Turquoise Hill to go ahead with $2.4b rights offer

Turquoise Hill to go ahead with $2.4b rights offer
German financial watchdog to investigate gold price-fixing
Minnesota copper-nickel developer shares off to the races
Market assumption about Detour Gold was wrong: Haywood
How China got a firm grip on 90% of Ecuador's oil
Canadian museum gets $1 million from petroleum producers

Posted: 26 Nov 2013 11:51 PM PST

Rio Tinto's unit Turquoise Hill Resources Ltd will present a $2.4 billion rights offer in order to pay down credit facilities.

In the offer, Turquoise Hill Resources investors will be entitled to purchase an additional share at a 42% discount on closing prices in New York and Toronto ($2.40 and C$2.53, respectively) on November 25th.

The company expects to double the number of outstanding common shares with the offer, using the proceeds to repay a $1.8 billion interim credit facility and a $600 million bridging facility.

Turquoise Hill shares rose 1.8 percent to C$4.47 on Tuesday.

Posted: 26 Nov 2013 05:32 PM PST

BaFin, Germany's financial supervisory authority, has begun an investigation into suspected price-fixing of benchmark gold and silver prices, WSJ Deutschland reported Tuesday.

"Apart from Libor and Euribor, BaFin is also looking into other benchmark setting procedures at individual banks such as for gold and silver prices," a BaFin spokesman said.

The WSJ report also claimed that similar probes were under way in the UK and US, though no sources were mentioned.

Regulators around the world have begun to wrestle back oversight authority over the financial sector since the 2008 financial crisis and after a long period dominated by "light-touch" regulatory philosophy.

Minnesota copper-nickel developer shares off to the races

Posted: 26 Nov 2013 04:30 PM PST

PolyMet Mining Corp. (TSE:POM) (NYSEMKT:PLM) gained 17% on Tuesday bringing its gains over the last three trading sessions to 43%.

The Toronto-based junior is developing a 100%-owned copper-nickel-precious metals mine and processing plant in Minnesota and the initial boost for the stock came after comments by Edison Investment Research last week predicting huge upside for the counter:

"PolyMet purchased the Erie Plant and associated infrastructure for a fraction of the replacement cost, which positions the project at a low capital and operating cost relative to its peers," Edison said in a research note.

"PolyMet's valuation has material upside if it expands its capacity or uses its infrastructure to consolidate the Duluth Complex in Minnesota," the equity researcher said.

Polymet's current plan only utilizes about a third of the Erie plant's 100,000 tonnes per day capacity.

By the close Polymet was trading up 17.2% at $1.29 on the Toronto big board, in huge volumes. More than 350,00 shares versus usual daily volume of 75,000 shares had changed hands on Tuesday.

The $354 million company, which is expecting environmental permits by end of next year and completed construction by 2016, is up 40% since the start of year.

Market assumption about Detour Gold was wrong: Haywood

Posted: 26 Nov 2013 04:29 PM PST

The market assumed wrongly yesterday that the departure of CEO Gerald Pannenton would derail Detour Gold's ramp-up, according to Haywood Securities.

Haywood also wrote today that investor expectations of an imminent financing are ill advised, as the firm anticipates Detour to assess its financing needs only after the close of Q4.

Detour's share price lost 33% Monday and then recovered 31% from the low of the day to close at $3.77 per share. The stock dipped another 7.4% Tuesday, trading at $3.49 in the afternoon.

Back in May billionaire investor John Paulson's hedge fund put $153 million into the Detour Gold.

Year to date the company has lost 87% of its value.

Tuesday note from Haywood:

Detour Gold yesterday announced the departure of Gerald Panneton, CEO, and Paul Martin, (previously the CFO) has taken over in the interim as CEO while the Board looks for a replacement. The market assumed (wrongly in our opinion) Mr. Panneton's departure suggested the ramp-up was not going as well as expected or a financing was imminent, (again wrongly assumed as we expect Detour will assess their financing needs once Q4 is finished) and as a result the shares sold off sharply yesterday, down 33% at one point but up 31% from the low of the day on big volume (14.5mm shares) to close at $3.77 per share. This one-day reversal would suggest to us that the lows are now behind us, and we expect operational improvements going forward will lead to a higher valuation. We think the Board (and the market) lost confidence in the incumbent CEO and the Board moved quickly to help restore market credibility, although some indication on progress in the mill ramp-up in November would have been helpful as the market has assumed the worst.

How China got a firm grip on 90% of Ecuador's oil

Posted: 26 Nov 2013 03:52 PM PST

China is serious about expanding its international portfolio: The Asian giant's recent foreign purchases include a 20% stake in Brazil's Libra oil field, a skyscraper near Wall Street, and the country's Lenovo tried, but failed, to buy Canada's Blackberry.

But these acquisitions pale in comparison to what records reviewed by Reuters are showing. According to a special report, China now controls 90% of Ecuador's oil, an OPEC nation.

Through a series of financing deals with state-owned oil company PetroEcuador, China has coaxed the Latin American country into submission. Ecuador had little leverage: After a $3.2 billion default in 2008, money hasn't exactly been flowing into the country.

China is expected to cover 61% of the Ecuadorian government's $6.2 billion financing needs this year. As part of the deal, "China can claim as much as 90% of Ecuador's oil shipments in coming years," Reuters writes.

By mid-2013, Chinese state-controlled firms controlled 83% of its Andean friend's oil exports. PetroChina, a branch of state-owned China National Petroleum Corp, holds about 60% of these shipments.

The Chinese "provide financing for our country and, in exchange, we ensure sales of oil at international prices," Ecuador's former Finance Minister Patricio Rivera told state-run TV earlier this year, as reported by Reuters.

Strapped for cash and eager to fund anti-poverty programs, Ecuadorian President Rafael Correa last month announced plans to authorize drilling in the Yasuni National park in the Amazon rainforest. In the grand world of OPEC however, Ecuador is a small player. The country produces just under 360,000 barrels per day, compared with 1.75 million barrels exiting nearby Venezuela – where China also has a firm grip, having negotiated $43 billion in loans. PetroChina also recently snatched up Brazilian Petrobras's Peruvian oil and gas assets for $2.6 billion.

Read the full Reuters report here.

Canadian museum gets $1 million from petroleum producers

Posted: 26 Nov 2013 02:40 PM PST

Over the next five years, the Canadian Museum of Civilization in Gatineau, Quebec will get an influx of $1 million dollars, thanks to an unprecedented donation from the Canadian Association of Petroleum Producers (CAPP).

The museum announced the donation on Monday, calling it the largest corporate sponsorship in the museum's history.

CAPP will be recognized as an official partner on all major exhibits until 2018, but will not have any influence on the content, Mark O'Neill, the museum's president and CEO told the Ottawa Citizen. The museum's next exhibit is about snow.

"We are grateful to the Canadian Association of Petroleum Producers for their very generous and vital support," O'Neill noted in a news release. "Canadians rightly expect their national museum of history to play a prominent role in the commemoration of the 150th anniversary of Confederation. CAPP's sponsorship is a shining example of a private and public partnership that will enable us to present a very exciting line-up of exhibitions, programs and activities at the Museum for the next five years."

CAPP's membership represents 90% of Canada's natural gas and oil production. Direct supporters of the organization's sponsorship include BP Canada, Cenovus, ConocoPhillips, MEG Energy and others.