Fresh high for iron ore price as Chinese steel breaks records

Benchmark iron ore prices climbed on Friday after economic data showed the country’s steelmakers produced just shy of 1 billion tonnes, the second record-breaking year in a row.

The Chinese import price of 62% Fe content ore advanced to $97.58 per dry metric tonne according to Fastmarkets MB, a 6-month high and up 6% since the start of the year.

China produces more crude steel than the rest of the world combined reaching 996.3 million tonnes in 2019, up 8.3% over the prior year according to government figures. During December steelmakers churned out on average 2.7m tonnes per day, 12% higher than December 2018.

Production of steel products in China grew by nearly 10% from a year earlier to 1.2 billion tonnes in 2019. The China Iron and Steel Association said last week it expects domestic demand for steel to grow modestly in 2020 to roughly 890m tonnes.

Vale tailings suspension

Iron ore was also lifted by news Vale halted tailings operations at the 1.2m tonnes per year Esperança mine for safety reason.

The price of iron ore is up 30% following a dam burst at Vale’s Brumadinho operations in Brazil in January 2019 that killed nearly 300 people. In response, the world no 1 producer initially suspended 93m tonnes of output.

Iron ore peaked in July last year just shy of $126 a tonne, the highest since January 2014, but declined over the summer months as fears of a shortage on the seaborne market receded.

However, the Rio de Janeiro-based company managed to bring much of that capacity back online and ended the year with only around a 5% drop in output to an estimated 310m tonnes. Rio Tinto, set to overtake Vale as the world’s top iron ore miner, reported a 3% drop in annual output yesterday.

Imports top 1 billion tonnes

Chinese imports of the steelmaking raw material topped 1 billion tonnes for the third year in a row as Beijing’s efforts to stimulate the economy pays off.

China’s iron ore purchases in December totalled 101.3m tonnes, up nearly 12% from July and 17% from last year customs data showed, marking the highest level of imports since September 2018.

Full year iron ore imports was the second best on record at 1.069 billion tonnes, up 0.5% from last year and within shouting distance of 2017’s record 1.075 billion tonnes.

Goldsource plans ‘significant’ drilling, expects resource update mid-2020

Goldsource Mines (TSXV: GXS) on Friday provided a summary of its highlights and accomplishments over the past year and presented an outlook for 2020.

In 2019, the company made a new discovery at the Salbora deposit, which was considered the highest-grade (weighted average of 2.58 g/t) near-surface gold mineralization on the Eagle Mountain property. The Salbora discovery is also a “significant complement” to the nearby Eagle Mountain deposit.

This year, Goldsource has work planned to advance the project towards prefeasibility stage.

The company is now aggressively exploring several targets including the Salbora discovery and Eagle Mountain gold project extensions. A third drill will be added in the first quarter to the current two drill rigs on the project.

This ongoing work will be used for an updated resource estimate by the middle of the year that will include Salbora and other peripheral mineralized targets.

A large amount of infill drilling (approximately 4,000 metres) is also expected to improve the resource categorization of the existing near-surface gold ounces (saprolite and hard rock) at Eagle Mountain.

Omineca stakes 13 more claims at Wingdam, stock soars

Omineca Mining and Metals (TSX-V: OMM) announced Friday that it has staked an additional 36,000 hectares of mineral claims at Wingdam, British Columbia.  

Omineca now holds 100% ownership of over 39,000 contiguous hectares at its Wingdam project, in addition to the placer claims comprising the Wingdam underground alluvial gold recovery project.   Based on the explorer’s geophysical work from 2018-19 and the review of available SKYTem geophysical data and regional geology, Omineca said it has identified multiple targets for its 2020 lode gold exploration program.  

The newly acquired claims significantly expands the inventory of target structures that will be subject to the upcoming exploration and drilling program at the Wingdam gold project

The geological similarities and location parallel to the multi-million ounce gold resource at Osisko Gold Royalties’ Cariboo Gold Project (formerly Barkerville Gold Mines) provides an exciting exploration opportunity, Omineca said in a press release.  

The newly acquired claims significantly expands the inventory of target structures that will be subject to the upcoming exploration and drilling program at the Wingdam gold project.  The program will specifically target disseminated gold mineralization within the phyllite bedrock units as well as gold associated with quartz veining found at Wingdam and the surrounding area, the company said.  

At market close Friday, Omineca’s stock was up 50%. Shares had been traded 294,420 times, more than 20 times the average daily volume of 13,800. The company has a C$7.6 million market capitalization.   

Minera Alamos starts construction on Santana mine in Mexico

Minera Alamos (TSXV: MAI) has started construction of its Santana open-pit heap leach mine in Sonora state and expects to transition from a developer to gold producer this year.

Between now and then it plans to complete a maiden resource for the project.

“The Santana gold project does not have a completed feasibility study or technical report, however, results from the 50,000 tonne bulk heap-leach test completed between 2018 and 2019 were positive and management built the Castillo mine in Mexico in the same fashion,” Kerry Smith of Haywood Securities said in a research note. “For 2020 we model 15,000 ounces of production in a partial year, followed by 35,000 oz. in 2021 with all-in sustaining costs of ~$800 per ounce.”

The mining analyst estimates the initial capital cost for the project will run to $10 million.

Minera Alamos holds two development projects in its project portfolio that can be quickly ramped up to production, with the potential to produce ~100,000 ounces of gold over the next few years

Smith has a buy rating on the stock and recommends “accumulating shares at current levels.” At press time the company’s shares were trading at 28.5¢ and Smith has a 50¢ target price on the stock.

“Minera Alamos holds two development projects in its project portfolio that can be quickly ramped up to production, with the potential to produce ~100,000 ounces of gold over the next few years,” he stated. “The company’s strategy of finding, building and expanding low capex, near-term projects in Mexico is something that the management team has successfully done.”

CEO Darren Koningen was a founding member and vice president of mine development at Castle Gold and played a key role in the development and commissioning of the El Castillo heap leach gold mine in Durango, Mexico. Argonaut Gold TSX: AR) acquired Castle Gold for C$130 million in 2009.

Federico Alvarez, vice president and project development at Minera Alamos, previously worked for Castle Gold and Argonaut Gold as vice president of operations, supervising production at El Castillo. Alvarez also has good connections in Mexico, where he held the position of director of mining affairs for the state of Guanajuato. Miguel Cardona, Minera Alamos’ vice president of exploration, managed exploration for Castle Gold, leading a three-fold increase in El Castillo’s resources from 400,000 oz. gold to 1.2 million oz. prior to its acquisition.

Breccias typically outcrop at surface at Santana and the company is undertaking a systematic review of the entire 8,500-hectare project area to identify additional surface expressions with potential for resources.

During its bulk test mining phase in mid-2018, about 1,000 oz. gold was recovered.

The company recently closed a $6 million financing with Osisko Gold Royalties (TSX: OR) consisting of 30 million common shares at 20¢, giving Osisko an 18.7% stake.

Minera Alamos also owns 100% of the La Fortuna project in Mexico’s Durango state, about 85 km southwest of the city of Culiacan. Based on a preliminary economic assessment, the gold-silver-copper project would have a mine life of five years based on an initial resource starter pit and average annual production of 50,000 equivalent oz. gold.

La Fortuna has measured and indicated resources of 3.5 million tonnes grading 2.78 grams gold per tonne, 16.51 grams silver per tonne and 0.22% copper for contained metal of 309,800 oz. gold, 1.84 million oz. silver and 7,600 tonnes copper.

The company has a market cap of $116 million. Its 406 million common shares outstanding have traded in a range of 10¢ and 32¢ over the last year.

(This article first appeared in The Northern Miner)

A global look at high-risk tailings dams

Tailings dams are the most common waste disposal methods for mining companies, whether they’re extracting iron ore, gold or copper.

However, a third of the world’s tailings dams are at high risk of causing catastrophic damage to nearby communities if they crumble, according to data compiled by Reuters.

A year ago, more than 240 people died in Brazil when a Vale-owned tailings dam collapsed, leading to a slew of social, political and economic aftershocks that are still felt today.

With environmental issues becoming a more heated topic than ever before, investors are now demanding mining companies become more responsible and transparent — with emphasis placed on meeting environmental, social and governance (ESG) standards.

The Church of England, which invests in mining companies through its pensions for retired clergy, along with its partners are now requesting companies to disclose data on tailings dams on a regular basis.

The latest Reuters data reflects disclosures from 89 companies with mines in over 60 countries.

More data and graphics are here.

(With files from Reuters)

Lucara cuts deal to cut diamond with Louis Vuitton

Lucara Diamond Corp. (TSX:LUC) has struck a deal with the luxury house Louis Vuitton to cut and polish the world’s largest uncut diamond, and second largest ever found.

Under the deal, Louis Vuitton and HB Company, a diamond manufacturer in Antwerp, will cut and polish the 1,758-carat Sewelo diamond.

Lucara isn’t saying how much the deal will be worth. The company will retain 50% of the diamonds that are cut from the massive Sewelo.

The Sewelo was unearthed at Lucara’s Karowe mine in Botswana in April 2019, bumping a previous find – the 1,109-carat Lesedi La Rona – to third place.

When Lucara unearthed the Lesedi La Rona in 2015, it was the second largest diamond ever recovered. But in April 2019, the Sewelo became the second largest diamond ever unearthed.

The Sewelo is the world’s largest uncut diamond.

In 2017, Lucara sold the Lesedi La Rona diamond to Graff Diamonds for $53 million.

(This article first appeared in Business in Vancouver)

American Battery Metals signs LOI for Elk gold project, stock up 16%

Vancouver-based American Battery Metals Corp. (CSE: ABC) has entered into a non-binding letter of intent to acquire Bayshore Minerals Inc., a private exploration and development company that owns the Elk gold project located in south-central British Columbia.

The Elk project is host to an NI 43-101 compliant resource estimate comprising 442,600 ounces of gold in the measured and indicated categories as well as 88,000 ounces of gold in the inferred category.

The property is located within the Similkameen mining division and consists of 27 contiguous mineral claims and one mining lease covering 16,566 hectares.

Currently the Elk project has a ‘small mines’ permit under the care and maintenance provision, has bonding in place for an exploration permit, and an effluent discharge permit. Bayshore has been focused on reactivating and expanding the scope of the mine permit for a much larger operation.

“The Elk gold project is known as a high-grade gold gold deposit that has been the subject of significant expenditures including over 125,000 metres of drilling property wide, over 110,00 metres of which forms the basis confirming the project’s high-grade resource estimate,” Jeremy Poirier, president and CEO of American Battery Metals commented.

“Given the extensive exploration and development to date, we see the potential for near-term production coincident with the recent macro events which supports an improving gold market.”

Under the terms of the LOI, American Battery Metals would issue approximately 27 million shares in exchange for all the issued and outstanding shares of Bayshore. Completion of the transaction is expected in the first quarter.

Shares of American Battery Metals surged by 16% on the CSE at midday Friday. The company’s market capitalization stands at C$10.81 million.

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.

Altamira Gold granted trial mining license in Brazil

Altamira Gold (TSXV: ALTA) has just received the first Trial Mining License with respect to permit 866.160/2007 for its Cajueiro gold project in Brazil.

In a press release, Altamira explained that the permit grants the company and its partner FMS Investimentos e Participacoes Ltda. the right to process up to 50,000 tonnes per year from the southern part of the key Crente resource area, and is valid for 36 months.

Altamira is pursuing Trial Mining Licenses over three additional claim blocks which would cover the resources in the northern part of the Crente deposit

The license also allows Altamira and FMS to start building a 1,000-tonne-per-day processing plant in the Cajueiro project area and will open up the southern portion of the highly-prospective Crente resource for feed for the plant.

“The publication of the first Trial Mining License on our flagship Cajueiro project is the culmination of an enormous amount of effort and allows Altamira and its partner FMS to begin construction of the processing plant early in the first quarter of the new year, as we advance towards trial mining, gold production and cash flow during 2020,” Michael Bennett, the Canadian miner’s president and CEO, said in a statement.

Located in the northern part of the Mato Grosso state in western Brazil, the Cajueiro project comprises a large land package located in the Alta Floresta – Juruena Gold Belt.

Historic gold production in the belt is recognized to be in the range of 7-10MM oz., primarily from garimpeiro activity. 

B2Gold achieves record production for 11th year in a row

B2Gold (TSX: BTO) (NYSE AMERICAN: BTG) reported a record annual consolidated gold production of 969,495 ounces in 2019, including 118,379 ounces from discontinued operations.

The 2019 figures exceeded the upper end of the company’s guidance, which was set between 935,000 and 975,000 ounces. The numbers also mark the eleventh consecutive year that B2Gold achieved record annual consolidated gold production.

Part of B2Gold’s 2020 plans will be supported by the Fekola mine expansion project, which will increase processing throughput to 7.5 Mtpa

In a press release, the Canadian miner explained that this success can be attributed to the high output of the Fekola mine in Mali, the Masbate mine in the Philippines and Otjikoto mine in Namibia, which all exceeded the upper end of their 2019 production guidance.

“In December 2019, the Fekola mine exceeded one million ounces of gold production (since the commencement of ore processing began in September 2017), achieving this milestone a full year ahead of the original production schedule,” the media brief states.

B2Gold also reported annual consolidated gold revenues from continuing operations of $1.15 billion on sales of 827,800 ounces, and annual consolidated gold revenues of $1.31 billion on sales of 943,465 ounces, including gold sales from discontinued operations.

For 2020, the company said it expects to continue the upward trend with its production guidance set between 1,000,000 and 1,055,000 ounces of gold, including attributable ounces of between 45,000 and 50,000 from Calibre Mining.