Kinross cuts Tasiast expansion costs by $1.1 billion |
- Kinross cuts Tasiast expansion costs by $1.1 billion
- Gold price slides to 7-week low as hedge funds drop 1.8m ounces
- Barrick Gold slashes pay, adopts exec scorecard
- Drummond to restart coal exports from Colombia
- Vale could lose all of its Simandou investment
- Iron ore price ends first quarter with a bang
| Kinross cuts Tasiast expansion costs by $1.1 billion Posted: 31 Mar 2014 03:36 PM PDT Kinross Gold (TSE:K, NYSE:KGC)) released an updated technical report for its Tasiast mine in Mauritania on Monday that makes deep cuts to capex costs for the troubled project. Kinross said the initial capital cost to expand the mine in Mauritania would total $1.6 billion, compared to its pre-feasibility estimate of $2.7 billion. The Toronto-based miner says it does not plan to make a final decision on the project until 2015 at the earliest. The NI 43-101 study forecasts average annual production of 826,000 ounces of gold, up from 247,000 ounces in 2013, over a 17 year mine life. The mine first opened in 2007, producing more than 1.12 million ounces to date.  |
| Gold price slides to 7-week low as hedge funds drop 1.8m ounces Posted: 31 Mar 2014 03:12 PM PDT Softness in the price of gold continued on Monday bringing the retreat in the metal from its 2014 highs to more than $90 an ounce as speculators cut bullish positions and gold-backed ETF investors scale back holdings. On the Comex division of the New York Mercantile Exchange, gold futures for June delivery in late afternoon dealings traded at $1,284.50 an ounce, down nearly $10 or 0.8% from Friday's close and at the day's low. The yellow metal has taken a hammering over the past two weeks of trading – gold is down from a 2014 high above $1,380 reached a fortnight ago to levels last seen February 11. Gold is still up 7% since the start of the year, but the positive momentum seems to be grinding to a halt. Speculators in gold futures and options reversed course last week with large investors cutting back on long positions – bets that the price will go up – in the week to March 25 according to the Commodity Futures Trading Commission. On a net basis hedge funds now hold 120,042 lots or 12 million ounces in net longs. That compares to 13.8 million ounces the previous week which was the most bullish positioning taken in more than a year. Last week also saw a second week of reductions of holdings in exchange traded funds backed by physical gold. Latest data show in the week to 28 March global gold ETF holdings declined by 0.4 tonnes taking total bullion allocated to investors down to 1,765.8 tonnes. Bullion held in gold ETFs are still on track for a net gain of more than 30 tonnes during the first quarter, however. Gold bullion holdings in global ETFs hit a record 2,632 tonnes or 93 million ounces in December 2012, but last year saw net redemptions of 800 tonnes. |
| Barrick Gold slashes pay, adopts exec scorecard Posted: 31 Mar 2014 02:18 PM PDT Barrick Gold Corp. (TSE:ABX) is overhauling its executive compensation, cutting down on cash bonuses and forcing the top brass to invest more heavily in the company. In a release titled "Barrick Redefines Compensation, Introduces Most Shareholder-Friendly System in Canada" accompanying its annual report, the world's top gold miner outlines a range of changes including a new scorecard system. Barrick said the long-term scorecard "will assess participating executives on eight performance measures including return on invested capital, dividends to shareholders, capital project performance and free cash flow," adding that scores will be published at the end of each year, "ensuring transparency of the process." The company is cutting down on annual bonuses and moving to a system where the majority of compensation awarded "will be long-term in nature, in units that ultimately convert into Barrick common shares. These shares cannot be sold until a participating executive retires or leaves the company," the Toronto-based firm said. Significantly, the shares "will be purchased on behalf of participating executives on the open market, resulting in no dilution to shareholders." Barrick also increased the minimum share ownership requirements for its chief executives to 10 times their base salary, up from four times under the previous regime. In its annual report published today, Barrick revealed cuts to executive compensation in 2013 compared to the year before when the multimillion dollar packages paid to senior management sparked shareholder outrage. Chief executive officer Jamie Sokalsky received total compensation of $7.7 million last year, down from $11.4 million in 2012, mostly as the result of a reduction in the non-cash component of his pay. Co-chairman John Thornton also saw his remuneration dwindle to $9.5 million. That's down from an eye-watering $17 million in 2012 which included a roughly $12 million golden hello. Outgoing chairman Peter Munk banked $3.9 million, down from about $4.3 million in 2012. Barrick stock closed down 2.8% on the Toronto Stock Exchange on Monday affording the company a $23 billion market value. The counter has managed to eke out some gains amid a recovery in the gold price in 2014 after a dismal 2013 which saw shares in the company slide 45%. |
| Drummond to restart coal exports from Colombia Posted: 31 Mar 2014 11:55 AM PDT
After close to three months of not being allowed exporting any coal from its Colombian mines, US-based Drummond Co is hours away from resuming shipments from its Cienaga port, on the Caribbean Sea. According to El Colombiano (in Spanish), the country's environmental regulator (ANLA) has already inspected the new installations that Drummond, the world's fourth coal exporter, was forced to build in order to comply with tighter environmental laws that went into effect in January this year. As a result of the 76 days of inactivity, the miner —Colombia's second largest coal producer— has lost close to US$420 million in revenue and cut its production forecast for 2014 to 25 million tonnes, down from a previous forecast of 30 million tonnes. The company produces around one third of Colombia's annual coal output. Coal shipments, in turn, account for 12% of the Colombia's total exports, placing them second to oil, which makes up 40% of all exports. Exports of the commodity now outpace the South American country's better-known products, such as coffee and bananas. Some of the world's top mining companies have operations in Colombia, including Anglo American (LON:AAL) and BHP Billiton (ASX:BHP), which jointly own Cerrejón, the country's largest coal producer. Image courtesy of Drummond Ltd. |
| Vale could lose all of its Simandou investment Posted: 31 Mar 2014 11:53 AM PDT The Simandou mountains in Guinea holds some of the richest iron ore deposits in the world and has the potential to transform the fortunes of the impoverished West African nation. World number two miner Rio Tinto is developing the southern part of the vast mountain deposit with first production from the massive $20 billion project not expected until late 2018 at the earliest. The northern part of the Simandou concession is held by BSG Resources, a company in the stable of billionaire diamond magnate Beny Steinmetz, and Brazilian giant Vale (NYSE:VALE). All work on the section awarded to BSGR by a former Guinea dictator in 2008 and 50%-sold to Vale has been halted as the government of Guinea revisits all mining contracts entered into under previous regimes. In the latest annual report filed to the US Securities and Exchange Commission by Vale, the world's top iron ore producer, the miner said it is bracing itself to lose all its investment in the project reports FT.com: "If the technical committee [reviewing past mining deals] recommends revocation and the government decides to accept that recommendation, Vale may lose its entire investment in the Simandou project subject to any rights to recourse Vale may have," the company said. Vale acquired the interest in Simandou from BSGR for $2.5 billion in 2010, but stopped payments after the first $500 million was forked over because certain progress milestones were not met. BSGR pegs the money spent on Simandou with Vale so far at about $1 billion. Earlier in March the Guinean committee reviewing the Simandou licences recommended the government strip BSGR as well as Vale of their rights because the panel alleges BSGR obtained the concession through corruption. Vale was not accused of any wrongdoing and BSGR has all along denied the claims maintaining that "the review has been conducted throughout without any respect for basic due process and procedural fairness." BSGR was awarded the rights days before the death of Guinea dictator Lansana Conté in 2008 after spending more than $160 million exploring the prospect. Conté had not long before stripped the Simandou blocks from Rio Tinto which had held the exploration rights since the late 1990, ostensibly over the Anglo-Australian company's failure to develop the deposits. The awarding of the rights are also the subject of a separate Swiss, UK and US anti-corruption and fraud investigations. |
| Iron ore price ends first quarter with a bang Posted: 31 Mar 2014 11:36 AM PDT The benchmark price of iron ore on Monday soared 4%, erasing steep losses earlier in March that saw the steelmaking raw material take a dramatic fall to near 18-month lows. According to data from the The Steel Index, the import price of 62% iron ore fines at China's Tianjin port added $4.50 to $116.80 per tonne, a three-week high. It was the best one day performance for iron ore since early August and a welcome turnaround in sentiment compared to the 8% drop in a single day to $104.70 on March 10. Iron ore remains down just under 13% since the start of the year as China's steel sector – which consumes more than two-thirds of the seaborne iron ore trade and forges almost as much steel as the rest of the world combined – adjust to slower growth in the world's second largest economy. The globe's most active steel future – Shanghai rebar – also jumped on Monday to around $540 as it recovers from record lows set earlier in the month. While China's steel output continues to moderate, easing back to 2.096 million tonnes a day according to the latest data from the China Iron and Steel Association, production is up from the 2.07 million tonnes daily average for last year. Expectations have been for a sharper slowdown in steel production as Chinese authorities clamp down on pollution in the industry by forcing closure of small steel mills and sintering plants. A new report by research house Wood Mackenzie suggest enforcement of new emissions standards will have a "negligible impact on total Chinese crude steel production and limited impact on iron ore demand": "Most of the announced closures to date have been for capacity already idled or curtailed for other reasons, with the lost production picked up by the larger steel plants. It is unlikely that we will see forced closures amongst the larger plants as this move will not reduce emissions significantly." So far this year Chinese imports have already jumped 21% compared to January-February 2013 and Wood Mackenzie forecasts China iron ore imports to reach new record high in 2014 rising 12% to 921 million tonnes compared to last year. UBS also has a sanguine note out on Monday about Chinese demand forecasting continued growth in imports. The investment bank predicts a short-term rise in the price of iron ore to more than $130 a tonne adding that the confusion surrounding Chinese credit and economic growth was behind the volatility in the price this year: "We see short-term target price recovery unfolding back to >US$130/t cfr Nth China. Why? This level was regarded as 'acceptable', in 2013Q4's more balanced trade." |
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