Senegal approves Barrick’s Massawa sale to Teranga

Canadian miners Teranga Gold (TSX:TGZ) and Barrick Gold (TSX:ABX; NYSE:GOLD) have secured key approvals from the government of Senegal to proceed with their previously announced transaction, pursuant to which Teranga will acquire a 90% interest in the Massawa gold project for $430 million from a wholly owned subsidiary of Barrick and its joint venture partner. The Senegalese government will hold the remaining 10% interest in project.

The approvals also include a formal consent to Teranga’s plans to integrate Massawa into its existing Sabodala gold mine, as well as a formal waiver by the government of Senegal of its equity participation right to elect, on its behalf or on behalf of the private sector, to purchase up to an additional 25% of Massawa at market value. These approvals were key conditions precedent to closing of the transaction.

Barrick and Teranga expect to satisfy the remaining conditions precedent to closing of the transaction in the coming weeks, which include the granting of an exploitation licence and a residual exploration licence for Massawa.

Senegal approves Barrick’s Massawa sale to Teranga

Canadian miners Teranga Gold (TSX:TGZ) and Barrick Gold (TSX:ABX; NYSE:GOLD) have secured key approvals from the government of Senegal to proceed with their previously announced transaction, pursuant to which Teranga will acquire a 90% interest in the Massawa gold project for $430 million from a wholly owned subsidiary of Barrick and its joint venture partner. The Senegalese government will hold the remaining 10% interest in project.

The approvals also include a formal consent to Teranga’s plans to integrate Massawa into its existing Sabodala gold mine, as well as a formal waiver by the government of Senegal of its equity participation right to elect, on its behalf or on behalf of the private sector, to purchase up to an additional 25% of Massawa at market value. These approvals were key conditions precedent to closing of the transaction.

Barrick and Teranga expect to satisfy the remaining conditions precedent to closing of the transaction in the coming weeks, which include the granting of an exploitation licence and a residual exploration licence for Massawa.

ICMM steps up the game for miners with membership requirements update

The International Council on Mining and Metals (ICMM) has released new, tougher requirements for members and an updated set of principles for responsible mining amid increased pressure for miners to carry out socially-responsible investments and operations.

The group’s principles have been revised to include site-level validation and transparent disclosure, in order to maximize the industry’s benefits to host communities and lessen negative impacts.

Fresh set of principles will apply to roughly 650 assets in over 50 countries.

The move is ICMM’s latest effort to keep up with rising stakeholder expectations around environmental, social and governance best practices.

“Our aim has been to develop a holistic set of requirements that establish a benchmark for responsible mining practices,” ICMM’s chief operating officer, Aidan Davy, said in the statement.

The principles, last updated in 2003, will apply to roughly 650 assets in over 50 countries, held by 27 companies including BHP, Rio Tinto, Barrick Gold, Anglo American, Codelco and Glencore.

“In an industry with a checkered history of accidents, environmental disasters and eye-watering corruption scandals, is seems that the balance is finally starting to tip in favour of ‘good’ ESG,” Jonathan Brooks, head of Mining and Metals at European law firm Fieldfisher, recently wrote.

Miners have been taking note. According to an annual study published by consultancy Ernst & Young (EY) in October, almost half of the global mining and metals executives interviewed believe that losing social support, or social licence to operate (SOL), is the main risk the industry faces these days.

Sirius last-minute attempt to avoid Anglo’s takeover fails

Sirius Minerals (LON:SXX), the British junior struggling to build a huge fertilizer mine beneath the North Yorks Moors national park, revealed on Friday it had been studying an alternate deal to the planned takeover by Anglo American (LON:AAL), adding that all of them have fallen through.

The fertilizer company evaluated over the past week a plan to raise $680 million put forward by a consortium of financial investors, but talks didn’t go anywhere. Unless shareholders approve Anglo American’s £405 million (about $524m) deal, the company at the risk of going under administration or liquidation, Sirius said in a statement.

The London-based developer once again called investors to back Anglo’s takeover proposal, as all attempts to find bank financing to complete its Woodsmith fertilizer project have failed.

Anglo’s offer of 5.5p a share is equivalent to one-third more than the targeted company’s market value the day before the proposed takeover was made public.

Sirius was worth more than $2.3 billion 18 months ago, before announcing in September its funding plans had failed, adding it only had enough cash to last another six months. 

The company has already raised £920 million ($1.2bn) to develop Woodsmith and received the backing of thousands of local retail investors, but needs a further $3.8bn to turn it into the world’s biggest producer of polyhalite, a multi-nutrient fertilizer.

Long time coming

Anglo’s lifeline didn’t come out of the blue. The major, which is looking to retreat from thermal coal, has hinted the bid for Sirius Mineral had been in the works for months.

“We are unashamedly transitioning our portfolio to later cycle products that we believe the world will need as it goes forward,” chief financial officer, Stephen Pearce, said on a call last month.

The executive noted Anglo had identified the project as being of potential interest “some time ago” due to its quality in terms of scale, resources and costs.

If successful, the takeover would mark a comeback to the fertilizer sector for Anglo, which owned some phosphate assets in the past but in recent years has focused on “four pillars” — copper, iron ore, diamonds and platinum.

It would also add a second major project to Anglo’s $5bn Quellaveco copper mine in Peru, at a time when most rivals are reluctant to expand.

“We fundamentally believe part of our responsibility is to keep an eye on growth over all the aspects of different time frames,” Pearce added.

The Woodsmith mine, poised to be one of the world’s largest in terms of the amount of resources extracted, is set to generate an initial 10 million tonnes per year of polyhalite, a multi-nutrient fertilizer, containing four of the six key elements needed for plant growth (potassium, sulphur, magnesium and calcium).

Sirius’ shareholders will vote on whether or not to accept Anglo’s lifeline on March 3.

Modest global growth for iron ore production – report

Global iron ore production will grow modestly over the years due to mine expansions in Brazil and increasing output from India, Fitch Solutions’ latest industry trend analysis found.  Meanwhile, analysts say output growth in China will decline on the back of falling ore grades and high costs of production. 

Global iron ore production will grow from 2,896mnt in 2019 to 3,147mnt by 2029, Fitch forecasts. This represents an average annual growth rate of 0.8% during 2020-2029, which is a significant slowdown from an average growth rate of 3.0% during 2010-2019.  

Fitch forecasts iron ore production in Australia to grow minimally over 2020-2029, averaging an annual 0.7% growth, compared with 8.7% growth over the previous 10-year period

Fitch forecasts iron ore production in Australia to grow minimally over 2020-2029, averaging an annual 0.7% growth, compared with 8.7% growth over the previous 10-year period. This is due to mothballing of mines from junior miners, while major players will stick to their production growth targets to crowd out high cost producers. 

Supply growth will be primarily driven by India and Brazil, where Vale is planning to expand output to 390-400mnt by 2022. Fitch says Vale’s supply will continue to dominate global output, but miners in China, which operate at the higher end of the iron ore cost curve, will be forced to cut output due to falling ore grades.  

Majors continue to decrease costs and increase production in the longer term. In June 2018 BHP approved the A$2.9 billion development of its South Flank iron ore project in Western Australia to replace existing mines. The world’s number one miner expects production to start in 2021 at the project.  

In the same month, Rio Tinto announced plans to start developing its Koodaideri iron ore mine in Western Australia’s Pilbara region in 2019, claiming it is one of the most technologically advanced in the world. The company will mine its first tonnes from the project in 2021. In May 2018, Fortescue Metals Group approved the development of a A$1.3 billion iron ore project, Eliwana, which will come online this year. 

Remaining cost-competitive will be a focus for iron ore miners in a long-term weak price environment, with top firms investing in technology to maintain an edge, Fitch maintains. 

Read the full report here.

Mexican Gold owns world’s best drill intersection of 2020

Mexican Gold’s (TSXV: MEX) Queensway gold project in Canada’s Newfoundland province reported the most significant drill intersections of 2020 to date, according to intelligence company Opaxe, based on companies listed on the Toronto Stock Exchange.

Opaxe compiles the best drill intersections around the world and then ranks them based on gold equivalent grams per tonne using ruling metal and mineral prices.

The top class grades over 19 meters boosted MEX shares 25% higher on the TSX Venture Exchange the day after the announcement. 

Walker River Resources’ (TSXV: WRR) Lapon Canyon gold project in Nevada lands second place, with good grades over 13.7 meters.

Year to date significant drill results from Opaxe weekly bulletin 03 – 09 February 2020

Based on companies listed on the Australian Securities Exchange, Evolution Mining’s (ASX: EVN) Cowal gold project in Sidney is the runaway winner, with Westgold Resources (ASX: WGX) gold project Fortnum in western Australia coming in second.

Number 3 on the list, Oklo’s (ASX: OKU) gold project in Mali returned top class grades over 55 meters – and OKU shares opened 57% higher on the Australian Securities Exchange the day after the announcement.

Year to date significant drill results from Opaxe weekly bulletin 03 – 09 February 2020

Australian companies are responsible for eight of the ten most significant drill intersections so far this year, followed by Canadian companies with seven. 

Significant drill intersections of the week

The ranking of significant drill intersections of the week is based on companies listed on Australian Securities Exchange was led by Azure Minerals (ASX: AZS) silver-gold-copper Alacran project in Mexico with reports of “robust estimates of the true mineralised thicknesses.”

Based on companies listed on Toronto Stock Exchange the weekly ranking was topped by Walker River Resources Lapon Canyon gold project in Nevada.

Barrick beats forecasts, hikes dividend by 40% as gold prices soar

Barrick Gold (TSX: ABX) (NYSE: GOLD) posted on Wednesday a better-than-expected quarterly profit and gave investor a more than welcome 40% dividend increase thanks to strong gold prices.

The world’s second largest producer of the yellow metal said adjusted net earnings in the three months to December reached $300 million, or 17 cents a share, up from $264 million recorder in the previous quarter. Analysts’ average estimate was 14 cents a share.

The results, along with Barrick halving its deb to $2.2 billion over the course of 2019, allowed the miner to declare a dividend of 7 cents a share, up from 5 cents in third quarter, payable on March 16.

“The board believes the dividend increase is justified by the significant reduction in net debt and strong balance sheet, together with the growth in free cash flow supported by a robust 5-year plan which we have shared with the market,” executive vice-president and chief financial officer, Graham Shuttleworth, said in a statement.

Gold prices increased about 18% last year, as investors sought safe-haven assets due to global uncertainty triggered by the long-drawn out trade war between the United States and China.

Barrick has also benefited from the $1 billion fetched through asset sales since chief executive Mark Bristow took the helm in January 2019.

More to come…

BHP becomes the world’s largest copper producer

BHP Group on Monday became the world’s largest copper miner based on production after Chile’s copper commission announced a slide in output at state-owned Codelco.

Hampered by declining grades Codelco production declined by 5.6% or about 100,000 tonnes last year.

Overall, Codelco, nationalized in the early 1970s, churned out 1.706 million tonnes of copper, the lowest level since 2008, when output was at 1.55 million tonnes.

Codelco, nationalized in the early 1970s, churned out 1.706 million tonnes of copper, the lowest level since 2008.

At that time, the giant Ministro Hales mine, which contributes between 180,000 and 200,000 tonnes of copper a year, had not yet begun operation.

Last month, the world’s number one mining company, BHP (NYSE:BHP) reported robust six months to end December numbers from its copper operations, including at Escondida in Chile, the world’s largest copper mine.

For the first six months of BHP’s financial year, output was up 7% year on year to 885,000 tonnes with Escondida contributing more than 600,000 tonnes.

In the six-months to end-June 2019, Melbourne-based BHP produced 864,000 tonnes bring the calendar year output to 1.749 million tonnes.

The Anglo-Australian giant kept guidance for its 2020 financial year unchanged at between 1.705 million and 1.820 million tonnes.

BHP may struggle to hang onto the crown despite spending $2.5 billion to expand its Spence mine in Chile.

Freeport-McMoran’s Grasberg mine in Indonesia returns to full production after a transition to underground mining in 2022. US-based Freeport produced 1.47 million tonnes of copper in 2019.

Codelco itself is in the midst of an ambitious, 10-year, $39 billion investment drive to open new projects and overhaul older mines so it may well catch up too.

Barrick sells Kenya project to Shanta Gold for $14.5 million

Barrick Gold (TSX: ABX) (NYSE: GOLD) has sold its project in southwestern Kenya, held by its former subsidiary Acacia Mining, to Tanzania-focused Shanta Gold for $14. 5 million.

The deal gives Shanta its first asset outside Tanzania, which Acacia began exploring in 2010 before being bought out by Barrick.

The West Kenya licence holds about 1.18 million ounces of gold with a grade of 12.6 grams per tonne (g/t). Historical gold production in the area is estimated in roughly 259,000 ounces of gold at 12.3 g/t, mainly from Rosterman mine, included in the licence area of the West Kenya Project.

Barrick will become Shanta’s fifth largest shareholder, with a 6.4% stake, as a result of the agreement.

More to come…

Chile’s copper output down in 2019 on declining grades

Copper production at Chile, the world’s No. 1 producer of the metal, dropped by 44,000 tonnes or almost 0.8% last year compared to 2018, amid a perfect storm of falling ore grades at the largest deposits, water scarcity and operational issues.

The country’s copper commission Cochilco said Codelco, the state-owned giant, was the miner most affected by aging mines as it production declined by 5.6% in 2019 to about 100,000 tonnes. The impact of such fall at a national level was offset by results at other mines, such as Barrick’s Zaldívar, Lundin’s Candelaria and Antofagasta’s Centinela.

Codelco contributed the most to the fall, producing 44,000 tonnes less than in 2018, as it grapples with falling grades at its aging mines.

Overall, the world’s largest copper producer churned out 1,706 million tonnes of copper, the lowest level since 2008, when it generated only 1.55 million tonnes. At that time, however, the giant Ministro Hales mine, which contributes between 180,000 and 200,000 tonnes of copper a year, had not yet begun operations.

Another mine that experience a sharp drop in production was BHP’s Escondida, the world’s largest copper mine, which ended 2019 with a production of 1,188 million tonnes or 4.4% less than in 2018.  

The biggest output increase, in turn, was registered at Antofagasta’s Centinela mine, which churned out 25.8% more copper than in 2018.  

Codelco, which hands over all of its profits to the state, is in the midst of an ambitious, 10-year, $39 billion investment drive  to open new projects and overhaul older mines.

The company 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 tonnes of production. The metal accounts for up to 15% of the country’s gross domestic product.