UAE and China to strengthen gems and jade bilateral trade

The Dubai Multi Commodities Centre and the China Gems and Jade Exchange signed a memorandum of understanding to create new trading opportunities between the United Arab Emirates and China.

The China Gems and Jade Exchange is a national-level gemstone trading platform approved by the State Council of China.

In a press release, the parties explained that the idea is to connect buyers and sellers of gemstones and jade from the two countries.

"Additionally, the collaboration will see both parties promote ethical and responsible business practices to their members," the media statement reads.

This is not the first MoU that the DMCC signs with the Asian giant. Prior to this, the group engaged with the China Council for the Promotion of International Trade.

According to the Dubai Multi Commodities Centre, the signing of these agreements is also aimed at emphasizing the group's support to the strategy to reignite the ‘Dubai Silk Road,' which was outlined in the 'Fifty-Year Charter' released earlier this year by Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE.

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Petra Diamonds fetches $15m for 425-carat legacy diamond

South Africa’s Petra Diamonds (LON:PDL) has sold its 425-carat “Legacy of the Cullinan Diamond Mine” diamond to Belgium-based Stargems Group for $15 million.

The exceptional D colour Type IIa gem was recovered in March from the company’s iconic Cullinan mine, the same that yielded the Cullinan diamond — at 3,106 carats the largest rough diamond ever found and which today is part of the  British Crown Jewels.

Petra, which recently appointed former gold miner Richard Duffy as chief executive, has been seeking to turn around its fortunes after piling up debt to expand Cullinan.

The mine, however, has been profitable every year since the company acquired it in 2008 and it's expected to generate free cash flow this year.

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Australian corporate watchdog goes after Merlin Diamonds

Australia’s corporate regulator is asking the Federal Court for approval to wind up Merlin Diamonds (ASX:MED), whose shares have been suspended from trading since October, after the watchdog kicked off a probe into a A$13 million-loan from the miner to a private company associated to the diamond producer’s owner.

The Australian Securities and Investments Commission (ASIC) is also looking into whether the owner of Merlin, mining magnate Joseph Gutnick, breached his director's duties by advancing unsecured loans to the private firm, AXIS Consulting.

AXIS, whose Melbourne offices are located in the same building that is home to Merlin, has been integral to Gutnick’s financial dealings. Many of his listed mining companies have contracted the firm to provide administrative, management and geological services.

ASIC has for months been probing how Merlin Diamonds has loaned A$13 million of investor money to a private company, AXIS Consultants, which has long been associated with the miner's chairman.

The problem is that AXIS has proved unwilling or incapable of repaying the loans Gutnick’s companies have provided it so far. Most of them have been written off as impairments and are, most likely, unrecoverable.

Gutnick was a long-standing director of AXIS until he filed for bankruptcy in 2016, but his ties with the consultancy were still strong at the time, as reported by The Sydney Morning Herald:

His eldest son, Mordechai Gutnick, and long-time business associate Peter Lee are present AXIS directors. Another loyal ally, David Tyrwhitt, who has worked with Mr Gutnick for more than 20 years, was an AXIS director until October 2017.

Mr Gutnick, his son, Mr Lee and Mr Tyrwhitt, the AXIS directors, have also all appeared as either directors or senior executives at publicly listed companies, including Merlin Diamonds, that have loaned AXIS money over the past six years.

In October, the Australian Stock Exchange (ASX) suspended Merlin’s stock trading as the miner failed to submit its FY18 results by the bourse’s deadline. Once the diamond producer logged its statements, the ASX decided to keep the trading halt “pending further queries”.

Among the explanations requested, the exchange wanted to know why the millions loaned to AXIS were not treated as “payment for services” given the consultancy provided management services to Merlin for the year.

Merlin has said AXIS was “instrumental” in raising over A$60 million for the company since 2009, including bringing it back into diamond production. 

“It is more beneficial for Merlin to treat the amount as a loan rather than payment for services,” the company replied at the time, adding it saw the services provided by AXIS as “critical to its ongoing needs.”

Merlin also said AXIS had been “instrumental” in raising over A$60 million for the company since 2009 and managing its affairs since that time, including bringing the miner back into diamond production, and more recently, the ongoing development of a diamond sales arm in Belgium.

ASIC’s latest move against Joseph Gutnick and Merlin Diamonds comes as the body is under a relatively new leadership team, known for their aggressive problem-solving approach.

Merlin Diamonds has also been in arbitration in Western Australia and the Northern Territory with former contractors and employees who claim they are owed more than A$1.2 million.

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Australian corporate watchdog goes after Merlin Diamonds

Australia’s corporate regulator is asking the Federal Court for approval to wind up Merlin Diamonds (ASX:MED), whose shares have been suspended from trading since October, after the watchdog kicked off a probe into a A$13 million-loan from the miner to a private company associated to the diamond producer’s owner.

The Australian Securities and Investments Commission (ASIC) is also looking into whether the owner of Merlin, mining magnate Joseph Gutnick, breached his director's duties by advancing unsecured loans to the private firm, AXIS Consulting.

AXIS, whose Melbourne offices are located in the same building that is home to Merlin, has been integral to Gutnick’s financial dealings. Many of his listed mining companies have contracted the firm to provide administrative, management and geological services.

ASIC has for months been probing how Merlin Diamonds has loaned A$13 million of investor money to a private company, AXIS Consultants, which has long been associated with the miner's chairman.

The problem is that AXIS has proved unwilling or incapable of repaying the loans Gutnick’s companies have provided it so far. Most of them have been written off as impairments and are, most likely, unrecoverable.

Gutnick was a long-standing director of AXIS until he filed for bankruptcy in 2016, but his ties with the consultancy were still strong at the time, as reported by The Sydney Morning Herald:

His eldest son, Mordechai Gutnick, and long-time business associate Peter Lee are present AXIS directors. Another loyal ally, David Tyrwhitt, who has worked with Mr Gutnick for more than 20 years, was an AXIS director until October 2017.

Mr Gutnick, his son, Mr Lee and Mr Tyrwhitt, the AXIS directors, have also all appeared as either directors or senior executives at publicly listed companies, including Merlin Diamonds, that have loaned AXIS money over the past six years.

In October, the Australian Stock Exchange (ASX) suspended Merlin’s stock trading as the miner failed to submit its FY18 results by the bourse’s deadline. Once the diamond producer logged its statements, the ASX decided to keep the trading halt “pending further queries”.

Among the explanations requested, the exchange wanted to know why the millions loaned to AXIS were not treated as “payment for services” given the consultancy provided management services to Merlin for the year.

Merlin has said AXIS was “instrumental” in raising over A$60 million for the company since 2009, including bringing it back into diamond production. 

“It is more beneficial for Merlin to treat the amount as a loan rather than payment for services,” the company replied at the time, adding it saw the services provided by AXIS as “critical to its ongoing needs.”

Merlin also said AXIS had been “instrumental” in raising over A$60 million for the company since 2009 and managing its affairs since that time, including bringing the miner back into diamond production, and more recently, the ongoing development of a diamond sales arm in Belgium.

ASIC’s latest move against Joseph Gutnick and Merlin Diamonds comes as the body is under a relatively new leadership team, known for their aggressive problem-solving approach.

Merlin Diamonds has also been in arbitration in Western Australia and the Northern Territory with former contractors and employees who claim they are owed more than A$1.2 million.

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Polished diamond prices drop in April – Report

A report published by Rapaport this week reveals that polished-diamond prices declined in April with 1-carat diamonds sliding 1% year-to-date and 3-carat diamonds falling by 6.1% year-to-date.

Right behind 3-carat diamonds, the price of 0.30-carat diamonds fell by 5.9% year-to-date, while 0.50-carat diamond prices dropped by 1.2% year-to-date.

According to Rapaport, the fall is caused by continued oversupply and selective Far East demand.

“Large inventories of lower-quality old goods are available, and suppliers are willing to discount them to raise cash. Liquidity is tight, as Indian credit lines declined after the March 31 fiscal year-end. Manufacturers reduced rough purchases in the first quarter, hoping to ease liquidity concerns by depleting polished stock,” the report states.

Demand is down everywhere but in the US, where purchases of 1.00 to 1.50-carat diamonds remain steady ahead of the summer wedding season.

But manufacturers' strategy may not be working as supply of polished gems continues to rise. Rapaport says the volume of diamonds listed on RapNet as of May 1 was up 7% since the beginning of the year, coming to 1.6 million stones valued at $8.23 billion.

Demand, on the other hand, seems to be down almost everywhere. The international firm’s document mentions that combined rough sales by De Beers and Alrosa dropped 19% by volume and an estimated 30% by value in the first quarter.

“Mining companies are planning to reduce supply, with global production down approximately 6% during the period.”

Rapaport’s analysis is based on the RapNet Diamond Index (RAPI), which is the average asking price in hundred $/carat of the 10% best-priced diamonds, for each of the top 25 quality round diamonds offered for sale on the Rapaport Diamond Trading Network.

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Stornoway’s Renard team takes all at provincial rescue competition

Stornoway Diamond Corp. mounted a mine rescue team from the Renard mine – and they won all the awards at the 57th Quebec Provincial Mine Rescue Competition. The contest took place on May 2-4, 2019, in La Sarre, Que.

The Renard team of Danny Berube, Mathieu Dresdell, Raphael Duchesne, Simon Gelinas, François Gilbert, Guillaume Lemay, Rachel Major, Adam Paquet and Patrick Tremblay led by Yannick Savard, emergency co-ordinator. Together they won every award – Best BG4 Breathing Apparatus Mechanic, Best Theoretical and Technical Performance, Best First Aid Performance, Best Team Management, and Best Team in the Field.

On account of this extraordinary performance, the team was awarded the overall title for a second consecutive year.

Stornoway VP operations Patrick Sevigny said, “The team demonstrated a remarkable devotion in their preparation and training, which enabled an exceptional performance.”

He also thanked the CNESST and the work of people at the Casa Berardi mine where the competition was held.

(This article first appeared in the Canadian Mining Journal)

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Coal hurts Anglo American’s Q1 production, 2019 guidance unchanged

Anglo American (LON: AAL) released its first quarter production results on Thursday, reporting decreased production numbers, mostly because of planned disruptions at its metallurgical coal

division, where production dropped 25%.

“Production is 6% lower in the quarter, with two planned longwall moves at metallurgical coal accounting for 80% of the reduction,” chief executive Mark Cutifani said in a statement.

“Isolated production issues at Venetia (De Beers), Kumba Iron Ore and Platinum Group Metals made up the balance, mitigated by stronger operational performance from copper, with a 4% production increase, and the ramp-up at Minas-Rio, which is ahead of plan following the restart of operations in December 2018,” said Cutifani.

De Beers’ diamond production decreased by 8% to 7.9 million carats driven by lower production at the Venetia mine as it transitions from open pit to underground.

Platinum and palladium production decreased by 5% to 471,900 ounces and by 6% to 326,600 ounces, respectively, due to operational challenges as well as one-off benefits in Q1 2018.

Kumba’s iron ore production decreased by 12% to 9.5 million tonnes due to plant maintenance while Minas-Rio’s iron ore production increased by 61% as its ramp-up progresses well, facilitated by access to higher grade ore in the step 3 licence area.

Metallurgical coal production decreased by 25% to 4.2 million tonnes with two longwall moves in the period compared to only one in Q1 2018.

Thermal coal export production decreased by 2% to 6.6 million tonnes, with solid operational performance across the South African mines offset by lower production at Cerrejón due to dust management.

Cutifani added that by the end of the quarter Anglo had increased its production run-rate and are on track to deliver this year’s production targets.

“Our guidance is unchanged,” Cutifani said.

Late Thursday, Anglo American’s stock was down 2.24%, with shares priced at 2,034p on the London stock exchange. The company has a £28.6 billion ($37 billion) market capitalization.

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Mega deals help Canada’s mining industry take centre stage again

Despite unfavourable market conditions, the mining industry is staging a comeback thanks to highly publicized  multi-billion mergers and acquisitions targeting mostly the gold sector.

The aggregate valuation of all miners listed on the Toronto Stock Exchange (TSX) declined by 12.7% in 2018, to $253.9 billion, compared with a 10.8% decrease in the market capitalization of the entire TSX market, says PwC in its ​Canadian Mine​ report published Thursday.

Liquidity also fell for the second year in a row, with the volume and value of TSX mining shares trading down by 21% and 20%, respectively.

Performance was hampered by a downward shift in most commodity prices, following a strong showing in 2017, the report reads:

Spot prices for base and precious metals decreased across the board. Zinc tumbled 25%, copper 17% and nickel 6%. Even cobalt and lithium prices, which have registered strong gains over the past five years, suffered double-digit declines in 2018.

However, Dean Braunsteiner, PwC Canada National Mining Leader, believes 2018 marked a turning point for the mining industry.

“While recent mergers were a sign of a wave of consolidation that will help companies better compete for capital, we can expect even more M&A activity in the near future,”  Braunsteiner says. “That creates a cascading effect of further deals as companies sell off non-core assets, which brings new opportunities for management teams to build the next big Canadian mining company.”

After years of speculation around how the sector could regain power, followed by a period of internal restructuring, companies are now focusing on opportunities, PwC ​Canadian Mine​ report states.

Growth was heavily powered by potash and gold. Nutrien overshadowed the top 25 during its first year of operation as the merged entity of Potash Corp. and Agrium. With a market capitalization of approximately $40 billion, it was almost twice as large as No. 2-ranked Barrick Gold. Yet, gold remained the most dominant commodity among the top 25, with 21 companies having exposure to the precious metal, up from 19 a year earlier, PwC notes.

While joint ventures, mergers and acquisitions are one way the mining industry in Canada is responding to commodity and business pressures, some are also trying to improve the performance of their operations by refocusing their approach to digital transformation.

PwC cites as an example a recent agreement signed by Goldcorp, Wheaton Precious Metals Corp. and Kutcho Copper Corp. to jointly build a new mining supply chain solution based on IBM Corp.’s blockchain platform.

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Canadian miners start 2019 off on the right foot amid mega-deals

Canada’s mining industry started the year off on the right foot, with major deals including the Barrick-Randgold merger and Newmont’s acquisition of Goldcorp, setting the tone for the sector.

As a result, Ernst & Young’s Canadian Mining Eye index — which tracks the performance of 100 Toronto Stock Exchange and TSX Venture Exchange mid-tier and junior mining companies — rose 5% fin the January-March period, compared to the previous quarter, the consultancy firm said Thursday.

Gold miners, in particular, recorded an improved performance, as prices for the metal increased by 1%, following an 8% quarter-over-quarter gain in October-December period.

EY suggests that mining and metals deals will continue to shift from divestment-led to investment-led, with a focus on replenishing portfolio growth options.

EY attributed gold’s higher prices in the period partly to the possibility of fewer U.S. Federal Reserve rate hikes in 2019, and it believes the Fed factor will likely continue to benefit gold prices in the near-term.

The consultancy also noted an increase in both production and exploration spend in the gold sector in Canada and globally.

The country’s gold output is set to grow by 6% this year, compared to a previous estimate of 2%. This improvement, EY analysts say, stems from increased exploration spending resulting in a strong buildup of the project pipeline in 2019.

Major projects slated to begin production this year include Newmont Goldcorp’s Borden project in Ontario, Agnico Eagle Mines’ Meliadine project in Nunavut and Barrick’s Hemlo mine in Ontario.

Base metal prices also fared well in Q1 2019. A surge in demand for electric vehicles (EVs) boosted nickel prices by 22% following a 15% decline in Q4 2018, says EY. The outlook for nickel remains positive with ongoing demand for stainless steel and reduced inventory levels.

Similarly, zinc and copper prices increased by 19% and 9%, respectively, in Q1 2019 and are likely to benefit in the near-term from declining inventories and tight market conditions.

“Improving market conditions are inspiring new confidence in the mining and metals sector and putting growth back on the boardroom agenda,” says Jeff Swinoga, EY Canada Mining & Metals Leader. “To stay competitive in a transformed operating landscape, miners must develop bold strategies that accelerate productivity, improve shareholder returns and win investor confidence. The qualities that define long-term success aren’t the same as they once were.”

The document suggests that mining and metals deal activity will continue to shift from divestment-led to investment-led with a focus on replenishing portfolio growth options in the near-term.

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Top miners back autonomous systems guidelines

BHP, Barrick Gold, Teck Resources and Antofagasta are some of the major mining companies that, together with equipment suppliers and universities, have helped develop global guidelines on automation.

The document, published this week by Canada-based Global Mining Guidelines Group (GMG), outlines a framework for miners to follow when they’re considering adding autonomous equipment to their operations. It also provides a maturity model for companies to emulate as they expand the scope of their unmanned fleets.

Document divides operations into six levels, from zero (entirely manual ) to five (fully autonomous), and assists in the preparation of a business case for autonomous mining for each.

More specifically, the publication divides operations into six levels, from zero (entirely manual operations) to five (fully autonomous operations), and assists in the preparation of a business case for autonomous mining, depending on level and stakeholder needs.

Its advice includes guidance for the slow, phased or fast implementation of autonomous systems, depending on stakeholder needs.

BHP principal, risk and business analysis technology, Chirag Sathe, said the outlined recommendations are relevant even to those who have already embraced autonomy.

“I would say that even though some mining companies have implemented autonomy, it hasn’t been a smooth ride and there are a number of lessons learned,” said Sathe, who also is one of the project’s co-leaders. “This guideline would be a good reference material.”

Although implementing autonomous systems creates new challenges, such as changes to the workforce and the workplace, the authors of the new guideline believe if successfully deployed, the technology adds definite value, with improved safety and efficiency and lower maintenance costs.

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