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In This List

Mongolia to improve Oyu Tolgoi deals; Energy Resources' A$476M offering halted

COVID19 Mining Impacts Mining Projects With At Risk Production

Mining Insights Newsletter June 2020

A Decade of Underperformance for Gold Discoveries

State of the Market: Mining Q1-2020


Mongolia to improve Oyu Tolgoi deals; Energy Resources' A$476M offering halted

TOP NEWS

Mongolian Parliament approves resolution to improve Oyu Tolgoi deals

The Mongolian Parliament unanimously approved a resolution instructing the government to improve the investment and financing agreements covering Turquoise Hill Resources Ltd.'s 66%-owned Oyu Tolgoi copper-gold mine. The resolution tells the government to improve the implementation of the 2009 investment agreement, the 2011 shareholder agreement, and the 2015 underground mine development and financing plan, which was recently validated by a Mongolian court. Rio Tinto, which owns 51% of Turquoise Hill, said the approval "re-confirms the validity" of all previous investment agreements between the company, Turquoise Hill and the Mongolian government.

Regulator halts Energy Resources of Australia's A$476M offering

The Australian Takeovers Panel suspended Energy Resources of Australia Ltd.'s A$476 million renounceable entitlement offer after flagging a possible takeover by Rio Tinto at the expense of minority shareholders. Energy Resources of Australia launched the offering of 6.13 new shares for every existing share to fund rehabilitation costs for the Ranger uranium project in Australia's Northern Territory.

First Quantum denies receiving takeover offers from Rio Tinto, Jiangxi Copper

First Quantum Minerals Ltd. has not received any takeover offers from potential bidders, including from Rio Tinto, since September, Bloomberg News reported, citing a phone interview with First Quantum President Clive Newall. In the report, Newall said that while management was surprised by Jiangxi Copper Co. Ltd.'s US$1.12 billion purchase, there is no chance that would lead to a takeover.

DIVERSIFIED

* Commodities trader Trafigura Group Pte. Ltd.'s metals and minerals segment booked a full-year 2019 gross profit of US$1.30 billion, or 44% of the overall group's record profit of US$2.98 billion. The company said results in 2020 could be better than 2019 as the market environment remains favorable for oil and metals.

* Tamino Minerals Inc. inked a letter of intent to acquire 100% ownership of a gold, silver and copper project named Ofelia, in the state of Sonora in Mexico. The company said that the purchase would involve making escalating payments of up to US$1.0 million plus 2% net smelter return.

BASE METALS

* Copper budgets have increased by US$245.4 million, or 12%, year over year in 2019, driven by optimism for new discoveries in Australia and by increased activity by major companies in Chile and the U.S., according to the Metals and Mining Research team of S&P Global Market Intelligence.

* German copper producer Aurubis AG booked a 3% yearly increase in operating earnings before taxes to €67 million for the fourth quarter of its fiscal 2019 but recorded a 42% decrease for the full year to €192 million driven by one-off impairment losses in the flat-rolled products segment and maintenance shutdowns. The company recommended a dividend of €1.25 per share, down from €1.55 in the previous year.

* Dongying Fangyuan Nonferrous Metal Co Ltd stopped the syndication of a US$300 million, one-year loan two weeks into its launch to the market, Bloomberg reported, citing unidentified sources knowledgeable of the matter.

PRECIOUS METALS

* Alamos Gold Inc. is on track to reach its full-year 2019 guidance for production and all-in sustaining cost of between 480,000 ounces and 520,000 ounces, and between US$920 per ounce and US$960 per ounce, respectively. The company expects lower gold production in 2020 of between 425,000 ounces and 465,000 ounces, with higher all-in sustaining cost of between US$1,020 and US$1,060 per ounce.

* Triple Flag Precious Metals Corp. dropped plans for an IPO in Canada, citing "challenging" year-end market conditions. Triple Flag had expected to raise up to C$360 million if the 20 million shares it planned to issue were priced at the top end of the C$15 to C$18 per share range, according to securities filings.

* ASX-listed Ora Gold Ltd.'s Crown Prince gold deposit, part of the Garden Gully project in Western Australia, may generate about A$21.1 million in pretax net profit, according to a scoping study. Total project funding is estimated at about A$4.7 million, with predevelopment costs pegged at A$1.4 million. Gold production was estimated at 22,444 ounces over a total mine life of 15 to 18 months. The study assumed gold prices of A$2,000 per ounce, all-in sustaining cost of A$1,006/oz and operating cash cost of A$891/oz.

* Turkey is set to loosen rules for gold imports and is working with its local bourse Borsa Istanbul to also include the registration of gold brought without certification from the London Bullion Market Association, Bloomberg reported, citing unidentified sources privy to the matter.

* Emgold Mining Corp. secured an option to acquire a stake of up to 55% in the East-West gold project in Quebec from an unnamed private individual. Emgold will purchase an initial 50% stake by paying 4,000,000 common shares and C$135,000 in staged cash payments over nine months.

* Red Pine Exploration Inc. increased its ownership in the Wawa gold project in Ontario to 64.5% from 60%. Red Pine's increased stake reduces the ownership of Citabar Ltd. Partnership to 35.5%.

* Investec Asset Management, South Africa’s biggest money manager, wrote 22 gold mining companies to disclose data on the emissions they cause, which adds pressure on the resources sector to address climate change, Reuters reported.

BULK COMMODITIES

* S&P Global Ratings upgraded its outlook on Russian steelmakers PJSC Magnitogorsk Iron & Steel Works, or MMK, and PJSC Novolipetsk Steel, or NLMK, to positive from stable thanks to their low-cost operations and stable domestic demand amid a downturn in the global steel industry.

* Steel market participants anticipate a strong year for iron ore demand and prices in 2020 on the back of improving steel margins and government stimulus, according to an Iron Ore & Steel Outlook Survey by S&P Global Platts.

* German conglomerate thyssenkrupp AG plans to boost the margins of its elevators unit ahead of a planned sale or IPO of the business.

* Tata Steel Ltd. is mothballing rather than closing its Orb steel plant in Newport in Wales, United Kingdom, while the company searches for a new buyer, according to a BBC News report. A spokesperson said that mothballing the plant ensures that it is properly maintained over the coming period.

* Nippon Steel Corp. intends to terminate its reporting obligations with the U.S. Securities and Exchange Commission.

* Steel Dynamics Inc. completed the sale of US$400 million of 2.800% notes due 2024 and US$600 million of 3.450% notes due 2030. The proceeds from the notes will be used to redeem or satisfy and discharge the entire US$700 million of Steel Dynamics' 5.125% senior notes due 2021, and for general corporate purposes.

* Indonesia is considering to reduce the minimum coal quantity required to be sold to domestic buyers to 20% of the production from the current 25%, according to the country’s energy ministry official Dodik Ariyanto, Reuters reported.

* The National Union of Mineworkers in South Africa will march on Dec. 13 to condemn the escalating violence at Rio Tinto's Richards Bay titanium mine that forced the mining giant to mothball the property, a decision that may lead to job losses, Mining Weekly reported.

* Zanaga Iron Ore Co. Ltd. and Glencore PLC's joint venture company, Jumelles Ltd., entered into a framework agreement with China Overseas Infrastructure Development and Investment Corp. Ltd. for potential cooperation on advancing infrastructure and financing requirements for the Zanaga iron ore project in the Republic of Congo. The priority is to explore the development of iron ore output of about 2 million tonnes per annum at Zanaga.

* Steel producer Nucor Corp. is acquiring TrueCore LLC, an insulated metal panel manufacturing company with a facility in Laurens, S.C. TrueCore serves the cold storage market, with future plans for additional commercial and industrial applications.

* Mozambique’s Minister of Mineral Resources and Energy issued a second mining license for the Mutamba heavy mineral sands project, a joint venture between Savannah Resources PLC and Rio Tinto.

* SRG Global Ltd. secured preferred tenderer status for a five-year, A$90 million contract to provide services at Alcoa Corp.'s Kwinana alumina refinery in Western Australia, Australian Mining wrote.

* Edenville Energy PLC signed two new contracts to supply washed coal from its Rukwa coal project in Tanzania, covering about 75% of the current capacity of the recently refurbished plant. Edenville will supply up to 6,000 tonnes to Rwanda-based Tara Group Ltd. and up to 3,000 tonnes to Uganda-based Springwood Capital Ltd.

* Dome Gold Mines Ltd. outlined an indicated resource estimate for the Koroua Island deposit, part of the larger Sigatoka iron sand project in Fiji, of 7.0 million tonnes of heavy minerals contained in 52.7 Mt grading 13.3% heavy minerals, using an 8% cutoff grade.

SPECIALTY

* The U.S. Army plans to invest in a rare earths plant as part of the country's efforts to boost domestic supplies of the materials used in military weapons and technology, Reuters reported, citing a government document. The Army will reportedly fund at least one project and up to two-thirds of a refiner's cost. The division overseeing munitions asked miners for proposals on the cost of a pilot plant to produce heavy rare earths, with responses due Dec. 16, according to Reuters.

* A report from the administrators of lithium miner Alita Resources Ltd. identified a number of legal violations, including the possibility that it may have been trading insolvent two months before it collapsed, The Australian Financial Review wrote. The report also suggests that China Hydrogen Energy Ltd. and its Liatam Mining unit will become Alita's new owners, the report said.

* ROSATOM's Uranium One inked a memorandum of understanding with Prospect Resources Ltd. to conduct due diligence on the latter and its Arcadia lithium mine in Zimbabwe. The deal consists of off-take terms for at least 51% of Prospect’s future lithium production.

* A Japanese government energy panel said that the national reserve scheme for oil and rare metals used for batteries and other high-tech products should be strengthened to ensure that the country can secure key fuels and materials, Reuters reported. The recommendation will be part of a new resource strategy set to be mapped out by Japan's industry ministry in 2020.

* Magnis Energy Technologies Ltd. executed a binding engineering, procurement and construction contract with Metallurgical Corp. of China Ltd. to secure a turn-key solution for a 240,000-tonne-per-annum graphite production facility at the Nachu project in Tanzania. The US$277 million contract includes the processing plant, infrastructure including roads, power, workers camps and storage facilities.

INDUSTRY NEWS

* The mining industry is likely to remain an attractive end-use industry through 2019 of automated trucks due to efforts to enhance output capacities to meet demand for minerals from the manufacturing sector, according to a report by Transparency Market Research.

* The National Mining Association said that a strong commercial partnership among U.S., Mexico and Canada will be bolstered by the USMCA, noting that the agreement can ensure secure and reliable supply chains across the shared borders.

* South Africa’s electric utility Eskom Holdings SOC Ltd. is aiming to stabilize its power grid by the end of March, following the most severe blackouts in the country in a decade, according to President Cyril Ramaphosa, Reuters reported.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.

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