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Low nickel prices force First Quantum to close Australian nickel mine

TOP NEWS

First Quantum to suspend Australian nickel mine amid low prices

Persistently low nickel prices prompted First Quantum Minerals Ltd.'s decision to place its Ravensthorpe nickel operation in Western Australia on care and maintenance at the beginning of September. It will cost the company US$10 million to suspend operations at the mine, with annual maintenance charges pegged at about US$5 million.

Hong Kong hedge fund seeks to block Yancoal's US$2.35B capital raising

Hong Kong-based Senrigan Capital Management Ltd. joined Noble Group Ltd. in calling on Australia's Takeovers Panel to block Yancoal Australia Ltd.'s proposed US$2.35 billion renounceable entitlement offer. Yancoal is raising the money to fund its US$2.69 billion acquisition of Coal & Allied Industries Ltd. from Rio Tinto. Senrigan said the rights issue is highly dilutive and does not allow existing minority shareholders like itself "a reasonable and equal opportunity to participate" and wants the Takeovers Panel to block the fundraising until it can make a decision.

Codelco struggling to reverse production decline, dwindling reserves

Chilean miner Codelco remained the world's largest copper miner in 2016, although Freeport-McMoRan Inc. and Glencore Plc are close behind, and the state-run company is battling dwindling reserves, declining ore grades, labor unrest and ongoing fiscal uncertainty as it seeks to maintain output at its aging operations. Production continued to trend lower in the first half, with an 11% decline in the March quarter.

BASE METALS

* BHP Billiton Group approved a US$43.2 million investment in a nickel sulfate production facility in Western Australia, Eduard Haegel, Asset President Nickel West at BHP, revealed at the Diggers & Dealers Mining Forum in Kalgoorlie, Australia. The facility will aim to start production of the product, which is needed for lithium-ion batteries, in April 2019. Meanwhile, Haegel told The Australian that demand from the battery market is expected to account for about 90% of the company's nickel output over the next five or six years, compared to about 10% now.

* Mitsubishi Materials Corp.'s net income attributable to owners of the parent rose by 8% year over year to ¥11.63 billion, or ¥88.80 per share, in the first quarter of its fiscal 2018. Operating profit for the metals sector decreased to ¥3.7 billion, from ¥4.5 billion in the year-ago period, while the aluminum sector remained unchanged at ¥2.3 billion. The company revised upward its earnings forecast for the first half and full fiscal 2018 on the back of firm demand for cement in Southern California and early payment of dividends from copper mines.

* Mitsui Mining & Smelting Co. Ltd. reported a 29.4% year-over-year increase in net income attributable to owners of the parent of ¥4.8 billion in the first quarter of its fiscal 2017. The company's metals segment posted an operating loss of ¥600 million, swinging from a ¥2.1 billion profit in the year-ago quarter, while sales increased 35.6% year over year to ¥37.3 billion.

* Fireweed Zinc Ltd. quadrupled the landholding of its Macmillan Pass zinc project in Canada's Yukon Territory by signing an option and exploration agreement with Newmont Mining Corp. for the latter's MAC claims.

* The British Columbia Ministry of Forests, Land and Natural Resources notified Engold Mines Ltd. that exploration activities at its Lac la Hache copper-iron ore-gold property will remain suspended, as fire danger remains at a high level within the project area.

* Shareholders of Ufaley Nickel JSC, the second-largest manufacturer of commercial nickel in Russia, voted to liquidate the company, Kommersant reported.

PRECIOUS METALS

* Tahoe Resources Inc. suspended dividend payments and its previously issued full-year production guidance due to the suspension of the mining license at its Escobal silver mine in Guatemala in July, even as it announced a doubling of second-quarter earnings to US$33.5 million, or 11 U.S. cents per share, from US$16.7 million, or 5 cents per share.

* Semafo Inc. produced 47,600 ounces of gold in the second quarter of 2017, down 22% on a yearly basis. The decrease in gold ounces produced was due to lower head grade, partially offset by higher throughput. All-in sustaining costs during the quarter also increased 45% to US$1,074 per ounce sold.

* Franco-Nevada Corp. posted net income of US$45.6 million in the second quarter, compared to US$42.3 million in the year-ago period. Revenue also rose to US$163.6 million, from US$150.9 million in 2016, on stronger sales.

* AngloGold Ashanti Ltd. has no plans to back out of Australia in the same fashion as other larger producers have done and is looking to strike more deals to encourage greenfields gold exploration in the country.

* Australian gold hopeful Riversgold Ltd. indicated that it may look to strike a deal with fellow Australian explorer Emerald Resources NL to advance its tenements in Cambodia. The company entered an agreement to acquire a company that has applied for exploration licenses in northeastern Cambodia that are next to Emerald's Okvau gold project.

* St Barbara Ltd. Managing Director Robert Vassie is accelerating the hunt for the company's next acquisition, The Australian reported. Vassie said at the Diggers & Dealers conference that it is difficult to find good projects at a suitable value in the Australian gold sector but there could be a good strategic sense in a merger of equals with a similarly sized miner.

* Pressure is mounting on Gold Fields Ltd. to restructure, sell or merge its Australian operations as a way of realizing value that does not seem to be reflected in its gold price, The Australian wrote. However, CEO Nicholas Holland is adamant that the current plan is the right one and will yield value with time.

* Klondex Mines Ltd. entered a definitive arrangement agreement to acquire all of the issued and outstanding common shares of Bison Gold Resources Inc.

* Conroy Gold & Natural Resources Plc received a request for a general meeting to remove Executive Chairman Richard Conroy and Managing Director Maureen Jones from the board, in favor of Patrick O’Sullivan, Paul Johnson and Gervaise Heddle.

* Santacruz Silver Mining Ltd. struck a definitive deal to sell the Gavilanes silver-gold project in Mexico to Marlin Gold Mining Ltd. for US$3.5 million.

* New Gold Inc. formally informed its staff at the Peak gold mine in New South Wales, Australia, about sale plans for the site. The asset is expected to fetch about US$100 million.

BULK COMMODITIES

* Preliminary findings of a probe by the U.S. Department of Commerce indicated that Chinese aluminum foil producers received subsidies of between 16.56% to 80.97%, the Financial Times reported. The department will tell customs to collect cash deposits from importers of Chinese aluminum foil based on these rates.

* The government in Queensland, Australia, granted a mining lease for the first stage of Glencore Plc's US$7 billion Wandoan coal project in the Surat Basin, The Guardian reported. The company applied for the lease in 2007 but shelved plans to develop the project due to the depressed coal market in 2013, according to Mining Weekly.

* The recent sale of coal production quota by Inner Mongolia Yitai Coal Co. Ltd. to its state-owned parent company for 240 million Chinese yuan brought the spotlight on the often overlooked market for coal production quota in China, where mining companies buy and sell rights to produce the tightly controlled commodity. It is a market with demand estimated at about 1.5 billion tonnes, but with only between 300 million and 500 million tonnes of new supply, according to Zhao Dongchen, a coal analyst with ICBC International Research Ltd.

* Jindal Steel & Power Ltd. narrowed its first-quarter after-tax loss to 4.21 billion Indian rupees from 12.40 billion rupees in the year-ago period. The company's steel and pellet production rose 6% and 8%, respectively, to 1.26 million tonnes and 1.69 million tonnes in the period.

* Timeless Software Ltd. said its subsidiary Xinjiang Tianmu Mineral Resources Development Co. Ltd.'s Tuchushan iron mine will be shut down and its exploration and mining certificates will be repealed.

* Aluminum prices increased to US$2,000 per tonne, the highest since 2014, as a result of decreased production in China, Vedomosti reported.

* China's coal imports went down 8.3% year over year and 10% month on month to 19.46 million tonnes in July, Reuters reported.

* IC Potash Corp. entered a binding letter of intent to sell its indirect interest in the Ochoa sulfate of potash project in New Mexico to Cartesian Capital Group LLC for about US$15 million.

* Pitchblack Resources Ltd. agreed to off-load the Division Mountain coal project in Canada's Yukon Territory for C$100,000 as part of the company's strategic review of its assets.

SPECIALTY

* Chilean state development agency CORFO said it has shortlisted seven companies to develop value-added lithium projects in the country, Reuters reported. Twelve companies from seven countries had applied for permission.

* Tronox Ltd. reported a second-quarter net income of US$3 million, or 2 cents per share, swinging from a net loss of US$52 million in the year-ago quarter and a net loss of US$41 million in the previous quarter.

* Latin Resources Ltd. signed a binding letter of intent to secure the Geminis lithium mine and Don Gregorio concessions in San Luis, Argentina.

* Anfield Resources Inc. completed an updated resource estimate for the Clarkson Hill uranium project in Wyoming. The project hosts inferred resources estimated at 957,000 tonnes grading 0.058% triuranium octoxide, which is equivalent to 1.1 million pounds of triuranium octoxide.

INDUSTRY NEWS

* South African President Jacob Zuma is considering a cabinet shakeup that could see mineral resources minister Mosebenzi Zwane and other ministers removed from their position, conditional to not being ousted as president. Zuma defeated the vote of no-confidence by 198-177 in a secret ballot.

* A steady uptick in M&A deals is expected in the second half, but EY forecasts that investors will stray from a one-size-fits-all approach and treat the industry commodity by commodity.

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.