Newcrest earns 40% interest in Havieron

Australia’s largest gold producer, Newcrest Mining (ASX: NCM) confirmed Wednesday that it has now reached its Stage 2 farm-in milestone at the Havieron project.

Newcrest has earned a 40% interest in the project and gave notice to Greatland Gold that it is proceeding to Stage 3.

The Havieron Project is operated by Newcrest under a farm-in agreement with Greatland Gold. It is centred on a deep magnetic anomaly located 45km east of Telfer in the Paterson Province, Western Australia. The target is overlain by more than 420m of post-mineral cover.

Newcrest started drilling during the June 2019 quarter and has increased drilling activity such that eight drill rigs are now operational

Newcrest started drilling during the June 2019 quarter and has increased drilling activity such that eight drill rigs are now operational.  

Drilling at the Havieron Project continues to expand and demonstrate the continuity of high-grade mineralisation which extends over 450m, to vertical depths of 600m and remains open at depth to the northwest.

Drilling has also identified mineralised breccias proximal to high-grade mineralisation, Newcrest said. A further 20,000m are planned to be drilled to support the objective of delivering a maiden resource estimate in the second half of 2020.

Studies are also underway to investigate the potential for starting an exploration decline by the end of calendar year or early 2021 and achieving commercial production within two to three years from the commencement of the decline.

Newcrest said it has implemented measures to reduce and mitigate the risks of the covid-19 pandemic to its project workforce and key stakeholders.

 “Today’s announcement highlights the significant investment we are making into this project,” Newcrest CEO Sandeep Biswas said in a media release. “The results to date have been very positive and I believe that Havieron provides a great opportunity to improve the economics and extend the operating life of Telfer.”

Polymetal signs offtake deal with Australia’s Blackham

Precious metals mining major Polymetal announced Tuesday it has signed a refractory gold concentrate offtake agreement and strategic alliance with Australian gold miner Blackham Resources.

The companies entered into the offtake agreement for the greater of 70% of refractory sulphide gold concentrate from Blackham’s Wiluna Stage 1 expansion project during its first three years of operation, or 122,500 tonnes of concentrate containing at least 195,000 ounces of gold.

The Wiluna deposit is located close to the town of Wiluna, approximately 750 km northeast of Perth.

Wiluna ores are either oxide, refractory sulphide or quartz reef free-milling ores, with most gold occurring within fine-grained sulphides. Currently the only operating CIL plant is treating oxide ores from both Wiluna and other nearby mining centres.

Blackham is implementing the expansion project in two stages to unlock the value of refractory ores. Stage 1 assumes 110,000 ounces of average annual gold production from sulphide ores during 2021-2027, followed by Stage 2 of expansion, which will see an increase of annual production to 250,000 ounces of gold for more than 10 years.

Upon expiration of the initial three-year period of Stage 1 and during Stage 2 of the Wiluna expansion project, Polymetal will obtain exclusive offtake rights for up to 100% of Blackham’s concentrate production.

Polymetal said the alliance will establish a process of two-way technical data sharing in respect of the potential expansion of Wiluna concentrate production and certain regional projects. Its long-term goal is to reduce the global environmental footprint of refractory sulphide gold ores and concentrates processing.

Glencore postpones dividend payment decision due to covid-19 related risks

Miner and commodities trader Glencore (LON: GLEN) has deferred making a decision on whether to go ahead with the proposed 2020 cash distribution as risks associated to a global recession and massive demand shock looms.

The Swiss-based company had announced plans to reward investors with $2.6 billion in cash distribution this year, or $0.20 per share. Instead, it said it was taking “prudent” action to protect and strengthen its capital structure amid the current period of heightened uncertainty.

Glencore warned that, while there were currently no risks of material production disruption owing to the coronavirus pandemic, the situation could rapidly change due to uncertainties.

The firm also extended its current credit facilities to protect its capital structure and generate free cash flow.

Today’s announcement makes of Glencore the first major diversified miner to take such a step in respect of capital returns. Others such as BHP, Rio Tinto and Anglo American, have not commented on changes to dividends or disruption to other kinds of capital return.

A decision on resuming the payout would be made later in the year, Glencore said.

The news come at a difficult time for the company. It reported in February its first annual net loss since 2015, as it had to take a $2.8 billion impairment charge to reflect the closure of its African copper business

It also follows an audit overview of the firm’s 2019 annual report in with examiners found potentially “relevant facts” that may help authorities progress on the multiple, but separate alleged corruption and bribery investigations targeting the Swiss company. 

Last week, it halted a number of smaller mines due to government restrictions to curb the spread of the coronavirus

While today’s announcement will be painful for investors, analysts believe it reflects a situation that is not nearly as bad as 2015, when top miners, particularly Glencore and Anglo American, were frantically trying to pay down debt and their share prices nosedived.

Rio pledges A$25m to support fight against covid-19

Global mining major Rio Tinto has pledged A$25 million in additional funding to support grassroots communities around the world with covid-19 preparedness and recovery efforts, bringing the company’s total voluntary global community contributions to around A$60 million for 2020.

Rio says the additional investment will predominantly focus on value-in-kind opportunities, some of which are well progressed and include:

  • Supply of masks and protective equipment to support emergency and health professionals;
  • Donations to national and local communities, hospitals and international agencies;
  • Provision of ventilation units and temporary medical units in communities;
  • Further investment in education and financial literacy programs as remote learning becomes the global norm for children;
  • Manufacturing of hand sanitizer at certain Rio sites.

The company is actively contributing to covid-19-related best practice forums in health, safety and communities, as established by the International Council of Mining and Metals, it said in a statement.

Rio has already put strict protocols in place globally across its operations, in line with government guidance and directives and advice from leading medical experts. The majority of Rio’s employees work at operations and cannot work from home, so the company has implemented a number of controls to support them, such as travel restrictions, social distancing protocols, personal hygiene, on-call service and leadership on site.

CEO Jean-Sébastien Jacques stated in a media release that the company’s focus is to maintain a “business as usual” approach with safeguards in place, but its first priority remains the health and safety of all employees and communities.

As an organization, Rio Tinto has been active with its humanitarian efforts. Earlier this year, the company donated A$750,000 to the Australian Red Cross to help with disaster relief and recovery efforts for people affected by Australia’s bushfire crisis.

De Beers scraps diamond sales event due to coronavirus lockdowns

De Beers, the world’s largest diamond producer by value, has cancelled its third sales event as lockdowns to contain the spread of the novel coronavirus in Botswana, South Africa and India made it impossible for buyers to attend.

The Anglo American unit sells diamonds to a handpicked group of about 80 buyers 10 times a year at events called sights. The third one this year was scheduled to take place from March 30 to April 3.

In February, the diamond giant reported its worst set of earnings since Anglo American (LON:AAL) acquired it in 2012.

De Beers is enabling customers to defer 100% of their sight 3 allocations to later in the year, and said it would continue to seek innovative ways to meet its sightholders supply needs in the coming weeks.

Russia’s Alrosa, the world’s No.1 producer of rough diamonds by carats, said earlier this month that it was studying options for online trade as global travel restrictions make traditional physical inspection of gemstones almost impossible.

The pandemic has placed new worries on the diamond industry, which was finally beginning to show signs of recovery, following a disastrous 2019.

Global demand and prices for all types of diamonds has steadily fallen since last 2018, affecting small stones producers the most, due to an oversupply in that segment that dragged prices down.

The glut of rough and polished stones destroyed margins for the industry’s crucial middlemen who cut, polish and trade them.

Increasing demand for synthetic diamonds also weighed on the market. Man-made stones require less investment than mined ones and can offer more attractive margins.

BHP commits $8-million to support Chile’s battle against COVID-19

Global miner BHP Group (ASX, LON, NYSE: BHP) launched an $8-million plan focused on helping mitigate the spread of COVID-19 in Chile.

BHP operates the Escondida copper mine, which is the world’s largest, and the Pampa Norte mine, which consists of two operations, Spence and Cerro Colorado. Both complexes are in the northern Atacama Desert but Escondida and Spence are located in the Antofagasta region while Cerro Colorado is in the Tarapacá region.

Just a week ago, the company announced that it decided to exclude contractors from its Chilean operations for 15 days, in an effort to curb the spread of coronavirus.

Efforts will be focused on the southeast area of Santiago’s Metropolitan Region, Antofagasta and Tarapacá

But as the number of confirmed cases continues to grow, now reaching 2139 including seven deaths, BHP decided to join efforts with the Medical Faculty at the Catholic University with the goal of raising the testing capacity of family healthcare centres located in the southeast area of Santiago’s Metropolitan Region, as well as in Antofagasta and Tarapacá. 

In a media statement, the miner said the plan involves an early detection program that includes 150.000 rapid tests able to provide results in 24 hours, 10 units for sampling and mobile tents and permanent units; the expansion of laboratory capacity, including the purchasing of new analysis equipment to maximize the speed for processing tests; community surveillance for cases that test positive and their contacts, something that will be done through primary attention centres and telemedicine; and a 24/7 call centre for identifying potential cases. 

“In addition, BHP will implement a program to support communities and high-risk, vulnerable groups in the regions where the company operates, Antofagasta and Tarapacá,” the communiqué reads. “This will allow the delivery of supplies, sanitization of public areas, areas for the isolation of potential cases and support to the state network to increase medical rounds, supplies and treatment for high-risk people.”

Polyus to launch covid-19 response fund in Russia

Polyus announced that, in cooperation with the Far East Development Fund (“FEDF”), it will co-found a fund to finance activities aimed at preventing the spread of covid-19 in the Russian Far East.

The size of the fund is expected to reach RUB 1 billion (about $12 million) reflecting donations from different parties.

FEDF and Polyus will donate a total of RUB 250 million under the first tranche which will be used to finance initiatives to help prevent the spread of the virus, the companies said in a media release.

A portion of the first tranche will be allocated to the Magadan region and Yakutia, Polyus’ principal regions of operations in the Russian Far East, and will be used for the procurement of personal protective devices and medical equipment for local hospitals.

The remaining portion of the first tranche will be directed to all other regions of the Far Eastern Federal District.

Polyus is the largest gold producer in Russia.

Gap between No. 1 and 2 copper miners widens as Codelco output drops 5.3%

Chile’s Codelco, the world’s second largest copper miner, has fallen further behind BHP (ASX: BHP) in the top producers of the metal’s rank, after reporting that its output for 2019 had fallen by 5.3% to 1.588 million tonnes.

BHP, the world’s biggest mining company, churned out last year 1.749 million tonnes of copper and expects to produce between 1.705 million and 1.820 million tonnes in 2020.

The Chilean miner, which hands all its revenue over to the state, attributed the drop in production to unusual bad weather in the first half of the year, strikes at its Chuquicamata mine and operational issues.

Profit for the year fell 17% compared to 2018 to $1.34 billion, while direct cash costs increased 1.8%.

Codelco said the poor financial results were a combination lower gross margins, the downward tendency of copper prices, a reduction in physical sales of the metal and molybdenum and weak results obtained from associated investments,

Colin Hamilton, managing director of commodities research at BMO Capital Markets, had anticipated earlier this week that the copper company would soon have to sell non-core assets.

“Any thoughts of shutting unprofitable operations, however, are off the agenda for now given the need to ensure employment,” he wrote in a note to investors.

Hamilton also noted that Codelco was looking increasingly unlikely to be the world’s largest copper miner from this year forward, as depletion and restrictions prove to be headwinds that are too strong.

The escalating number of Chileans infected with the novel coronavirus forced the company on Wednesday to suspend some key projects, including work being carried out to finish transforming Chuquicamata into an underground mine, and early stage projects at Rajo Inca and Traspaso Andina.

The halted projects are part of a 10-year, $40 billion ongoing plan to upgrade its aging mines and keep up production rates. The scheme, however, could further jeopardized by the effects of the measures taken to deal with the global pandemic crisis.

“Although the country’s government has taken proactive measures to contain the economic and health impacts of the covid-19, the ripple effects of a copper supply shock remain to be seen,” Mariano Pablo Machado, senior Americas analyst at global risk consultancy Verisk Maplecroft, said this week.

Codelco operates seven mines and four smelters, all in Chile. Its assets account for 10% of the world’s known proven and probable reserves and about 11% of the global annual copper output.

South Africa’s lockdown to hit Anglo American output

Diversified miner Anglo American (LON: AAL) said on Friday that South Africa’s 21-day lockdown to slow down the spread of the novel coronavirus will impact its iron ore and coal guidance the most.

The company, founded in South Africa more than 100 years ago, said production at its Kumba Iron Ore mine will drop by up to 3 million tonnes this year, while thermal coal output will be reduced by 1.5 to 2 million tonnes.

It noted that the rail and port logistics infrastructure to support the export of both commodities is expected to continue to service the operations during the three-week period.

Production at the company’s Kumba Iron Ore mine will drop by up to 3 million tonnes this year.

Anglo also lowered output of platinum and diamonds, but the National Union of Mineworkers (NUM) told Business Maverik the fact the company is keeping its mines open, though with less employees, was a “reckless and inhuman” pursuit of profit.

Venetia diamond mine, run by the group’s subsidiary De Beers, will operate with staff levels cut to 25%. Mogalakwena,  the world’s largest palladium mine outside Russia, and Mototolo platinum mine continue to operate with a reduced workforce and production, subject to further planning, Anglo said.

Three platinum operations — Amandelbult, Modikwa and Kroondal —as well as the Mortimer and Waterfall smelters, are being placed onto care and maintenance, it said.

Anglo American said most of its major operations in other countries had so far not been materially impacted. However, it has extended a slowdown in construction at its Quellaveco copper mine in Peru and paused work in its recently acquired Woodsmith polyhalite project in Britain.

With governments from Africa to Latin America issuing lockdown orders, disruptions to operations and supply chains are affecting the outlook for industrial and precious metals

Work is grinding to a halt and operations at mines are being temporarily suspended as companies move to enact measures to protect against the spread of covid-19.

Barrick unveils 10-year plan to become world’s most valued gold miner

Barrick Gold (TSX: ABX) (NYSE: GOLD), the world’s second largest gold miner, has 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.

President and chief executive officer, Mark Bristow, said Nevada Gold Mines — its recent joint venture with Newmont (NYSE: NEM) — would be the “value foundation” of its business moving forward.

“Already the world’s largest gold mining complex, it holds enormous potential for growth,” he said.

Bristow warned the new guidance might be impacted if operations were disrupted due to efforts to slow the spread of the covid-19.  He called the pandemic “a global disaster which is changing the way we work and live in a radically disruptive process with currently no clear end in sight”.

In the past year, Barrick has been focusing on its tier one assets and has reported strong performance across the group, particularly at Cortez mine in Nevada and Veladero in Argentina.

It has also boosted production at Kibali, Congo’s biggest gold mine, which last year beat its production guidance of 750,000 ounces of gold by a substantial margin, delivering a new record of 814,027 ounces.

Porgera in Papua New Guinea has tier one potential but faces many challenges in the form of legacy issues and an unruly neighbourhood,” Bristow said, adding the mine had exceeded guidance and the company continued to negotiate a 20-year lease extension with the government.

The executive, who took the helm in January 2019, said the work done over the past year had equipped Barrick to move to the next level.

“All in all, I am confident that we are more than capable of delivering on our promise: to build the world’s most valued gold company,” he said. Bristow  noted that Barrick’s definition of value was more wide-ranging and included factors such as economic benefits, the care with which it treated its people, communities and environments, its strategic focus on long-term sustainability and returns for investors.