Trilogy Metals, South32 JV creates Ambler Metals

Trilogy Metals NYSE: TMQ) and South32 Limited (ASX, LSE, JSE: S32) completed on Wednesday the formation of a 50/50 joint venture to create a new company: Ambler Metals.  

The new partnership structure comes as the Australian major exercised an option acquired in 2017 to buy a 50% interest in Upper Kobuk Mineral Projects (UKMP), located in Alaska’s Ambler mining district. 

The UKMP projects have a combined resource of 8 billion pounds of copper, 3 billion pounds of zinc and 1 million ounces of gold equivalent

As part of the deal, Trilogy contributed all of its assets associated with the 172,675-hectare UKMP, including the Arctic and Bornite projects, while South32 contributed $145 million, resulting in each party owning a 50% interest in Ambler. The funds will be used to advance the Arctic and Bornite projects, along with exploration in the Ambler mining district. 

“Forming the UKMP Joint Venture will be another important milestone as we reshape and improve our portfolio, by adding high-quality copper and base metals development options,” South32’s CEO, Graham Kerr, said in December. 

The UKMP projects have a combined resource of 8 billion pounds of copper, 3 billion pounds of zinc and 1 million ounces of gold equivalent. 

On the Move newsletter launches

MINING.COM, in partnership with The Northern Miner and Canadian Mining Journal today launched the new On the Move newsletter.  

A complimentary service, this new monthly publication will track management and board appointments across Canada’s mining and mineral exploration industry. Each month, we’ll also highlight the achievements of companies and individuals in the sector in our “Awards and Accolades” section. 

Keep us up to date on your company’s latest appointments and achievements by emailing editor@canadianminingjournal.com

Register for the free newsletter here. 

2020 to be pivotal for coal miners — report

After a Jekyll and Hyde year in 2019, and a decade characterised by China’s disruption of the met coal trade, participants can be forgiven for being sick of change. But research firm Wood Mackenzie believes a shift toward consistency and stability is probably too much to ask for in 2020 as China continues to play powerbroker over the seaborne market and spot pricing. 

Woodmac says 2020 is likely to be a pivotal year for those miners who struggled through the second half of 2019.

Under the global microscope, coal suppliers looking to grow will continue to face creeping resistance, grappling with an unfriendly permitting environment, and a climate-induced shift in capital. But opportunities for growth will still exist this year, and we expect the emergence of some potentially game-changing technological developments to keep the market particularly interesting. 

 China crude steel production, hot metal, coke and coking coal demand 

If 2019 taught us anything about the inner workings of Chinese markets and policy, it is that controlling imports to a finite number is almost impossible. The 2019 import quota policy failed to suppress trade volumes. Coal imports breached 2018 levels by 11% as demand, lower prices, and trader risk appetite pushed imports higher, says the firm.  

For 2020, Woodmac assumes a repeat from 2019 with soft targets being just that – targets. With record steel production and peak hot metal demand forecast in 2020, Chinese coal imports will reach similar levels as 2019 – pushing coal up against any import restrictions.

Coal suppliers looking to grow will continue to face creeping resistance, grappling with an unfriendly permitting environment, and a climate-induced shift in capital

Imported coals from Australia, unofficially, faced increased customs scrutiny with clearances regularly pushing over 40 days. Woodmac anticipates the same treatment in 2020. The expectation is Chinese officials will continue this practice in an effort to balance domestic and import supply over the year. Despite these efforts, the large Chinese coastal mills require access to premium Australian HCC and will continue to trade heavily in 2020. Seaborne metallurgical coal traders can’t discount that China will remain a major source of price volatility with the various market instruments at its disposal. 

As the year progresses and quotas shrink, be on the lookout for ports actively beginning to restrict imports. Woodmac says the last quarter should see China tightening imports despite record steel production, but impromptu limits will probably occur throughout the year. The demand will be there although nothing spooks coal traders more than not being able to complete a transaction in a timely fashion. The situation in Q4 2020 will likely repeat 2019 as buyers will drive pricing necessary to incentivise trades on potentially riskier transactions. Expect import restrictions to suppress international spot pricing especially as the year comes to an end. 

Supply growth to become more challenging 

Like all miners, metallurgical coal producers face mounting pressure as the global lens continues to focus sharper on the industry. The spectre of new external threats highlighted by recent Australian bushfires, and growing water stress, will add to the challenges for those trying to bring new supply to market, Woodmac asserts. The risk of direct impacts from drought and fire on operating mines has also increased, although we expect mitigation measures to successfully minimize potential disruption. Water levels in southern Bowen basin dams are an area to watch, starting the year at very low levels, and placing greater pressure on groundwater sources. 

Vale hit the pause button at its Moatize HCC mine operations in late 2019, and they face a tough decision at an important operation. The company will use the first two quarters of 2020 to revamp the mine and coal processing circuit in a bid to increase flailing production and diminished coal quality. Pay attention to Vale as they look to bring the mine fully back on-line in the second half of 2020. The loss of Moatize tonnes will have considerable consequences for the premium hard coking coal market. 

Australian mine safety will be in the spotlight in 2020 as 2019 saw a rash of mine fatalities rock the industry – nine workers across the mining industry with five related to coal mines. Not even a month into the new year, a Queensland miner lost his life at the Curragh coal mine. Calls for increased regulations have not gone unheard. The Queensland government is set to introduce legislation in 2020 to make mining industrial manslaughter an offence. The government is near passing legislation to establish an independent resources health and safety authority. 

Projects face heightened Environmental, Social and Governance (ESG) expectations from all facets of society including investors. Environmental review delays are the new norm for mine applications as regulators ratchet up their scrutiny. Don’t be surprised if some large projects don’t meet their preferred milestones this year. And expect approval conditions to continue to tighten, as we saw last year in Australia, where development consent was given for the United Wambo mine on the condition that coal was sold only to countries that were signatories to the Paris climate agreement. Metallurgical coal projects looking for major approvals this year include Riversdale Resources’ Grassy Mountain, Olive Downs and Futura’s Wilton and Fairhill. 

World’s first widescale autonomous haulage fleet 

In a first for the coal industry and a sign of the future, BHP Mitsubishi Alliance (BMA) will introduce an autonomous haulage fleet at its Goonyella Riverside operation. The Queensland operation will see a total of 86 trucks commissioned over the next two years with the first set due in the first half of 2020. According to BMA, beyond safety, the autonomous fleet is expected to deliver more consistent cycle times while increasing haulage hours. 

All eyes in the mining world will be on the operation to leverage learnings and improvements as other companies consider the leap into the driver-less world. Woodmac expects the new fleet could offer up to 15-20% haulage savings over a traditional haulage fleet. 

  While new to coal, Komatsu has close to 150 trucks operating autonomously in 9 mine sites. Woodmac expects that Komatsu has “skin in the game” and will be keen to see their product succeed at BMA’s operation with the goal for future installs. Stay tuned to BMA as they roll out their new driver-less fleet in 2020. 

Over 79,000 jobs in Canadian mining industry need to be filled over next decade — report

Competition for skilled workers within the Canadian mining industry is already fierce, and with companies in other countries also actively recruiting Canadian graduates and workers, it creates a significant skills gap in the sector, according to The Mining Association of Canada’s latest report.  

Canada’s mining industry is worth C$47 billion, with C$29.6 billion concentrated in Ontario, Quebec and British Columbia, The State of Canada’s Mining Industry, Facts and Figures 2019 found.

The workforce shortage is compounded by the wave of the industry’s skilled core of workers who are retiring

The country has shown upward signs of recovery in exploration investment in recent years in the Yukon and the Northwest Territories, with a leveling out in Nunavut after some buoyant years: $91 million in the Northwest Territories, $99 million in Nunavut and $99 million in the Yukon.  

Together, the industry’s direct and indirect employment exceeds 626,000 jobs, accounting for one in every 30 jobs in Canada. The industry will need to hire 79,680 new workers over the next decade, and this workforce shortage is compounded by the wave of the industry’s skilled core of workers who are retiring. 

By 2030, the Mining Industry Human Resources Council (MiHR) forecasts that more than 57,000 employees will retire from the sector, which represents over 25% of the industry’s current workforce by MiHR definitions. 

The federal government has taken some steps to help address these problems, including through the expansion of the Youth Employment Strategy, the proposed Post-Secondary Industry Partnership and Co-operative Placement Initiative, and continued funding for the Indigenous Skills and Employment Training Strategy (ISETS). 

MiHR has also benefited from programmatic support, specifically in developing critical research to inform industry actions to address its human resources challenges and meet its employment needs. 

Read the full report here.  

US production of critical rare-earth minerals up 44% in 2019 — report

Molycorp stock collapses as it misses $32.5M interest payment
Mountain Pass rare earth mine in California. (Image courtesy of Molycorp).

The US Geological Survey (USGS) announced Thursday that US mines produced approximately $86.3 billion in minerals in 2019 –- more than $2 billion higher than revised 2018 production totals. 

US metal mine production in 2019 was estimated to be $28.1 billion, or almost $500 million higher than in 2018. The principal contributors to the total value of metal mine production in 2018 were gold (32%), copper (28%), iron ore (19%) and zinc (7%). 

The 43rd annual Mineral Commodity Summaries report from the USGS National Minerals Information Center is the earliest comprehensive source of 2019 world mineral production data for the world.  

US metal mine production in 2019 was estimated to be $28.1 billion, or almost $500 million higher than in 2018

“The data we are releasing today is vital to understanding which minerals are vulnerable to disruptions in America’s supply chains and provides the analytical foundation for President Trump’s broader strategy to make our economy and defense more secure,” said Jim Reilly, USGS Director in a media statement. 

The steel, aerospace and electronics industries processed nonfuel mineral materials creating an estimated $3.13 trillion in value-added products in 2019, which represents a 2.5% increase over 2018.   

The US continues to rely on foreign sources for some raw and processed mineral materials. In 2019, imports made up more than one-half of US apparent consumption for 46 nonfuel mineral commodities, and the US was 100% net import reliant for 17 of those. 

The domestic production of critical rare-earth mineral concentrates increased by 8,000 metric tons (over 44%) in 2019 to 26,000 metric tons, making the US the largest producer of rare-earth mineral concentrates outside of China. 

For 2019, critical minerals as defined by President Trump’s Executive Order 13817, comprised 14 of the 17 mineral commodities with 100% net import reliance and 17 additional critical mineral commodities had a net import reliance greater than 50% of apparent consumption. The largest number of nonfuel mineral commodities were supplied to the US from China, followed by Canada. 

The Trump administration released “A Federal Strategy to Ensure a Reliable Supply of Critical Minerals,” last year. The strategy directed the US Department of the Interior to locate domestic supplies of critical minerals, ensure access to information necessary for the study and production of minerals and expedite permitting for minerals projects.  

USGS said it will conduct at least one multi-commodity critical mineral resource assessment every two years, supplying the results to Federal land managers and the public. 

The $86.3 billion worth of nonfuel minerals produced by U.S. mines in 2019 comprised industrial minerals, which includes natural aggregates as well as ferrous and nonferrous metals. 

The estimated value of U.S. industrial minerals production in 2019 was $58.2 billion, about 3% more than that of 2018.

US production of 13 mineral commodities were valued at more than $1 billion each in 2019. These were, in decreasing order of value: crushed stone, cement, construction sand and gravel, gold, copper, industrial sand and gravel, iron ore, lime, salt, zinc, soda ash, phosphate rock and molybdenum concentrates. 

In 2019, 13 states each produced more than $2 billion worth of nonfuel mineral commodities. The states were, ranked in descending order of production value: Nevada, Arizona, Texas, Minnesota, California, Florida, Utah, Alaska, Missouri, Michigan, Wyoming, Georgia and Pennsylvania. 

The report found that vanadium was produced in Utah for the first time since 2013, and of the $36.1 billion of domestically recycled products, iron and steel scrap contributed $17.6 billion.  

Read the full report here.  

Canada’s C$97 billion mining sector at a tipping point – report

The Mining Association of Canada (MAC) released its annual Facts & Figures report on Tuesday, saying it is time is for the industry to fulfill its potential as a dominant mining nation. 

The resource-rich country ranks among the top five countries in the global production of 15 minerals and metals. The industry was valued at $105 billion in 2018, and mineral exports accounted for 19% of Canada’s total domestic exports, the report found.  

Facts & Figures reports that in 2018, Canada’s mining industry contributed C$97 billion, (US$73 billion) or 5%, to Canada’s total nominal GDP.  

Capital investment increased modestly – by 5% – to C$12.9 billion year-over-year, following five consecutive previous years of decline

The industry’s direct and indirect employment exceeds 620,000 jobs, accounting for one in every 30 job in Canada. Proportionally, the mining industry is the largest private sector employer of Indigenous peoples and provided over 16,600 jobs to community members in 2018, MAC found.  

MAC said that with this data comes the need to focus on where the industry still has room to improve and that while Canadian mining’s year-over-year competitiveness metrics have improved, they remain depressed in some areas: 

Capital investment increased modestly – by 5% – to C$12.9 billion year-over-year, following five consecutive previous years of decline. 

Canada’s global share of non-ferrous exploration investment was 15% in 2018 – up 1.3% from 13.7% – but well below the peak of 20.8% in 2008, MAC reported.  

While showing growth of 5% (or C$8 billion) year-over-year, NRCan’s 10-year projected value of mining projects planned and under construction remains 50% below 2014 levels, from $160 billion to $80 billion. 

But only five new mining projects were submitted for federal Environmental Assessment review in 2019 – well below average levels seen from 2012-2014. 

 “We feel energized by a number of recent commitments pertaining to mining, including in Prime Minister Trudeau’s most recent Mandate Letters to his Cabinet, the Canadian Minerals and Metals Plan and the new Canada–US Joint Action Plan on Critical Minerals Collaboration, all of which bode well for our industry,” said Pierre Gratton, MAC’s president and CEO.  

Gold production is likely to keep falling, says Barrick boss

Global gold production is likely to keep falling, said Barrick Gold (NYSE: GOLD TSE: ABX) boss Mark Bristow, on Tuesday.  

Bristow spoke at African Mining Indaba, the continent’s biggest gathering of one of its most vital industries. 

Gold demand fell 1% in 2019 as a huge rise in investment flows into ETFs and similar products was matched by the price-driven slump in consumer demand, the World Gold Council (WGC) said in its latest report. 

2019 was broadly a year of two distinct halves: resilience/growth across most sectors in the first half of the year contrasted with widespread y-o-y declines in the second

2019 was broadly a year of two distinct halves: resilience/growth across most sectors in the first half of the year contrasted with widespread y-o-y declines in the second, the WGC reported.  

Global demand in H2 was down 10% on the same period in 2018 as y-o-y losses in Q4 compounded losses from Q3, notably in jewelry demand and retail bar and coin investment. Central bank demand also slowed in the second half – down 38% in contrast with H1’s 65% increase.  

There is also a fear that the outbreak of the new coronavirus could harm the production of gold from China – the largest producer in the world – and Chinese imports, since the country also imports the commodity to supply its domestic demand. 

The China Gold Association also recently reported that demand for gold in China had fallen in 2019.  

BC attracts C$331 million for mineral exploration, 97% stays in Province

AME, the lead association for the mineral exploration and development industry in resource-rich British Columbia (BC), hosted more than 6,000 people from 44 countries at its AME Roundup conference in Vancouver last week.  

MINING.COM sat down with the AME’s new president and CEO, Kendra Johnston, to discuss the industry’s economic impact and job creation in British Columbia, as well as advancements in reconciliation with First Nations.

MINING.COM: Can you tell us about the AME- its mandate and reach?

Johnston: AME is the lead advocacy group for mineral explorers who are working in BC, or are based in BC and are working abroad. Our main goal is to advocate on their behalf with government, based on policies and regulations. We also have a strong public relations and outreach component, to increase mineral literacy in the general public. Our reach is right across the Province, from a political advocacy perspective. And many of our members are working around the world, so we impact some things that are happening from a Canadian best-practice perspective and try to merge them internationally.

Last year there was C$331 million allocated in the province for mineral exploration alone

MINING.COM: You are a newly-appointed CEO – how long has it been?

Johnston: Seven months. I have been around the Association for 18 years as a volunteer, and sat on the board of directors for nine of those years.

MINING.COM: What is the AME’s impact on job creation in BC?

Johnston: There are a lot of projects that happen right across the province every year. Last year there was C$331 million allocated in the province for mineral exploration alone. This year the number is slightly down – by C$ 3 million. We’ve done a couple of surveys, and did some analysis, and what we found is that 37% of the dollars spent on any exploration project stays right there within the region or municipality or indigenous community, and 97% of those dollars actually stay within the province. People are, by far, using contractors and consultants that are from BC and quite often are local. So the impact to British Columbia is significant. That’s on the exploration level – if you extrapolate services and supplies…job creation and then all the tax base that comes from the job creation – it is a significant bottom line at the end of the day.

MINING.COM: In November 2019 the provincial government passed the legislation to implement the UN Declaration on the Rights of Indigenous Peoples Act, UNDRIP, which the Truth and Reconciliation Commission confirms as the framework for reconciliation.  British Columbia is home to 198 First Nations. In terms of advancements in reconciliation with Indigenous communities through agreements and partnerships embodying the principles of the UNDRIP, where is BC at in terms of First Nations reconciliation?

Johnston: In some respects we’ve come so far, and are leading the pack. With this new UNDRIP legislation, we are leaders around the world for how we interact with our indigenous communities. But looking through a different lens we are still very much at the early stages and at the very beginning. We look at the legislation, and we don’t really know how it’s going to move forward, we don’t really know what’s going to be included in the action plan and how its going to be shaped. Bill 41 really gives the government the power to implement UNDRIP to all of the other laws, so there’s going to be an action plan formed, out of Bill 41… we have a really long way to go to figure out what that looks like. We’ll continue to work with government to figure out how all those things get implemented. In that context, we’re still at the early stages of our story. In the 15 years I’ve been working in the field, the conversations have changed, vastly.

MINING.COM: Why should mining companies invest in exploration projects in British Columbia?

Johnston: Geology, number one. I’m a geologist, I believe in the passion of geology and finding good projects. Worldwide, we’re one of the safest jurisdictions to work in. We’ve got clear, concise policies and regulations. Our corporate controls are the best that are out there. If you’re comparing it to other provinces across [Canada], it’s a bit more of a level playing field, perhaps. But I think things like UNDRIP, and the fact that we are leading the pack with our conversations with our First Nations groups. And we have great people working in this province who are really engaged and want to move things forward. 

First Cobalt’s shares jump on upsized private placement

First Cobalt Corp. (TSX-V: FCC) announced Friday that it has increased its previously announced non-brokered private placement to accommodate demand. The offering has increased to 14.3 million units of the company at a price of C$0.14 per unit for gross proceeds of approximately C$2million. The company expects to close the offering on February 5, 2020. 

Each Unit issued pursuant to the Offering will consist of one common share in the capital of the company and one common share purchase warrant. Each warrant will entitle the holder to purchase one additional common Share at a price of C$0.21 for a period of two years.

The warrants are subject to accelerated expiry if the closing price of the common shares of the company is equal to or greater than C$0.37 per share for a period of ten consecutive trading days, in which case the company will have the option, but not the obligation, to accelerate the expiry to 20 calendar days from the date of notice. 

Closing is subject to receipt of regulatory approvals, including the approval of the TSX Venture Exchange.  

Midday Friday, First Colbalt’s shares were up nearly 7% on the TSX. The company has a $40.9 million market capitalization.  

Newcrest divests Gosowong for $60 million

Newcrest (ASX: NCM) announced Friday it has signed an agreement to sell 100% of Newcrest Singapore Holdings Pte Ltd (NSH) which owns a 75% interest in PT Nusa Halmahera Minerals (PTNHM), which operates the Gosowong mine in Indonesia, and 100% of PT Puncakbaru Jayatama (PTPJ), which employs exploration personnel in Indonesia to PT Indotan Halmahera Bangkit (Indotan).  

The move comes after the Joko Widodo government issued a mandate in 2018 stating that major mines such as Gosowong or Freeport-McMoRan’s (NYSE:FCX) Grasberg have to be at least 51% owned by Indonesian companies. 

Newcrest expects to recognize a A$44m loss on divestment of its 75% interest

The Gosowong gold operation is located on Halmahera Island, about 2,450 kilometres northeast of the national capital, Jakarta. It is a gold (epithermal and epithermal – low sulfidation) deposit, with additional occurrences of silver. 

Gosowong has produced 190,000 ounces of gold, and its all in sustaining costs (AISC) were $1,099/oz for the 2019 financial year.

In its 2018/19 Full Year Financial Results, released last August 16, Newcrest Mining said it had started the process aimed at divesting a least a 26% interest from its current 75% ownership of Gosowong. 

The divestiture comprises a A$5m cash deposit paid on execution of the sale and purchase agreement, A$55m cash payable on transaction completion,  A$30m deferred cash payable 18 months after completion for a total of A$90 million (US60.2 million).  

The sale of NSH follows a strategic review of the asset and to comply with the amended Gosowong Contract of Work, which required Newcrest to sell down to at least 49% of PT NHM by 30 June 2020, the Australian miner said in a press release.  

“Following an extensive review and sale process we are pleased to be able to announce the sale of Gosowong to Indotan. This outcome delivers value for Newcrest shareholders and provides a clear future path for Gosowong for the benefit of its employees and the community,” Sandeep Biswas, Newcrest’s Managing Director and CEO said. 

“Gosowong has been a valued part of our operating portfolio since we discovered it in 1993, with first production commencing in 1999.  Over the last 30 years we have built valued relationships with our Indonesian joint venture partners, suppliers, employees, government and community stakeholders, and together achieved the strong culture we see today which is based on safety, trust and teamwork, Biswas added.”  

Newcrest expects to recognize a A$44m loss on divestment of its 75% interest after taking into account the sales proceeds less written down value of the assets sold and transaction costs. 

Friday morning, Newcrest’s shares were down over 3% on the ASX.