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Freeport sells Tenke mine stake for US$2.65B; Samarco seeks restart approvals; Silver Wheaton Q1'16 net income down 17%

Greenhouse gas and gold mines Nearly 1 ton of CO2 emitted per ounce of gold produced in 2019

Essential Metals & Mining Insights - September 2020

Essential Metals & Mining Insights - August 2020

State of the Market: Mining Q2-2020


Freeport sells Tenke mine stake for US$2.65B; Samarco seeks restart approvals; Silver Wheaton Q1'16 net income down 17%

TOP NEWS

isselling its stake inTF Holdings Ltd. to ChinaMolybdenum Co. Ltd. for US$2.65 billion in cash and contingentconsideration of up to US$120 million, which comprises US$60 million if theaverage copper price exceeds US$3.50 per pound and US$60 million should theprices of cobalt exceeds US$20 per pound, both during two years between 2018and 2019. Freeport owns a 70% interest in TF Holdings and thereby an effective56% stake in the TenkeFungurume copper mine in the Democratic Republic of the Congo. Inaddition, the company also agreed to negotiate with China Molybdenum the saleof its interests in the Kokkola cobalt refinery in Finland for US$100 millionand the Kisanfucopper project in the Democratic Republic of Congo for US$50 million.

FollowingBrazilian court endorsement of Samarco's settlement, BHP Billiton Group said has begun the processof seeking approvalsfrom relevant authorities to enable a restart of its operations."Samarco's operations will restart only when it is safe to do so, and whenall regulatory approvals are granted and accepted by the relevant authoritiesand communities," the company statement said, without providing a timeframe.

'snet income dropped 17% year over year to US$40.9 million in while revenueincreased 44% to US$187.5 million primarily to a 65% increase in the number ofsilver equivalent ounces sold, partially offset by a 13% decrease in theaverage realized silver equivalent price. The company's attributable silverequivalent production increased 24% to 12.7 million ounces.

DIVERSIFIED

*Following Brazilian court endorsement of Samarco's settlement, said has begunthe process of seeking requiredapprovals from relevant authorities to enable a restart of itsoperations. "Samarco's operations will restart only when it is safe to doso, and when all regulatory approvals are granted and accepted by the relevantauthorities and communities," the company statement said, withoutproviding a time frame.

*Bernstein analysts expect the new, 155 billion Brazilian reais lawsuit againstthe BHP- and ValeSA-owned joint venture, Samarco Mineração, to be unsuccessful as"Brazil's negotiation power, especially against BHP, is nowhere near thatof the United States in the BP case," Barron's wrote.According to the analysts, "Vale is more at risk than BHP, due to theheavy concentration of its assets in Brazil."

*During the week, BHP Billiton intends to reveal a plan focused on increasingits earnings during the currently depressed commodities sector, the Financial Times reported.

*The Association of Mineworkers and Construction Union in South Africa presenteda memorandum of demands to Glencore Plc, seeking a minimum wage of 6,000 SouthAfrican rand a month for all employees earning less than that amount and a 10%pay increase for those earning above that threshold, Mining Weekly reported.The union also demanded health benefits and housing and transport allowances,

BASE METALS

* Freeport-McMoRan Inc. is its stake in TF Holdings Ltd. toChina Molybdenum Co.Ltd. for US$2.65 billion in cash and contingent consideration of upto US$120 million, which comprises US$60 million if the average copper priceexceeds US$3.50 per pound and US$60 million should the prices of cobalt exceedsUS$20 per pound, both during two years between 2018 and 2019. Freeport owns a70% interest in TF Holdings and thereby an effective 56% stake in copper mine in the DemocraticRepublic of the Congo. In addition, the company also agreed to negotiatewith China Molybdenum the sale of its interests in cobalt refinery inFinland for US$100 million and the Kisanfu copper project in the Democratic Republic ofCongo for US$50 million.

*Earlier, China Minmetals Corp.unit MMG Ltd. wasreported by Bloomberg to be among the bidders in 's 56% stake inTenke Fungurume. Previously, MMG acquired the Kinsevere copper project in DRC for US$1.36billion in early 2012.

*Codelco's Ventanasfacility is under investigation by the Chilean environmental regulator for atotal of 13 environmental violations as communities near the refinery andsmelter complained of health problems due to emissions and heavy-metalparticles from the plant, Reuters wrote. The state miner said that the environmentalviolations do not pose a risk to health, adding that it will reply to theaccusations in 72 hours.

*Codelco chairman Oscar Landerretche said that private mining companies in Chileare not fully cooperating in reducing costs as part of industrywide efforts inresponse to the fall in copper prices. While the state miner has lowered itsbonus payments to employees, other private miners continue paying big bonuses,he said. Landerretche called for a unified front on costs, daily El Mercurio reported.

* Production will began at 's planned expansion projectat the OyuTolgoi underground mine in Mongolia when the global copper marketwill be in deficit by 2020, Bloomberg News reported,citing the company's new CEO Jean-Sebastien Jacques. "The long-term needfor copper remains strong" Jacques said adding that the US$5.3 billioninvestment to expand the copper-gold mine required "courage" amidchallenging market conditions.

*Residents of Islay province, in Peru's Arequipa region, will protest againstSouthern CopperCorp.'s TiaMaria copper project on May 11, 12, and 13, due to the project's"imminent" execution, said local community leaders, daily La República reported.

* After Solomon Islands' Ministry of Mines, Energy and RuralElectrification pledged to run an inclusive and transparent process in theawarding of license on the Isabel nickel deposit in the country, Axiom Mining Ltd. said it has submitted an over the deposit. Earlier in March, the Solomon IslandsCourt of Appeal ruled that neither Sumitomo Metal Mining Co. Ltd. nor Axiom Mining wereentitled to theIsabel nickel deposit.

*On May 9, Grupo México SAB deCV and the Cananea workers union would ratify a preliminaryagreement to reduce the working schedule for its personnel at the mine in lightof the three workers who died on May 3 in a labor accident, daily El Imparcial reported.

*L'sea Resources International Holdings Ltd. said the total production volume oftin in concentrates from the Renisonjoint venture project, part of the Bluestone mines in Tasmania, for the monthof April came in at 335 tonnes, representing a year-over-year declineof 41.2%, while the production volume for January to April totaled 2,012tonnes, reflecting a 6.4% decline.

* As stockpiles rise, Chinese copper imports fell to 450,000tonnes in April, from 570,000 tonnes in March while year-to-date shipments increased23% on a yearly basis to 1.88 million tonnes, Bloomberg News wrote,citing data from the General Administration of Customs.

PRECIOUS METALS

* SilverWheaton Corp.'s net income dropped 17% year over year to US$40.9million in the first quarter of2016 while revenue increased 44% to US$187.5 million primarily to a65% increase in the number of silver equivalent ounces sold, partially offsetby a 13% decrease in the average realized silver equivalent price. Thecompany's attributable silver equivalent production increased 24% to 12.7 millionounces.

*In the first quarter, AngloGoldAshanti Ltd. achievedtotal output of861,000 ounces from continuing operations at an all-in sustaining cost ofUS$860 per ounce, compared to 928,000 ounces at US$920 per ounce a year ago.The lower production was due mainly to planned reductions from the , and mines, as well as anunanticipated drop in production from the Kibali joint venture.

* CanarcResource Corp. agreed to sell the El Compas gold-silver mine in Mexico toEndeavour SilverCorp. for a deemed value of C$10.5 million. Endeavour will assumeCanarc's obligation to deliver 165 troy ounces of gold to in three 55-troy-ounceinstallments due in October 2016, 2017 and 2018.

* EldoradoGold Corp. will resume construction work at its gold mine in Greece followingan approval of its updated technical study by the Ministry of Energy andEnvironment.

* AzumahResources Ltd. reduced the expected preproduction CapEx at itsWa gold projectin Ghana by A$54 million to A$142 million. The ASX-listed company achieved A$28million saving bythe incorporation of a contractor mining fleet into the mine plan, while a reschedulingof ore mining during construction saved some US$33.8 million. However, nochanges were made to the plant design or supporting infrastructure, and theproject was still expected to deliver around 90,000 ounces per annum over aseven-year mine life. "The recent high-grade discovery at Manwe, therequisition of the high-grade 69,000-ounce Julie West resource, a firmer goldprice and improved investor sentiment towards overseas gold projectsconsiderably enhances the prospects of securing project finance or adevelopment partner," company's Managing Director Stephen Stone said.

* A scopingstudy into Kin MiningNL's Leonora gold project in Western Australia, showed theproject can produce 315,600 ounces of gold over a seven-year mine life and willneed A$55 million to build based on a gold price of A$1,500 per ounce withpayback in 45 months. The project is estimated to generate net present value ofA$56.3 million, an internal rate of return of 30% and revenue of A$461.6million. The operation is expected to deliver 30,500 ounces of gold in thefirst year, peaking at 65,800 ounces in the 5 years and then declining to10,500 ounces during its final year.

* A preliminary economic assessment for 's gold project in Québec,Canada, indicated a twelve-year underground mining operation with attractiveeconomics in the current gold price environment. The study pegs an after-taxnet present value, at a 5% discount rate, of C$667 million and an internal rateof return of 16.0%. Production will average 236,000 ounces per annum, or 3.1million ounces of gold over the entire mine life with an all-in sustaining cashcost of US$427 per ounce net of by-product credits. The project is estimated togenerate gross revenue of C$6.8 billion and operating cash flow of C$2.6 billion.

*Havilah ResourcesLtd.'s said its mining partner, Consolidated Mining and Civil,intends to resumeopen pit mining operations at the Portia gold mine later during the week. Start-up wasscheduled for normal shift changeover on May 11, but recent heavy rains delayedaccess to the site by one day at this stage, the company said.

*Chrometco Ltd. saidit expects its lossper share and headline loss per share for the year ended Feb. 29 to be at least20% lower year over year.

*MHM Metals Ltd.lodged applications for forfeiture, pursuant to the Mining Act 1978, whichaffect tenements held by StoneResources Australia Ltd. Stone Resources said it "intendsto vigorously defendagainst the applications."

*Gold Road ResourcesLtd. was granted the mining leases covering its Gruyere, Central Bore andAttila gold projects, part of the Yamarna project in Western Australia. The company is onschedule to complete its feasibility study over the Gruyere project by the endof this year.

*Stillwater Mining Co.reported a consolidated first-quarter net loss attributable to shareholders of US$9.9 million,swinging from year-ago profit of US$23.0 million. The company attributed thefall to a 29.7% year-over-year drop in the average sales price per minedpalladium and platinum ounce to US$612. Total revenues were US$133.6 million,down from US$200.5 million a year ago.

*China Nonferrous GoldLtd. secured a US$120million loan from its 38.36% shareholder, , to refinance a previous loan and lower the cost of servicingits debt. The funds will be used to refinance a loan facility with Industrialand Commercial Bank of China (Macau) Ltd., under which the company has drawnUS$115 million to date, and for working capital.

BULK COMMODITIES

* IntrepidPotash Inc. decided to idle operations and placed the potash project inNew Mexico to care and maintenance in July. The company attributed thedecisions to less profitability in recent months as oversupply and foreigncompetition in the U.S. potash market has pressured prices. According to thecompany, about 300 jobs will be affected by the decision.

* In a separate release, Intrepid reported it swung to a netloss of US$18.4 million in the first quarter, from year-ago profit of US$6.5 million.Sales dropped to US$73.3 million in the quarter from US$117.0 million a yearearlier. Potash sales dropped 6% year over year to 218,000 tonnes primarily dueto the timing of shipments to customers. Meanwhile, average net realized sales price per potash tonne fell 40% toUS$216 as oversupply and the strength of the U.S. dollar resulted insignificant price pressure in the markets the Intrepid operates in.

*Sumitomo Corp.'sprofit attributable to its metal products segment for the year ended March 31,dropped to ¥12billion, from ¥32.5 billion in the prior year because of a ¥5.3 billionimpairment loss in Edgen Group and a decrease in earnings of tubular productsbusiness in North America. The company swung to a profit attributable to shareholdersof ¥74.55 billion, from a loss of ¥73.17 billion a year ago.

*Sojitz Corp.'s profitattributable to shareholders for the company's metals & coal segmentswung to a profit of¥4.66 billion for fiscal 2015, from a year-ago loss of ¥2.74 billion, due torecording gains on revaluation of coal business assets, offset by commodityprice drops and impairment losses on coal and iron ore interests. The companyposted a profit attributable to shareholders of ¥36.53 billion, up from ¥33.1billion in the year-ago period. In fiscal 2016, the company expects a profit of¥43 billion.

*Glencore's Maru Sky unit has acquired an 8.5% stake in struggling Australian iron oreproducer Atlas IronLtd. during the latter's restructuring of its debt.

*BlueScope SteelLtd.'s steel plant in Delta, Ohio, is expected to lose about 35,000 tonnes of production, fora total financial pre-tax cost of about US$5 million, due to an explosion andfire at the South EAF shell. No workers were harmed and the plant is producingsteel from the second EAF.

*On the back of recovering iron ore prices, Goldman Sachs Group revised its ironore outlook for the quarter to US$55 per metric tonne, up 47%, the July toSeptember view was increased 20% to US$45 and for the last three months it wasboosted 14% to US$40, The Sydney MorningHerald reported.

*Gladiator Resources Ltd.will not go through with the proposed merger through the acquisition of a thirdparty, which holds significant iron ore tenement interests within the IslaCristalina Belt and surrounding areas. The board of the target failed to ratifythe proposed transaction during their recent meeting, the company said.

*Pan Asia Corp. Ltd.executed a definitive share saleand purchase agreement with Universal Coal Resources Pte Ltd for the 100% sale ofits wholly owned Singaporean subsidiary, Innovation West Mantewe Pte. Ltd.,which owns the company's 75% interest in the PT Transcoal Minergy coal project in South Kalimantan,Indonesia. The company has also pledged the shares in Innovation West prior toshareholder approval being obtained.

*Bushveld MineralsLtd.'s wholly owned subsidiary, Bushveld Vametco Ltd., will acquireEvraz Group SA 78.8%economic interest in StrategicMinerals Corp., which owns the producing Vametco vanadium mine andplant in South Africa, for US$17.2 million.

*OJSC Magnitogorsk Iron &Steel Works will likely repay US$614 million in debt ahead of schedulethis year using most of its spare cash on hand, CFO Sergey Sulimov said, addingthat the company was aiming to close a deal to pay down most of its debtmaturing in 2016 by the summer. He also confirmed executives were keen to repay"expensive" debt taken on in 2009 to finance construction of thecompany's Turkish steel plants, since the yield was high. Sulimov alsosuggested that a sale of the remaining 3% stake in Fortescue could come soon.

*Fitch Ratings placed Noble GroupLtd.'s long-term issuer default rating, senior unsecured rating anddebt ratings of BBB- on Rating Watch Negative. The move is driven by Fitch'sexpectations that Noble will focus more on shorter-term and secured financingto lower financing costs amid a difficult operating environment, which islikely to result in less financial flexibility for the company. The RatingWatch Negative will be resolved when Noble completes refinancing of itscommitted bank facilities, due in May, and on the announcement of its first-quarterresults.

*Russia's antitrust regulator approved Mechel OAO's sale of its Elga railway track to Gazprombank in a dealthat could finally dispel the threat of bankruptcy that has dogged the coalgroup for the past two years. The Federal Antimonopoly Service will allowGazprombank to buy a 75% stake in the 321-kilometer rail track, which links themassive Elga coal hub to the country's main transport system.

SPECIALTY

*Lucara Diamond Corp.sold a 812.77 carat,type IIa diamond — named "The Constellation" — recovered from theKarowe mine inBotswana for US$63.1 million, or US$77,649 per carat.

* Meanwhile, Swiss jeweler De Grisogono SA acquired rightsto sell a 404-carat rough diamond discovered at Lucapa Diamond's mine in Angola,Bloomberg News wrote.In February,  Lucapa sold a similar404-carat diamond for US$22.5 million.

*Latin Resources Ltd.intends to form a jointventure with LepidicoLtd., which will acquire and advance lithium projects in Argentinaand Peru. Two joint venture companies, one in Argentina and the other in Peru,will be formed under the agreement.

INDUSTRY NEWS

* The Mining Association of Canada contributed C$50,000 onbehalf of its Canadian miner members to the Red Cross to support thecommunities which were affected by the wildfire in Fort McMurray andsurrounding areas in Alberta, MiningWeekly reported. 

The Daily Dose isupdated as of 7 a.m. New York time, and scans news sources published inChinese, English, Indonesian, Malay, Portuguese, Russian, Spanish, Thai andUkrainian. Some external links may require a subscription.