Gold price barrels through $1,400

Gold hit an intra-day high of $1,415 an ounce on Friday

The rally in the price of gold went into overdrive on Friday with the metal hitting a near six-year high on a combination of a weaker dollar, slumping bond yields, geopolitical uncertainty, trade tensions and institutional money pouring into the sector.

Gold for delivery in August, the most active futures contract trading in New York, touched a high of $1,415.40 an ounce level overnight but by lunchtime was back just above the $1,400 level.

That’s up nearly $50 an ounce for the week and the highest since September 2013. Contracts representing 45m ounces had been traded by 1pm in New York on Friday meaning that over the last two days the equivalent of almost a year’s worth of gold mining exchanged ownership.

“There has been a dramatic change in sentiment,” Adrian Day, president of Annapolis, Maryland-based Adrian Day Asset Management told Bloomberg.

The wire service also quotes from a report by investment bank Citigroup saying “the enthusiasm is justified” and $1,500 to $1,600 an ounce is possible in the next 12 months under a bullish-case scenario that includes borrowing costs falling below zero.

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Chile’s Codelco has already lost $17.5 million on Chuquicamata strike

Chile’s Codelco, the world’s largest copper producer, has already lost $17.5 million due to an ongoing strike at its Chuquicamata copper mine, its largest operation, as the labour action enters week two.

About 3,200 unionized workers in
Chile downed tools on June 14, after failing to reach a deal with the state-owned
miner.

According to local mining consultant PLUSmining, the copper giant is losing about $2.5 million per day in missed production, estimated in 500 tonnes per day.

That means the impact on Codelco’s revenue is already of the tune of $17.5 million, while lost production amounts to about 3,500 tonnes.

The copper giant is losing about $2.5 million per day in missed production, equivalent to nearly 500 tonnes per day.

The company, which last month
reported an 18% year-on-year drop in its first-quarter copper output, is in the
midst of a $5.6 billion project to turn century-old
Chuquicamata, its second largest copper operation by size, into an
underground mine.

The last blast at the bottom of the
open pit was carried out in November, though copper extraction goes on.
The company has said it plans to gradually decrease activities

Chuquicamata’s switch is part
of Codelco’s 10-year, $39 billion-overhaul of its core assets, and is
expected to extend the iconic mine’s life by at least 40 years. It will also
allow the copper giant to keep up production rates, despite falling ore grades
and increasing costs at its operations.

Annual production from “Chuqui” —
as locals call it — once it has fully transitioned to underground extraction is
projected to be 320,000 tonnes of fine copper and 15,000 tonnes of molybdenum.

Codelco, which hands over all of its profits to the state, holds vast copper deposits, accounting for 10% of the world’s known proven and probable reserves and about 11% of the global annual copper output with 1.8 million metric tonnes of production.

Ugly trend

The world’s main copper producing
nations have been showing output declines this year, according to the
International Copper Study Group
(ICSG).

Global production declined 2.4% in
February 2019, when compared to the same month last year, with 1,515kt
(19,749ktpa) of contained copper produced globally.

Chile led the pack with output down
7.1 % y/y to 415.9kt (5,412ktpa) while Peru, the second main global producer,
saw its output fall by 5.1% y/y to 176.1kt (2,296ktpa).

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Adani begins construction at Carmichael coal complex

Adani Group has kicked off construction at its controversial Carmichael coal and rail project in Australia’s Galilee Basin after receiving last week approval from the Queensland government to break ground.

The company said it already had around 60 workers at the
location, in charge of surveying and clearing for access to the mine site.

Announcement triggered rally in the Queensland’s capital on Friday evening, which more that 700 people calling on the state government to “tear up the contracts” and “revoke” approvals for the mine.

They are also undertaking fencing, geotech and water management activities which “are being conducted safely and in line with environmental approvals,” the company tweeted.

Queensland’s Department of Environment and Science (DES) approval of Adani’s groundwater management plan (GDEMP) for the mine last week, marked the end of an almost 10-year wait, during which the proposed mine faced steady resistance by environmental groups

But opponents to the project are not resting. More than 700 people rallied in the Queensland’s capital on Friday evening, calling on the state government to “tear up the contracts” and “revoke” approvals for the mine.

Local and international detractors, including the
scientific, educational and cultural arm of the United Nations, (UNESCO), worry about the impact on marine ecosystems,
particularly by the Great Barrier Reef.

The Carmichael project, acquired by the Indian conglomerate
in 2010, is expected to produce 8-10 million tonnes of thermal coal a year and
cost A$2 billion ($1.4 billion) during its initial phase.

According to official estimations, the mine will contribute
$2.97 billion each year to Queensland’s economy and will create 1,500 direct
and 6,750 indirect jobs during ramp up and construction.

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Canada’s Trans Mountain pipeline work greenlighted for fall

Providing there are no excessive regulatory delays, work on the Trans Mountain pipeline expansion should resume in late summer or early fall, and oil should be flowing through a new pipeline by the second or third quarter of 2022, says Ian Anderson.

The former Kinder Morgan Canada (TSX:KML) president, who is now CEO of the Trans Mountain Corporation – a Crown-owned company – spoke to the media Wednesday, June 19, one day after Prime Minister Justin Trudeau once again gave the pipeline twinning project the green light.

Work on the expansion project was halted in August 2018 by the Federal Court of Appeal.

The expansion project involves the twinning of the existing Trans Mountain pipeline, which runs 1,150 kilomtres from Edmonton to Burnaby, and the expansion of the Westridge Marine Terminal in Burnaby.

The new second line will be dedicated to crude oil, while the existing pipeline will remain a batched pipeline that can move a variety of petroleum products, including refined fuels.

Before work can recommence, Anderson said the company needs a certificate from the National Energy Board (NEB). Hundreds of permits are also needed from the province and municipalities.

“If things go according to plan, I can see shovels in the ground in September – early September”

CEO, Trans Mountain Corporation

Prior to the work being halted last year, there were a number of NEB condition filings that had to be made, variances approved, and route hearings to determine specific route locations.

“The process we’ve got to go through now with them is how to, in effect, bring forward or reinstate all of that work so we can commence again from a place we were before,” Anderson said. “That process will take, hopefully, some number of weeks, and not months, to solve.

“If things go according to plan, I can see shovels in the ground in September – early September,” Anderson said.

Timing is important, since there are seasonal construction windows that limit when the work can be done. There are, for example, migratory bird and fisheries windows the company must work within. And the season for work on the Coquihalla is short, because winter comes early and stays late at higher elevations.

Delays add to costs. Anderson confirmed that the project will likely exceed the last capex estimate of $7.4 billion, but could not say if it will come closer to the $9.3 billion that the Parliamentary Budget Officer estimated in January.

“I can give you some certainty that the number will north of 7.4 (billion) and I’ll disclose a final number in due course,” he said.

“Once there’s more certainty on that regulatory process and we know when we can get back to work, we’ll be in a better position to provide an update on both the specific schedule and project costs. As you can appreciate those two are connected.

“We all know that delays are going to push up costs. We’re also hitting a different market in terms of competing projects and access to labour.”

Indeed, the project will be competing with the $40 billion LNG Canada project for workers, …read more

Ero Copper intersects highest grade to date at Vermelhos; stock jumps 7%

Ero Copper Corp (TSX: ERO) announced today it has drilled the highest grade-metre intercept so far at the Vermelhos underground mine in Bahia state, Brazil, intersecting 28.1 meters grading 12.60% copper.

Ero Copper’s share price increased by more than 7% on Thursday, taking its market cap to C$1.76 billion.

In its initial drilling, high-grade mineralization was encountered 70 meters beneath the Toboggan orebody. Highlights include 13.4 meters grading 5.86% copper. The holes drilled are showing a 40% increase in the modelled thickness of mineralization in the surrounding areas.

Also at the company’s Pilar open-pit mine, a new zone called Barauna was discovered, where the company intersected 8.4 meters grading 4.02% copper and 6.9 meters grading 3.15% copper approximately 40 meters below the previously known deepest intercept.

The Vancouver-based company is currently focused on copper production in the Vale do Curaca property in Brazil, where it has been operating for 39 years. The company also owns 97.6% of the NX gold mine, the Boa Esperanҫa development project and another gold and silver mine in Matto Grosso, Brazil.

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BQE Water to supply SART plant for GoGold’s Parral project

BQE Water, a leader in the management of mine wastewater and metallurgical bleed streams, has been retained by GoGold Resources to supply a SART plant at the Parral tailings project in Chihuahua. The contract comes after on site testing and preliminary assessment of SART integration into the metallurgical process at Parral that were completed earlier by BQE Water.

Under the contract, BQE Water’s scope of work will include plant engineering design, process automation, engineering support during procurement and construction, plant commissioning, and ongoing operations support after plant start-up. The plant construction is expected to be completed by the end of Q4 2019. Once the plant is commissioned, BQE Water will provide operations support services for a monthly fee for a period of three years.

Owned and operated by GoGold Resources, the Parral project involves the reprocessing of old tailings to recover silver and gold by conventional cyanidation. In addition to the precious metals, the tailings also contain significant quantities of cyanide soluble copper and zinc. These base metals compete for cyanide, causing high cyanide consumption and increasing operating costs.

Invented in the mid-1990s by Dr. Chris Fleming at Lakefield Research, the SART (sulphidation-acidification-recycling-thickening) process recovers copper from cyanide leach solution while allowing free cyanide to be recycled back to the leaching of precious metals. This lowers the cost of gold extraction and reduces the environmental footprint of gold mining projects.

This story first appeared in the Canadian Mining Journal

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Taseko’s Florence mine reaches commercial grade leach solution

Taseko Mines says after running the test facility for only six months, the leach solution from its Florence in situ copper mine has reached commercial grade – 1,600 ppm of copper in solution. The project is about midway between Phoenix and Tucson.

Taseko CEO Russ Hallbauer said, “Based on previous bench scale testing, we expected it would take upwards of a year to reach target solution grade, so we are obviously extremely pleased to have achieved this milestone after such a short period of time.”

The company has taken a two-step approach to the Florence mine. First, it ran the test facility to gain experience among its employees. With that knowledge the commercial facility will be built and the scale up to final operating parameters should be smooth.

Taseko is now focused on three initiatives – technical, permitting and financing. The goal is to have the project shovel ready in the first half of 2020 followed by commercial production in 2021. The company recently filed an amended aquifer protection permit with the Arizona Department of Environmental Quality. The other critical permit is the underground injection control permit, and application will be made to the U.S. Environmental Protection Agency in the coming weeks.

This story first appeared in the Canadian Mining Journal

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Champion Iron unearths 33.4% IRR for Bloom Lake expansion

Montreal’s Champion Iron must like the feasibility study done for the phase two expansion of its Bloom Lake iron mine 400 km north of Sept-Iles, near the town of Fermont. The after tax internal rate of return is a healthy 33.4% and the net present value is $1.53 billion.

The expansion would double output to 15 million tonnes of 66.2% iron concentrate annually. The initial capital requirement is $589.8 million. After 21 months of construction, the life of the mine would be 20 years. Proven and probable reserves are estimated to be 807 million tonnes averaging 29.0% iron.

A second concentrator is to be built, largely based on the existing mill but with minor changes to improve performance. The main change will be the addition of a scavenger circuit to boost recovery and respond to feed variations. The major processing equipment is currently at the mine site thanks to previous owner Cliffs Natural Resources, that abandoned its attempt to expand Bloom Lake.

The Champion board has already approved a budget of $68 million to advance work on the expansion through the end of the year. The company expects to complete additional financing by mid-2020.

This story first appeared in the Canadian Mining Journal

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Rio Tinto looks at developing Simandou again — report

Rio Tinto (ASX, LON: RIO) is mulling
options to develop the giant Simandou iron ore deposit in Guinea, which almost
sold last year to its partner in the project Aluminium Corp of China, or
Chinalco, as it is known.

People familiar with the matter told Bloomberg on Thursday that the world’s No. 2 miner has rehired consultants to work with its own team on how it would be possible to export ore, should the mine be developed.

Guinea has always said that Simandou’s output would have to be shipped via the country’s own ports. This means that the project would have to include a 650km trans-Guinean railway line and a port, which could push the total investment needed to a whopping $23 billion.

Rio is said to have rehired consultants to work with its own team on how it would be possible to export ore, should the mine be developed

Simandou is one of the world’s richest reserves of high-grade iron ore, holding an estimated 2 billion tonnes of the steelmaking ingredient. It’s also one of the most easily exploitable iron ore fields outside of Australia’s Pilbara region and top producer Vale’s Brazilian home base.

At full production, the concession
would export up to 100 million tonnes per year – that’s a third of Rio’s
total capacity at the moment – and would catapult the company past Vale as
world number one iron ore miner.

Simandou would by itself be the
world’s fifth-largest producer behind Australia’s Fortescue Metals and BHP.

The asset, however, has
been a source of headaches for Rio since it was first granted
rights to start prospecting for iron ore two decades ago.

In 2008, one of Guinea’s former dictators stripped Rio’s rights over two of the four blocks and handed them BSG Resources, the mining arm of Israeli diamond billionaire Beny Steinmetz. Rio was able keep to the two southern blocks but only after paying $700 million to the government in 2011, which guaranteed the miner tenure for the lifetime of the Simandou mine.

That deal came under scrutiny in 2016, forcing Rio to fire two senior managers over a questionable $10.5 million payment made to a consultant who helped the company secure the two blocks and alerted authorities, including the US Department of Justice and the UK’s Serious Fraud Office.

BSG Resources and Steinmetz were also subject of several investigations over bribery and corruption accusations, but it was able to put an end to and to all that in February this year, through a deal with Guinean President Alpha Conde.

Such agreement removes a key obstacle for Simandou to move forward. Rio holds a 45% stake in two of the four blocks that make up the giant Simandou deposit, while state-controlled Chinalco owns 40% and the Guinea government 15%.

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Brazil’s President hands indigenous land decisions back to farm sector

Brazil’s right-wing President, Jair Bolsonaro, has issued a new decree that returns the decision-making power of indigenous reserves demarcation to the Ministry of Agriculture, effectively removing any involvement of the National Indigenous Affairs agency (FUNAI) in the matter.

In May, the country’s lower house of Congress rebuffed the exact same measure, keeping land decisions in FUNAI’s hands.

The fresh move, considered a concession to the country’s farm lobby, comes only a week after the agency’s president, Franklimberg Ribeiro de Freitas, announced he was leaving the post as he rejected the government’s push to open up reservation lands to commercial activity.

In May, Brazil’s lower house of Congress rebuffed Bolsonaro’s attempt to do the same, keeping land decisions on the National Indigenous Affairs agency’s hands

A Native descendant, Freitas had previously run FUNAI until April 2018, but was let go by the previous government over allegations that he was “too supportive” of indigenous tribes’ land claims.

Freitas took part in several operations in the Amazon forest aimed at reducing deforestation by evicting illegal miners and loggers from the area, an ecosystem with worldwide ecological significance.

While the temporary decree goes into effect immediately, it is required to be approved by Congress within 120 days. If that doesn’t happen, the order expires.

Bolsonaro, a former Army captain elected last year, has shown
no sympathy towards indigenous people, who make up less than 1% of the
country’s population and live on reservation lands that cover 12% of its
territory.

He has also made controversial statements, which have raised concerns among environmental experts, academics and activists.

He has said, for instance, that he wants to open reservation lands to agriculture and mining, even in the Amazon rainforest. He has also vowed to assimilate the country’s 800,000 indigenous people — less than 1% the total population — into Brazilian society.

Source: Latentes

Climate scientists say Bolsonaro’s intentions could make it impossible for Latin America’s largest
nation to meet its reduced emissions targets in the coming years.

Other issues conservationists are worried about include Bolsonaro’s criticism of Brazil’s environmental agencies for blocking or taking too long to approve mining and energy projects. He has promised to reduce the wait time to license small hydroelectric plants to a maximum of three months, rather than the decade it can sometimes take.

Brewing conflicts

There are over 400 brewing disputes involving mining companies, quilombos (communities made up of the ancestors of runaway slaves) and other indigenous peoples, according to Latentes, a journalistic project to map conflict areas in Brazil.

The investigative reporters found that from the 428
potential conflicts detected in the country, 245 are found in reserves, while
183 involve traditional bondservant communities, as Brazil was the West’s last
nation to abolish slavery.

The mapping crosses data from Funai, the national indigenous
affairs agency, the Palmares Foundation, which regulates quilombos and data
from active mining concession contracts signed by the newly reformed National Mining Agency.

Companies operating and exploring in Brazil …read more

Gem Diamonds exits Botswana with $5.4m Ghaghoo mine sale

Africa-focused Gem Diamonds (LON:GEMD) said Thursday that it has sold its mothballed Ghaghoo mine in Botswana to local company Pro Civil for $5.4 million.

Gem Diamonds acquired the mine from De Beers in 2007, hoping it would help it diversify its portfolio away from Lesotho, where its only asset — the prolific Letšeng mine — is located.

Instead, and after spending more
than $85 million developing an underground mine, the company ended up having to
write off $170 million in March 2017 against the asset, which it had placed on
care and maintenance the month before.

Gem Diamonds acquired the mine from De Beers in 2007, hoping it would help it diversify its portfolio away from Lesotho

The London-listed diamond producer intended to resume operations once market conditions improved, but it later decided to offload the operation.

“This sale is in line with our
strategic objective to dispose of non-core assets,” chief executive Clifford
Elphick said in a statement.

Proceeds from the Ghaghoo sale, expected
to close in the third quarter, will be used for general corporate purposes,
said Gem Diamonds.

Pro Civil will assume the environmental liability currently associated with Gem Diamonds. “The Government of Botswana has been consulted throughout the process and is fully conversant with the relevant details of the transaction,” the company noted.

Ghaghoo is not Gem Diamonds’ only failed attempt to extend operations beyond Lesotho. In 2008, the company shut down the Cempaka alluvial mine in Indonesia. Four years later, it had to sell its Ellendale mine in Australia, a source of rare yellow diamonds, for $15 million.

Since acquiring Letšeng in 2006,
Gem Diamonds has found five of the 20 largest white gem quality diamonds ever
recovered, which makes the mine the world’s highest dollar per carat kimberlite
diamond operation.

At an average elevation of 3,100
metres (10,000 feet) above sea level, Letšeng is also one of the world’s
highest diamond mines.

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Cyanide-free gold processing technology hits the market

A new technology
that delivers commercial-scale, cyanide-free gold processing has been released
by Australian-based company Clean Mining.

The process replaces
cyanide with a safer, less hazardous chemical reagent called thiosulphate. This
inorganic compound helps dissolve fine gold out of ores into a solution, which
can then be recovered through further processing.

The new technology
was developed over more than a decade by Australia’s national science agency,
CSIRO, and trialed in Australia in 2018 with Clean Mining’s parent company –
Eco Minerals Research Limited. This trial proved the thiosulphate solution
could extract gold from ore at an industrial scale.

Following this Clean
Mining negotiated exclusive rights to sell and distribute new cyanide-free gold
processing technology worldwide.

Clean Mining’s
managing director Jeff McCulloch said the deal now allows Clean Mining to
launch the new technology solution and begin its global sales and distribution
program.

“The world has been
waiting for a cost-effective, non-toxic solution to gold processing and Clean
Mining now offers that solution,” McCulloch said in a statement.

About 75% of gold
extracted from ore is currently processed using cyanide or mercury, which are
toxic to humans and the environment.

These chemicals are
often contained in large storage tanks and, once used, expelled into large
tailing dams that can potentially leach into the local surroundings.

“Eliminating cyanide
and the associated tailing dams from the gold recovery process is a
game-changer for the sector and, importantly, for the communities where gold
miners operate,” Mr McCulloch said.

Clean Mining will
initially target small to mid-scale miners who can benefit from the
cost-effective leaching ore processing solution, which includes a plug-and-play
plant that can be customized and scaled to meet individual needs.

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