Work starts at first British metals mine in 45 years |
- Work starts at first British metals mine in 45 years
- Iron ore price builds on rally
- Platinum, palladium prices slide despite stalled strike deal
- CHART: Silver price busts out of 3-year downtrend
- Caterpillar mining sales slump, stock still performs
- Balmoral Resources: Two projects, one vision, proven share price performance
| Work starts at first British metals mine in 45 years Posted: 20 Jun 2014 04:42 PM PDT  Britain's Hemerdon mine. Photo: Google Images Excavation work has started at what is said to be Britain's first metals mine in nearly half a century. The Drakelands mine in Devon will boost local employment by exploiting one of the world's largest tungsten resources. Demand for tungsten, used in making super-hard steel, is increasing as China, which produces more than 80% of the world's supply, limits its export. The new mine, operated by Australian metals company Wolf Minerals (ASX:WLF), is expected to produce 3,500 tonnes of tungsten concentrate per year, roughly 3.5% of forecast global demand. The mine on the outskirts of Dartmoor is also seen creating 200 jobs. While some in the area are unhappy about the idea of a large-scale open pit mine in their back yard, many welcome the development amid declining employment in farming, shipyards and fishing ports. Operations manager Jeff Harrison told British newspaper The Guardian that most people have been supportive. "They want us to do it right, they want us to restore the site once mining is complete, but most see that this will bring benefits to a community that needs it," the paper quoted Harrison as saying. The mine site, formerly known as Hemerdon, has long been exploited, with evidence of mining activity dating back to the Bronze Age. Work there stopped after World War II, during which tungsten was needed for ammunition. But rising tungsten prices now make reviving the mine viable. Watch Wolf Minerals' video on the project here.  |
| Iron ore price builds on rally Posted: 20 Jun 2014 02:25 PM PDT Benchmark iron ore gained 1.5% on Friday, the fourth straight day of gains as the steelmaking raw material bounces back from 22-month lows hit on Monday. According to data from the The Steel Index, the import price of 62% iron ore fines at China's Tianjin port was pegged at $92.10 per tonne, up $1.40 on the day and up 3.5% since Monday. China is responsible for two-thirds of the 1.2 billion tonne seaborne trade and the decline in the price has been blamed on continued signs of a slowdown in the world's second largest economy combined with a surge in supply. The commodity has lost more than 30% of its value year to date and industry-specific factors in China have arguably played a bigger role than fundamentals. Beijing is clamping down on unofficial financing activities happening outside state-owned banks within the so-called shadow banking system. The use of commodities – particularly copper and iron – as collateral in trade financing agreements makes up a large portion of the unofficial banking sector. Inventories of iron ore at Chinese ports declined only slightly from record highs this week falling by 600,000 tonnes to 112.5 million tonnes as of June 13. More than a third or 38 million tonnes of the stockpiles are held by traders. Last week's revelation that authorities are probing whether traders at the port of Qingdao pledged the same copper, iron ore and aluminum inventories as collateral for loans multiple times to different banks has prompted the Chinese regulator to more closely scrutinize these deals and commercial banks making it much more difficult to obtain. One of the big four banks in the country, China Construction Bank, has stopped issuing commodity-backed letters of credit altogether and are calling in existing loans, meaning traders are forced to dump stocks onto an already well-supplied market reports Reuters: "Tighter credit will exacerbate the oversupply situation in the market and will send iron ore prices even lower. The next level I'm looking at is $80," said Helen Lau, senior mining analyst at UOB-Kay Hian Securities in Hong Kong. Platts News reports that the current uptrend in iron ore and steel may not last due to underlying bad fundamentals, quoting a Zhejiang-based steelmaker as saying: "Port stock volumes in China have still not been able to go down, and Australian and Brazilian miners have been pumping in so much supply into the seaborne market at the same time. In the later half of the year, this seaborne supply is not expected to ease at all, so supply and demand have not and will not achieve any balance, and this will definitely pressure prices down." Imports also point to further weakness ahead. After a strong first quarter iron ore imports fell back to 77.4 million tonnes in May, down 7.2% from April; a sign that these deals may be unwinding at a more rapid rate than previously thought. On Monday the iron ore price fell below $90 for the first time since early September 2012. On a quarterly basis iron ore hasn't averaged less than $100 since the height of the global financial crisis, but the 2014 second quarter average has now declined to $103.60. |
| Platinum, palladium prices slide despite stalled strike deal Posted: 20 Jun 2014 11:47 AM PDT Despite a broad rally in metals prices, PGM futures trading in New York pulled back on Friday despite a fresh impasse in strike negotiations in South Africa. Palladium futures trading on Nymex gave up more than 2% or $17 an ounce on Friday day to trade at $822.50 an ounce, while platinum contracts fell 1.1% or $16 an ounce to change hands for $1,458.20, below the level it was trading at when the strike began. More than 70,000 workers at the world's three largest platinum and palladium producers, Anglo American Platinum (LON:AAL), Impala Platinumm (OTCMKTS:IMPUY) and Lonmin (LON:LMI), have been on strike since January 23 and a week ago an "in-principle" wage deal was reached. Now Johannesburg paper Business Day reports the Association of Mineworkers and Construction Union (Amcu) have returned with fresh demands including a R3,000 ($280) return-to-work payment and a moratorium on retrenchments. The demands add 25% to 30% to last week's reported agreement which called for a basic pay increase by R1,000 month ($94) excluding benefits for the lowest wage workers. The three mines which together contribute 40% of global supply, have lost combined revenue of R23.4 billion ($2.1 billion) while striking workers's forfeited wages are approaching $1 billion. The 21-week strike translates into roughly 10,000 ounces of platinum production and 5,000 ounces of palladium lost each day. When strikers do return to work it would take up to three months to bring the mines back to full production. The platinum price remains higher year to date, gaining more than 4%, while June palladium reached levels last seen early 2011 during the strike and is up some 14% this year. The strike has seen mining output in the African nation plummet leading to a contraction in the overall economy during the first quarter. South Africa and Russia combined account for close to 80% of global supply of palladium and 70% of platinum output which are mainly used to clean emissions in automobiles. |
| CHART: Silver price busts out of 3-year downtrend Posted: 20 Jun 2014 10:37 AM PDT With all the focus on the surprise move in gold on Thursday after months of subdued trade, it was easy to miss the action in silver. As is the norm, trade in silver was more volatile than gold, with the precious metal gaining 4.4% to trade above $20 an ounce for the first time in almost three months. The metal added another 1% on Friday, hitting $20.91 and bringing gains for the week to more than 6%. While gold broke through its 200-day moving average – a very bullish sign – on a long term horizon silver's breakout could turn out to be more significant. A number of fundamental factors are playing a part in the surge in precious metals, among them safe haven buying on the back of the Iraqi and Ukraine troubles and financial repression by global central banks. Ole Hansen, chief of commodity strategy at Saxo Bank says an equally important factor is the speculative positioning held in the market by tactical traders such as hedge funds and money managers. The change in sentiment among speculators towards silver has been astonishing. On May 27 for the first time in more than three years so-called managed-money entered a net short position – bets that the price will go down. Two weeks later short positions hit nearly 40,000 contracts or 200 million ounces. Hansen points to this chart that shows silver in the process of breaking a trend line which has been providing resistance ever since the metal reached $50 an ounce back in April 2011: Source: Saxo Bank |
| Caterpillar mining sales slump, stock still performs Posted: 20 Jun 2014 10:04 AM PDT
 Caterpillar Inc. (NYSE:CAT) said Thursday that its slumping retail machine sales in Asia suffered an even sharper drop in the three months through May due to ongoing spending cuts at mining companies. The world's largest construction and mining equipment manufacturer reported in a filing that resource industry sales in the Asia/Pacific region were down an average of 69% compared to the same period a year earlier. Such sales in Latin America fell an average of 63% in the period from their levels during the same three months the year before. But despite the dismal sales numbers, Caterpillar stock year to date is up almost 20% to $108.85, driven by cost cutting, dividend increases and the mining sector's cyclical nature, which has investors looking forward to a recovery. Commodity price falls have caused miners to reduce spending, hitting the Peoria, Illinois-based company hard. Bloomberg reports Caterpillar saying in April that sales of large mining trucks in the first quarter declined around 80% from their peak in 2012. Rolling 3 Month Retail Sales Statistics Figures from Form 8-K for CATERPILLAR INC. Retail sales of machines by geographic region for the 3-month rolling period ended as of the month indicated compared with the same period of the prior year. |
| Balmoral Resources: Two projects, one vision, proven share price performance Posted: 19 Jun 2014 05:03 PM PDT With two 100%-owned, shallow, high-grade properties in Canada churning out results and millions of dollars in the bank to keep the drills turning, Balmoral Resources is taking advantage of elevated nickel prices and a quiet junior mining backdrop to turn investors' heads. President and CEO Darin Wagner shares his focus for moving both projects forward. Management Q&A: View From the Top BTV/The Gold Report: Please explain the focus of Balmoral Resources Ltd. (BAR:TSX; BAMLF:OTCQX). Darin Wagner: Our principal focus is on our Detour Gold Trend project. That's located in the northern end of the Abitibi Greenstone Belt, in central Québec. We're right across the border from the massive Detour Gold deposit in Ontario, which is now happily producing multiple bars of gold every day. We control 80% of that belt and own the property outright. We're not beholden to anyone, which is a good thing in a tough market. BTV/TGR: Please share some of the results you've had. DW: We are focused on two principal projects. Martiniere is a high-grade gold discovery we made about two years ago. We have been working on building it out toward its initial resource. It's a multi-component system, so there are numerous shallow zones of high-grade gold mineralization. We also have an exciting new discovery on our Grasset property about 40 kilometers away. It is also 100% owned and another shallow, high-grade discovery, but this one is a little different. It's a nickel-copper-platinum group metals (PGM) discovery, which is very timely given the fact that the nickel market is on fire right now. It's one of the few commodities that is really performing well. The PGM kicker also helps since North American PGM sources are always highly sought after. BTV/TGR: Why is the nickel market so hot today? DW: The nickel market is always a relatively tight market. Economic nickel deposits are rarer than gold deposits. There are never a lot of nickel plays out there. More recently you've had commotion in Indonesia, which supplies over 20% of the nickel market, the restriction of supply similar to what we went through in Canada a few years back at Voisey Bay where the government wants smelting done in-country. Indonesia doesn't want to be shipping raw ore to China so it has banned exports. That's really constricted the nickel market. Recent problems in Russia and New Caledonia have tightened the nickel supply even more. This market is always close to balance so it doesn't take much to make prices increase 50%, as we have seen this year. BTV/TGR: How has Balmoral performed in the market relative to your peers? DW: Since January, we've had a great run. We came into the year off fairly heavy tax-loss selling in December at around the $0.35 mark. The stock has hit highs of $1.40; it is currently trading in the $1.30-$1.35 range. It's been a great win for an awful lot of folks, which is really nice in this market. It's meant that we have caught a lot of attention in a very quiet market. We used the same approach as with West Timmins Mining in 2008. We were one of the few companies actively drilling through the lows in 2008 and so one of the first to emerge in 2009. We took the risk to spend our money and stay active when others weren't. It's paid spectacularly for shareholders so far this year much as it did for our shareholders in West Timmins Mining previously. BTV/TGR: What is your financial position? DW: We're in strong financial shape. We have about $7.3 million ($7.3 M) in the treasury today. On June 20 we will close a bought-deal private placement, which we completed at a 59% premium to the market at the time it was announced. The private placement will bring in another $4.5M, and another $1.5M in warrants could come in between now and October. We are seeing them cashed on a semiweekly basis. That would bring us up over $13M. We're in great shape on the financial front. It means we can go and execute our programs. We don't have to be worried about capital. Certainly we're opportunistic on the capital front, but it just leaves us that much stronger than so many of our peers. BTV/TGR: What is the plan for the remainder of the year? DW: For the rest of the year our focus is on those two projects, the high-grade nickel and the high-grade gold. We'll have drills turning by mid-June on the nickel side, about two weeks after that on the gold side. Drills will be there through the summer so there will be aggressive drill campaigns on both. We look forward to filling up inboxes with good news. Our focus in this tough market is on growth and expansion. We have to continue to recognize that this is a difficult market, but if our drilling will drive valuation for the company we will be aggressive on that front. Both systems are still open so they can expand rapidly. With the winter drilling having returned spectacular results from both sides the BAR has been set high (pun intended) but we are very confident we can build on the new base here. BTV/TGR: How do you feel about where you are today as a company? DW: We couldn't be happier about where we are right at the moment. We recognize it's a tough market for the resource sector, but we're clearly outperforming by a large scale. We have two great projects and a land package of almost 700 square kilometers behind that to generate more opportunities. With the financing in place to turn the drills, we're looking forward to a really exciting summer. We hope to continue the successful roll that we've been on. BTV/TGR: Thank you for your time. Darin W. Wagner, president and CEO of Balmoral Resources Ltd., is a professional geologist with 20 years of exploration and corporate development experience. Wagner spent the first 10 years of his career with two of Canada's largest and most successful exploration and mining companies, Noranda (now Xstrata), and Cominco (now Teck), as a project geologist and manager in North and South America. Wagner became president of Sydney Resource Corp. in September 2005 and helped engineer the successful merger between Sydney and Band Ore Resources to form West Timmins Mining Inc. in 2006. He then served as a president, CEO, director and Qualified Person for West Timmins Mining through the discovery of the high-grade Thunder Creek Gold Zone in Timmins, Ontario, and the acquisition of West Timmins by Lake Shore Gold in an all-share deal valued at $424 million, which was completed in November of 2009. Wagner currently serves as a director of Druk Capital Partners and as a technical and/or corporate adviser to several other publically listed resource companies including MAG Silver Corp., Abzu Gold Ltd. and Metals Creek Resources Corp. Read what other experts are saying about: Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page. DISCLOSURE: Streetwise – The Gold Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part. Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported. 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