Novagold sues J Capital Research for defamation

Novagold (NYSE, TSX: NG) announced on Tuesday that it had served short-seller J Capital Research USA (JCAP) with a civil action lawsuit for defamation in the United States District Court for the Eastern District of New York.

The company alleged that on May 28, JCAP issued a “report” on
Novagold that contained false and misleading statements as part of what the company believes to be a “short and distort” attack.

Novagold and Barrick have reopened the Donlin camp last month following a two-month due to the covid-19 pandemic

J Capital Research accuses managers of the Vancouver-based explorer of “systematically” misleading investors about its proposed Alaska gold mine over the last 15 years.

NovaGold and Barrick’s Donlin project, with measured and indicated resources of about 39-million ounces of gold is considered one of the largest open pit gold deposits in Alaska.

JCAP, a company founded in China a decade ago which usually targets overvalued media and tech companies for short-selling, says the Donlin Gold project “will never be built” and “in short, is a stock promote, not a mining plan.”

Drilling at Donlin

Novagold and Barrick have reopened the Donlin camp last month following a two-month due to the covid-19 pandemic.

Four drill rigs have been remobilized at the project, Novagold says.

The company anticipates that most of the planned program, aimed at confirming recent geologic modeling concepts and testing potential extensions of high-grade zones, will be completed by year-end.

The 2020 drill program consists of approximately 80 holes totalling about 22,000 metres centered on the ACMA and Lewis resource areas.

Midday Tuesday, Novagold’s stock was up 4.25% on the TSE. The company has a C$4.28 billion market capitalization.

Lundin restarts Fruta del Norte in Ecuador

Lundin Gold has restarted operations at its Fruta del Norte (FDN) gold mine in Ecuador and expects to resume concentrate shipments in the next few days.

Operations at the site were suspended in March due to the covid-19 pandemic.

Based on a projected mill ramp up to 3,500 t/d over the next two months, FDN is expected to generate 150,000 oz. to 170,000 oz. of gold in the second half of this year, for an expected total of 200,000 oz. to 220,000 oz. in 2020.

Midday Monday, Lundin’s stock was up 5.1% on the TSE

The company previously announced that the mine achieved commercial production on Feb. 20, 2020.

The underground mine is now once again producing ore with a production ramp up expected over the next three months. Lundin has covid-19 protocols at the site to minimize risks to staff and communities.

In the second half of this year, the mill throughput is expected to average 3,200 t/d at a head grade of 10 g/t gold. All-in sustaining costs are anticipated to range between $770 and $850 per oz. in the second half of 2020, which includes additional costs due to covid-19 and the associated production ramp-up.

In a note to investors, Brian Quast of BMO Capital Markets noted that this is a positive development for the company and removed his ‘Speculative’ designation on the stock. Quast maintains an unchanged C$14.50 target price and ‘Outperform’ rating for the shares.

Over a 13-year mine life, the operation is expected to produce an average of 325,000 gold oz. annually at life-of-mine AISCs of $621 per oz. FDN sits within the 38-sq.-km Suarez pull-apart basin, with drill-ready targets nearby. Current probable mineral reserves for the operation stand at 15.5 million tonnes grading 9.67 g/t gold, containing a total of 4.8 million gold oz. – the reserves are estimated using cut-off grades between 4.7 g/t gold and 6.8 g/t gold.

Midday Monday, Lundin’s stock was up 5.1% on the TSE. The company has a C$5.6 billion market capitalization.

(This article first appeared in the Canadian Mining Journal)

Freeport beats revised Q2 copper sales, shares jump

Freeport-McMoRan (NYSE: FCX) announced on Monday that it exceeded several key performance targets included in its April revised operating plans.

According to the company, second-quarter 2020 copper sales are expected to exceed the estimate of 690 million pounds by approximately 8% and gold sales are expected to exceed the estimate of 165,000 ounces by approximately 10%.

Freeport said that the Lone Star project in Arizona is substantially complete and on track to produce approximately 200 million pounds of copper per year, beginning in the second half of 2020.

Midday Monday, Freeport’s stock was up 7.9% on the NYSE

“Significant progress was achieved at Cerro Verde during the second quarter to restore operations following covid-19 restrictions imposed by the Peruvian government,” the company said in a press release.

During June, Cerro Verde mill operations averaged 315,000 metric tonnes of ore per day, approximately 80% of the 2019 annual average. Meanwhile, Freeport continues to operate its open-pit copper mining complex El Abra in Chile.

Grasberg

After cutting its workforce at Grasberg in May amid a surge in covid-19 cases, Freeport expects to ramp-up underground production at the world’s second-biggest copper mine.

“During the second quarter, combined production rates from the Grasberg Block Cave and Deep MLZ underground mines exceeded 54,000 metric tonnes of ore per day, approximately 9% above the April 2020 estimate and 46% above the first-quarter 2020 average,” the company said.

At the end of June, combined production from the Grasberg Block Cave and DMLZ averaged approximately 70,000 metric tonnes of ore per day.

PT Freeport Indonesia expects its 2021 copper and gold production to approximate 1.4 billion pounds of copper and 1.4 million ounces of gold, nearly double projected 2020 levels.

Freeport expects second-quarter 2020 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to approximate $650 million and expects to record a net loss before nonrecurring items (adjusted net income) approximating $0.03 per share.

Midday Monday, Freeport’s stock was up 7.9% on the NYSE. The company has a $18 billion market capitalization.

Peru miners struggle as coronavirus cases top 300,000

Mining companies operating is Peru are being forced to keep operations suspended and halt new ones as confirmed coronavirus cases in the country jumped past 300,000 on Sunday, with several of the new infections happening in the copper sector.

Canada’s Trevali Mining (TSX: TV) said on Friday that a total of 82 workers had tested positive for covid-19 at its Santander mine, which would remain halted. The company had suspended operations in June after 19 workers tested positive. The number of confirmed cases now comprises nearly 30% of the total workforce of the mine.

London-based Hochschild Mining (LON: HOC) halted on Monday operations at its flagship Inmaculada silver mine, after “a number” of workers there tested positive for coronavirus. The mine will now operate with a reduced workforce running care and maintenance activities at the site. The company expects to resume operations as soon as a safe and healthy workforce can return to site.

Hochschild’s Pallancata silver-gold mine in Peru and the San José mine in Argentina remain open, it said.

Japan’s Mitsui Mining and Smelting seems to have the situation under control as it said on Monday it had resumed operations at its two zinc mines in Peru last week. The company’s Huanzala and Palka mines had been suspended for more than three months to limit the spread of the novel coronavirus.

The death toll from the virus in Peru, the world’s no. 2 copper producer, now stands at 10,589, the 10th-highest in the world, based on data from Johns Hopkins University. In terms of confirmed cases, the Andean country is the fifth-highest in the world.

Key week for copper

Disruptions related to pandemic situation in Peru as well as in neighbouring Chile, the world’s largest copper producer, have been propelling prices for the metal in recent weeks.

After hitting a five-month high last week, copper was trading close to that milestones again on Monday thanks to growing optimism about demand in top consumer China and concerns about the spread of covid-19 in the world’s largest producers.

Benchmark copper on the London Metal Exchange traded up 1.5% at $6,105 a tonne in official rings. Then industrial metal, also needed in the making of electric vehicles, hit $6,120 a tonne last week, the highest since Jan. 22.

Analysts believe that copper will extend gains above $6,000 for days, especially after state-owned Codelco suspended expansion work at El Teniente, its largest copper mine.

It means that the world’s largest copper miner is now running parts of its two flagship divisions (Chuquicamata and El Teniente) at reduced levels. Additionally, work at all of Codelco’s Northern District projects including Chuquicamata, Gaby, Ministro Hales and Radomiro Tomic have now been temporarily suspended.

While Chile managed to maintain output at high levels in May, curtailments and shift-pattern changes have begun to affect the country’s overall output. A clear view into how it fared in June comes on Tuesday, with monthly export data.

“The risks are clearly mounting and we believe completion timelines on the aforementioned structural projects are set to be further delayed,” said Colin Hamilton, analyst at BMO Capital Markets, in a note to investors.

There’s also important technical action in the charts, with spot copper now trading higher than in the futures market. In addition, the metal’s 50-day moving average is now fast closing in on its 200-day counterpart and may move above it in the coming days, Bloomberg analysts said on Monday.

The pattern, known as “golden cross”, normally anticipates further gains in an asset. The last time investor watched it  unfold for copper was early this year, just before it collapse due to the spread of the novel coronavirus.

Dividend payments may resume, says Vale CFO

Vale (NYSE: VALE) is ready to resume dividend payments to investors and is just waiting for more certainty around the coronavirus pandemic before approving the move, Chief Financial Officer Luciano Siani Pires told investors on Friday.

Speaking on a live conference promoted by XP Investimentos, Siani Pires said that the uncertainties depend on the behavior of China, the destination of most of Vale’s exports.

“The company today is negotiated lower than it should be”

LUCIANO SIANI PIres, VALE CFO

“China today consumes 75% of the world’s iron ore. The risk of a second wave of coronavirus there has to be monitored,” he said.

The company suspended dividend payments since the disaster at Brumadinho, Minas Gerais, when its dam burst in 2019, killing over 270 people.

Siani Pires said that after the disaster the company began developing its environmental, social and governance (ESG) practices.

“Today there is a perception of greater risk for the company because of Brumadinho. The company is negotiated lower than it should be,” he said.

Iron ore price

Seaborne iron ore prices were up Friday, crossing the $100 per tonne threshold.

A rise in prices in both the Chinese iron ore futures market and the 62% Fe July swaps contract on the Singapore Exchange contributed to the increase.

Vale tends to play an important role to bring down the prices as its production increases in the second half of the year, according to Siani Pires.

“We had a bad first semester, also because of climate factors. As we normalize production in H2, we expect the prices to fall.”

Midday Friday, Vale’s stock was up 1.26% on the NYSE. The company has a $53.4 billion market capitalization.

ESG policies boost mining investor confidence – report

On April 20, Teck Resources Ltd. (TSX:TECK.B) released a 76-page first-quarter financial report that reported an $800 million decline in earnings compared with Q1 2019, due in large part to the impact of a global pandemic.

And on May 20, Teck released a 114-page sustainability review for 2019 that details its progress on environmental, social and governance (ESG) issues.

That progress includes:

• A 279,000-tonne reduction in carbon dioxide (CO2) emissions since 2011;

• A 249-terajoule reduction in energy use;

•5,781 hectares of land reclamation;

• $225 million spent on aboriginal business procurement;

• $19 million in community investments; and

• 32% of new hires being women in 2019.

That report followed an announcement in March that Teck was committing to a 33% CO2 reduction by 2030.

Institutional investors are increasingly looking at ESG and sustainability reports because they have become earmarks of well-managed companies, according to Daniel O’Brien, PwC’s Western Canada lead for sustainable business solutions.

While the mining sector took a hit from the pandemic in 2020’s first half, as the world moves into recovery, O’Brien said there could be a significant influx of capital back into the markets, and companies with good ESG policies stand to benefit.

“That capital will largely be controlled by larger institutional investors that have a very strong viewpoint on ESG,” he said. “They see ESG as a proxy for a well-managed company.”

According to PwC’s annual report on mining in British Columbia, the province’s mining sector held up well in 2019, even though commodity prices began to fall in the latter part of the year.

“That capital will largely be controlled by larger institutional investors that have a very strong viewpoint on ESG. “They see ESG as a proxy for a well-managed company”

Daniel O’Brien, Western Canada lead for sustainable business solutions, PwC

And B.C. miners appear to have weathered the covid-19 pandemic better than some of their peers elsewhere. In some cases, it may be because some already have strong ESG policies, which would include health and safety measures that helped them address worker safety issues posed by covid-19.

Some companies in B.C. either reduced production or temporarily shut down some operations to address worker safety during the pandemic.

“In the last six weeks, we’ve seen many of those operations either come back online or return to full production levels,” said Mark Patterson, PwC’s B.C. mining leader.

While metallurgical coal prices are currently soft, gold prices are up, and even copper prices have risen recently – a possible early indicator of global economic recovery.

“In the gold space, we’ve obviously seen gold prices respond very positively to current circumstances of uncertainty,” Patterson said. “I think the expectation on the gold side would be … maybe growth in exploration and, in the longer term, hopefully development opportunities coming out of a higher gold price environment over the next little while.”

Michael Goehring, president of the Mining Association of BC, said the PwC report confirms how important mining is to the province.

It points to a $216 million increase in direct payments to government and increase of 1,563 direct jobs since 2017. The mining sector in B.C. had capital expenditures of $1.5 billion in 2019, compared with $1.1 billion in 2018.

The increases in revenue to government occurred even though revenue to mining companies in B.C. overall was down by $1 billion compared with 2018.

“The numbers point to the need for policymakers and the industry to work together to improve our province’s fiscal and regulatory conditions so our mines and smelters can compete and succeed in global markets,” Goehring said.

“I would argue, with the right policies in place, mining offers British Columbians a significant opportunity to help our economy grow and recover from covid-19.”

O’Brien said companies that take ESG policies seriously may stand a better chance of attracting investment capital.

“There’s some early indication that companies with a strong ESG profile – low risk related to ESG – are outperforming peers in terms of their financial performance and stock prices,” he said. 

“Mining companies that are doing a good job of reporting on ESG, and indicating how they’re progressing towards their targets and objectives, are going to be the ones that are well-positioned to attract that capital.” 

(This article first appeared in Business in Vancouver)

Nevada Gold Mines exceeds expectations, says Barrick

Barrick Gold’s (NYSE:GOLD) (TSX:ABX) Nevada Gold Mines (NGM), established one year ago Wednesday, has posted an exceptional performance in its first 12 months of operation, CEO Mark Bristow said in a media statement Wednesday.

Barrick, the world’s second-largest gold miner operates NGM, the world’s largest gold mining complex, and owns 61.5% of the business, with Newmont (NYSE: NEM) holding the remaining 38.5%.

The business combination is expected to generate savings of $500 million a year within the first full five years. It includes Barrick’s Goldstrike, Cortez, Turquoise Ridge, and Goldrush and Newmont’s Carlin, Twin Creeks, Phoenix, Long Canyon, along with associated processing plants and infrastructure of both companies.

NGM is expected to produce 2.1 – 2.25 million ounces of gold in 2020.

In May, Barrick reported Q1 gold production and costs were consistent with full-year guidance.

In its first year of combined operation, NGM met the production and cost targets set out at the start of the joint venture, despite the covid-19 pandemic

In its first year of combined operation, NGM met the production and cost targets set out at the start of the joint venture, despite the covid-19 pandemic, Bristow said, and added that the joint venture had required the integration of multiple assets, including three Tier One mines into a unified complex under a new leadership team.

“The new team was drawn from both legacy companies. It started with a clean slate in a fit-for-purpose structure, integrating the two bodies of knowledge to produce new models and fresh opportunities, and introduced a strong geological focus to the operations,” Bristow said. “It was the strength of the team and the structure, incidentally, that enabled NGM to deal so quickly and effectively with the unprecedented threat posed by the pandemic.”

Barrick said the joint venture has created a platform from where both companies see NGM as the industry leader.

In March, Barrick unveiled a 10-year production plan aimed at becoming the most valued bullion company. The strategy, outlined in its first annual report since its merger with Randgold Resources, includes boosting Barrick’s production to about 5 million ounces of gold a year, with the bulk coming from its North American operations.

At the time, Bristow said Nevada Gold Mines would be the “value foundation” of its business moving forward.

Alrosa resumes operations at International mine

Alrosa (MCX: ALRS) announced on Tuesday that operations have restarted at its International underground diamond mine near Minry, Russia.

The world’s top diamond producer by output suspended works at the mine last week, after several employees tested positive for covid-19.

The mine’s operations have resumed in a two-shift mode so mine staff don’t come into contact with contractors working at surface facilities.

“This decision was made as the majority of workers and contractors were tested negative for covid-19,” the company said in a press release.

“Employees of the mine waiting for the confirmation of test results remain furloughed. The company’s management also notes that regular testing for coronavirus will continue until the stabilization of the covid-19 situation on the national level.”

Last month, Alrosa had to suspend production at another two assets. That decision, however, was based on the dire state of the diamond market and not the pandemic

International is located the subarctic Russian republic of Sakha.

It opened in 1999 and yields some of the world’s highest diamond grades, at 8.09 carats per tonne.

It produced 2.2 million carats in 2019, contributing around 6% of the company’s total output.

Last month, Alrosa had to suspend production at another two assets. That decision, however, was based on the dire state of the diamond market and not the pandemic.

The state-controlled miner said in March it may revise down its output guidance for 2020, which it did last month. Now Alrosa expects to produce between 28 and 31 million carats. In 2019, it produced 38.5 million carats.

Russia’s overall case count stands at 647,849, the third-highest in the world, with 9,320 deaths.

White Gold starts drilling at Titan project, shares up

White Gold (TSXV: WGO) announced on Monday that it has started drilling on its Titan Project as well as initiated ground surveys on other high priority targets in Canada’s Yukon territory.

The 2020 exploration program is backed by partners Agnico Eagle and Kinross Gold and it has been designed to further test existing targets and recent new discoveries on the White Gold, Hen and JP Ross properties.

Company’s stock jumped 12% on the TSXV

“The fully funded program is designed to be focused and impactful starting with drilling the Titan anomaly identified late last year and to follow up on some of our other highest priority projects,” said chief executive David D’Onofrio in a media release.

The Titan project is located on the Hen property 25 kilometres northeast of the company’s flagship Golden Saddle and Arc deposits, which host mineral resources of 1,039,600 ounces Indicated at 2.26 g/t gold and 508,700 ounces Inferred at 1.48 g/t gold.

Extensive exploration work programs are planned across the White Gold District properties this season, and include approximately 10,000 soil samples, 1,000 GT probe samples, 700 line kilometres of ground magnetics and VLF-EM surveying, and high-resolution drone surveys, the company said.

Earlier this month, White Gold closed a private placement of approximately 6.66 million common shares at C$0.90 per share for gross proceeds of C$6 million to be used to kickstart the 2020 exploration program.

Midday Monday, company’s stock was up nearly 12% on the TSXV. The company has a C$135 million market capitalization.

Rio Tinto reaches power deal for Oyu Tolgoi

The world’s second largest miner Rio Tinto (ASX, LON, NYSE: RIO) has reached an agreement with Mongolia regarding the construction of a power plant to supply the giant Oyu Tolgoi copper and gold mine, located in the Gobi Desert. 

The new deal is a revision of the original power source framework agreement (PSFA) signed in 2018. It states that Rio, its subsidiary Turquoise Hill Resources (TSX, NYSE:TRQ) and the Mongolian government will work towards finding a permanent power supply solution by the end of March 2021.

Coal-fired plant is expected to come on stream within the next four years.

The notice confirms that Rio will not have to build its own 300 MW coal power plant, which it had earlier estimated could cost $924 million. Instead, is the government which will begin construction of a coal-fired power plant by July 2021.

The company estimates the plant will come on stream within the next four years. Until then, power supply to the mine and the underground project, which is sourced from China, will continue under the current terms, Rio said.

The massive Oyu Tolgoi deposit was discovered in Mongolia’s southern desert in 2001. Rio Tinto gained control of it in 2012, with the government of Mongolia retaining one-third ownership of the asset.

Canada’s Turquoise Hill, the Rio-controlled company that owns 66% of Oyu Tolgoi, is spearheading an ongoing underground expansion, which has faced multiple delays and costs blowouts.

Rio Tinto and Turquoise estimated last year a cost overrun at the project of up to $1.9 billion due to difficult geology. They noted that total capital expenditure would be in a range of $6.5 billion-$7.2 billion.

The cost of building a power plant was expected to come on top of that figure.

Delays

The companies also warned of further delays of up to two and a half years, with first sustainable production expected between May 2022 and June 2023.

The project will to lift production from 125,000–150,000 tonnes in 2019 to 560,000 tonnes at peak output, targeted for 2025. This would make it the biggest new copper mine to come on stream in several years.

Oyu Tolgoi produced 35,203 tonnes of copper and 26,154 ounces of gold in the first three months of this year, on track to achieve 2020 production guidance. The coronavirus pandemic, however, has caused operation to slow down since.