Silver Wheaton doubles gold stream at Vale mine

Posted: 02 Mar 2015 07:29 PM PST

Silver Wheaton (NYSE:SLW, TSX:SLW) has doubled down on the gold stream it currently has in place at Vale's (NYSE:VALE) Salobo mine in Brazil.
The Vancouver-based company said on Monday that it will pay $900 million for the right to buy an additional 25 percent of future gold production at Salobo, adding to the 25 percent it acquired in 2013. The deal will boost SLW's 2015 output to 230,000 ounces. Under the agreement, Silver Wheaton will be entitled to 50 percent of all gold produced at the copper mine, over its lifetime, for the lesser of $400 an ounce, adjusted for inflation, or the market price when the gold is produced.
"The Salobo mine is one of Silver Wheaton's cornerstone assets and we are fortunate to have the opportunity to double our gold production from this high-quality mine," Randy Smallwood , Silver Wheaton's President and CEO, said in the press release.
SLW also used the press release to announce an increase in production guidance. Silver Wheaton now forecasts 43.5 million ounces of silver-equivalent production in 2015 will grow to 51 million silver-equivalent ounces, in 2019. Gold as a percentage of production is expected to grow by 40 percent over the next five years, the company states.

'Worst bear market in decades': Kaiser at PDAC

Posted: 02 Mar 2015 06:09 PM PST

The Dr. Doom of mining has spoken, and as expected, the news isn't good.
Mining analyst John Kaiser, publisher of kaiserbottomfish.com and a frequent commentator at mining investment conferences, told the Prospectors and Developers Association Conference in Toronto that a turnaround in the slumping mining sector isn't expected until 2017.
"We are now in the worst bear market in decades," Kaiser told the audience assembled at PDAC.
The mining investment guru holds the least hope for junior miners. These small companies are dependent on buyouts from larger mining firms for growing their stock prices, but according to Kaiser, the buyers are disappearing. As explained by The Toronto Star, which covered the event:

That's because a $140 billion junior buyout "binge" in recent years has left the seniors with ample development inventory, and the big financial institutions need higher metal prices to care about advanced resource juniors "and have little interest in earlier stage exploration juniors," Kaiser said.

In the absence of a big discovery such as the Voisey's Bay nickel find in Newfoundland or the Ekati diamond deposit in the Northwest Territories, the small-cap mining firms that are struggling to survive will need to rely more on retail or individual investors to weather the storm – and lots more of them, he said.

Kaiser has of course been down this road before, arguing in several past conferences that the Canadian venture exchange which hosts most junior companies is broken due to overregulation and that big banks have consolidated the brokerage business, to the detriment of the small-cap explorers.
CEO.ca recently ran a video interview of Kaiser, in which he states that the way to bolster the sector is to abolish Accredited Investor Exemption rules that restrict non-high-net-worth individuals from participating in private placements, the main source of junior mining financing.
Crowdfunding has also been suggested as a way to increase investor participation in the moribund junior space.
Watch the video here

Canadian miners the world’s top buyers of assets in 2014

Posted: 02 Mar 2015 10:30 AM PST

Canada led the acquisition of mining and metals assets in terms of volume last year, and it was a close contender in terms of value, a study released Monday shows.
Despite the deals boom, overall mergers and acquisitions globally continued to decline on both a volume and value basis in the sector compared to 2013, according to EY's Mergers, acquisitions and capital raising in mining and metals: 2014 trends, 2015 outlook.
"A few big deals in Canada in 2014 put us at the top in terms of deal volume," says Bruce Sprague, EY's Canadian Mining & Metals Leader. "But the reality is that the majority of the deals were junior-level strategic mergers aimed at conserving cash."
Canada scored the top gold deal in 2014, with the joint acquisition of Osisko Mining Corp by Yamana Gold and Agnico Eagle Mines for $3.6 billion. The next largest gold deal was the UK's Polymetal International's acquisition of Kazakhstan's Altynalmas Gold (Kyzyl gold project) for $619m.
"Gold remains the most-targeted commodity by volume," says Sprague. "We saw that play out right here in Canada. The majority (88%) of gold deals, however, were valued at less than $50m, reflecting distress among gold juniors on the back of squeezed margins."
Companies in a quandary
Still, in its outlook EY says long-awaited funding from private capital funds should begin to deploy across the sector as sellers align their value expectations with the market, and assets continue to be sold by the large cap producers in search of optimum portfolios.
"The deals we're seeing now are a lot of mergers between equals and consolidation opportunities benefiting both parties," explains Sprague. "The large cap producers are more focused on looking to either sell or spin off non-core assets."

Surce: E&Y's Mergers, acquisitions and capital raising in mining and metals: 2014 trends, 2015 outlook.

EY says current market conditions are putting mining companies in a quandary – investing for the next stage of growth is potentially unpopular with shareholders, but it could prove to be a masterstroke if they want to fully capitalize on the next uplift in the cycle.
"For the past few years, companies have been focused on cost-reduction programs, internal capital allocation and productivity measures," notes Sprague. "Moving forward, they need to have a broader focus on total shareholder return and make capital decisions that will support long-term value creation."
The full report is available here.
Image: Canada Day's celebrations in Ottawa

American junior finds rare earth deposit on old gold concession

Posted: 02 Mar 2015 06:08 AM PST

New World Gold Corporation (OTC Pink: NWGC), a gold mining and milling junior with existing operations in Ecuador and Peru, may diversify its business after discovering a rare earth deposit in one of its old gold concessions.
While the Florida-based company has not disclosed the location of the finding it says that since the discovery several companies, including a Chinese group, have approached them with offers.
From the press release:

Independent analysis results indicate that the rare earth mineral discovered is Antimony. Preliminary testing results indicate that there are significant economic reserves present on the concession.
Since discovery of the antimony deposit, the Company has had significant interest in the deposit. The Company is negotiating with several companies including a Chinese group to option and then develop the deposit. The British Geological Survey reported in 2005, The Peoples Republic of China was the top producer of antimony with approximately 84% of the worlds share followed at a distance by South Africa and Bolivia. Roskill Consulting estimates that primary production of Antimony shows that in 2010, China held 76.75% of the world's supply of antimony followed by Russia with 4.14%. Antimony was identified as one of 12 critical raw materials for the EU in a report published in 2011, primarily due to this lack of supply outside China.
Processed antimony is used as an alloy to strengthen tin and steel. Antimony compounds contain fire retardants found in many commercial and domestic products like stoves and refrigerators. There is an emerging application for the use of antimony in microelectronics.

Cecilia Jamasmie

Email: cjamasmie@mining.com
Cecilia Jamasmie on

Cecilia Jamasmie, news editor at MINING.com, has over 15 years of experience in print media, TV, online media and public relations. She specializes in Corporate Social Responsibility (CSR) and the Latin American market. Cecilia has been interviewed by BBC News and CBC among others. She has also been syndicated by Forbes, Seeking Alpha and BIV. She holds a Master of Journalism (MJ) from the University of British Columbia, Canada, and she is currently based in Halifax, Nova Scotia.

Greece deals major blow to Eldorado’s Skouries mine

Posted: 02 Mar 2015 06:00 AM PST

Skouries — Grading and flotation buildings. (Image courtesy of Eldorado Gold)

Contrary to what it said last week, Greece leftist new government has revoked a key approval that Canada's Eldorado Gold Corp (TSX:ELD) (NYSE:EGO) needs to complete its Skouries project, the company said Monday.
The move, which may force the company to reconsider its investment plans, sent the company's shares plummeting.
Eldorado was trading 8.6% lower to $6.59 in Toronto and almost 7.7% to $5.36 in New Yorkat 9:51 am ET.
"The company believes the decision of the ministry has no legal basis and will, if necessary, act to protect the legal rights of the company, employees and stakeholders," the miner said in today's statement.
Locals divided
Skouries has had locals divided since early 2011, when the Vancouver-based firm's subsidiary Hellenic Gold received government approval to mine in the northern peninsula.
Some claim the mine, owned 95% by Eldorado, may hurt tourism and the environment, while others believe the operation is good news for Greece because it will generate new jobs and bring hundreds of millions into the struggling economy.
Truth is Skouries was the flagship project of the last government's foreign investment drive and, for many, remains a test case that would reveal whether Greece could protect foreign investors despite local opposition.
Eldorado has invested more than $450 million since 2012 on construction and development of the Skouries and Olympias mines in Greece, and had planned to invest another $200 million this year to advance construction at Skouries.

Poor market conditions put major chill on global exploration

Posted: 02 Mar 2015 05:04 AM PST

Poor market conditions put chill on global exploration

Global exploration spending dropped 26% in last year, compared with 2013, as several juniors threw in the towel and producing miners slammed the brakes on capital and exploration expenditure to improve their margins, a study released Monday shows.
According to the latest World Exploration Trends report from SNL Metals & Mining, the global industry's total budget for nonferrous metals exploration was US$11.4 billion in 2014. This contrasts with the US$15.2 billion allocated in 2013 and the record US$21.5 billion budgeted in 2012.
The rout in commodity prices to the lowest in 12 years will spur deeper spending cuts by the world's biggest mining companies in Africa, hurting a region more reliant on mineral exports than any other on the planet.
Miners will scale back spending by $20 billion this year, according to Macquarie Group Ltd., as they cut growth plans amid waning demand for raw materials. With projects planned during the decade-long commodities boom now being shelved, Africa is likely to bear the brunt of the cuts.
In Australia, where major miners have been shelving or unloading projects and mines, experts are expecting a boom of mergers and acquisitions, especially in the gold sector. Analysts argue Down Under's gold mines have largely become more profitable during the past year on the back of the falling local dollar and a trend for miners to axe costs.
SNL's 2014 exploration estimate was based on information collected from more than 3,500 mining and exploration companies worldwide, of which almost 2,000 had exploration budgets reported in the study.
Those companies (each budgeting at least US$100,000) together allocated US$10.74 billion for nonferrous exploration, which SNL estimates covers 95% of worldwide commercially oriented nonferrous exploration spending. Adding estimates of budgets that SNL was unable to obtain, the 2014 worldwide total exploration budget reached US$11.36 billion.
Image by Sumit buranarothtrakul | Shutterstock.

Silver Wheaton doubles gold stream at Vale mine

Silver Wheaton doubles gold stream at Vale mine

Cecilia Jamasmie

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