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South32 Q2'19 metallurgical coal output up 99% YOY; Alcoa swings to Q4'18 profit

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


South32 Q2'19 metallurgical coal output up 99% YOY; Alcoa swings to Q4'18 profit

TOP NEWS

South32's Q2'19 metallurgical coal output surges 99% YOY

South32 Ltd.'s metallurgical coal production in the second quarter of fiscal 2019 swelled 99% year over year to 1.6 million tonnes, leading to an increase in its fiscal-year 2019 production guidance on the back of improved longwall performance at the Illawarra operations. The company bumped up the forecast for metallurgical coal production in fiscal 2019 by 300,000 tonnes to 5.2 million tonnes. CEO Graham Kerr noted that the process to transform ownership of its South Africa Energy Coal unit is on track and the company expects to receive binding bids in the June 2019 half year. Separately, Katie Tovich will succeed Brendan Harris as CFO, effective May 1.

Alcoa swings to Q4'18 profit, flags savings from closure of 2 Spanish plants

Alcoa Corp. swung to a net profit of US$43 million, or 23 cents per share, in the fourth quarter of 2018, from a net loss of US$196 million, or US$1.06 per share, in the year-ago period. Revenues in the quarter increased to US$3.34 billion, from US$3.17 billion a year earlier on the back of higher shipments at the primary aluminum, alumina and Brazil energy segments. Alcoa also reached a tentative deal with workers' representatives over the collective dismissal at its Avilés and La Coruña aluminum plants in Spain, which are both scheduled for closure in 2019. Following the shutdown, the company expects annual savings of US$70 million to US$80 million, based on 2018 market prices.

US Senate rejects bid to keep sanctions on Rusal, En+

The U.S. Senate rejected legislation to retain the sanctions on Russian billionaire Oleg Deripaska's companies United Co. Rusal PLC, its parent En+ Group PLC, and EuroSibEnergo PLC, Reuters reported. The Senate voted 57-42 to end the debate on the measure. The Republican-dominated Senate previously moved forward the resolution hindering the Trump administration's plan to lift the sanctions, with 11 Republicans defying President Donald Trump to vote with the Democrats.

BASE METALS

* Nickel Asia Corp.'s estimated value of shipments in 2018 climbed 20% year over year to 17.29 billion Philippine pesos due to a combination of higher export volume, improved prices and a favorable Philippine peso to U.S. dollar exchange rate. The company sold 19.35 million wet tonnes of nickel ore at US$16.86 per wet tonne, compared to 17.70 million wet tonnes in 2017 at US$16.17 per wet tonne.

* Hillgrove Resources Ltd. has restored the section of a wall at its Kanmantoo copper project in South Australia where rock fall occurred in mid-December 2018, and the company has restarted mining after securing access to the restricted area. Meanwhile, modifications to the pit design to avoid future accidents is expected to reduce future copper output by about 2,000 tonnes of recovered metal.

* Codelco extended the deadline for tender offers for the US$1 billion construction of its desalination plant to April, from early February, as several parties have showed strong interest, daily Diario Financiero reported. The plant will supply water to the company's Distrito Norte operations in Chile's northern region.

* Philippines-based Global Ferronickel Holdings Inc. plans to keep its nickel ore shipments to China in 2019 at the prior-year level of 5.7 million wet tonnes due to expected weaker demand, Reuters reported. The company agreed to sell 1 million wet tonnes of ore to China Baowu Steel Group Corp. Ltd. unit Baoshan Iron & Steel Co. Ltd.

* South32 agreed to provide funding of US$9 million over four years as part of its phase one earn-in commitment to secure a 60% interest in Inca Minerals Ltd.'s Riqueza zinc project in Peru.

* Ford Motor Co., Zhejiang Huayou Cobalt Co. Ltd, IBM, LG Chem Ltd. and RCS Global plan to use blockchain technology to trace ethically sourced minerals. The companies launched a pilot that will trace the production, trading and processing of cobalt, a key component of lithium-ion batteries used in electric cars, laptops and mobile devices.

* Kazakhstan's 2018 refined copper production grew 2.8% to 438,233 tonnes, while refined zinc output slipped 0.7% to 328,764 tonnes, Reuters reported, citing data from Statistics Committee. KAZ Minerals PLC and Glencore PLC's Kazzinc Ltd. unit account for majority of the country's metals production.

* Waterton Global Resource Management Inc. picked Peter Kukielski, the former CEO of Nevsun Resources Ltd., as its bet to become Hudbay Minerals Inc.'s new CEO as the dissident shareholder named its eight nominees for election to the Canadian miner's 10-member board at this year's annual meeting.

* KGHM Polska Miedź SA expects average copper prices in 2019 to range from US$6,100 per tonne to US$6,300/t, which is at the lower end of analyst forecasts, Reuters reported, citing CEO Marcin Chludzinski.

* Cobalt Blue Holdings Ltd. paused drilling at the Thackaringa cobalt project in New South Wales, Australia, as it was unable to secure an extension to a land access agreement. The company planned to drill at least 15,000 meters at Thackaringa by the first half and has completed 9,561 meters so far.

* NorZinc Ltd. entered into a traditional land use agreement with the Nah?a Dehé Dene Band, or NDDB, for construction and operation of an all-season road to connect its Prairie Creek zinc-lead-silver property to the Liard Highway in Canada's Northwest Territories.

* Six Sigma Metals Ltd. secured approval for a three-year prospecting license in Botswana. The license contains at least three historical prospects with potential for nickel sulfide and/or base metals mineralization.

PRECIOUS METALS

* The assets likely to be divested from both Newmont Mining Corp.'s proposed US$10 billion takeover of Goldcorp Inc. and the US$18.3 billion Barrick Gold Corp.-Randgold Resources Ltd. tie-up could propel some highly successful, cashed-up midtiers into majors, with some in the sector seeing the most opportunity for Australian miners to grow. Industry CEOs and analysts see Australian companies as particularly strong suitors for the assets. "There'll potentially be a flood of assets taken up by the Australians," Exploration Insights partner Joe Mazumdar said. "They've got the most cash flow. They've got the best value."

* LeaGold Mining Corp.'s feasibility study for its Los Filos gold mine in Mexico defined a posttax net present value, discounted at 5%, of US$565 million, and an 87% internal rate of return. Gold production is expected at 3.3 million ounces over the total mine life of 10 years, at all-in sustaining costs of US$795/oz.

* Orocobre Ltd.'s lithium carbonate production in the fourth quarter of 2018 declined 4% year over year to 3,782 tonnes, while sales dropped 13% to 3,019 tonnes. The average sales price received by the company declined 8% year over year to US$10,587 per tonne, leading to a 20% drop in revenue to US$32 million.

* Moreton Resources Ltd. expects to start silver production at its Granite Belt silver-gold project in Queensland, Australia, in February.

* B2Gold Corp.'s consolidated gold production for 2018 reached a record 953,504 ounces, near the top end of its revised guidance and up 51% on a yearly basis.

* IAMGOLD Corp.'s attributable gold output in the fourth quarter of 2018 climbed 1.3% year on year to 231,000 ounces, according to preliminary figures. Full-year 2018 production remained steady at 882,000 ounces, near the high end of its guidance of 850,000 to 900,000 ounces.

* Premier Gold Mines Ltd. reported full-year 2018 production of 89,699 ounces of gold and 321,814 ounces of silver. Fourth-quarter 2018 production came in at 23,042 ounces of gold and 120,730 ounces of silver.

* Atlantic Gold Corp.'s fourth-quarter gold output of 22,509 ounces from the Moose River Consolidated mine brought its full-year production to 90,531 ounces, slightly above its full-year guidance of between 82,000 ounces and 90,000 ounces.

* Avesoro Resources Inc.'s gold production in the fourth quarter of 2018 declined 4% year over year to 24,573 ounces. Full-year output increased 15% year over year to 220,458 ounces on the back of strong performance of the New Liberty gold mine, part of its Bea Mountain operation in Liberia.

* Serabi Gold PLC achieved record gold production in the fourth quarter of 2018 of 10,256 ounces, compared to 9,337 ounces produced a year ago. Full-year 2018 output increased to 37,108 ounces from 37,004 ounces a year ago. Gold production in 2019 is expected between 40,000 and 44,000 ounces.

* A Canadian national was kidnapped by a dozen gunmen on a site owned by Progress Minerals Inc. in Burkina Faso. The victim was identified as Kirk Woodman, the company's vice president of exploration. Canadian Foreign Minister Chrystia Freeland said the government is aware of the incident and is working with Burkina Faso authorities.

* Xtract Resources PLC unit Explorator Ltda. inked a mining contractor deal with Huafei Gold Resources Co. Ltda. for the exploitation of alluvial gold deposits at the Manica gold project in Mozambique.

* Alto Metals Ltd. agreed to purchase the right to prospect and search for gold down to 2 meters of depth from surface at the Sandstone gold project in Western Australia for 3 million shares.

BULK COMMODITIES

* Whitehaven Coal Ltd. achieved record managed run-of-mine coal production of 7.4 million tonnes in the second fiscal quarter for 2019, a 36% increase year over year. Meanwhile, managed saleable coal output increased 11% year over year to 5.6 million tonnes. Total coal sales in the three months, including purchased coal, dropped 7% on a yearly basis to 5.4 million tonnes. The company is on track to meet full-year production guidance of 22.0 million to 23.0 million tonnes of saleable coal.

* Voestalpine AG lowered its full fiscal 2019 forecast for EBITDA to about €1.55 billion and its EBIT forecast to about €750 million due to lower earnings for the first nine months and a further expected economic slowdown in the last fiscal quarter. The company said its preliminary nine-month EBITDA of about €1.1 billion and EBIT of approximately €525 million are below market expectations due to higher ramp-up costs of its automotive activities in the U.S. and a provision in connection with a pending German Federal Cartel Office investigation.

* Karnalyte Resources Inc. said its plans for 2019 include advancing the development of its Proteos nitrogen project towards an investment decision, while continuing discussions with its 38.7% shareholder Gujarat State Fertilizers and Chemicals Ltd. to finalize a time frame for development of the Wynyard potash project in Saskatchewan.

* Korab Resources Ltd. agreed to supply up to 20,000 tonnes of dead burned magnesia per year to ZM Ropczyce SA in exchange for research and development support and cooperation to develop new products.

* Jindal Steel & Power Ltd. unit Wollongong Coal Ltd. received a notice of withdrawal in connection with an industrial action at the company's Wongawilli colliery in New South Wales, Australia.

* The European Union agreed to limit steel imports into the bloc until July 2021 to alleviate concerns that steel could flood the European market amid U.S. metal tariffs, Reuters reported.

SPECIALTY

* Base Resources Ltd. revised its 2019 production forecast, slashing ilmenite guidance to 385,000 tonnes to 415,000 tonnes from 420,000 tonnes to 450,000 tonnes previously, increasing the top end of rutile guidance by 1,000 tonnes to 88,000 tonnes to 94,000 tonnes, and reducing zircon guidance to 31,000 tonnes to 34,000 tonnes from 32,000 tonnes to 37,000 tonnes previously.

* An independent survey will determine if mining will be allowed at Transworld Energy and Minerals Resources (SA) (Pty.) Ltd.'s Xolobeni mineral sands project in South Africa, Mining Weekly wrote, citing Mineral Resources Minister Gwede Mantashe, who will also visit the local community to gain consent for mining in the region. The Pretoria High Court recently ruled that the minister could not award a mining right at Xolobeni without permission from the community.

* Activist investor Krupa Global Investments notified European Metals Holdings Ltd. of its intention to make a purchase offer for the latter's wholly owned Cinovec lithium-tin project in the Czech Republic. Company shares were up 28% in late-afternoon London trading. European Metals said it would not give it any consideration to the "purported indicative offer letter" due to a lack of any details about the price, terms or conditions.

INDUSTRY NEWS

* Mining investment in Peru between January and November 2018 surged 25.4% year over year to US$4.18 million, according to figures by the Ministry of Energy and Mines. Southern Copper Corp.'s Peruvian unit Southern Peru Copper Corp. led investments with US$527 million, daily El Comercio reported.

* Bosasa, a South African facilities management firm, paid up to 6 million South African rand in bribes monthly to secure tenders at mining companies and state institutions, according to a state capture testimony by former COO Angelo Agrizzi, as reported by Business Day.

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