World’s copper producer issues 10-yr and 30-yr bonds to fund mines overhaul

World’s largest copper producer, Chile’s Codelco, issued on Monday 10- and 30-year dollar-denominated bonds to secure funding for its multibillion-dollar upgrade projects only five months after saying it didn’t need to raise money this year or next.

IFR, Refinitiv’s capital markets news service, said the new paper were issued in New York with a price range of between 150 to 180 basis points over equivalent US Treasuries.

The move is part of the state-owned copper giant’s fresh funding strategy that includes taking out loans and selling non-structural assets. 

Codelco borrowed last month $300 million and sold two bonds for a combined $180 million of funding.

World’s copper producer issues 10-yr and 30-yr bonds to fund mines overhaul

It also a 37% stake in natural gas port terminal GNL Mejillones for $193.5 million.

The Santiago-based miner’s change of heart surprised some analysts as chairman Juan Benavides had said in April the company had sufficient funding this year and next to develop planned multibillion mine upgrades, key to maintain its production at current levels.

Ore grades have plummeted at Codelco’s aging mines, prompting the urgent need for overhaul schemes.

The company has already kicked off one of its most ambitious plans — the $5.6 billion conversion of the giant Chuquicamata open pit mine into an underground operation.

The next major mine overhaul is a $5.5 billion new level at El Teniente underground mine, the company’s largest, which fell under new CEO Octavio Araneda’s mandate in his previous role.

Taken from Codelco’s presentation May 2019.

In the company’s pipeline of so-called structural projects are also a $1.3 billion expansion at the Andina mine, a $1 billion upgrade at Salvador and the expansion of Radomiro Tomic, which doesn’t have an estimated capital expenditure yet.

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.

Osisko Gold grabs Barkerville, creates North Spirit Discovery

Canada’s Osisko Gold Royalties (TSX, NYSE: OR) is buying all the shares it doesn’t already own in fellow miner Barkerville Gold Mines, in a deal valued at C$338 million (about $255m).

The Montreal-based miner said each Barkerville shareholder would receive 0.0357 common share of Osisko for each share of Barkerville held, implying a value of C$0.58/share, based on Osisko’s Sept. 20 closing price on the Toronto Stock Exchange.

The deal gives it access to Barkerville’s touted Cariboo gold project in British Columbia, which Osisko sees as a “potentially world-class asset” with significant infrastructure in place.

“Osisko and Barkerville will take advantage of their combined mine building, exploration, permitting, development and construction expertise to advance the Cariboo gold project,” the company’s chief executive chair of the board, Sean Roosen, said in the statement

The company noted it would fund planned work through available liquidity, future revenue from royalties and streams, project debt as well as outside private equity and joint venture (JV) capital through the creation of a new company aimed to become a resource development and finance firm — the North Spirit Discovery Group.

Earlier this month, the miner announced it was buying fellow Canadian Stornoway Diamond, which has filed for bankruptcy protection.

Osisko also announces the creation of North Spirit Discovery Group, which aims to become a leading resource development and finance company with the assistance of joint venture partners and/or private equity capital.

Osisko, formed in 2014, is a royalty company, which means that it seeks agreements giving it the right to a share of income from mines operated by other companies.

Its primary focus is the North American precious metal offtake market, with more than 135 royalties and a portfolio of resource companies such as a 16.6% interest in Osisko Mining Inc. and a 19.9% interest in Falco Resources Ltd.

Petra finds 20.08-carat blue diamond at flagship Cullinan mine

South Africa’s Petra Diamonds (LON:PDL) has found yet another big rock at its iconic Cullinan mine, one of the many coloured diamonds it has unearthed at the operation this year.

The “exceptional” 20.08 carat blue gem quality diamond, Type IIb, demonstrates that Cullinan remains a significant source of rare blue diamonds, and confirms the ability of the mine’s plant to recover the full spectrum of precious stones, the company said.

Recovery demonstrates Cullinan remains a significant source of rare blue diamonds, said the company.

In April this year, the company a 424.89 carat exceptional D colour Type IIa diamond at the same mine. The stone was sold the next month for just under $15 million.

Petra’s shares hit an all-time low last week after it reported a net loss of $258.1 million for the year ending in June, amid challenging market conditions.

Richard Duffy, who has been at Petra’s helm since April, said the diamond market was in its worst state since the financial crisis in 2008, but expects it to stabilize in the next 12 to 18 months.

Petra has been trying to turn around its fortunes after piling up debt to expand its flagship Cullinan mine in South Africa, where the world’s largest-ever diamond was found in 1905.

Struggling market

Diamond miners are struggling across the board, especially those producing cheaper and smaller stones, where there is an over-supply. 

The US-China trade row and protests in Hong Kong dented demand in Asian markets.

Increasing demand for synthetic diamonds has also weighed on prices. Diamond prices

Man-made diamonds require less investment than mining natural stones and can offer more attractive margins.

Synthetic producers spend around $300-500 per carat produced, according to a 2018 report by Bain & Company.

Diamond miners are struggling across the board, especially those producing cheaper and smaller stones, where there is an over-supply. 

Lab-grown diamonds produced by De Beers, the world’s top diamond miner by value, sell for $800 per carat.

Petra, by contrast, has to shift 20,000 tonnes of earth at Cullinan to yield just one cup of diamonds. Average cost in the 2019 financial year was $110 per carat, 12% less than in 2018.

Buyers, those that polish and cut diamonds for retailers, have been hit this year by lower prices and tighter credit, prompting them to delay purchases. Tiffany’s reported in August a 3% decline in like-for-like sales, while shares in Signet, the world’s largest retailer of diamond jewellery, have lost more than 60% of their value this year.

De Beers has responded by axing production — with a target of 31 million carats this year compared with 35.3 million in 2018. It has also announced it would spend more on marketing.

In March, Africa-focused Firestone Diamonds (LON:FDI) put plans to extend the life of its 75%-owned Liqhobong mine in Lesotho on the back burner, saying that current market conditions didn’t support such project.

Petra will report production and sales results for the September quarter on October 21st.

IAMGOLD resumes operations at gold mine in Suriname

Canada’s IAMGOLD Corp. (TSX IMG), (NYSE: IAG) has resumed mining operations in the southern pits of its Rosebel gold mine, in Suriname, with full ramp up expected in about a month.

Mine development activities at its 70:30 Saramacca joint venture (JV) project with the government of Suriname have also restarted, the company said.

Operations in the northern pits resumed at the end of August.

The Toronto-based firm had halted work at the mine early last month, following an incident involving police that caused the death of an artisanal miner and left some equipment unusable.

Shortly after, it laid off 325 contractors for the South American mine and lowered its production forecast for the year to between 765,000 to 810,000 ounces of gold, to reflect the operation’s halt.

IAMGOLD said on Monday it was hiring back the dismissed workers and that has reached an agreement with the local community, enabling the haul of Saramacca ore to the mine’s mill in early November.

Rosebel, located in the mineral rich Brokopondo district, about 85 km south of the capital city of Paramaribo, has often been a target for illegal miners. This has led the company to allow some artisanal miners to work on the concession.

The Canadian company owns 95% of the gold mine and the government of Suriname holds the remaining 5%. 

Brazil to lay criminal charges against Vale, auditor in dam burst

Brazilian authorities will lay criminal charges against iron ore giant Vale (NYSE: VALE), 13 of its employees and German auditor TÜV SÜD, accusing them of fraud in relation to a deadly dam burst at the company’s Córrego do Feijão mine in January.

Federal police said the companies presented fake documents backing the stability of the dam whose collapse killed nearly 250 people and unleashed a gush of mining waste on a nearby towns.

Federal police said the companies presented fake documents backing the stability of the dam that collapsed in January.

Penalties for these kinds of crimes can be of up to 18 years in jail.

The Rio de Janeiro-based company reacted to the news by saying it was “aware of the police investigation,” but wouldn’t comment further until it analyzes “the full content of the report.”

Police also said it didn’t rule out the possibility of charging executives from both Vale TÜV SÜD with homicide and environmental damage in coming days, local O Globo reported.

Seven people from Vale and six from Tüv Süd are being indicted, according to the paper.

The world’s top iron ore producer is also facing a lawsuit by a group of investors who argue that Vale did not disclose information about risks facing the dam in the state of Minas Gerais to the market, even though it was aware of it,

Earlier this year, Vale’s announced a $107-million compensation (400 million Brazilian real) to workers impacted by the rupture of the dam and said would spend R$1.8 billion ($471 million) by 2023 on several projects to stabilize remaining structures at the Córrego do Feijão mine.

Other programs include reducing tailings flow into the Paraopeba river and ensuring proper disposal of tailings and rebuilding public facilities. The projects are expected to generate around 2,500 jobs. 

SL Mining to halt operations at Marampa iron ore mine in Sierra Leone

SL Mining, a subsidiary of US commodity trader Gerald Group, is allegedly planning to halt operations as early as next week to help it offset the impact of a Sierra Leone’s ban on export from the company’s Marampa mine, imposed in July.

Despite an international court recently ordered the West African nation to lift such prohibition, authorities remain firm, claiming that SL Mining has failed to maintain the mine’s agreed work schedule or make royalty payments. 

The company, which rejects the government’s claims, told employers that without being able to export, it was not possible for them to remain in operations.

“The [Sierra Leone’s government] continues to ignore the terms of the London’s court final order, failing to engage in a meaningful discussion with SL Mining,” it said in a letter published by The Sierra Leone Telegraph.

“SL Mining’s sole shareholder, the Gerald Group, has invested a great deal of money and efforts in Sierra Leone over many years and yet, was only allowed to make three successful shipments in a highly favorable market before being struck [by the ban],” it said.

The move would leave more than 1,000 locals on forced leave.

SL Mining’s first iron ore concentrate from Marampa, branded “Marampa Blue’, set sail from Freetown Port on June 16.

Located in the Port Loko District, in the country’s north, SL Mining is engaged in the exploration, development and production of a high-grade iron ore concentrate with >65 percent Fe content.

The company estimates that Marampa, permitted since 2017, holds about 1 billion tonnes of iron ore with a potential lifespan of 30 years.

Following a steady growth until 2012, foreign direct investment in Sierra Leone was severely impacted by an Ebola outbreak.

The country’s economy currently faces serious challenges, the latest World Bank’s report shows. Those issues include falling government revenue as a result of low export and lack of investments in key sectors of the economy, including mining.

Uganda to invite companies to redevelop former copper mine

Uganda attempts to reopen an idled mine estimated to contain 4 million tonnes of copper by inviting international firms to present bids for a production sharing deal.

Once a major copper and cobalt producer, the Kilembe copper mine was abandoned by Canadian firm Falconbridge in the 1970s as the East African nation’s economy deteriorated under the leadership of dictator Idi Amin Dada.

This is not the first time the Uganda tries reviving the mine, near the border with the Democratic Republic of Congo. Previous efforts, however, were thwarted by a commodities downturn a failed 2013 deal with group led by China’s Tibet Hima Mining, which had vowed to invest $175 million in the asset.

The government cancelled the 25-year concession in 2013 on grounds that Tibet Hima had failed to execute its mandate as outlined in the permit. The Chinese firm sued the government and is seeking compensation of at least $33 million in damages.

The country decided to retry bringing Kilembe back to life in April this year. At the time, authorities said 28 companies had expressed interest in the project.

With files from Bloomberg

SolGold’s projects safe after Ecuador courts rejects mining referendum

Doubts around the fate of SolGold’s (LON, TSX:SOLG) projects in Ecuador have been cleared up after the country’s Constitutional Court rejected a fresh request to make mining permits subject to popular approval.

The ruling, covering the southern province of Azuay, said the petition to seek local consultation to ban mining was too broad and potentially misleading. Further, it ruled that any referendum which could result in other nationally enjoyed constitutional rights being restricted, were inadmissible.

It’s the second time a request to hold a referendum about mining is denied, which is seen as a victory for companies seeking to exploit some of the world’s largest untapped reserves of copper.

The decision follows a June verdict that rejected community consultation in Imbabura, the northern province that is home to SolGold’s flagship copper and gold Cascabel project —potentially one of Ecuador’s biggest mines.

The resolutions represent a victory for companies seeking to exploit some of the world’s largest untapped copper reserves. According to SolGold, they also set a “strong precedent” for any future petitions for consultation that imply changes to the country’s constitution.

Azuay province hosts several mining projects, including Canada’s INV Metals’ (TSX-V: INV) Loma Larga gold, silver and copper project. The Toronto-based company said late on Wednesday it would kick off its financing and permitting efforts for its proposed mine, one of five projects deemed strategic for Ecuador by the Ministry of Energy and Non-renewable Resources.

SolGold’s 100%-owned Sharug project, which the Australian miner believes has considerable potential for the discovery of a world-class orebody, is also located in Azuay.

On top miners’ radar

The Cascabel copper-gold project has piqued the interest of major miners, including BHP (ASX, NYSE:BHP). The world’s largest mining company last year acquired a 6.1% stake in SolGold, increasing its exposure to copper.

The move pushed Australia’s largest gold producer, Newcrest Mining (ASX: NCM), to up its holding in the company, consolidating its position as SolGold’s top shareholder.

While Ecuador has gained ground as a mining investment destination in the past two years, existing and future projects risk delays and potential halts due to growing local opposition to the extraction of the country’s resources, a report by Fitch Solutions Macro Research shows.

As mining projects face headwinds from rising tensions, investors’ courage will be tested, the study concluded, which could thwart Ecuador’s plan to attract $3.7 billion in mining investments in the next two years, significantly up from the $270 million it received in 2018.

Lucara finds another big diamond at its Karowe mine in Botswana

Canada’s Lucara Diamond (TSX:LUC) has unearthed a 123 carats, gem-quality, top white Type II diamond at its Karowe mine, in Botswana, the same operation where it found the largest precious rock ever found in the African country.

The stone was recovered from direct milling ore sourced from the EM/PK(S) unit of the South Lobe, the same area that yielded the famous “Lesedi La Rona.” The giant 1,109-carat diamond, however, was a hard sell for Lucara. Its buyer, Graff Diamonds ended up cutting it into smaller stones.

Karowe, which began commercial operations in 2012, has yielded this year 22 diamonds larger than 100 carats, eight of them exceeding 200 carats. 

Karowe, which began commercial operations in 2012, has yielded this year 22 diamonds larger than 100 carats, eight of them exceeding 200 carats. 

The mine also yielded the 1,758-carat Sewelô (meaning “rare find”) diamond, the largest ever recovered in Botswana.

The Vancouver-based company also announced it had recovered a 375-carat gem-quality diamond during the processing of historic tailings from the mine. Reprocessing has so far yielded 29 diamonds over 100 carats, Lucara said. 

Since the start of the year the miner has sold 19 diamonds with an individual price in excess of $1 million at its quarterly tender sales. This includes seven diamonds that fetched more than $2 million each, and one diamond that carried a final price tag of over $8 million.

“Lucara is pleased with the continued strong performance of the mine and the consistent recovery of large, high quality diamonds that contribute more than 70% of Lucara’s total revenues,” chief executive officer, Eira Thomas, said in the statement. 

The company, which has focused efforts on the prolific Botswana mine this year, is close to completing a feasibility study into potential underground production and life-of-mine expansion at Karowe.

Apple to include part made of 100% recycled rare earths in new iPhones

Tech giant Apple Inc (NASDAQ: AAPL) has revealed it will use 100% recycled rare earth elements in a key component included in its new iPhones.

As outlined in the environmental reports for the new iPhone 11iPhone 11 Pro, and iPhone 11 Pro Max, the devices’ “Taptic Engine,” which allows iPhones mimic a physical button click despite being a flat pane of glass, will all be manufactured with recovered rare earths.

The part represents only a quarter of the total rare earth elements used in each iPhone.

The part represents around 25% of the total rare earth elements used in each iPhone, the company said, adding that  the move was “not related” to trade tensions but could help it maintain a steady supply.

“This is one of those happy coincidences where what is good for the planet is really good for business at the same time,” Apple’s environmental chief Lisa Jackson told Reuters. “One of the things we talk about a lot internally, just in general, is how much more resilient this makes our supply chain.”

China, the world’s largest producer and consumer of rare earths, has threatened to use its market dominance to make a political point in the ongoing trade war with the US.

Washington imports from China about 80% of the group of 17 chemical elements used in both consumer products, from phones to electric car engines, and critical military applications including jet engines, satellites and lasers.

Daisy at work

In its annual environmental responsibility report released earlier this year, Apple said it was recovering 32kg of rare earths from every 100,000 iPhones it recycles, thanks to a robot named Daisy.

“Elements like neodymium, praseodymium and dysprosium are used in magnets for audio applications, in cameras, and in haptics technology,” Apple said. “Traditional recyclers don’t recover these rare earth elements because they are used in small quantities, and technology has not advanced sufficiently to recover them.”

Apple to include parts made of 100% recycled rare earths in new iPhones
Taken from Apple’s Environmental Responsibility Report 2019.

The company has also made headlines recently due to its attempts to buy long-term supplies of cobalt directly from miners. The move is seen as a way to ensure sufficient supply of the metal, an essential ingredient in the batteries that power its phones and tablets.

Apple has increased its engagement with cobalt miners in recent years due to scrutiny from international human rights organizations. According to Amnesty International, about 20% of the cobalt mined in Congo is extracted by hand by informal miners including children, often in dangerous conditions.