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Cameco sees C$1.3B hit to sales after client cancels supply contract

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Global M&A Infographic Q1 2021

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COVID-19 Impact & Recovery: Private Equity

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Lithium prices rally cobalt prices correct

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COVID-19 Impact & Recovery: Investment Banking


Cameco sees C$1.3B hit to sales after client cancels supply contract

TOP NEWS

Cameco to take C$1.3B sales hit after major customer declares force majeure

Cameco Corp. is expected to lose about C$1.3 billion in revenues through 2028 after Tokyo Electric Power Co. Holdings Inc. served a termination notice for a uranium supply contract. Tokyo Electric alleged that force majeure has occurred as it was unable to operate its nuclear generating plants for 18 consecutive months due to government regulations arising from the Fukushima nuclear accident in March 2011. The termination would impact about 9.3 million pounds of uranium deliveries through 2028, and the Canadian uranium miner is seeking "to enforce its rights under the uranium supply contract to recover losses." In 2017, Cameco's consolidated revenue, including the Tokyo Electric volume, is expected to range between C$2.1 billion to C$2.2 billion.

Workers at BHP Billiton's Escondida mine vote to strike

Workers at BHP Billiton Group's Escondida copper mine in Chile rejected a wage offer and voted for a strike, Reuters reported, citing the union. The company will likely ask for government mediation to resolve the matter, which would delay the strike by a week.

Southern Copper Q4'16 profit jumps

Southern Copper Corp.'s net income for the fourth quarter of 2016 jumped 182.7% year over year to US$171.9 million as sales improved 11.5% to US$1.39 billion. For the full year, the NYSE-listed miner posted a 5.4% increase in net income to US$776.5 million, while sales rose 6.6% to US$5.38 billion.

BASE METALS

* Freeport-McMoRan Inc. unit PT Freeport Indonesia will be temporarily exempted from some new mining rules while the Indonesian government processes the company's application for new mining rights, Reuters reported, citing Coal and Minerals Director General Bambang Gatot.

* Antofagasta Plc's Los Pelambres copper mine finished removing the tires that had been discarded as mining waste on an alleged illegal tailings dam located inside Glencore Plc's El Pachon copper mine in San Juan province in a confusing situation that has led to a legal dispute between the miners before an Argentine court, daily Once Diario reported.

* Strategic Minerals Plc's access to the Cobre magnetite stockpile in New Mexico, owned by Freeport-McMoran, has been extended by 12 months to Feb. 28, 2018.

* Royalco Resources Ltd. shareholder High Peak Royalties Ltd. said it has no intention of accepting Fitzroy River Corp. Ltd.'s A$10.5 million takeover offer. High Peak, which owns 21.36% of ASX-listed Royalco, is one of the parties attempting to eject the company's board. Fitzroy recently declared its off-market bid unconditional and so far has obtained a 43.265% stake in Royalco.

* TNG Ltd.'s new company that will own its base metals assets in Australia's Northern Territory filed a A$6 million IPO to list on the ASX. Todd River Resources Ltd. is offering 30 million shares at 20 cents apiece to raise the cash and list on the ASX on March 24.

* China Africa Resources plc will acquire a 48.88% shareholding in Global Exploration Technologies Pty. Ltd., a private Australian company holding five exploration licenses in the Kalahari copper belt in Botswana.

* Glencore Plc is considering a bid for Impala Platinum Holdings Ltd.'s 65% stake in Impala Chrome Pty. Ltd., Bloomberg News reported, citing two people familiar with the matter. The operation produces more than 200,000 tonnes of chrome concentrate annually from tailings.

* Archer Exploration Ltd. terminated the farm-in and joint venture agreement with Cobalt Bull Pty. Ltd. after the latter failed to meet the final conditions. Archer will retain 100% of the tenements, including the Ketchowla cobalt-manganese project in South Australia.

* PJSC MMC Norilsk Nickel posted quarter-over-quarter increases in its fourth-quarter 2016 production of nickel and copper, while platinum group metals output declined. Consolidated nickel production increased 5% on a quarterly basis to 58,392 tonnes, while output from the company's Russian feed rose 16% to 52,604 tonnes, and copper production also rose 11% on a quarterly basis, to 96,188 tonnes.

* Sherritt International Corp. produced 75,033 tonnes of nickel in 2016, slightly exceeding the top end of its guidance. For 2017, Sherritt plans to produce 81,000 tonnes to 86,000 tonnes of nickel and 7,300 tonnes to 7,900 tonnes of cobalt.

PRECIOUS METALS

* Orion Mine Finance Group is looking to sell a portfolio of 87 mining royalty, streaming and off-take agreements spread across 16 countries, Reuters reported, citing the company's portfolio manager, Douglas Silver. According to unnamed sources, the U.S. private equity company is in talks with Franco-Nevada Corp., Silver Wheaton Corp. and Royal Gold Inc. for the said divestment, which could fetch up to US$1 billion. Alternatively, Orion is also considering an IPO of the portfolio, the newswire added.

* SEMAFO Inc. said its fourth-quarter and full-year 2016 gold production dropped 4% and 6% on a yearly basis to 55,100 ounces and 240,200 ounces, respectively, due to lower head grade compared to 2015. This year, the company plans to produce between 215,000 ounces and 235,000 ounces of gold at all-in sustaining costs of US$795 per ounce to US$835 per ounce.

* Centamin Plc's net profit attributable to shareholders for 2016 increased to US$214.8 million from US$51.6 million in 2015. Revenues were up 35% to US$687.4 million as EBITDA surged 145% on a yearly basis to US$373 million thanks to higher gold prices, increased production and lower costs.

* Major shareholders of Banro Corp. agreed to support the company's recapitalization plan, which will see it refinance US$207.5 million of outstanding debt, equitize outstanding preferred shares and raise US$45 million through a forward gold sale.

* Harmony Gold Mining Co. Ltd. suspended all scraper-related operations at its Masimong mine in Free State, South Africa, after an employee was killed in an accident. An investigation into the incident is underway.

* Richmont Mines Inc. said mineral reserves at its Island gold mine in Ontario increased by 34% to 752,200 gold ounces, net of depletion, at an 11% higher gold grade of 9.17 g/t contained within 2.6 million tonnes of ore. The reserves are effective Dec. 31, 2016.

* Residents of the Cocula municipality in Mexico's Guerrero state blocked access to Torex Gold Resources Inc.'s Media Luna gold mine in Mexico, demanding compensation for environmental pollution allegedly caused by the operation, daily El Sol de Zacatecas reported.

* Forty-seven families, who are residents of the Chalchihuites municipality and former workers of Pan American Silver Corp.'s La Colorada silver-gold mine in Mexico's Zacatecas state, claimed the mining company illegally evicted them from their homes after two years of harassment, daily Jornada reported.

* Anova Metals Ltd. secured final approvals required to start mining at its Big Springs gold project in Nevada.

* Talga Resources Ltd. granted GBM Investments No 1 Pty. Ltd. an exclusive three-month option to purchase its wholly owned Bullfinch gold project in Western Australia.

* Kalamazoo Resources Ltd. signed an ore sale and purchase agreement with Minjar Gold Pty. Ltd. to fund the drilling, feasibility study and development of the company's A-Zone project at the Snake Well gold mine in Western Australia.

* Two workers at Hochschild Mining Plc's Inmaculada gold and silver mine in southern Peru were killed due to a tunnel cave-in, Reuters reported, citing a local police chief.

BULK COMMODITIES

* Arconic Inc. CEO Klaus Kleinfeld admitted that the U.S.-based aerospace and automotive component manufacturer "got it wrong" with respect to the Firth Rixson business and needs to do better. "Overall we got it wrong on the non-aero side and our outlook is substantially reduced for this market," Kleinfeld said. Arconic reported a US$1.25 billion net loss in the fourth quarter of 2016, widening from a loss of US$701 million in the year-ago period, primarily due to its separation from Alcoa Corp. as well as restructuring and other costs.

* Meanwhile, Arconic's 10.5% shareholder, Elliott Management, is looking to oust CEO Kleinfeld, claiming it could improve the company's valuation to between US$33 and US$54 per share from the Jan. 31 close of US$22.79 per share, Reuters reported. Elliott proposed former CEO of Spirit AeroSystems Holdings Larry Lawson as Kleinfeld's replacement.

* Beowulf Mining Plc shares crashed after the County Administrative Board for the County of Norrbotten referred the company's exploitation concession application for the Kallak North iron ore project back to the Mining Inspectorate of Sweden. The company lodged a revised exploitation concession application with the Inspectorate in 2016, which was sent to the country board to respond to the Inspectorate's questions until Feb. 28.

* The Danakali Ltd. and Eritrean National Mining Corp. 50/50 joint venture, Colluli Mining Share Co., which wholly owns the Colluli potash project, entered into a mining agreement with the Eritrean ministry of energy and mines covering about 100 square kilometers, including the entire Colluli resource. The joint venture secured exclusive exploitation rights of all mineral resources within the agreement area, an exclusive right to apply mining licenses within the area and the exclusive right of land use over the life of the resource.

* Prairie Mining Ltd. estimated a maiden coal resource of 301 million tonnes of hard coking coal at its wholly owned Debiensko hard coking coal project in Poland.

* In 2017, PAO Severstal plans to invest about 43 billion Russian rubles across its operations, primarily focusing on increasing production of high-value added products, enhancing safety and customer care, and cost control.

* India's National Aluminium Co. Ltd. and Neelachal Ispat Nigam Ltd. signed a memorandum of understanding to set up a joint venture company to produce coal tar pitch from the coal tar produced at the latter's coke oven plant in Kalinga Nagar in Odisha state, India.

* U.S. Steel Corp. booked a net loss attributable to the company of US$105 million in the fourth quarter of 2016, narrowing from a year-ago net loss of US$1.13 billion. Net sales, meanwhile, totaled US$2.65 billion, up from US$2.57 billion a year earlier. For the full year 2016, the company posted a net loss of US$440 million, narrowing from a net loss of US$1.64 billion in 2015.

* Puls Biznesu reported that a Polish court acquitted of corruption charges former heads of Katowice Coal Holding and former directors of the company's mines. Prosecutors had accused them of accepting bribes for awarding contracts in the mining industry.

* Deutsche Bank decided not to finance any greenfield thermal coal mining and new coal-fired power plant construction. The German bank revised its coal financing guidelines and will also gradually reduce its existing exposure to the thermal coal mining sector.

SPECIALTY

* Avira Energy Ltd. received approval from Australia's Foreign Investment Review Board to take a 30% stake in Paladin Energy Ltd.'s Manyingee uranium project in Western Australia and form a joint venture with Paladin.

* Bearing Resources Ltd. and Li3 Energy Inc. entered a definitive agreement to merge, with Li3 Energy to become a wholly owned Bearing subsidiary. Li3 Energy's main assets include the Maricunga lithium property in Chile. Upon completion of the merger, Bearing will have an undivided 17.7% interest in the project.

* Anglo Pacific Group Plc is investing C$43.5 million in Denison Mines Corp., with the proceeds to be used to fund the development and exploration expenditures at its projects and for general corporate and working capital purposes. Anglo will fund the financing by issuing shares of up to £13.7 million and through the drawdown on a new revolving credit facility.

* Mineral Deposits Ltd. kicked off chloride titanium slag and high-purity pig iron production at its TiZir titanium-iron ilmenite upgrading facility in Norway using ilmenite from the Grande Cote mineral sands operation in Senegal.

INDUSTRY NEWS

* Exploration budgets allocated to Canada in 2016 totaled US$971 million, which was US$214 million less than in 2015. This represented a fall of 18%; however, the decline was less than the global average decline of 21%. The 2016 total budget was a 12-year low for the country, down 70% from the 2012 high of US$3.24 billion. There were 400 companies budgeting for exploration in Canada in 2016, which was 14% less than the 464 companies with budgets in the previous year.

* About 500 union workers blocked access to federal highways in Zacatecas, Mexico, in protest against a new state environmental tax aimed at mining companies, which became effective Jan. 1, daily El Universal reported.

* The ASX tumbled Jan. 31, following Wall Street, which saw its biggest sell-off since the U.S. presidential election as investors dumped stocks that could be affected by the Trump administration's isolationist policies, The Sydney Morning Herald reported. Dow Jones' MarketWatch wrote that Wall Street's fear index was at its highest in three months following the executive order tightening U.S. immigration rules, according to FactSet data.

* Meanwhile, the Toronto Stock Exchange fell to a one-month low on the back of a drop in heavyweight financial shares, partially offset by gold stocks, Reuters reported.

The Daily Dose is updated as of 7 a.m. ET, and scans news sources published in Chinese, English, Indonesian, Malay, Portuguese, Russian, Spanish, Thai and Ukrainian. Some external links may require a subscription.