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Wesfarmers, Kidman to implement A$776M merger; SQM's Q1'19 earnings slip YOY

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Wesfarmers, Kidman to implement A$776M merger; SQM's Q1'19 earnings slip YOY

TOP NEWS

Wesfarmers, Kidman to implement A$776M merger

Wesfarmers Ltd. formally agreed to acquire 100% of Kidman Resources Ltd. for A$1.90 cash per share in a transaction valued at A$776 million. Meanwhile, Wesfarmers agreed with SQM to amend the joint venture agreement over the Mount Holland lithium project in Western Australia between SQM and Kidman. The takeover is expected to be complete in September.

SQM's Q1'19 earnings slip YOY; Atacama expansion delayed

Sociedad Quimica y Minera de Chile SA's first-quarter earnings slipped to US$80.5 million, or 31 U.S. cents per share, from US$113.8 million, or 43 cents per share, a year ago due to lower average prices and higher costs related to a new lease payment structure with CORFO, the Chilean economic development agency. Meanwhile, SQM CEO Ricardo Ramos said the company would delay the planned expansion of its Salar de Atacama lithium operations in Chile until late-2021 from 2020 due to the fast-evolving requirements of the battery industry, Reuters reported.

Codelco bracing for 40% output drop over 2 years at Chuquicamata copper mine

Codelco is bracing for a 40% drop in output over two years from its Chuquicamata copper mine amid a US$4.88 billion project to convert the open-cast mine into an underground operation, Reuters reported, citing an internal company forecast. The mine is expected to produce 459,000 tonnes of copper in 2019 before dropping to 182,000 tonnes by 2021 as Codelco decreases and eventually stops open pit operations next year.

BASE METALS

* Freeport-McMoRan Inc. agreed to sell its Kokkola cobalt refinery in Finland and related cobalt cathode precursor business to Umicore SA for US$150 million. Freeport said its joint venture partner Lundin Mining Corp. is entitled to 30% of the proceeds. Closing is expected late this year.

* Zambian President Edgar Lungu turned down Vedanta Resources PLC's request for a meeting over the state's planned seizure of copper assets of subsidiary Konkola Copper Mines PLC, Bloomberg News reported. The country's mines minister, Richard Musukwa, insisted that the move is not nationalization and accused Vedanta of violating its license conditions, the report said. The Zambian government also ordered a regular audit of all mines to avoid any repeat of the issues at Konkola, Reuters reported.

* Mincor Resources NL entered into a binding agreement with Independence Group NL to wholly acquire the Long nickel operation in Western Australia, which holds a JORC-compliant resource of 750,000 tonnes at 4.2% nickel containing 32,000 tonnes of nickel.

* Rockfire Resources PLC exercised its option to acquire 100% of the Copper Dome porphyry copper deposit in Queensland, Australia, and will pay A$30,000 cash and A$50,000 in shares to Symbolic Resources Pty. Ltd.

PRECIOUS METALS

* B2Gold Corp. may buy Metallon Corp.'s Shamva gold mine in Zimbabwe if it secures an exemption from a law requiring miners to sell output to the country's central bank, Bloomberg News reported, citing unnamed sources. B2Gold will spend US$150 million to US$200 million to develop the mine if a deal proceeds, the report said.

* The drop in Sibanye Gold Ltd.'s stock price since it announced its bid for Lonmin PLC may affect Public Investment Corp. (SOC) Ltd.'s vote on a merger, a source told Bloomberg News. The South African funds manager has a 30% stake in Lonmin, enough to block the proposed deal, the report said.

* The Supreme Court of British Columbia appointed The Bowra Group Inc. as receiver of bankrupt Sutter Gold Mining Inc.'s asset sale.

* Bavura Holdings signed an agreement to explore and mine platinum on Zimbabwe's mineral-rich Great Dyke as the country seeks to quickly exploit its reserves by speeding up investment in the mining sector, Reuters wrote, citing the information ministry. Nigerian billionaire Benedict Peters owns a major stake in Bavura.

* Woomera Mining Ltd. agreed to purchase an 80% interest in Cazaly Resources Ltd.'s Mount Venn gold tenements in the northeastern goldfields of Western Australia.

* McEwen Mining Inc. achieved commercial production at its Gold Bar mine in Nevada, outlining production guidance of 50,000 gold ounces for the year at all-in sustaining costs of US$975 per ounce.

BULK COMMODITIES

* The Australian Manufacturing Workers' Union accused Rio Tinto of compromising workers' safety at its Gove bauxite operations in Northern Territory, Australia, amid a ramp-up in the past two years, ABC News reported. Safety issues at the site reportedly prompted the recent resignation of the mine's general manager, Linda Murry.

* Mechel PAO's first-quarter profit came in 244% higher than 2018, when a slump in sales damaged earnings, despite declines in production across the board. Profit hit 11.34 billion Russian rubles as the ruble strengthened against the dollar and euro, resulting in an exchange gain of 11.98 billion rubles. Coal output fell 29% year over year to 3.5 million tonnes, and steel production slipped below 1 Mt.

* Samarco Mineração SA is postponing talks to restructure debt of US$3.8 billion to at least November, three unnamed sources told Bloomberg News. The creditors agreed to the delay amid uncertainty around liabilities and fines the Vale SA-BHP Group joint venture may be subject to, the report said.

* Despite dropping the mining lease application for its China Stone coal project in Queensland, Australia, Meijin Energy Co., Ltd unit MacMines Austasia Pty Ltd committed to develop the A$6.7 billion project in the short term, indicating that its development would likely follow Adani Enterprises Ltd.'s controversial Carmichael mine, The Australian Financial Review reported.

* Westmoreland Resource Partners LP requested expedited approval from the bankruptcy court to sell its Kemmerer coal mine in Wyoming.

* Sanjeev Gupta's Liberty House Ltd, Chinese steel group Hebei Iron & Steel Group Co. Ltd, Ltd. and U.K.-based private equity group Endless LLP may bid for the embattled British Steel Corp. Ltd., Financial Times reported.

* Bushveld Minerals Ltd. established a dividend policy based on free cash flow for future payouts, which will also be reviewed depending on business conditions and capital allocation priorities. The company did not recommend a dividend for 2018.

* The Singareni Collieries Co. Ltd kicked off development of the Kalyani Khani-6 Incline block in Telangana, India, into a new underground mine, Mining Weekly wrote. The project is expected to help the company reach its target of producing 70 million tons of coal in 2020.

* Brazilian steel demand in April slipped 1.5% year on year to 1.67 million tonnes from 1.7 Mt in the same period last year despite a recovery in the long-rolled market, Fastmarkets MB, citing national steel association Instituto Aço Brasil.

SPECIALTY

* AVZ Minerals Ltd.'s extended scoping study for the Manono lithium project in the Democratic Republic of the Congo outlined a pretax net present value of US$2.63 billion, at a 10% discount rate, with an internal rate of return of over 64% based on annual throughput of 5 million tonnes per annum. Capital expenditure for the project is now estimated at US$380 million to US$400 million.

* Talga Resources Ltd.'s preliminary feasibility study for its Vittangi graphite project in Sweden estimated a pretax net present value, discounted at 8%, of US$1.06 billion, a 55% internal rate of return and a 1.5-year payback period after commissioning of the second stage. Capital expenditure is estimated at US$27 million for the first stage and US$147 million for the second stage, including contingency of about 20%.

* The Barruecopardo tungsten joint venture project in Spain, owned 70% by Oak Tree Capital Management LP and 30% by Ormonde Mining PLC, is planning to mine higher-grade ore sources in the near term after the initial ore feed from the northern starter pit returned grades that were lower than expected.

* Aura Energy Ltd. produced the first samples of yellowcake product at its Tiris uranium project in Mauritania as part of a definitive feasibility study.

INDUSTRY NEWS

* European Metal Recycling Ltd. will sell parts of its Metal & Waste Recycling Ltd unit to Recycling Lives Ltd. after an antitrust inquiry, Fastmarkets MB wrote. As part of the deal, European Metal will retain Metal & Waste's two sites in London.

* Paul Jourdan, former CEO of Mining Equipment Manufacturers of South Africa, urged mining companies to stop sending workers down dangerous deep-level mines and instead use remote machinery to mine at depth, Mining Weekly reported.

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