Deficit should keep palladium price on the boil

Prices for March palladium went 1.18% up in late afternoon on Friday as the metal was trading at $2,634 an ounce on the Comex market in New York.

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Earlier in the week, palladium futures for March delivery climbed 7.8% at $2,497.60 an ounce on the New York Mercantile Exchange on Wednesday and prices kept rising after the market closed, touching $2,504.50, the highest in 30 years.

Tight supplies for palladium have continued to feed its price rally. A report from chemicals company Johnson Matthey estimated that the supply deficit for the metal widened to nearly 1.2 million ounces last year and is expected to deepen this year, as stricter emissions legislation in China and Europe will drive up vehicle palladium loadings.

Johnson Matthey put the 2019 supply deficit at 1.2 million ounces and said it was “likely to deepen in 2020”

Rhodium is also expected to deepen its deficit. The metal was traded at $13,100 per ounce on Friday.

Scotiabank reports that even with the coronavirus crisis continuing to weigh on the “Detroit of China” (Hubei) and while the quantity of demand being either lost or delayed remains uncertain, overall palladium and rhodium demand will not change.

According to Scotiabank, synchronized repricing in rhodium and palladium and the lack of viable substitution marks a new cycle – an era of higher prices versus the previous decade, but also with higher volatility. The bank also reports that palladium above ground known stocks have reached decade lows.

“There is nothing on the horizon to change the direction of these shortages,” Neal Froneman, the chief executive officer of Sibanye-Stillwater said at a presentation about the company’s results in 2019 on Wednesday, referring to palladium and rhodium.

“The way I put it, the CEO of an auto company won’t get fired for spending $20 on a vehicle on a bit more palladium. What they might get fired for is not meeting their emissions targets. That’s the critical issue,” Anglo CEO Mark Cutifani told the Financial Times.

Thefts of catalytic converters

Meanwhile, thefts of catalytic converters jumped in London – from 867 in 2015 to 8,248 in 2019, according to the Financial Times. Metropolitan Police urged car owners to be vigilant and consider buying protective sleeves for their catalytic converters.

Catalytic converter contain precious materials including platinum, rhodium and palladium (Image from Wikimedia commons)

Other cities in North America are dealing with the same problem. In Vancouver, 298 thefts were reported in 2019, Global News reported. Global News also said thefts spiked in Calgary, with just over 200 stolen last year, compared with 48 in 2018.

In Berkeley, California, police released a map showing over two dozen thefts of this kind since the beginning of 2020.

Stolen catalytic converters are sold on the black market for an average of …read more

Wyoming vs Washington: Interstate showdown over last major coal export project

Wyoming and
Montana filed a U.S. Supreme Court motion last month against the state of
Washington for blocking access to the last major coal export project on the
West Coast, impeding the states’ ability to get their coal to Asian markets.

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When Wyoming Governor Mark Gordon announced the legal action over blocking the export terminal in Longview, it had been long anticipated by lawmakers who see the west coast terminal as crucial to bringing Powder River Basin coal to international markets.

In an industry shakeup, Wyoming and Montana’s motion says it’s “unconstitutional discrimination against a proposed coal export terminal.”

Washington says the Millenium bulk terminal failed to meet water quality and other environmental standards.

The case breaks down into two parts: A state’s right to impose environmental laws versus constitutional rights to access commerce

The Millennium Bulk Terminal hit a major hurdle when the Washington Department of Natural Resources denied a necessary permit for construction on environmental grounds. The Washington State Court of Appeals in August upheld the state’s choice to deny the required state-owned land permits for the terminal last year, the Casper Star Tribune reported.

The Powder River Basin in northeast Wyoming and southeast Montana is America’s’ top coal-producing region. 47% of country’s coal comes from Wyoming and virtually all coal in Wyoming is thermal.

Matt Micheli, a Cheyenne, Wyoming-based attorney environmental and energy partner at environmental law firm Holland & Hart says the case breaks down into two parts: A state’s right to impose environmental laws versus constitutional rights to access commerce.

“Certainly, here in Wyoming we saw the
decline of coal more than anyone else in the country. Our history doesn’t get
told as much Appalachia and West Virginia, but we produce more coal than any
state in the country… For a while we produced almost as much coal as the rest
of the country combined.”

“We are feeling the decline here mightily. You talk about coal miners; you’re talking about nameless people. For us, that’s our family, friends, it’s a real thing real crisis we face, and it also has an impact on our state finances. We are so dependent on coal and oil and natural gas from somewhere between 65% of our state budget comes from those three fossil fuels so we feel it on a lot of different levels,” Micheli told MINING.COM.

The Powder River Basin in northeast Wyoming and southeast Montana is America’s’ top coal-producing region

Micheli said Wyoming believes that coal is an important part of the state’s energy security and its future.

“They continue to build coal fire plants in Asia. China continues to burn coal. They are going to burn coal from somewhere.”

Micheli said coal from Wyoming and Montana is the cleanest coal that China can possibly get to burn.

“I think for the environment groups coal
has become a bad word, in the environment community they just want to block any
use of the coal so… it helps them to feel good blocking coal from being shipped
internationally. …read more

Brazil mining royalties jump 40% to record high

Even with Vale (NYSE: VALE) posting this week a loss of $1.68 billion in 2019, Brazil set a record on royalties received from mining companies.

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Brazil received $1.03 billion in mineral royalties in 2019, according to the Brazilian Mining Agency. The royalties paid by mining companies were 48.3% or $700 million, higher than the previous year and 145% higher than 2017, when the government changed the way it charges the mining sector.

Until 2017, royalties were charged on net billing, discounting transportation and logistics costs, which decreased the amount owed. Royalty is now charged on the gross revenue from the sales.

Brazil’s royalties collection 2019. Figures in Brazilian Real (1 BRL to USD = 0.239805) – Credit AMIG

According to the Association of Mining Municipalities of Minas Gerais and Brazil (AMIG), iron ore was responsible for 76% of all royalties received, boosted by high exports. Gold royalties increased 50% due to the increase in production and the price of the metal on international markets.

Vale was the company that paid the most in royalties with $566 million – or 54.8%.

In a research note, AMIG economist Luciana Mourão said that in 2020, the collection of royalties will depend especially on China’s demand for iron ore after the coronavirus outbreak.

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Nemaska Lithium CEO steps down

Nemaska Lithium CEO Guy Bourassa has stepped down. He would leave the management team and vacate his seat on the board with immediate effect, the Quebec-based lithium developer announced Friday.

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“Given the restructuring the corporation is undergoing and the current market conditions, we mutually agreed that it was in the best interest of the corporation to undertake the next steps with a new approach and renewed leadership,” said chairperson Jacques Mallette.

Nemaska is currently restructuring under the supervision of the Superior Court of Quebec and PricewaterhouseCoopers, as monitor of its business and financial affairs

Nemaska is currently restructuring under the supervision of the Superior Court of Quebec and PricewaterhouseCoopers, as monitor of its business and financial affairs, after the company entered creditor protection in December.

A sale and investor solicitation process will begin later this month, with a target of closing a transaction by mid-August. Mallette and the corporation’s management team will oversee the restructuring operations.

Nemaska’s Whabouchi project is facing cost overruns of about $300 million. It tried to negotiate a deal with mine financier, the Pallinghurst Group, to secure up to C$600 million. However, having failed to reach a deal, the company suspended operations in October and laid off all but 30 employees.

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Vale posts $1.7 billion loss for 2019

Vale (NYSE: VALE) posted a loss of $1.68 billion in 2019, compared to a net income of $6.860 billion in 2018, the Brazilian miner reported on Thursday.

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The $8.5 billion decrease was mostly driven by provisions and expenses related to the Brumadinho dam rupture that killed more than 230 people in January 2019.

“We have… an effective reparation program, relevant governance and operational improvements, and a decharacterization – process by which the structure of a dam is reincorporated into the relief and the environment – plan for our upstream tailings dams under accelerated implementation” said CEO Eduardo Bartolomeo in the media release.

“We are de-risking Vale. We are paving the way to make our business better, safer and more stable,” he said.

Vale reported a $1.56 billion net loss in the fourth quarter

Vale reported a $1.56 billion net loss in the fourth quarter. A Refinitiv poll of analysts had predicted a net profit of $2.61 billion.

That miss was largely due to a $2.51 billion impairment at its nickel mine in New Caledonia, where Vale has revised down expected production levels due to “challenging issues” related to “production and processing.”

Vale also recognized a $1.69 billion charge at a coal mine in Mozambique for similar reasons and a previously announced $671 million charge to “decharacterize” some dams similar to the one that burst last year.

Earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for some one-off items, totaled $3.53 billion. Vale said EBITDA was hit by about $900 million in Brumadinho-related provisions.

(With files from Reuters)

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IAMGOLD posts loss for 2019, stock drops

IAMGOLD (TSE: IMG) posted a net loss from continuing operations of C$373.3 million on revenues of $1.1 billion after recording a $395-million impairment charge related to its Westwood mine in Quebec.

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Westwood experienced increased seismic activity in the fourth quarter and the company had to adjust mining methods and the mine plan at the operation, 40 km east of Rouyn-Noranda.

Across all its operations in 2019, IAMGOLD produced 762,000 ounces of gold at total cash costs of $907 per ounce or all-in sustaining costs (AISC) of $1,124 per ounce, down from the 882,000 ounces at total cash costs of $793 per ounce or AISC of $1,057 per ounce in 2018.

“2019 was a year of significant challenges for IAMGOLD,” said president and COO Gordon Stothart in a release.

The company expects the second half of 2020 to be stronger, as mill upgrades at its Essakane mine in Burkina Faso should be completed in the first half. Grades at its Rosebel mine in Suriname are also expected to rise with the ramp-up of the Saramacca open pit about 25 km to the southwest.

For 2020, IAMGOLD expects to produce 700,000 to 760,000 ounces of gold at AISC of $1,100-1,150 per ounce.

“Iamgold is currently swimming against the tide of current public opinion, but we expect that the advancing project pipeline will be attractive to investors seeking operating leverage to gold prices”

Jackie Przybylowski, mining analyst, BMO Capital Markets

In December, the company agreed to sell its 41% interest in the Sadiola gold mine in Mali.

Jackie Przybylowski, a mining analyst at BMO Capital Markets, said in a research note that moving forward with new greenfield projects, such as Côté in Ontario and the Boto gold project in Senegal, will improve Iamgold’s geographical diversification and could reduce overall average operating costs.

“Iamgold’s Q4 earnings release and yesterday’s reserve and resource update underscored that Iamgold is not only motivated to grow, but that growth is necessary for the company,” Przybylowski said in a note, adding that investors currently want to see higher dividends returned to shareholders rather than investment in production growth.

“Iamgold is currently swimming against the tide of current public opinion, but we expect that the advancing project pipeline will be attractive to investors seeking operating leverage to gold prices.”

BMO has a market perform rating on the stock and a one-year target of $4 per share.

At market close Thursday, Iamgold’s stock was down over 7%. The day’s trading volume reached over 10.9 million, more than twice the daily average. The company has a $1.37 billion market capitalization.

(A version of this article first appeared in the Canadian Mining Journal)

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MINERAL ID: New field spectrometers from Spectral Evolution

Spectral Evolution will introduce the oreXplorer and oreXpert portable field spectrometers at this year’s PDAC convention in Toronto. The rugged units allow real-time mineral analysis.

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The company’s portable spectrometers and EZ-ID mineral identification software allow users to identify over 1,100 minerals within seconds for more efficient exploration programs.

In the core shack, users can map alteration and minimize unnecessary assays, reduce time spent logging core and build a digital archive of the results.

The units are designed for field work with a rugged chassis, no moving optical parts and a metal-clad, field-replaceable fiber optic cable.

They feature one-touch operation with auto-dark current and auto-exposure. The spectrometers are Bluetooth-enabled and also support USB connectivity.

The following spectrometer models are available for mining applications:

The oreXpress, allowing quick and reliable mineral analysis with a standard resolution of 3 nanometres;The higher-resolution oreXplorer, with higher resolution and sensitivity; andThe oreXpert, the highest-resolution field spectrometer on the market, which allows the distinction of trace minerals and features that help with mineral unmixing.

The company’s selection of probes and light sources allows users to analyze minerals in a variety of forms, including core samples, chips and powders.

(This article first appeared in the Canadian Mining Journal)

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Canada vs US: how exchange rates impact mining salaries

Employment in the mining industry is highly specialized and as a result, retaining skilled staff can be challenging. Skilled employees are often the most valuable asset at a mine, and can run anywhere from 25% to 50% of the daily operating costs.

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One of the top reasons that employees leave for greener pastures is how much they are paid.  Individuals such as geologists, engineers and top line supervisors are in demand and can often find new opportunities fairly quickly. Mines compete for these specialized employees, often recruiting from other countries. As a result, the mining workforce is highly mobile.

Once the exchange rate between the two countries is factored in, the salaries for Canadian mine superintendents and geologists falls far short of their US counterparts beginning in 2015

According to CostMine’s 2019 mine survey results of US and Canadian mines, employees at Canadian mines received a 2 to 4% salary increase for the year, while their US counterparts reported an average increase of 2.7%. These statistics are derived from the results of two surveys completed last year by CostMine.

Taking a longer view, we analyzed the salaries for Canadian and US mine superintendents and mine geologists over the last 10 years, derived from our previous surveys. The charts below show the average annual salaries for these titles at metal mines in Canada and the US, from 2009 to 2019.

Source: Canadian Mining Journal

Source: Canadian Mining Journal

In 2009, the salaries were very similar for these professionals between the two countries. It is clear from the charts, that beginning in 2011, US salaries for these titles lagged behind their Canadian counterparts. Our studies show that while salaries expressed in their own currencies have steadily increased over time, once the exchange rate between the two countries is factored in, the salaries for Canadian mine superintendents and geologists falls far short of their US counterparts beginning in 2015. As shown below, the strengthening US dollar shows the impact on Canadian salaries when expressed in US dollars.

From 2010 to 2019, salaries for mine superintendents have increased by 21% in the US, and 23% in Canada. Though, for Canadian mine superintendents, when you factor in the exchange rate, their salary is 5% less than in 2010, when expressed in USD.

Salaries for mine geologists show a similar trend over the last ten years, with the exception of a slight downturn for US geologists in 2019. Even with the decline in 2019, a geologist in the US enjoyed a 25% increase over the last ten years, while Canadians saw a 21% increase.  However, as with mine superintendents, when you factor in the exchange rate, Canadian geologists are making almost 7% less than they were in 2010 in USD equivalents.

Source: Canadian Mining Journal

Source: Canadian Mining Journal

Are Canadians in the mining industry keeping up with inflation?

According
to Statistics Canada, inflation increased by 16.7% from 2010 to 2019, while
mining wages increased an average of 21%.

So while Canadians may be at a disadvantage compared to their …read more

Rare look inside Bank of England’s gold vaults

The Bank of England’s gold vault has more than 400,000 gold bars – worth roughly $257 billion. If you stacked them all on top of each other, they would be the same height as 46 Eiffel Towers.

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They hardly ever let anyone in to film, but the BBC’s Frank Gardner has been given access.

The vault was turned into a staff canteen during WW2. There have been no heists since the bank’s establishment in 1694.

(Filmed and edited by James Wignall and Erica Brown)

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Calibre Mining posts first results as a producer

After completing the acquisition of the El Limon and La Libertad mines in Nicaragua from B2Gold last year, Calibre Mining has reported its first quarterly results as a gold producer.

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The company reported fourth-quarter production of 33,506 oz. gold at all-in sustaining costs of $959 per oz. Calibre posted a net income of $3.1 million for the quarter on revenue of $57.8 million with an average realized gold price of $1,481 per oz.

For 2020, Calibre forecasts production of 140,000-150,000 oz. gold (70,000 to 75,000 oz. from each of its mines) at total cash costs of $840-890 per oz. or all-in sustaining costs (AISC) of $1,020-1,060 per oz.

The transaction with B2Gold, worth $100 million, closed in October.

In 2020, Calibre plans to advance cost saving opportunities, as well as optimizing and improving production efficiencies at El Limon and La Libertad. This will include managing the mines as integrated operations through implementing a “hub-and-spoke” approach, rather than operating them as stand-alone entities, reviewing supply chain synergies and optimizing contracted services.

El Limon is in Leon department, about 100 km northwest of the capital of Managua, and La Libertad is in Chontales department, about 110 km east of Managua.

In addition to the two producing mines, the company is focused on advancing its Pavon gold project in Matagalpa department, 227 km southwest of El Limon. Pavon hosts indicated resources of 230,000 oz. gold in 1.4 million tonnes grading 5.16 g/t gold, plus additional inferred resources. The company wants to develop the project as an open pit and truck higher-grade material to an existing processing facility. About 10,000 metres of drilling is planned for the project this year.

With a focus on higher margin ounces, Calibre will look at opportunities to haul higher grade ore from various sources, including Pavon, to the La Libertad mill.

The company also has six drill rigs at La Libertad and El Limon focused on resource expansion.

(This article first appeared in the Canadian Mining Journal)

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Wesdome extends Kiena Deep A zone

Drilling at Wesdome’s (TSX:WDO) Kiena gold complex in Val D’Or, Quebec, has extended the high-grade Kiena Deep A zone downdip and confirmed the limits of existing mineralization.

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Drill highlights from stepout work, which extended the A zone by 100 metres downplunge to a total of 830 metres, include 10 metres of 114.8 g/t gold and 17.2 metres of 25.3 g/t gold.

Highlights of infill drilling include 9.2 metres of 66.8 g/t gold and 10.5 metres of 106.3 g/t gold.

Wesdome has also completed an exploration ramp, which will provide drill platform locations to test the up-plunge extensions of the Deep A zone

Seven drills are currently working on the Kiena Deep A zone with an updated resource estimate for the property expected later this year. Work is ongoing on a preliminary economic assessment evaluating a potential re-start of mining at Kiena, expected in the second quarter.

Wesdome has also completed an exploration ramp, which will provide drill platform locations to test the up-plunge extensions of the Deep A zone.

“Not only does it (the ramp) provide optimal drill platforms for testing the up-plunge extension of the Kiena Deep A zone, the ramp would also serve as a haulage drift for any future production from this area as it accesses the main shaft level dump pocket,” Duncan Middlemiss, the company’s president and CEO, said in a release. “Any additional resources found in this area could greatly enhance the project restart time line and reduce initial capital investment.”

This year, the company plans to drill 75,000 metres at Kiena and continue with underground development as well as metallurgical and engineering studies ahead of a potential mine restart.

Current indicated resources for the Deep A zone stand at 679,200 tonnes grading 18.55 g/t gold for a total of 405,100 oz. with additional inferred resources of 676,300 tonnes at 15.27 g/t gold for a total of 332,000 oz.

The property features a 2,000 t/d permitted mill, as well as a shaft and ramp system. The mine produced an estimated 1.8 million oz. between 1981 and 2013 at a head grade of 4.5 g/t gold.

Earlier in February, Wesdome also released exploration results from its Eagle River mine in Ontario, where drilling extended the Falcon zones as well as the 303 Lens within the 300 East zones. The 300 East zones are a potential source of short- to medium-term mill feed while Falcon is now a potential future near-mine resource. Exploration at Eagle River is ongoing with five drill rigs.

This year, the company expects to produce 90,000 oz. to 100,000 oz. of gold, primarily from the Eagle River underground mine near Wawa.

(This article first appeared in the Canadian Mining Journal)

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Nighthawk’s stock jumps on Goldcrest drill results

Nighthawk Gold (TSE: NHK) released results from recent drilling at the Goldcrest sill, part of its Indin Lake property in the Northwest Territories that also hosts its flagship Colomac Main project.

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The company drilled seven holes totalling 2,190 metres to follow up on areas identified during its three previous drill campaigns and to target resource expansion opportunities in the Goldcrest South part of the property. The Goldcrest sill is located 400 metres east of the Colomac Main sill.

Highlights include: 68.5 metres (8 metres true width) of 2 g/t gold from 17.5 metres downhole depth, including 15.5 metres of 5.47 g/t gold and 4.3 metres of 16.98 g/t gold in hole C19-05.

Hole G19-01 returned intercepts including 13.55 metres of 0.89 g/t gold from 154.2 metres and 10 metres of 1.02 g/t gold from 312.5 metres.

“Goldcrest is very similar to Colomac Main except it has been drilled significantly less and has a shorter strike length of 2.5 kilometres compared to the 9-kilometre strike length of Colomac Main,” said Nighthawk president and CEO Michael Byron.

“We continue to encounter robust mineralization throughout the Colomac area sills, which reinforces our belief that with continued exploration, new discoveries and ongoing expansion of known zones will follow,” Byron said.

The Colomac project has an inferred resource of 50.3 million tonnes grading 1.62 g/t gold for 2.6 million oz.

At market close Wednesday, Nighhawk Gold’s stock was up over 11%. The day’s trading volume reached 260,267, over four times the daily average. The company has a C$108 million market capitalization.

(A version of this article first appeared in the Canadian Mining Journal)

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