Turquoise Hill’s role in Oyu Tolgoi-related decisions may change this week

SailingStone Capital, the second largest shareholder in Rio Tinto- controlled Turquoise Hill (TSE, NSYE: TRQ), is expected to vote against the re-election of the Canadian miner’s board members this week, during the world’s No.2 miner annual meeting.

The San Francisco-based investor claims the four independent directors were handpicked by Rio and are not representing the interest of all investors.

SailingStone Capital, the second largest shareholder in Rio Tinto- controlled Turquoise Hill says the mining giant currently wields too much influence over the Canadian firm.

The investment group’s discontent with the way the world’s No.2 miner has handled many Oyu Tolgoi-related decisions goes back at least five years, it says.

During that time, SailingStone has accused Rio of wielding too much influence over Turquoise Hill, the Canadian miner that owns 66% of the massive Oyu Tolgoi copper-gold-silver mine in Mongolia and acts as its operator.

The US investor’s position is that Turquoise’s dropping share value and recent setbacks at Oyu Tolgoi have little to do with the risk profile of Oyu Tolgoi and Mongolia and everything to do with avoidable mismanagement, and a “failure of market confidence” in governance at Turquoise Hill.

Oyu Tolgoi was discovered in 2001 and Rio gained control of it in 2012. Once finished, the ongoing but dragged-out extension of the mine (now expected to be done in 2022) will lift production from 125–150kt in 2018 to 560kt of copper concentrate at full tilt. That would make it the biggest new copper mine to come on stream in several years.

Turquoise Hill shares are trading about half the value of 12 months ago, and were last down 2.99% in Toronto on Monday to C$1.78, which makes it market capitalization slightly over C$3.5 billion.

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B2Gold to produce 5m ounces of gold at Mali mine after $50m expansion

Mid-tier Canadian miner B2Gold (TSX:BTO)(NYSE: BTG) will invest $50 million into expanding its 80%-owned Fekola mine in southwestern Mali, which would allow the operation churn out 5 million ounces of gold over the new mine life of 12 years.

Average annual gold output would increase to more than 550,000 ounces in the five-year period 2020 – 2024, and over 400,000 ounces during the remaining seven years.

The project could also take the operation’s processing throughput to 7.5-million tonnes a year, up from the current 6-million tonne throughput.

Average annual gold output would increase to more than 550,000 ounces in the five-year period 2020 – 2024.

The decision comes as the results of a preliminary expansion assessment (PEA), published on May 10, recommended extending the mine’s fleet and upgrading the existing plant to process an additional 1.5-million tonnes a year.

Vancouver-based B2Gold, which poured first gold at Fekola in late 2017, said half of the total capital needed will be spent in this year with the remaining half in 2020. It also said it expected to recover the full investment in less than a year.

In 2018, its first full year of commercial production, Fekola exceeded expectations, producing 439,068 ounces of gold, while B2Gold expected a maximum of 430,000 ounces.

B2Gold said it continued to further optimize the PEA and expected to incorporate those results into an updated study, which will be available in the final quarter of the year.

Fekola is located near Mali’s border with Senegal, and about 520 km from the country’s capital, Bamako. The country’s government owns the reminding 20%.

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B2Gold goes ahead with $50 million expansion of Fekola mine

Mid-tier Canadian miner B2Gold (TSX:BTO)(NYSE: BTG) will invest $50 million expanding its 80%-owned Fekola mine in southwestern Mali, which could take the operation’s gold output to 7.5-million tonnes a year from the current 6-million tonnes.

The decision comes as the results of a preliminary expansion assessment (PEA), published on Wednesday, recommended an expansion of the existing plant to process an additional 1.5-million tonnes a year, without requiring an extra ball mill or additional power generation capacity.

The Vancouver-based company, which poured first gold at Fekola in the last quarter of 2017, said that as result of the expansion the mine will produce more gold over a longer life. It will also have “more robust economics and higher average annual gold production, revenues and cash flows than the previous life of mine,” it said in a statement.

In 2018, its first full year of commercial production, Fekola exceeded expectations, churning out 439,068 ounces of gold, while B2Gold expected a maximum of 430,000 ounces.

Utilizing additional resources discovered in October, the mine could produce 550,000 ounces a year between 2020 and 2024 and 400,000 ounces between now and 2030, B2Gold said.

The PEA also predicts an increase in the net present value of Fekola of some $500 million and forecast life of mine pre-tax net cash flow of about $2.8 billion. The revised life of mine operating cash cost and all-in sustaining cost (AISC) would be between $500 and $700 per ounce respectively.

B2Gold  said it was also assessing various optimization alternatives, including processing gold-bearing ore from the company’s Anaconda project, which is situated north of Fekola, as well as installing solar power at the Fekola premises and “… various tailings and waste disposal strategies”.

This process would continue through the second quarter of this year and would be incorporated into a revised Fekola life of mine plan, which is expected to be available early next year.

Fekola is located near Mali’s border with Senegal, and about 520 km from the country’s capital, Bamako. The country’s government owns the reminding 20%.

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Operations resume at Goldcorp’s Cerro Negro mine in Argentina

Canada’s Goldcorp (TSX:G) (NYSE: GG) said workers at its Cerro Negro mine in Argentina have returned to work, after an illegal strike at the gold producing operation, the company’s biggest in the South American country.

Mining stopped on March 8, when members of the Asociación Obrera Minera Argentina (AOMA) downed tools, and processing activities have now also ceased following the exhaustion of surface stockpiles.

The Vancouver-based miner said a conciliation process resolution was issued by the provincial government of Santa Cruz and accepted by the parties, but didn’t provide further details.

“All personnel have been remobilized and the site is ramping back up to normal operations,” it said in the statement.

Cerro Negro underground mine began operations in 2015. It produced 489,000 gold ounces last year at an all-in sustaining cost of $535 per ounce.

Separately, the company said its chairman, Ian Telfer, won’t be joining the board of the merged Newmont-Goldcorp, assuming the planned $10 billion-merger gets shareholder approval next month.

The companies said earlier this year the business combination would create the world’s largest producer by output, challenging Barrick’s recently cemented supremacy.

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Northern Dynasty raises $10 million to further develop mine in Alaska

Northern Dynasty Minerals (TSX:NDM) has entered into a bought deal financing with Cantor Fitzgerald Canada to raise $10 million that allows the miner to further advance its Pebble copper-gold-silver project in Alaska.

The deal prices the company’s shares at 64 Canadian cents, a 13.5% discount to the stock’s price before the financing was announced.

The Canadian miner has also granted the underwriters an over-allotment option to acquire up to an additional 2.34 million-plus shares, which could raise another $1.5 million.

Company is still looking for a partner for Pebble mine as fellow Canadian company First Quantum Minerals pulled out last year.

Development of the proposed mine was mostly stalled during the Obama administration, but is moving forward under President Donald Trump, who is in favour of increasing domestic mining.

The Vancouver-based company reached a key settlement in 2017 with the US Environmental Protection Agency (EPA), which ended a dispute over the agency’s decision to block construction of Pebble mine.

It came three months after Alaska’s Department of Natural Resources (DNR) granted Northern Dynasty’s subsidiary — Pebble Limited Partnership — a long-awaited land-use permit.

And last month, the U.S. Army Corps of Engineers released a draft environmental impact statement for the project, which shows no major data gaps or substantive impacts associated with a mine at the Pebble site.

Current resource estimates indicate the asset holds 6.5 billion tonnes in the measured and indicated categories containing 57 billion pounds copper, 71 million ounces gold, 3.4 billion pounds of molybdenum and 345 million ounces of silver.  In the inferred category, Pebble has 4.5 billion tonnes  —  25 billion pounds copper, 36 million ounces of gold, 2.2 billion pounds of molybdenum and 170 million ounces of silver. Palladium and rhenium are also present at the site.

The company is still looking for a partner as fellow Canadian miner First Quantum Minerals (TSX:FM) pulled out last year.

Northern Dynasty raises $10 million to further develop mine in Alaska

There are currently four operating mines and four late stage development projects in Alaska. (May courtesy of Northern Dynasty Minerals.)

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Strike hits Goldcorp’s Cerro Negro mine in Argentina

Canada’s Goldcorp (TSX:G) (NYSE: GG) said an illegal strike at its Cerro Negro mine in Argentina has forced it to halt operations at the site, the company’s biggest gold producing asset in the South American country.

Mining stopped on March 8, when members of the Asociación Obrera Minera Argentina (AOMA) downed tools, and processing activities have now also ceased following the exhaustion of surface stockpiles.

Mining stopped on March 8 and processing activities have now also ceased following the exhaustion of surface stockpiles.

The Vancouver-based miner, which is in the midst of its merger with mining giant Newmont (NYSE: NEM), said it was working with the union and government authorities to find a resolution and restart operations.

The company gave no indication of why the union has gone on a strike.

Jefferies analyst Christopher LaFemina said there would likely be a quick resolution, as Goldcorp is unlikely to want to draw negative attention before the Newmont vote next month.

Analysts at Canaccord Genuity noted the work stoppage would materially impact the fundamental value of the mine. However, we do note that a prolonged stoppage could impact the company’s ability to meet its 2019 production guidance of 2.2-2.4 million ounces,” they wrote in a note to investors.

Cerro Negro underground mine began operations in 2015. It produced 489,000 gold ounces last year at an all-in sustaining cost of $535 per ounce.

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Vancouver AI firm Andritz takes top spot at Goldcorp’s #DisruptMining

Vancouver AI firm Andritz takes top spot at Goldcorp’s #DisruptMining

The main stage at Goldcorp and KPMG's #DisruptMining innovation challenge held in Toronto in March 2019, with master of ceremonies Rick Mercer and a judging panel of Sue Paish, CEO of Canada's Digital Technology Supercluster; Ian Telfer, chair of Goldcorp; Katie Valentine, global head of mining consulting at KPMG; Wal Van Lierop, founder and managing partner of Chrysalix Venture Capital; and Jacob Yeung, student and captain of the University of British Columbia #DisruptMining judging team. Photo by The Northern Miner.

Vancouver-based artificial intelligence (AI) and automation supplier Andritz took home first place during the finale of the 2019 annual installment of Goldcorp’s (TSX: G; NYSE: GG) #DisruptMining mining innovation contest held before a live audience of 500 in a nightclub in downtown Toronto on the opening night of the annual convention of the Prospectors and Developers Association of Canada.

Andritz is described as having developed a “unique and continuous way of training artificial intelligence to operate a mineral processing facility using Andritz’s digital twin. The AI is trained to respond to a variety of situations, making it capable of adapting to changing inputs and improving recovery time. The trained AI’s ability to quickly process information and recommend data-driven solutions will allow for the improvement of the operation, such as start-up and shutdown, and assist operators to achieve plant-wide optimization.”

The event’s major sponsors included Goldcorp and KPMG, as well as Hard-Line Solutions and Sandvik.

The judging panel was comprised of Sue Paish, CEO of Canada’s Digital Technology Supercluster; Ian Telfer, chair of Goldcorp; Katie Valentine, global head of mining consulting at KPMG; Wal Van Lierop, founder and managing partner of Chrysalix Venture Capital; and Jacob Yeung, student and captain of the University of British Columbia #DisruptMining judging team.

Canadian comedian and commentator Rick Mercer served as master of ceremonies.

The winner’s prize is an “opportunity to negotiate up to a $1 million investment” in their technology, either toward a proof of concept or direct investment.

Vancouver AI firm Andritz takes top spot at Goldcorp’s #DisruptMining

Congratulating the winning team from AI-supplier Andritz at Goldcorp’s #DisruptMining challenge in Toronto in March 2019, from left: David Garofalo, president and CEO of Goldcorp; Arthur Gooch, director of innovation at Andritz; Sohail Nazari, business development manager at Andritz; and Rick Mercer, master of ceremonies. Credit: #DisruptMining.

Three finalists out of an original 90 submissions presented their pitches to the judges during the evening, with two runners-up being Newfoundland-focused gold miner Anaconda Mining (TSX: ANX), which has a new drilling approach that can unlock the value in narrow vein deposits; and large German technology firm Voith, which is trying t expand its mining business and has an “internet of things” (IoT) application that increases the intelligence of belt conveyors used to transport material at mine sites.

After a technical review of the 90 submissions by a group from the University of British Columbia, shortlisted submissions were reviewed by senior Goldcorp representatives to determine semi-finalists and finalists for #DisruptMining.

Anaconda’s technological offering is described as an “innovative, two-stage drilling method that enables economic mining of narrow-vein deposits. The technology, known as Sustainable Mining by Drilling (SMD), was developed in collaboration with Memorial University of Newfoundland. SMD has the potential to unlock value in existing deposits that were previously thought to be uneconomic to mine using traditional underground or surface mining methods.”

Voith’s IoT application BeltGenius is described as a “digital twin of belt conveyors which provides real-time insight into the behavior of the operation. Resulting from a constant learning system, this information is used to identify potential risks and inefficiencies, allowing for greater uptime, more efficient energy use, predictive maintenance and optimization of weight and speed. With BeltGenius, mine sites can operate their belt conveyors with greater control and consistency, increasing their savings on repairs and material transportation costs while reducing the environmental impact of traditional haul trucks.”

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Eldorado to hike gold production to over 500,000 ounces in 2020

Shares in Canada’s Eldorado Gold (TSX:ELD)(NYSE:EGO) climbed on Friday after it said is ready to grow its yearly output to more than 500,000 ounces next year, supported by the restart of its Kışladağ gold mine in Turkey, and the soon coming online of the Lamaque project in the home country.

The Vancouver-based miner cancelled last month plans to build a $500-million processing mill at Kışladağ, choosing to resume mining and heap leaching instead.

The resumption of mining and heap leaching at the Kışladağ gold mine in Turkey should provide the opportunity to consider initial debt retirement later this year.

The decision may not have been entirely voluntarily, since Eldorado has almost $600 million in debt due in 2020, is building its first mine in Canada — the Lamaque project in Val d’Or, Quebec — and it had only about $287 million in cash on its balance sheet at the end December.

When it comes to output, however, Eldorado had a good year, generating 349,147 ounces of gold in 2018, which include 35,350 ounces of pre-commercial production from Lamaque. The figure is significantly higher than the previous year’s output of 292,971 ounces and its original 2018 guidance of 290,000 to 330,000 ounces.

For 2019, the gold company expects to produce between 390,000 and 420,000 ounces, it said while delivering its financial year-end results.

While Eldorado generated $459 million in revenue from its operations in 2018, it also registered impairments adjustments of almost $448 million related to Olympias, in Greece, and its Turkish mine, resulting in a net loss of $362 million, or $2.28 a share.

The adjusted net loss came to $26.3 million, compared with adjusted net earnings of $15.2 million in the previous year.

Looking ahead, chief executive officer George Burns said the restart of Kışladağ and the kick off of commercial production at Lamaque, later this quarter, should allow Eldorado to generate significant free cash flow and provide it with the opportunity to consider debt retirement later this year.

The stock was up 5.53% at C$5.92 by 12:12 p.m. EST.

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Teck misses Q4 profit estimates on lower copper, zinc and oil prices

Teck Resources (TSX:TECK.A | TECK.B)(NYSE:TCK), Canada’s largest diversified miner, posted Wednesday quarterly profits below estimates, due mainly to weak prices for heavy crude and base metals.

The Vancouver-based miner, the world’s second-biggest exporter of steel-making coal, recorded negative pricing adjustments, charges related to write-down in inventory and an operating loss at its Fort Hills oil sands mine during the last three months of 2018.

The company had warned that its fourth-quarter profit may be lower than expected because of disappointing business at its energy unit and also as its Trail Operations, which produces refined zinc and lead, faced ongoing supply interruptions from third-party providers.

Revenue, however, increased by 2.9% to C$3.25 billion (about $2.46B) in the quarter, up from a $3.16 billion in the 2017 fourth quarter, as lower base metal prices were offset by higher prices for steelmaking coal and new contributions from oil sands production.

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Barrick, Reunion Gold to jointly go after key assets in South America

Canada’s Barrick Gold (TSX:ABX)(NYSE:GOLD), the world’s top bullion producer by volume has entered into a 50-50 strategic alliance with fellow junior miner Reunion Gold (TSX-V:RGD), to jointly explore for and develop projects on South America’s North Atlantic coast.

The deal allows Barrick to tighten its grip on four of the Guyana-based projects Reunion already owns — Waiamu, Aremu, Arawini and Oko.

As part of the deal, Barrick will initially invest $4.2 million on those assets, as credit for exploration conducted so far by Quebec-based Reunion. Subsequent funding, said the gold giant, will be on a 50:50 basis between the two companies.

Strategic alliance expands Barrick’s exploration footprint in the Guiana Shield, a significantly under-explored region and one of the most prospective in the world for large scale gold discoveries.

The deal specifies that if Reunion acquires an interest or an option to acquire a stake in any mineral property in the joint venture’s target area, Barrick will have 90 days to decide whether to include the new project in the association.

“The strategic alliance agreement expands Barrick’s exploration footprint in the Guiana Shield, a significantly underexplored region and one of the most prospective in the world for large scale gold discoveries,” Barrick said.

President and CEO Mark Bristow noted the two companies will jointly to identify and acquire properties in the Guiana Shield and Northern Brazil, which have the potential to yield discoveries consistent with Barrick’s definition of Tier 1 mines.

The Toronto-based company, which already owns 15% of Reunion and bought further shares in the junior last year, will buy up to 35,700,000 common shares at a price of C$0.15 per unit, which increases Barrick’s ownership in the smaller miner to 19.9%.

Known recipe

The move on Reunion is another example of a growing trend that dominated the mergers and acquisition scene last year.

It's not uncommon these days to see a senior gold company making a so-called “strategic investment” in a junior, in the hope that it will eventually pay off in the form of much needed added production.

Seniors make a rather low-risk bet without jeopardizing huge amounts of capital, and juniors are able to raise much-needed money to fund their projects.

Barrick is becoming an expert on these kinds of deals. Last year, the company forked out $8.3 million on ATAC Resources Ltd. and $9.1-million on Reunion itself. It also invested $1.6-million into Royal Road Minerals Limited and, in May, announced a 19.9% investment in Vancouver-based Midas Gold (TSX-V:MAX), worth $38 million.

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