Lynas’ rare earth licence renewal in Malaysia challenged in court

Australian rare earths miner Lynas Corp (ASX: LYC) said Friday that three individuals in Malaysia had filed a lawsuit challenging the government’s decision to renew the company’s operating licence last year.

The miner, the world’s only major producer of rare earths outside China, isn’t the only one being sued. Other targeted people include the Prime Minister of Malaysia, 27 other Ministers and Cabinet members, the Government of Malaysia and the Atomic Energy Licensing Board, Lynas said

The court case questions the processes followed by the government in reaching its August decision to allow the miner to continue operating in the country, under certain conditions, , including identifying a Malaysia-approved site for a permanent disposal of the waste Lynas generates at its plant.

The Sydney-based miner agreed to start extracting low-level radioactivity from the ore mined at its Mt. Weld operation, before shipping it to Malaysia for final treatment.

The cracking and leaching plant, to be built this year in Kalgoorie, Australia, will perform the first step of concentrate processing in 2021. The facility is expected to be completed in late 2022 or early 2023.

Lynas said at the time it planned to explore opportunities for the next stage of rare earth processing (upstream solvent extraction) in Western Australia.

The company, which controls just over 10% of the global rare earths market, has also revealed plans to build a separation plant in the United States.

The facility would be the world’s only large-scale producer of separated medium and heavy rare earth products outside of China, which currently accounts for 70% of global production. Beijing also controls 90% of a $4 billion global market for materials used in magnets and motors that power phones, wind turbines, electric vehicles and military devices.

The series of announcement came after increased opposition and scrutiny to its Lynas Advance Material Plant (LAMP) in Malaysia. Environmental groups and local residents feared about the impact the low-level radioactive waste the refinery generates could have on the health of those living nearby, and to the environment.

Lynas said its Malaysian subsidiary and LAMP have been the subject of four independent scientific reviews, including two probes by the International Atomic Energy (IAEA) and a report by the current Pakatan Harapan Government’s independent scientific committee. All of them, it said, have concluded that Lynas Malaysia is low risk and compliant with the country’s laws and regulations in effect.

The company will face the fresh case against it in Jan. 21, it said.

Rio Tinto readies to close world’s biggest diamond mine

Rio Tinto’s (ASX, LON, NYSE: RIO) iconic Argyle mine in remote Western Australia, the world’s biggest and the main global source of high-quality pink diamonds, will close in the fourth quarter this year, potentially pushing prices up and spurring exploration.

The planned closure, the company said, will impact its total diamond output for the year. Rio now expects to produce between 12 and 14 million tonnes of rough diamonds in 2020, down from the 17 million tonnes it churned out last year.

The impact on Rio’s balance sheet, however, are expected to be minimal. Diamonds bring in only about 2% of earnings, while iron ore — the company’s main commodity⁠ — accounts for almost 60%.

Miner expects to see production of rough diamonds drop from 17 million tonnes last year to 12-14 Mt in 2020.

Pink diamonds, already rare, are about to get scarcer as Argyle accounts for 90% of worldwide production of the coloured precious rock. The mine has yielded more than 865 million carats of rough diamonds since it opened in 1983 and, so far, there hasn’t been major discoveries or projects capable of measure up to Argyle in terms of production. 

At its peak, the mine produced 40% of world diamond output by volume. It still accounts for all of Australia’s diamond production.

Rio Tinto estimates Argyle’s direct contribution to the East Kimberley in roughly 6% of the region’s gross regional product.

Analysts and auctioneers alike expect prices for the unique diamonds to go up. Pink stones have already been fetching record prices in the past few months and the closure of their mine source could see that trend strengthen.

Rio Tinto readies to close world’s biggest diamond mine
The Argyle Opus, a 2.01-carat Fancy Intense Pink, round brilliant-cut diamond. (Source: Rio Tinto.)

In 2018, the 18.96-carat Pink Legacy sold for $50 million at Christie’s auction house, breaking the world record for price paid per carat for a pink diamond at auction.

At Sotheby’s Hong Kong October sale, one of the star pieces — described as an “exquisite 10.64-carat vivid purplish pink diamond” — sold for just under $20 million. Rio Tinto’s own data show that the prices for their Argyle pink diamonds have jumped by 500% since 2000.

The mining giant said the decommissioning and dismantling the mine would take five year, after which it would monitor the site for a period to be defined.

Scotgold looks for new targets as it readies to open Scotland’s first commercial gold mine

Scotgold Resources (LON: SGZ), the company aiming to open Scotland’s first commercial gold and silver mine in Cononish, is seeking its next big discovery by stepping up sediment and soil sampling programs across the Grampian project, in the Scottish Highlands.

“Although our prime focus continues to be the development of the Cononish mine, our exploration activities continue to build an exciting portfolio of anomalies which will form the basis for potential future drilling programs in the years to come,” chief executive Richard Gray said in a statement.

The company, which is close to declare commercial production at Cononish, has been working to reopen the abandoned gold mine near Tyndrum for almost 13 years. The hope, Gray told FT.com, is that the project proves the viability of precious metal extraction in Scotland.

Chief executive, Richard Gray, expects to see a “mini gold rush” in the Scottish Highlands in coming years.

“It sounds a bit presumptuous and grandiose, but we do see this as being the start of a gold mining industry in Scotland,” Gray told FT.com. “I think there will be a sort of mini gold rush, potentially, in the years to come.” 

While gold panning has a long history in Scotland, investor worries and opposition from environmentalists have botched attempt to take the activity to an industrial level.

Scotland has survived green activists’ disapproval, mainly focused on the scale of the tailing that will be left behind, scoring a major win in early 2018. At the time, it received initial approval for Cononish, about 80 km (50 miles) north of Glasgow.

The asset produced its first gold in August 2016, following the launch of an ore processing trial. After the local authorities gave the project their blessing, the company began building a large-scale operation.

Now Scotgold is about to start producing at its underground mine with an initial output capacity of 23,500 ounces of gold annually, for up to 17 years.

The company expects to process around 3,000 tonnes of ore per month in the first phase, which it says will double in phase two.

As many as 52 jobs could be created during production, and the firm has offered nearly £500,000 (about $612K) in payments to support the local community of Tyndrum.

The small village is currently a local tourist destination, known mostly for being at a junction of major transport routes.

IAMGOLD’s 2019 production falls short, CEO to retire

Canada’s IAMGOLD Corp. (TSX IMG), (NYSE: IAG) announced on Thursday that chief executive officer Stephen Letwin will retire at the end of February after a decade at the company, with the post to be assumed by the current president and chief operating officer (COO) Gordon Stothart.

The news comes on the same day the Toronto-based miner posted preliminary operating results for 2019, which show output fell short of IAMGOLD’s target for the year.

Attributable gold production last year reached 726,000 gold ounces, compared to the 765,000 to 810,000 ounces the company expected. Fourth quarter output totalled 192,000 ounces.

Upcoming CEO Stothart warned that 2020 would be a year of transition for the miner, as focuses on the future of Essakane and Rosebel, continues development of Westwood and brings its 70:30 Saramacca joint venture (JV) project with the government of Suriname up to full production.

IAMGOLD halted work at Rosebel, also in Suriname, in August, 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.

The company, however, ended up re-hiring the dismissed workers after reaching an agreement with the local community, which allowed it to resume operations.

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.

Looking forward, IAMGOLD expects to produce between 700,000 and 760,000 ounces of gold in 2020, which reflects no output at Sadiola, which is in the process of being acquired by Australia’s Allied Gold Corp.

Rising civil unrest the latest threat to miners

Global miners will have to get ready to deal with the increasing threat from civil unrest, following last year’s succession of dramatic — and in several cases unforeseen — social explosions in almost 50 countries, including highly popular mining jurisdictions such as Chile, Mali, Guinea, Congo and Zimbabwe.

According to risk consultancy Verisk Maplecroft’s quarterly civil unrest index, released on Thursday, turmoil will linger in 2020, as most nations experiencing ongoing bursts of public discontent lack the tools and ability to handle them.

The experts foresee as many as 75 countries having to deal with soaring public rage over a variety of topics, including economic inequality and political roguery during the next six months.

Other jurisdictions, such as Hong Kong and Chile, which saw the greatest increases in risk over the last year, are unlikely to improve over the next two years, Verisk Maplecroft’s predicts.

Courtesy of Verisk Maplecroft | Political Risk Outlook 2020.

As a result, the number of extremely risky countries in the Civil Unrest Index jumped by 66.7%; from 12 in 2019 to 20 by early 2020.

An ‘extreme risk’ rating in the index, which measures the risks to business, reflects the highest possible threat of transport disruption, damage to company assets and physical risks to employees from violent unrest. Most sectors, ranging across mining, energy, tourism, retail and financial services, have felt the impacts over the past year.

The resulting disruption to business, national economies and investment worldwide has totalled in the billions of US dollars, the consultancy says, citing Chile as an example. The first month of unrest in the copper-rich country caused an estimated $4.6 billion worth of infrastructure damage, and cost the Chilean economy around $3 billion, or 1.1% of its GDP, Verisk Maplecroft notes.

Courtesy of Verisk Maplecroft | Political Risk Outlook 2020.

The consultancy detected that a deterioration in some risk factors could serve as an early warning sign in certain jurisdictions. Out of the 11 elements considered in the Civil Unrest Index, subsidy cuts were the single biggest indicator that the risk of civil unrest was growing in Chile, Lebanon and Zimbabwe.

Inflation and the weakening of mechanisms that allow the channelling of discontent before it erupts into unrest also played a role, Verisk Maplecroft says, particularly in Chile, Hong Kong and Zimbabwe.

With protests continuing to rage across the globe, the consultancy expects both the intensity of civil unrest, as well as the total number of countries experiencing disruption, to rise over the coming year.

SQM may resume lithium production expansion thanks to Chile’s regulator backing

Chile’s environmental watchdog (SMA) has appealed a lower court decision against a $25 million remediation plan by SQM, the world´s No. 2 lithium producer, which called into question the miner’s $380 million production expansion project.

The First Environmental Court of Antofagasta, where SQM’s operations are based, upheld in December a complaint made by local communities about the use of water in the Atacama Desert.

The ruling was based, according to filings, on the ecosystem’s “special condition of fragility” in Atacama, where more than a third of global lithium carbonate supply is sourced. The court also cited the high level of scientific uncertainty surrounding the impact of lithium mining on water in the region.

The environmental regulator, which had approved SQM’s plans in March last year, called the lower court’s arguments “unfounded”, especially those alleging the rejected plan failed to protect the environment.

The SMA’s appeal must now be considered by Chile’s Supreme Court.

SQM’s current annual production capacity is 70,000 tonnes of lithium carbonate and 13,500 tonnes of lithium hydroxide. The company, however, wants to increase production to 120,000 tonnes of lithium carbonate and almost 30,000 tonnes of lithium hydroxide by the second half of 2021 and to 160,000 tonnes of lithium carbonate by the end of 2023.

Nemaska Lithium goes bankrupt, victim of market oversupply
Wave of lithium supply coming online. (Source: BMO Capital Markets.)

Water has become a flashpoint for the expansion plans of both SQM and top competitor Albemarle (NYSE: ALB), both of which operate in the salt flats of the Atacama, the world’s driest desert.

The Chilean miner’s planned expansion would come as lithium prices are experiencing a welcomed rebound. The surge was prompted by expectations of a jump in electric vehicle sales in China after the government gave assurances that its subsidies for buyers would not be cut any further.

Chile, which holds about 52% of the world’s known lithium reserves, lost in 2018 its top lithium producer crown to Australia.

The country, however, is working on reversing that situation. It predicts that lithium will soon become its second largest mining asset, behind copper. The commodity is currently the country’s fourth biggest export.

Continental Gold shareholders urged to back Zijin’s $1bn takeover deal

Canada’s Continental Gold (TSX:CNL) said on Tuesday that independent proxy advisory firms ISS and Glass Lewis have urged the Canadian miner’s shareholders to vote in favor of the takeover offer from Zijin Mining, China’s No.1 gold producer.

Zijin in December agreed to buy the Toronto-based miner for C$1.3 billion ($1bn) to gain access to Continental’s flagship Buritica gold project, in Colombia.

The asset, in north-western Colombia, has measured and indicated gold reserves of 165.47 tonnes and an inferred reserve of 187.24 tonnes.

Expected to begin operations this year, the mine will churn out 250,000 ounces of gold per annum on average over a 14-year productive life, boosting Zijin’s gold reserves to more than 2,000 tonnes.

Institutional Shareholder Services (ISS) and Glass Lewis highlighted the $5.5 per-share-offer represented a significant premium to Continental’s shares value — 29% to be exact. They also referred to favourable market reaction as factors supporting their recommendations.

The Chinese gold, copper and zinc miner has been expanding its footprint by acquiring assets from Africa to Australia.

In November, Zijin announced it was buying partner Freeport McMoran’s copper-gold assets in Serbia for up to $390 million, substantially boosting its resources of both metals.

In 2018, it spent $1.26bn for a 63% in Serbia’s largest copper mining and smelting complex RTB Bor.

It also trumped Lundin Mining’s (TSX:LUN) earlier hostile bid for Canada’s Nevsun Resources, gaining access to yet another Serbian asset — the Timok copper and gold project. With the move, it also secured ownership of the Vancouver-based miner’s flagship operation, the Bisha copper-zinc mine in Eritrea.

Continental’s shareholders will meet on January 28 in Toronto to consider the transaction.

Savannah Resources completes licensing for Mozambique JV with Rio Tinto

Multi-commodity developer Savannah Resources (AIM:SAV) has received the third and final permit for the Mutamba heavy minerals sands project, being developed in partnership with Rio Tinto (ASX, LON, NYSE: RIO).

The licence, valid to Sept. 2044, with the possibility of an additional 25-year extension, completes the London-based company’s full tenement permitting of Mutamba, which will allow it to focus on progressing a pre-feasibility study (PFS).

“The process has been rigorous and demanding, but we have now achieved one of the most important milestones in the orderly progression towards mine development,” Savannah chief executive, David Archer, said in the statement.

Once the PFS is completed, Savannah Resources will increase its interest in the asset from 20% to 35% and ultimately to 51% upon delivery of a feasibility study.

Mutamba contains an indicated and inferred mineral resource of 4.4 billion tonnes, grading 3.9% total heavy minerals. It’s located within close proximity to the infrastructure – the Port of Inhambane, reliable power supply and excellent road connections

Savannah expect to begin production this year, at an initial rate of 456,000 tonnes of ilmenite and 118,000 tonnes of non-magnetic concentrate.

The company is also gearing up to start commercial lithium production in northern Portugal in 2021.

Mina do Barroso, arguably one of the most advanced lithium mining concessions in Europe, is expected to become the continent’s first significant producer of spodumene, a hard-rock form of lithium.

Savannah, which acquired a majority stake in the project in May 2017, has maintained a fast paced development approach since.

Endeavour Mining walks away from takeover talks with Centamin

Canada’s Endeavour Mining (TSX:EDV) has walked away from a potential 1.47 billion pound ($1.9 billion) acquisition of Centamin (LON:CEY) (TSX:CEE), citing lack of information on the targeted company’s assets.

The gold miner said the quality of the data shared by the Egypt-focused company during an accelerated due diligence process was “insufficient” to make a firm offer. Therefore, merger talks have been terminated, it said.

 “We remain convinced about the strategic rationale of combining Endeavour and Centamin to create a diversified gold producer with a high-quality portfolio of assets,” chief executive Sébastien de Montessus said in the statement.

Centamin rebuffed the all-stock takeover proposal from Endeavour in December, saying it did not offer enough value to Centamin shareholders.

The UK’s takeover panel agreed to extend a deadline for the Toronto-listed miner to make a firm offer, to allow more time for the two sides to engage and share information.

More to come…

Resolute in talks to sell Ravenswood gold mine to EMR Capital

Australia’s Resolute Mining (ASX:RSG) confirmed on Monday that is in advanced talks with private equity fund EMR Capital Management Ltd over the sale of Ravenswood gold mine, located in Queensland, Australia.

The miner, which has been trying to make the asset look as attractive as possible over the past year, said the deal could be worth up to A$300 million ($207 million).

The transaction would see EMR paying A$100 million upfront and up to A$200 million in additional deferred consideration, subject to production milestones and future gold prices.

The two firms signed an exclusivity arrangement, which expires on Wednesday.

The transaction would see EMR paying A$100 million upfront and up to A$200 million in additional deferred consideration.

EMR is also said to be preparing the sale of a few copper and gold assets, which may include Capricorn Copper mine in Queensland and the Golden Grove mine in Western Australia.

The gold miner, which set overall output target for 2020 at 500,000 ounces, said in a production update that completion of stage 1 of the Ravenswood Expansion Project, or REP, had increased processing capacity to 5 million mt/year. The upgrade, it noted, allows a production target for 2020 of 80,000 ounces of gold at an all-in sustaining costs (AISC) of $1,200 per ounce.

Stage two of the expansion would see the Perth-based miner’s target production of 200,000 ounces a year for 15 years from 2022.

Ravenswood, located about 95km southwest of Townsville, is made up of multiple open pits to support large scale, long-term gold production beyond the life of the existing Mt. Wright underground mine.

Resolute Mining churned out last year 384,731 ounces of gold, or 4% less than the expected 400,000 ounces. AISC reached $1,09 per ounce, compared to a cost guidance of $1,020 per ounce.