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In This List

BHP reduces potash mine ops; Anglo flags hit to iron ore, coal output

Mining Exploration Insights - April 2020

Mining Exploration Insights December

Mining Exploration Insights: Dip in gold drilling weighs on results

State of the Market: Mining Q2-2019


BHP reduces potash mine ops; Anglo flags hit to iron ore, coal output

TOP NEWS

BHP reduces operations at Saskatchewan potash project amid coronavirus pandemic

BHP Group is reducing operations at its Jansen potash project in Saskatchewan in response to the Canadian provincial and federal government's emergency measures amid the coronavirus pandemic. The company said that it had been installing final liners in the production and service shafts at the Jansen project but will now focus on one shaft at a time with reduced crews as part of the "stringent measures" it is implementing at the project to mitigate the spread of the coronavirus.

Anglo flags hit to iron ore, coal output amid South African lockdown

Anglo American PLC will ramp down its South African operations after the country imposed a 21-day nationwide lockdown from March 26 to stem the spread of the coronavirus. The mining major said that it expects a production impact of 2 million tonnes to 3 Mt at its Kumba Iron Ore Ltd. unit as the workforce at the Sishen and Kolomela iron ore mines will be halved. Anglo American also flagged a production loss of 1.5 Mt to 2 Mt for export thermal coal as manpower and production at its thermal coal operations will be slashed by 50% to 70%.

Codelco's FY'19 output falls 5.3% to 1.6Mt; profit drops 17% to US$1.34B

Codelco's copper production in full-year 2019 fell 5.3% to 1.6 million tonnes, while its profit dropped 17% to US$1.34 billion due to higher costs and lower ore grades at the company's deposits, Reuters reported. The newswire quoted Codelco as saying that the drop in profits was due "principally to lower gross margins, the downward tendency of copper prices, a reduction in physical sales of copper and molybdenum and weak results obtained from associated investments."


DIVERSIFIED

* Mitsui & Co. Ltd. said that there is a possibility it may record some losses from impairment and others for fiscal year ending March 31, ranging from ¥50 billion to ¥70 billion, due to the drop in commodity prices caused by the COVID-19 pandemic, the deteriorating business environment and the decline in the company's value of listed shares.

BASE METALS

* Pakistan exported US$550 million worth of copper products to China in 2019, a 400% increase from the US$106 million exports recorded in the three years prior, The Nation reported.

* Trevali Mining Corp. said that it will not be able to process ore at the Santander mine during the 13 days added to the original 15-day state of national emergency in Peru. Trevali said that mining and other activities will continue and mined ore will be stockpiled until April 12, at which time the company anticipates it will resume normal production levels, including milling at the mine.

* Tim Roberts increased his stake in Galena Mining Ltd. to 19.6% from 14.4%.

PRECIOUS METALS

* Mining industry M&A activity contracted year over year in 2019, although the total value of deals was down only slightly, according to S&P Global Market Intelligence's Metals and Mining Research team. For the past two years, the Barrick-Randgold tie-up in late 2018 and the Newmont-Goldcorp merger in early 2019 have contributed significantly to total deal values — especially in 2019 as both postmerger majors spun off surplus assets during the year.

* The daily closing price of gold fluctuated as much as 11.8% through March as investors turned to the safe-haven commodity for shelter while fears of the COVID-19 pandemic pummeled the world economy.

* Resolute Mining Ltd. swung to a net loss of A$112.9 million in full-year 2019 from a net profit of A$34.1 million in the prior year. Revenue increased to A$770.3 million in 2019 from A$465.7 million in 2018. Meanwhile, the company has set a production guidance of 500,000 ounces of gold at an all-in sustaining cost of A$980 per ounce for 2020.

* Red 5 Ltd. made a A$125 million share placement at 18 cents per share, which will be used to derisk the funding requirements to develop the proposed integrated bulk open pit and underground mining and processing operation for the KOTH gold project in Western Australia, with a final feasibility study due for completion in the September quarter.

* First Majestic Silver Corp. acquired an aggregate 17,097,500 common shares in the capital of GR Silver Mining Ltd. The shares were issued to First Majestic as partial consideration for GR Silver's buyout of its subsidiary Minera La Rastra S.A. de C.V., owner of the Plomosas project in Mexico.

* Falco Resources Ltd. completed the acquisition of Golden Queen Mining Consolidated Ltd.

* Troy Resources Ltd. reported an almost threefold increase to its Hicks ore reserve within the Karouni gold project in Guyana to 480,000 tonnes grading 2.0 grams per metric tonne for 31,600 ounces of gold.

* Perseus Mining Ltd.’s updated life of mine plan for the Edikan gold project in West Africa outlined a total estimated gold output of 1.3 million ounces, higher by 95% than the estimate in the previous life of mine plan, and a 5% lower all-in sustaining cost of between US$870 and US$890 per ounce.

* AngloGold Ashanti Ltd. has decided to withdraw its market guidance given the uncertainties caused by the COVID-19 pandemic. AngloGold Ashanti also announced that it is temporarily suspending operations at Serra Grande after the state of Goiás in Brazil extended its restrictions on non-essential businesses to include mining.

* South Africa-based Royal Bafokeng Platinum Ltd. will postpone its annual general meeting scheduled on April 7 due to the national lockdown.

* Chaarat Gold Holdings Ltd. expects a six-month delay in the first gold pour at its Tulkubash project in Kyrgyzstan as construction has slowed due to the coronavirus pandemic.

* Equinox Gold Corp. has suspended mining activities for 15 days at its RDM mine in Brazil as a result of local government restrictions related to the COVID-19 pandemic.

* Nighthawk Gold Corp. is in the process of suspending exploration activities on its Indin Lake gold property in Canada's Northwest Territories in response to the coronavirus pandemic, noting that its Colomac camp will be temporarily closed by the first week of April. The company has also decreased its marketing budget, while its management and directors have agreed to a reduction in cash compensation for the second quarter in an effort to cut general and administrative expenses at this time.

* An employee of Kirkland Lake Gold Inc. who had been at Detour Lake mine in Ontario earlier in March tested positive for COVID-19.

BULK COMMODITIES

* The iron ore price resilience has begun to crack in late March as expectations of a major global recession intensify amid the COVID-19 contagion, according to S&P Global Market Intelligence's Metals and Mining Research team. The S&P Global Platts IODEX 62% Fe price assessment closed March 25 at US$87.05 per tonne, down from US$90.75/t a week earlier.

* Rhino Resource Partners LP warned investors that downward trends in metallurgical and steam coal prices exacerbated by the global COVID-19 pandemic threaten the company's ability to continue as a going concern and could lead the company to miss crucial financial metric.

* Methane emissions from global coal mining could increase over the next century even if production declines, according to a new study supported by the U.S. Environmental Protection Agency and the Global Methane Initiative. Under a "middle of the road" scenario that considered coal production growing at current rates, global coal mine methane emissions will be 4.2 times higher by 2100, and the amount of methane produced from abandoned coal mines will increase by a factor of 7.5.

* Rio Tinto extended its contracts with Primero Group Ltd. for the Koodaideri and Mesa K projects, for a combined value of about A$20 million. Meanwhile, the mining giant is pledging a further US$25 million in its support for community COVID-19 preparedness and recovery.

* Vale SA will receive a total of 500,000 rapid coronavirus tests from China, which will be used to augment testing in Brazil’s healthcare system, Reuters reported. The tests are expected to arrive in April.

* China’s first iron ore futures-based exchange traded fund (ETF) made its debut on the Hong Kong Exchange. The ETF, launched by Shanxi Securities International Financial Holdings Limited, will track the performance of iron ore by investing directly in iron ore futures contracts, Futures Daily reported. The average daily turnover of Exchange Traded Products, including ETFs and Leveraged and Inverse Products, from Jan. 2, 2020, to March 25, 2020, rose to $7.9 billion from HK$4.6 billion in the same period last year.

* China’s benchmark iron ore futures price rose by 0.45% to 658 Chinese yuan per metric tonne. The pandemic is expected to last through the second quarter, which may affect around 4 million metric tonnes of steel exports per month, or around 5% of China’s apparent steel consumption. Meanwhile, Australia’s iron ore exports to China have increased by 2.59 million metric tonnes to 17.29 million metric tonnes between March 16 and March 22, while Brazil’s iron ore exports to China also rose by 1.51 million metric tonnes to 4.49 million metric tonnes.

* Yanzhou Coal Mining Co. Ltd. reported a full-year 2019 profit of 11.83 billion Chinese yuan, or 1.91 yuan per basic and diluted share, higher than the 2018 profit of 11.32 billion yuan, or 1.75 yuan per share. The company's revenue grew to 67.80 billion yuan in 2019 from the previous year's 67.45 billion yuan.

* Yancoal Australia Ltd.'s subsidiary, Yancoal Moolarben Pty. Ltd., acquired a 10% stake in the Moolarben Coal Joint Venture for A$300 million in completion and deferred cash payments.

* Itafos incurred a net loss of US$144.2 million, or US$1.02 per diluted share, in full-year 2019, widening from the net loss of US$113.5 million, or 82 cents per share, incurred in the prior year. The company's revenue increased to US$339.4 million in 2019 from US$302.2 million in 2018.

* IRC Ltd. swung to a net loss of US$38.7 million in 2019 from a net profit of US$68.2 million in 2018. Revenue before hedging losses increased by 30.9% to US$200.5 million in 2019 from the previous year's US$153.1 million.

* En+ Group IPJSC's metals segment generated a net profit of US$960 million in full-year 2019, lower by 43.5% than the previous year's US$1.70 billion. The metals segment revenue in 2019 dropped 5.5% to US$9.71 billion from US$10.28 billion in 2018.

* Nippon Steel Corp.'s subsidiary Osaka Steel Co. Ltd. revised its fiscal 2019 forecast to an attributable net loss of ¥300.0 million from a net income of ¥5.07 billion, and its estimated net sales to ¥60.0 billion from ¥64.29 billion.

* Metalloinvest-Steel OOO approved an investment worth 21 billion Russian rubles for its environmental program from 2020 to 2025. The company said that 70% of the budget will be allocated for improving air quality.

* Allegiance Coal Ltd. entered into a US$25 million loan term sheet. The loan will contribute to the start-up capital requirement of the New Elk Mine.

* Angang Steel Company Ltd. generated an attributable net profit of 1.79 billion Chinese yuan, or 0.187 yuan per diluted share, in full-year 2019, plunging 77.53% from the previous year's net profit of 7.95 billion yuan, or 0.84 yuan per share.

* A member of PAO Severstal's office staff tested positive for COVID-19 and was isolated, leaving operations unaffected.

* Fortescue Metals Group Ltd. introduced a temporary change to its site operational roster to a four-week-on/two-week-off roaster from a two-week-on/one-week-off roster to reduce travel to and from the site by about 40%.

* Coronado Global Resources Inc. is temporarily idling its operations in the U.S., effective immediately. Meanwhile, the company will continue shipping to Europe, Brazil and the U.S. from existing inventories of about 750,000 tonnes.

SPECIALTY

* A Trump administration effort to expand the domestic sourcing of nuclear fuel is believed to be stalled amid the government response to the coronavirus pandemic, frustrating U.S. uranium producers that believe that the crisis may exacerbate fault lines in the supply chain for nuclear-powered utilities.

* Russian diamond producer PJSC Alrosa said that it divested a total of 109 noncore assets in 2019 with a book value of over 2.55 billion Russian rubles.

* Petra Diamonds Ltd. has suspended its production guidance of 3.8 million carats in 2020 until the company is in a better position to quantify the full impact of the lockdown in South Africa.

INDUSTRY NEWS

* The U.S. House passed a mammoth US$2.2 trillion coronavirus relief package to provide much-needed financial assistance to workers and businesses as the U.S. stares down the barrel of perhaps its greatest economic crisis to date. The largest bailout package in history, passed by the Senate by a 96-0 margin earlier in the week, serves as a necessary bandage amid a time of market turmoil and unprecedented job losses, several economists told S&P Global Market Intelligence.

* U.S. equities fell sharply on March 27, ending a three-day winning streak and another turbulent week, as investors shifted their focus back to the increasing spread of the coronavirus in the country and the economic fallout from the pandemic. The S&P 500 closed the trading day 3.4% lower, at 2,541.47, giving up some of the 16.8% gain accumulated from March 24. The benchmark index was up 10.4% for the week but remains in bear market territory, trading 25% below its Feb. 19 closing high.

* Mining events around the world have been canceled over fears created by the coronavirus pandemic, which has already killed thousands and rocked the global economy.

* The West Virginia Department of Environmental Protection filed a lawsuit against ERP Environmental Fund Inc. and requested the appointment of a special receiver to assume control of its assets and operations.

* The government of Namibia ordered mining companies to stop operations for three weeks as the country begins its partial lockdown in a bid to curb the spread of the coronavirus, Reuters reported.

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