GLOBAL MINING OBSERVER Issue 82 INDEPENDENT COVERAGE OF THE MINING MARKETS May 2014 RIO TINTO is suing Brazil’s Vale over lost mineral rights in Guinea, saying it was Personalities involved in a $200m bribe to former mining minister, Mahmoud Thiam. Mr. Altius Pumps New Pervade Barrick Thiam has described the claim as “libelous” and “borderline comical.” Mega-Projects into Newmont Talks WHITEHAVEN COAL is relying on police helicopters and a dog squad to contin- Project Pipeline ue construction at its $760m Maules Creek coal mine in New South Wales, due to Hopes of a mammoth paper merger sustained environmental protests. Royalty group Altius Minerals has between gold majors Barrick Gold and pumped two new mega-projects into Newmont Mining, first leaked to the ECHO RESOURCES has hit bonanza gold grades at its Julius project in Western its project pipeline, including 100 per Wall Street Journal in April, publicly Australia, including 20m at 9.8 gold grams per tonne. cent of the CDP, a vast land bank in broke down this week after Barrick’s western Canada that was once part of ego-charged board appeared to let per- the Canadian Pacific Railway’s rambl- sonality clashes override any possible MARKET REPORT ing land estate. cost savings. The news follows a $1bn asset sell- Barrick, valued at C$23bn ($21bn) Walter’s Troubles Deepen as Prices off last year by embattled nickel miner on gold production of 7m ounces last Weigh on Debt Laden Groups Sherritt, which saw Altius emerge as year, kicked off the battle on Monday, Canada’s largest royalty group outside saying Newmont’s board had “decided of precious metals. to terminate” discussions, adding that CANADA: Subdued commodity prices LONDON: Gold miner Petropavlovsk In a sidecar agreement it bought 50 it still believed in the merger. are beginning to take their toll on debt dropped 14 per cent on Tuesday, after per cent of the CDP for $21m, covering Newmont, valued at $12bn on pro- laden groups, as cost cuts, debt extens- the company expressed doubts over its over 13bn tonnes of coal and potash duction of 5m gold ounces last year, ions and paired back operations prove ability to refinance its borrowing. resources plus small scale producing responded by releasing a private letter untenable without an uptick in pricing. According to its auditor, Petropavlo- royalties. Its co-owner, an Ontario- from its chairman to Barrick, saying US-based coal miner Walter Energy vsk, which has $310m of convertible based pension fund manager, had the that “our efforts to find consensus have today reported a quarterly net loss of debt maturing in February, looks set to right to match the terms or exercise a been rejected out of hand repeatedly.” $92m, double that of a year ago, after breach covenants on its loans this year. put option, which Altius angled for and Barrick’s co-chairman, the letter an 18 per cent drop in prices for its top “There are a number of ways we could has now agreed, granting it the entire GLOBAL MINING OBSERVER is a mining news bulletin. To receive future issues as they are released email: [email protected] said, had twice told Newmont the deal ranking coking coal to $127 per tonne. do the refinancing and we would need land package for $42m. was “dead”. The comment is thought to Interest payments topped $79m, as shareholder approval for some of According to insiders, the company have come from Barrick’s John Thorn- doubts over its ability to service debt of them,” said chairman Peter Hambro. has already been approached by prosp- ton, rather than founder Peter Munk, $2.9bn drove up borrowing costs. In a ective partners looking to develop the over the Easter weekend. sign of possible dilution to come, last AUSTRALIA: Copper group Antofaga- resource, with talks “well advanced.” If the leaking of merger talks was week Walter converted $35m of 9.9 per sta has reshuffled its exploration joint- Altius founder Brian Dalton has pre- meant as a pawn in Barrick’s efforts to cent debt into 3.2m shares, equal to 5 ventures, a hallmark of its exploration viously taken large land positions in realise talk of a Chinese investment per cent of its total equity. strategy outside of Chile. The company northern Labrador and in the Labrador into its aborted $8.5bn Pascua-Lama Indebted nickel juniors are likewise has struck an earn-in with ASX-listed Trough, leading to the spin-out of project, the strategy has backfired, with under the cosh. Anfield Nickel sold its Argonaut Resources over the Lumwana uranium group Aurora Energy and iron Barrick’s rough-handling of Newmont flagship asset in Guatemala last week West project in Zambia and has taken a ore junior Alderon, with combined instead showing it to be far from a to pay down debt, whilst copper-nickel 51 per cent share in Monax Mining’s capital gains of around $250m. face-saving deal with industry peers. junior PolyMet has extended a deben- Punt Hill prospect in South Australia. “Brian’s ability over the next 5 or 6 “As we contemplated further dialo- ture owed to trading giant Glencore. “The implications of this agreement years to make something of that invest- gue, we read in the continuing report- The $25m debenture carries accru- are considerable,” said Argonaut’s Lin- ment needs to be considered in the ing of the transaction in the financial ed interest of $7.2m. dsay Owler. Shares were unmoved. context of his $100m-plus successes in press a pointed characterization of our both the uranium and iron businesses,” company as ‘extremely bureaucratic one cornerstone investor says. and not shareholder-friendly,’” Newm- Altius, which holds 25 per cent of ont’s letter read, this time quoting Alderon and 8 per cent of gold royalty Munk, who retired from Barrick’s group Virginia Mines, has also said it is board on Wednesday at the age of 87 in “final stage” talks with the Govern- amid a string of outspoken interviews. ment of Newfoundland and Labrador Glencore’s chief executive Ivan Gla- over mineral rights to the monster senberg is who Munk admires most in Julienne Lake iron ore deposit. the mining industry, he told one Julienne Lake has a 1.1bn tonne reporter. “He’s taken Xstrata, he’s now resource at grades of 34 per cent and is very close to the BHP Billiton’s,” Munk surrounded by land already owned by said. “He’s going to eat them all.” the company. Combining the tenem- Newmont’s chief executive Gary ents is expected to produce a project Goldberg and Barrick’s chief executive capable of 21m tonnes per annum, Jamie Sokalsky, who was due to lead a which Altius intends to spin-out, retai- spin-out had a merger proceeded, em- ning a minority stake and a 3 per cent erged unsullied by the week’s drama. royalty on sales. “I’m an accountant,” Sokalsky recently Its Sherritt deal, which closed Mon- told the Toronto Star. “My wife is an day, is being funded by cash, a $140m accountant, my oldest daughter is an credit facility and a $65m equity offer- accountant and my youngest daughter ing announced this week. Shares have is studying to be an accountant.” WALTER’s operations, Alabama. The company has idled its mines in Canada risen 30 per cent since the deal was Shares in Barrick and Newmont are and plans to delist from the Toronto Stock Exchange. Goldman Sachs has first announced to C$14.00, equal to down by around two-thirds since 2011. downgraded the group to ‘sell’, saying it faces a “liquidity challenge.” the offer price. Nickel (US$ per tonne) Copper (US$ per tonne) COMMODITIES: Platinum prices are Gold (US$ per ounce) finding strong support from crippling 20,000 7,700 1,425 strike action in South Africa, now in its 14th week. Talks between union AMCU 17,750 7,275 and producers Anglo American, Impala 1,363 and Lonmin collapsed late last week, 15,500 6,850 holding prices above $1,400 per ounce. 1,300 “No work, no pay” applies for the dura- 13,250 6,425 tion of the strike, producers warned. 1,238 Strike action has so far cost employees 11,000 6,000 $600m in lost earnings and producers 1,175 Jan Feb Mar Apr May Jan Feb Mar Apr May over $1.4bn in lost revenue, betraying Jan Feb Mar Apr May the labour intensity of South Africa’s outdated platinum industry..