First Aboriginal mine opens in Northern Territory

Photo of bauxite by Goxxy via Flickr Creative Commons license.

Sunday was a proud day for Aboriginal people in Australia’s Northern Territory, with the opening of a new bauxite mine.

At a ceremony marking the official mine opening, Gumatj leader Galarrwuy Yunupingu poured a handful of bauxite into the hands of two Rio Tinto (LON:RIO) workers, Sky News reported on the weekend.

The occasion was historic because it’s the first mine in Australia that will be owned and operated by Aboriginals. The bauxite will be sold to Rio Tinto for export to domestic and international customers.

“As the first indigenous bauxite mine, fully owned, all through the supply chain, this is world breaking,” Rio Tinto Gove Operations general manager Linda Murry said in a news video on the opening.

The mine, located at Gulkula in Northeast Arnhem Land, is expected to provide around 65 full-time jobs for indigenous employees, with the goal to reach a staff of 100 employees by 2018. Two of the mine’s new employees are among 10 new graduates from the Gulkula Training College.

“I feel more proud than ever before,” Dr Yunupingu told Sky News, adding that the mine was only possible because his people had been allowed to make their own decisions about the use of their land.

Meanwhile in Queensland, a native title agreement between indigenous communities in the Gulf of Carpathia (the Gulf Communities Agreement (GCA)) and New Century Resources (ASX:NCZ) will stay in place, ABC News reported on Sunday.

The CGA, which made the Century Mine responsible for providing social and economic development for gulf communities while protecting and promoting cultural heritage, was considered landmark at the time it was negotiated.

“We won’t be seeking to make any changes to that agreement, so all the clauses that ceased operation when the previous owners stopped mining at Century will be renewed,” said New Century Resources head of corporate affairs, Shane Goodwin. The company expects to start production in the third quarter of 2018.

The Century zinc mine will open again thanks to a $52.9 million private placement raised by owner New Century Resources (ASX:NCZ).

The mine was the third largest zinc mine in the world prior to its closure in 2016. New Century acquired its interest in 2017 and undertook a feasibility study into the recommissioning of the existing processing plant. The results of the feasibility study, which included conversion of the Century tailings deposit from measured resources to reserves, was published on Nov. 28. It shows proven ore reserves of 77.3 million tonnes at 3.1% of zinc-equivalent. The plant is designed to process 507,000 tonnes per annum of zinc concentrate, or 264,000 tpa zinc metal.

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Bitcoin's mania parabolic

Bitcoin’s meteoric skyrocketing this year has been astonishing, captivating traders across the globe.  This once-obscure cryptocurrency has exploded into the world’s hottest market.  With fortunes being won on paper, everyone is talking about bitcoin.  But with its price shooting parabolic, unfortunately this wild ride has all the hallmarks of a classic popular speculative mania.  And those all end badly, totally collapsing.

In the annals of financial-market history, the word “mania” is never used lightly.  These are very-rare events where some market blasts higher so radically that it captures the popular imagination.  The dictionary definitions of mania include “an excessively intense enthusiasm, interest, or desire” and “a pathological state characterized by euphoric mood, excessive activity or talkativeness, and impaired judgment”.

The seminal book on popular speculative manias is Charles Mackay’s “Extraordinary Popular Delusions and the Madness of Crowds”, first published way back in 1841.  Manias are certainly nothing new, they have been periodically erupting for many centuries if not millennia.  Mackay’s incredible work is one of the few must-read books for every investor.  I’ve read it several times in my life, starting back in college.

Mackay’s title is brilliant, perfectly summing up manias.  They are truly extraordinary popular delusions, illustrating the madness of crowds.  Objectively, this year’s extreme bitcoin action definitely fits that bill.  I say this as a lifelong student of the markets.  Like the objects of lust in past popular manias, bitcoin and its underlying blockchain technology have real potential to change the world.  But that doesn’t justify its price.

As a techie, I started getting interested in bitcoin about 5 years ago, well after its birth in January 2009.  It was intriguing as the world’s first decentralized digital currency, an Information Age end run around the established government fiat-money systems relentlessly being inflated away by central banks.  Bitcoin’s never-unmasked creator going by Satoshi Nakamoto was a marketing genius, wrapping bitcoin in gold terminology.

The “coin” suffix implied bitcoin is money, rather than a virtual fiction with artificial scarcity.  And it used a novel distributed-ledger technology called blockchain.  That is a record of all bitcoin transactions that is broadcast and validated by the entire bitcoin network.  This ensures that bitcoins can be transferred with no counterparty risk, trust is irrelevant.  Maintaining the blockchain is called “mining”, again bringing gold to mind.

The countless computers all over the world participating in recordkeeping for bitcoin’s blockchain work to simultaneously solve complex cryptographic problems, or hashes.  This mining guarantees that all new bitcoin transactions are legitimate.  While it is computationally-intensive which requires much electricity, bitcoin ingeniously awards participating miners with newly-created bitcoins.  That’s a heck of an incentive today!

Somewhat like gold, the bitcoin supply grows at slow and ever-decreasing fixed rates.  Today there are around 16.7m bitcoins in circulation.  12.5 new ones are created every 10 minutes and distributed to the miners maintaining the blockchain.  That supply-growth rate will be gradually halved again and again until the bitcoin supply hits its hard-coded maximum of 21m bitcoins after 2110.  So bitcoin’s …read more

Zinc Explorer Finally Hits; How Big Can the Resource Get?


Source: The Critical Investor for Streetwise Reports 12/09/2017

The Critical Investor provides an update on this zinc explorer’s latest drill results.

Ayawilca project; drilling location

After several attempts in vain, it seems like Tinka Resources has finally found what it was looking for: mineralization on the highly anticipated target Zone 3. Drilling in Zone 3 isn’t easy as the terrain in this area is steep, and the drilling itself took longer than usual, causing earlier hole 091 to be abandoned after no less than six weeks of drilling it. The rig was also badly needed for resource drilling at the time, so it was of better use elsewhere (South Ayawilca). Notwithstanding this, CEO Graham Carman didn’t forget the significant green alteration appearing at the very end of the drill core of another abandoned drill hole in Zone 3, hole 081, caused by chlorite, which is a strong indicator mineral for zinc. He needed a definitive answer from Zone 3, and deepened hole 091 another 145 meters. This time he and his crew had more luck and finally hit economic grade mineralization. What this could mean for the resource will be explained in this update.

All presented tables are my own material, unless stated otherwise.
All pictures are company material, unless stated otherwise.
All currencies are in U.S. dollars, unless stated otherwise.

Please note: the views, opinions, estimates or forecasts regarding Tinka’s performance are those of the author alone and do not represent opinions, forecasts or predictions of Tinka or Tinka’s management. Tinka has not in any way endorsed the information, conclusions or recommendations provided by the author.

Things are getting interesting again for Tinka on the exploration front, after the company outlined the resource on South Ayawilca and updated the total Ayawilca resource estimate to 42.7Mt @7.3% ZnEq on a US$55/t cut-off (about 3.6% ZnEq cut-off grade). As Zone 3 is a large target, and mineralization is abundantly found at Ayawilca, I wasn’t too concerned about the first misses. The current resource already indicates a pretty economic and sizable project, but investors (and management) were hoping for more, which might have been one of the reasons the share price didn’t hold on to higher levels as much as anticipated after the resource update on November 8:

Ready for impact – four tech startups graduate Unearthed Accelerator 2017 at Demo Day

On Friday 1st December 2017, over 120 resources industry executives, METS professionals, government supporters, technology entrepreneurs and investors gathered at Advance Queensland’s The Precinct in Fortitude Valley, Brisbane for Unearthed Accelerator Demo Day 2017.

Accelerator Demo Day was a celebration of the startups, supporters and mentors that have made this year’s program so memorable, and a chance for the dynamic startups to show how much they have grown over the 6-month program and demonstrate their readiness for investment and success in the energy and resources sector.

Program Manager Anya Nova opened the event by welcoming guests and stating how proud she was of how far the startups have come since July, and how grateful she was to the 50+ industry mentors who have provided invaluable expertise and guidance to the startups.

Unearthed Founding Director Justin Strharsky then talked about the massive industry opportunity for startups in the energy and resources sectors.

“We truly believe in the power of entrepreneurship to change people’s lives. It is also fundamental to Unearthed that we believe in the unique opportunity on the back of which entrepreneurs can build sustainable businesses. Nearly $2T of impact is coming from digital technologies to the global resources sector by 2035,” said Strharsky.

Keynote speaker, Origin Energy Director [x], Felicity Underhill then spoke about their business challenges and how they are seeking to address these with innovation across the gas value chain. She explained how Origin became involved with Unearthed at the Brisbane hackathon in April this year, and how they sponsored the Accelerator program as a result of that experience.

“The Accelerator itself has had a number of benefits for us. It has been an awesome opportunity for our mentors to engage and energise as a development activity. It has helped us make connections internally. Sometimes the products that were less suited to our upstream business were better suited to our energy markets business. It has provided us access to new ideas. One of the things we have realised is that we know we are not going to have all the ideas to deliver our lower break-even price, so we really rely on Advance Queensland, the research institutions and you guys to come up with these great ideas for us, so thank you” said Underhill.

And finally, the four dynamic startups who graduated the program: Canaria, Flowpay, SiteSee and Modulr Tech showcased their incredible progress with pitches and live demonstrations of their transformative technologies set to impact mining and oil & gas companies.

Accelerator Demo Day concluded with networking, drinks and canapes.

The Unearthed Accelerator 2017 has been an incredible collaboration of a community Unearthed is trying to foster between industry, government and startups. Thank you to everyone who made the program such a success, especially the talented and inspiring startups: Canaria, Flowpay, Modulr Tech, and SiteSee, as well as our fantastic supporters: Origin Energy, Advance Queensland, River City Labs and METS Ignited, and last, but certainly not least the 50+ generous mentors who have contributed so much over the last 20 weeks.

SiteSee Sales Director and Co-Founder Lachlan …read more

Iron ore, copper prices recover after record Chinese imports

Copper and iron ore prices bounced back on Friday after customs data showing a sharp increase in imports by China as the country’s winter anti-pollution program cuts down domestic refinery and blast furnace production.

In brisk trading New York Comex copper for delivery in December added nearly 1% from Thursday’s settlement price touching a high of $2.9915 a pound ($6,595 per tonne). Copper is still down sharply for the week after suffering its worst one-day decline in almost three years on Tuesday.

The fact that copper concentrate imports climbed to a record high in November does not tally with this argument, however. It points rather to an ongoing high level of refined copper production in China

November customs data from China showed import volumes of unwrought copper rose sharply totalling 470,000 tonnes during the month, up more than 42% from October and the highest since December 2016. While imports were up 23.7% from November last year, cargoes are down some 5% over the first 11 months of 2017 to 4.24m tonnes compared to the same period in 2016. Full year imports in 2016 hit a record 4.94m tonnes.

Shipments of copper concentrate in October increased slightly from last year to total 1.78m tonnes in November, a new monthly record and up nearly 30% from October’s disappointing figure. Year to date Chinese concentrate imports are up moderately from last year. China consumes nearly 50% global copper output.

“Chinese traders appear to have bought more copper abroad because some copper smelters in the country have reduced their production for environmental reasons or because the traders expect production to be cut,” Commerzbank analysts said in a note.

“The fact that copper concentrate imports climbed to a record high in November does not tally with this argument, however. It points rather to an ongoing high level of refined copper production in China.”

Iron ore shipments set for another record year
China’s iron ore imports rose in November even as steel mills are cutting output as part of a government drive against pollution as some analysts said traders were stockpiling inventory

China consumes more than two-thirds of the seaborne iron ore market and produces as much steel as the rest of the world combined. Beijing’s war on smog has concentrated on the country’s steelmaking hubs near the capital where mandated cuts of as much as 50% came into effect in October.

Imports of high-quality iron ore fines and lump ore from Australia, Brazil and South Africa jumped 19% from October to 94.45m tonnes last month. November imports were up 2.8% from a year ago after topping 100m tonnes in a single month for the first time in September.

Total shipments for the first 11 months of the year are up 6% to 990m tonnes putting the country on track to top record imports in 2016 of just over 1 billion tonnes.

China’s iron ore imports rose in November even as steel mills are cutting output as part of a government drive against pollution as some analysts said traders were stockpiling inventory.

Iron ore imports “were not necessarily just by steel mills but could have been also purchased by traders,” said Helen Lau at Argonaut Securities in Hong Kong.

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Vale aims to halve debt to $10bn by 2019

Vale (NYSE:VALE), the world’s No.1 iron ore producer and Brazil’s largest private company, expects to halve net debt to less than $10 billion by 2019 and use the extra cash flow to hike dividends.

The Rio de Janeiro-based company, which earlier this week threatened to flood the market with iron ore if prices get too high, has made of reducing debt its number one priority particularly under the helm new chief executive Fabio Schvartsman.

Vale is ready to close its loss making nickel project on New Caledonia mid-next year if it has not found a strategic partner ready to buy a 20 to 40% stake in the mine.

To achieve such goal, the miner has been revising the future of unprofitable and non-core operations and even selling some of its former fleet of 19 Valemax vessels of 400,000 tonnes capacity.

In November, the company signed a 14-year $2.7 billion project-financing package with Japanese industrial and commodity trading giant Mitsui for a giant Mozambican coal mine and infrastructure project.

Vale is now looking for a partner for its lossmaking nickel project on the South Pacific island of New Caledonia. Speaking to journalists in London Friday, Schvartsman said he would have no hesitation in mothballing it if it could not find a partner ready to acquire a 20 to 40% stake.

He added it expected to close a deal on the matter by mid-2019, Reuters reported.

Vale has said it wants to diversify its investments and improve capital allocation, which should lead to stronger financial results over the long term.

For now, the miner expects financial expenses to drop to $550m- $660m by 2020 from $1.6bn- $1.7bn this year, while it forecasts Ebitda to hit anywhere between $13bn-$19bn over the period.

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Mongolian Gov’t can’t nationalize Erdenet Copper Mine — court

Mongolia’s Supreme Court has ruled the government is not allowed to nationalize a 49% stake little-known Mongolian Copper Corp (MCC) owns in a former Russian copper mine.

The Mongolian parliament had voted in February to seize MCC’s holding in Erdenet mine after the legislators’ own probe concluded the $400 million-sale by state-owned Russian holding company Rostec to MCC was unconstitutional. This, because it was agreed without the legislators’ approval.

Erdenet, which produces 530,000 tonnes of ore annually, is one of Asia’s biggest copper and molybdenum mines and a top tax contributor to Mongolia’s $12bn economy.

Industry sources quoted by Reuters said MCC would now seek compensation through international arbitration as it claims the Mongolian government breached international rules on investors’ rights.

Erdenet, which produces 530,000 tonnes of ore annually, is one of Asia’s biggest copper and molybdenum mines and a top tax contributor to the country’s $12 billion economy.

The Mongolian government, which owns 51% in the mine, has vowed to make things easier for miners and explorers as part of renewed efforts to attract foreign investment.

In May, the landlocked country bordering China and Russia decided to open more than one-fifth of its territory for mining exploration, hoping to shore up its finances following an International Monetary Fund-led bailout.

Since mining accounts for around 25% of Mongolia’s GDP and more than 80%vof exports, experts believe that increasing mining exploration could potentially raise the Asian nation’s GDP and economic security.

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Chile’s Codelco hiring for underground expansion of Chuquicamata

Chile’s Codelco, the world’s top copper producer, will begin Monday accepting applications from people interested to work in one of the company’s flagship projects — the much-needed underground expansion of its century-old Chuquicamata mine.

About 150 workers will be pre-selected as a result of the process, which closes on Dec. 24, local paper El Mercurio de Calama reported (in Spanish).

Chuquicamata is one of Codelco’s largest, but also oldest operations.

They’ll join the over 1,100 Codelco employees already working on the expansion project, originally approved in 2010, and modified earlier this year.

Taking Chuquicamata underground is one Codelco’s most important projects included an ambitious investment plan, originally pegged at $25 billion (now sitting at about $18bn), aimed at upgrading the company’s aging mines and dealing with dwindling ore grades.

The copper giant is expected to spend a total of $4 billion in the underground expansion, to be completed in 2019, and which will allow Chuquicamata to remain in operations. Once at full tilt, by 2025, the mine is expected to produce 1.7 million tonnes of the red metal a year.

Codelco generates around a tenth of the global copper supply and it has been one of the main forces behind Chile’s transition from one of Latin America’s poorest countries to one of the richest over the past 40 years.

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Canada’s Desjardins not scratching pipeline loans after all

Canada’s Desjardins, the largest association of credit unions in North America, has decided to lift a moratorium on loans for energy and pipeline projects, noting that it will weigh its clients’ environmental, social and governance practices in all future lending decisions.

The Quebec-based financial institution, a backer of Kinder Morgan’s expansion of its Trans Mountain pipeline, had been evaluating its pipeline-related policy for months. In July, it put such loans temporarily on hold, threatening the financing of high-profiles projects, including TransCanada Corp’s Keystone XL and Energy East and Enbridge’s Line 3.

Currently, the Canadian lender is one of 24 financial institutions that is backing a subsidiary of Kinder Morgan Canada (TSX:KML), majority owned by US-based Kinder Morgan.

The moratorium on loans for energy and pipeline projects is being replaced by the application of the ESG (environmental, social and governance) criteria, Desjardins said in a statement.

Desjardins is moving to a carbon-neutral state by offsetting its own greenhouse gas emissions through the purchase of carbon credits starting this year.

This means the institution will put in place four new practices to support Canada’s transition to a greener economy.

Effective immediately, the lender will purchase carbon credits to offset its greenhouse gas emissions. It has also vowed to focus on renewables for the direct investment of its own assets in energy infrastructure. The Desjardins Group pension plan is making this same commitment, it noted.

The financer also said it would ensure that by 2020, the carbon footprint of its own assets invested in publicly traded securities is 25% less than the average greenhouse gas emissions of the companies that make up the stock and bond market indices.

“Going forward, for all business decisions, Desjardins will apply new authorization criteria that take environmental, social and governance factors into consideration,” the company said.

Industry groups, including the Independent Contractors and Businesses Association (ICBA), which is Canada’s largest credit union federation, applauded the decision.

“This is welcome news for an industry that is under a lot of pressure and is often unfairly vilified,” Chris Gardner, ICBA president, said in a statement. “We congratulate Desjardins on making the right call and supporting Canada’s responsible resource development industry, the billions of dollars it generates, and the more than 400,000 Canadians it directly employs.”

He added the move is a message to the world that “Canada supports responsible development of our natural resources.”

“If we want the energy transition to succeed, it has to be a group effort. Now, more than ever, the financial industry needs to come together and set an example, by making responsible use of the money under our control,” Guy Cormier, President and CEO of Desjardins Group said.

Earlier this year, another heavyweight in the financing sector — the ING Group — announced it would not directly finance any of the four proposed oil sands sands pipelines (Trans Mountain expansion, Keystone XL, Line 3 and Energy East).

ING resolution followed Sweden’s largest pension fund — AP7  — decision to divest from TransCanada, as it considers building new pipelines incompatible with the Paris climate agreement.

Oil and gas investments currently …read more

Newmont gold output growth: 'We've only just begun'

Newmont expansion plans: 'We've only just begun'

Barrick Gold’s output fell to 5.5m ounces last year and the Toronto-based gold miner wil record another decline this year. Mined ounces could fall below 5m ounces next year. That’s down from a peak of 7.7m ounces in 2010 and 2011.

While Barrick has been getting rid of mines to tackle its debt load, world number two gold producer Newmont Mining is on an expansion drive coming close to topping 5m ounces for the first time in 2016.
Not included in Newmont’s  outlook are seven greenfields projects located in the Yukon, Ethiopia, Colombia, Australia and elsewhere
This week Denver-based Newmont upped estimates for next year to between 4.9m and 5.4m ounces which could well result in the company overtaking Barrick Gold in terms of output of 2018. Barrick has not updated its 2018 guidance since February but it’s not expected to differ substantially from the 4.8m to 5.3m it forecast at the time.

In the last five years, the company has sold $2.8 billion in non-core assets, bought the Cripple Creek & Victor mine in Colorado, built three new mines and executed nine expansions, Newmont chief executive Gary Goldberg told investors on Wednesday:

“Taken together, we’ve added more than two million ounces of gold production at all in sustaining costs of about $750 per ounce.”

Not included in Newmont’s current outlook are seven greenfields projects located in the Yukon, Ethiopia, Colombia, Australia and elsewhere and projects that could come to fruition within three years at its Ahafo mine in Ghana and Tanami operations in Australia.

By 2024, Newmont’s global share of mined production will be 5%, Goldberg said, compared with 4.4% in 2015. Asked if the company has room for more production increases and lower costs, Goldberg said: “We’ve only just begun.”

(Bloomberg contributed to this article)

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Massive Oyu Tolgoi mine to more than double gold production in 2018

Rio Tinto-controlled Turquoise Hill (TSX:TRQ) is expecting its majority-owned Oyu Tolgoi copper and gold mine in Mongolia to churn in 2018 more than double the amount of the precious metal forecast for this year, with operating costs dropping about 2.8%.

In an update that went almost unnoticed, the Canadian miner said earlier this week it expected the massive Mongolian mine to produce 240,000 to 280,000 ounces of gold concentrate next year, more than double the 100,000 to 140,000 ounces initially expected for 2017.

The Vancouver-based company also forecast the mine to generate 125,000 to 155,000 tonnes of copper in 2018, slightly less than the 130,000 to 160,000 tonnes predicted for this year.

Operating cash costs for 2018 are expected to be about $700 million, down from the $720 anticipated for this year as a result of lower concentrator and logistics costs.

The mine is expected to be world’s third-largest copper operation at peak production in 2025, with output of over 550,000 tonnes per year.

Capital expenditures for 2018 on a cash-basis are expected to be approximately $150 million for open-pit operations and $1.1 billion to $1.2 billion for underground development, Turquoise Hill noted.

Open-pit operations are expected to mine in Phase 6 in early 2018 and Phase 4 throughout the year, while it will also expects to process stockpiled ore in 2018.

The increased gold production relative to the 2016 technical report, Turquoise Hill said, can be explained by the splitting of Phase 4 into two parts (4A and 4B) and also by bringing production forward from future years, it noted.

Situated in the southern Gobi desert of Mongolia, about 550 km south of the capital, Ulaanbaatar and 80 k north of the border with China, Oyu Tolgoi is jointly owned by the government of Mongolia (34%) and Turquoise Hill (66%, of which Rio Tinto owns 51%).

The mine is expected to be world’s third-largest copper operation at peak production in 2025, with output of over 550,000 tonnes per year.

While Oyu Tolgoi is Mongolia’s highest profile asset, the country hosts a number of other copper, gold and coal mines and projects, including Canada’s Erdene Resource Development (TSX:ERD), the company that literally struck gold earlier this year after finding its new gold project was richer than previously thought.

Australian explorer Xanadu Mines (ASX:XAM) is also among the established companies in Mongolia, with its underway Kharmagtai copper-gold project, south-east of Ulaanbaatar, returning exceptional results in the first months of this year.

Searching for the next Oyu Tolgoi 

Aware of the country’s mineral potential, Rio Tinto and Turquoise Hill revealed earlier this year they are already exploring the area close to Oyu Tolgoi, following the country’s renewed efforts to attract foreign investment.

In May, the landlocked country bordering China and Russia decided to open more than one-fifth of its territory for mining exploration, hoping to shore up its finances following an International Monetary Fund-led bailout.

Since mining accounts for around 25% of Mongolia’s GDP and more than 80%of exports, experts believe that increasing mining exploration could potentially raise the Asian nation’s GDP and economic security.

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