetite stockpile.
Compliance Energy has received an exploration permit from the Ministry of Energy and Mines of British Columbia, for the Camp Lake project.
The Camp Lake project, which covers 34.42km² area, is located 25km west of Campbell River, and is situated on the flank of an intense circular aeromagnetic high measuring ten kilometres in diameter.
Compliance Energy is planning to carry out a 1,000m diamond drilling programme on the property.
The exploration programme conducted in 2010 confirmed the existence of elevated values of copper, silver, molybdenum and iron in both outcrop chip samples and select grab samples of mineralisation.
A new copper discovery in outcrop was made, and an iron skarn deposit was mapped, sampled and identified as the probable source of the Willis Magnetic Anomaly.
Barrick Gold Corp. ABX -0.07% said that its Pierina gold mine in Peru may operate until 2018.
Minera Barrick Misquichilca SA, the company’s Peruvian unit, told the Peruvian securities regulatory agency on Wednesday that its operating plan for the mine depends on the price of gold and operating costs, among other factors.
In October last year, the company said that it planned to keep running the gold mine located in the Andes Mountains until the last quarter of 2014.
The Canadian-based company has carried out exploration in order to add to reserves and to extend the life of the Pierina mine, which it purchased in 1996
Chile's Codelco has awarded a $400m contract to VINCI for the design and construction of two tunnels at the El Teniente mine in Chile.
VINCI will carry out the project through its subsidiaries VINCI Construction Grands Projects and Soletanche Bachy.
El Teniente is located at an altitude of between 1,500 and 1,900m, 80km to the south of Santiago, in the Libertador General Bernardo O'Higgins region in the Andes.
The scope of work will include drilling and blasting two 9km tunnels, each with an average cross-section of 65m², along with two intermediate access tunnels totalling 6km.
The first tunnel will be utilised for transporting personnel and the other tunnel will be used for the ore.
The works are scheduled to commence in October 2011, and are expected to take 40 months to complete.
Lundin Mining Corporation recently announced the results of the Feasibility Study for the Lombador Phase I project.
The Feasibility Study shows that Lombador Phase I, which is designed to exploit only the upper portions of the Lombador zinc/copper ore bodies can be developed as a profitable and value accretive extension to the Neves-Corvo mine, Portugal.
The Project extends the mine life to at least 2026 and creates a platform for further extensions.
The Project adds approximately $100M to the NPV8% of the mine at Lundin’s Base Case price assumptions.
Incremental Lombador project C1 cash costs of $0.56/lb Zn.
The Lombador project adds significant value to Lundin Mining and provides flexibility to zinc and copper production from the Neves-Corvo operation. Its implementation also serves as a precursor to expansions to exploit the deeper portions of adjacent Lombador South, East and North ore bodies and provides the necessary underground access for ongoing Lombador area zinc and copper exploration drilling.
“The Lombador project is of strategic value to Lundin Mining and is a natural extension to the existing Neves-Corvo mine. This study confirms the Company’s view that the Lombador Phase I project can be developed into a successful and profitable expansion to the existing operations. The combined Neves-Corvo/Lombador measured and indicated zinc resource is one of the largest undeveloped near mine zinc resources available today in the industry. The initial phase of Lombador development enables zinc production to ramp up taking advantage of the expected strong zinc markets evolving over the next several years.” said Mr. Paul Conibear, CEO of Lundin Mining.
Lombador Phase I Feasibility Study
The zinc-copper rich Lombador orebodies are located immediately to the north-east of the existing Neves-Corvo mine workings and lie below the bottom of the mine’s existing extraction infrastructure at depths between 700 metres and 1,200 metres below surface. The objective of the Phase I study was to define an economically accretive project to exploit upper portions of the Lombador ore bodies, not only to enhance the overall financial performance of Neves-Corvo but to facilitate underground exploration of the extensive Lombador area mineralization serving further expansions.
The Lombador Phase I project is an expansion to the current Neves-Corvo operations and comprises:
Copper and zinc production from the upper 300 metres of primarily the Lombador South orebody;
Mine deepening by a new haulage ramp extending 300 m below the existing lowest extraction level.
Extraction of up to 1.1 million tonnes per annum (“Mtpa”) of zinc ore and 0.5Mtpa of copper ore. In combination with the existing Neves-Corvo operations, the study base mine plan has ore production peaking at 3.7 million tonnes of copper and zinc ores in 2019;
Zinc recoveries are expected to average 80% and copper recoveries average 87% from Lombador ore.
Expansion of the existing zinc plant ore processing capacity from 1.0Mtpa to 2.5Mtpa, with nominal zinc metal production increasing from 50,000 tpa to a peak of approximately 150,000 tpa (averaging 112,000 tpa over the study base life of mine);
Expansion of surface infrastructure necessary for the increased mine and processing capacity;
The development of an exploration drift at the lower level of the Lombador Phase I mineralization to better define footwall copper mineralisation and to explore the deeper Lombador East and North (Phase II) deposits, both of which remain open at depth.
Rio Tinto Ltd, the Anglo-Australian mining firm, is eyeing a share of the rapidly growing Indian thermal coal market.
“India's coal imports are projected to touch about 200 million tonnes over next few years. We want to be part of that supply,” said Dr Nik Senapati, Managing Director, Rio Tinto India.
Rio Tinto has been selling other mineral resources such as coking coal, alumina, borates and rough diamonds to Indian companies.
“Last year, we sold some small quantity of thermal coal to India through a trader. Now we want to get into Indian thermal coal market directly,” Dr Senapati told a group of visiting Indian journalists.
The company is in talks with the Indian buyers in sectors such as cement and power to supply the thermal coal. However, Mr Senapati did not comment on how much the company expects to sell in India.
Rio Tinto produces high grade thermal coal from its deposits in Eastern Australia. In a bid to make it competitive with those from Indonesia, Rio Tinto proposes to ship the commodity in large (cape size) vessels to India to reduce costs, Dr Senapati said. India currently imports a bulk of its thermal coal from Indonesia, while it relies heavily on Australian coking coal to produce steel.
Last year, Rio Tinto supplied three million tonnes of coking coal to Indian steel companies such as JSW Steel and Tata Steel.
Rio Tinto has seen its business from India grow to more than a billion dollars in the past five years. The domestic thermal coal output in India, constrained by environmental regulations, is insufficient to meet the rising demand.
India's coal import stood at 70 million tonnes in 2010-11. In the current fiscal, the shortfall in coal demand-supply has been pegged at 142 million tonnes, which will be met through imports.
France-based Eramet is planning to invest about $6bn on the Weda Bay nickel project located in Maluku province, Indonesia.
Earment CEO Patrick Buffet said that the firm will have spent around $450m on the project before the final investment decision is proposed by the end of 2012.
Earment holds 54% interest in the project, with Aneka Tambang holding 10% interest and Mitsubishi holding the remaining interest.
The project will include the development of several mining centres in Halmahera, a hydrometallurgical plant and facilities that provide electricity, water treatment and other basic infrastructure.
35,000tpa of nickel is expected to be produced in the first phase of the project and a further 30,000t will be produced in the second stage.
Rio Tinto will invest US$310 million to assure a sustainable water supply for its iron ore operations in the Pilbara region of Western Australia, ensuring a sufficient resource to accommodate the expansion of annual production capacity up to the planned 333 million tonnes (Mt/a).
The coastal water supply project, which involves construction of a new borefield and pipeline system, will be completed by mid-2013, coinciding with the first ore from the planned increase in production capacity to 283 Mt/a.
Rio Tinto will build, own and operate the new borefield, located in the lower Bungaroo Valley, 35 kilometres south east of the town of Pannawonica, with an annual capacity of 10 gigalitres (GL/a).
Under the proposal, which has been agreed in principle with the Government of Western Australia, Rio Tinto will surrender its existing priority entitlements to the Millstream water supply, the system Rio Tinto constructed and financed 40 years ago. In return, the Government has agreed to amendments to secondary processing obligations.
Rio Tinto chief executive, Iron Ore and Australia, Sam Walsh said “The decision is a major boost to our operational capability and an important investment to support our Pilbara expansion. We will ensure the future reliability of our water supply without any interruption to current operations.
“This decision will provide significant benefits for the communities of the Pilbara region and represents a huge vote of confidence in the coastal communities of Dampier, Karratha, Wickham, Roebourne and Port Samson – towns for which Rio Tinto has supplied critical infrastructure since the Pilbara was developed. By freeing up water supply for our growing communities this project will support the Government’s ‘Pilbara Cities’ initiative”.
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