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Glencore's Q1 copper, zinc output down; Samarco faces new 155B reais lawsuit; Fortescue to repay US$650M debt

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


Glencore's Q1 copper, zinc output down; Samarco faces new 155B reais lawsuit; Fortescue to repay US$650M debt

TOP NEWS

Glencore'sQ1 copper, zinc, coal output falls

Glencore Plcposted loweryear over year production in the first quarter for copper, zinc, lead, coal as wellas oil as it followed through on previously announced production cuts. Productionfrom own sources in the three months, dropped 4% for copper to 335,000 tonnes, 28%for zinc to 257,100 tonnes, and 6% for lead to 71,000 tonnes, on a yearly basis.Coal production of 29.7 million tonnes was down 17% year over year. Production ofnickel, gold, silver and cobalt improved on a yearly basis.

Brazilian prosecutors fileda 155 billion Brazilian reais civil lawsuit against ValeSA, BHP Billiton Groupand their joint venture Samarco MineraçãoSA over a dam burst at the Samarco iron ore mine in the country's Minas Gerais statethat claimed 19 lives, Bloomberg News reported. The lawsuit demands an initial paymentof 7.8 billion reais to be made within 30 days, challenging the previously signedagreement between the Brazilian government and the companies. BHP responded thatit has not received formalnotice of the claim.

Fortescue MetalsGroup Ltd. issued a US$650 million repayment notice for the company's 2019 senior secured termloan, which will be made at par from Fortescue's accumulated cash and will generateinterest savings of US$28 million per year. According to Fortescue CFO Stephen Pearce,the debt repayment of US$650 million, in addition to the US$577 million that thecompany recently paid for 2019 senior unsecured notes, brings total debt repaymentsfor fiscal year 2016 to US$2.3 billion, generating annual interest savings of US$164million.

DIVERSIFIED

* Glencore Plcposted loweryear over year production in the first quarter for copper, zinc, lead, coal as wellas oil as it followed through on previously announced production cuts. Productionfrom own sources in the three months, dropped 4% for copper to 335,000 tonnes, 28%for zinc to 257,100 tonnes, and 6% for lead to 71,000 tonnes, on a yearly basis.Coal production of 29.7 million tonnes was down 17% year over year. Production ofnickel, gold, silver and cobalt improved on a yearly basis.

* Brazilian prosecutors filed a 155 billion Brazilian reais civil lawsuit against ValeSA, BHP Billiton Groupand their joint venture Samarco MineraçãoSA over a dam burst at the Samarco iron ore mine in the country's Minas Gerais statethat claimed 19 lives, Bloomberg News reported. The lawsuit demands an initial paymentof 7.8 billion reais to be made within 30 days, challenging the previously signedagreement between the Brazilian government and the companies.

* BHP responded that it has not received formal notice of the claim from the federalpublic prosecution service, adding that it believes the March agreement enteredwith the Federal Attorney General of Brazil, the States of Espirito Santo and MinasGerais and certain other public authorities will provide the "appropriate platform"to address the impact of the Samarco dam failure.

* Following the US$1.5 billion sale of its niobium and phosphatesbusinesses, Moody's changed the outlook for all ratings of Anglo American Plc and its rated subsidiaries to positivefrom negative. Concurrently, Moody's has affirmed the Ba3 corporate family ratingof Anglo American Plc, the Ba3 senior unsecured instrument ratings of , as wellas Anglo's (P)NP short-term ratings and the Baa2.za/P-2.za national scale ratingsof Anglo American SA Finance Ltd.

BASE METALS

* Three workers of GrupoMéxico SAB de CV's Buenavistadel Cobre copper mine in Mexico's Sonora state died in a labor accident.According to local media reports, a mining truck with a capacity of 360-tonnes crushedthe vehicle they were driving inside the mine, daily El Universal reported.

* Chile would reach its maximum production of fine copper of9.54 million tonnes in the next 10 years, up 60% compared to projections for thisyear of 5.77 million tonnes, according to a study of mining development scenariosin Chile by 2035 from Universidad Católica, business daily Diario Pyme reported.

* Of the 15 larger mining operations in Chile, 10 recorded lossesin 2015, six of which went from profits in 2014 into lossmaking territory in 2015,including Carmen de Andacollo,Centinela, , Mantos Copper,El Abra and . Despite recordinga poorer performance in 2015, Escondida,Collahuasi, , , and continue to make a profit,daily Diario Financiero reported.

* Atalaya Miningplc said the temporary tailings disposal suspension at its Riotintocopper project in Spain has now been liftedand the company can continue to use the tailings facilities, effective immediately.The company added that the commissioning of the expansion project has started andwill offset any lost production resulting from the temporary suspension.

* Following the US$1.5 billion deal to buy Anglo's Brazilianniobium and phosphate assets, ChinaMolybdenum Co. Ltd. is mulling over buying more mining assets from westernrival companies in a bid to expand its international business, the FinancialTimes reported, citing two senior company executives.

PRECIOUS METALS

* An exclusive report by Colombian news radio W said is being investigatedby the Office of the Attorney General in three separate investigations concerningillegal mining activities. The first enquiry relates to the miner's operations inindigenous reserves in Chocó region, the second involves illegal exploitation ofmineral deposits in Santander de Quilichao, Veredas del Palmar, San Vicente, andSanta Rita regions, and the third relates to alleged business deals between thecompany and paramilitary groups, drug traffickers and land usurpers through itsGramalote project.

* Separately, operations were suspended at AngloGold Ashanti Ltd.'s Savuka gold project in South Africa, followingthe death of two employees on April 30, Mining Weekly reported. The Departmentof Mineral Resources will launch a probe May 3.

* In an attempt to bring its net debt down to US$18 billion,Glencore is mulling over the option to sell its Vasilkovskoye gold mine Kazakhstan, in a deal thatmay fetch the Swiss miner some US$2 billion, after interested investors approachedthe company, the Financial Times reported.

* Randgold ResourcesLtd. posted profitattributable to equity shareholders of US$54.4 million, up from US$48.2 milliona year ago reflecting the increase in profit from mining, lower exploration expenditureduring the quarter, partially offset by increased taxes during the current quarter.Production increased to 291,912 ounces from 279,531 ounces, and sales increasedto 291,385 ounces, from 283,624 ounces.

* The crack in a pipeline of the El Chanate mine of Minera Santa Rita S de RL de CV, a subsidiary company ofthe Canadian miner Alamos Gold Inc.,led to a spill of 400 cubic meters of cyanide-rich solution in northern Mexico.Sources toldregional daily Zócalo that the spill wasthe result of poor safety measures and lack of maintenance on site.

* Tahoe ResourcesInc. recorded adjustednet earnings of US$35.5 million, or 16 cents per share, in the firstquarter, compared to net earnings of US$31.9 million, or 22 cents per share, inthe year-ago quarter. During the three-month period, the company paid out US$13.7million to shareholders through its monthly dividend. Quarterly sales reached 4.6million ounces of silver, 50,598 ounces of gold, 2,386 tonnes of lead and 3,336tonnes of zinc. This year, Tahoe expects to produce 18 million ounces to 21 millionounces of silver, and 370,000 ounces to 430,000 ounces of gold.

* IAMGOLD Corp.'sattributable gold productionin the first quarter fell to 191,000 ounces from 208,000 ounces in the year-agoperiod. The company's net earnings from continuing operations attributable to equityholders was US$53.1 million, reversing the US$16.5 million net loss the previousyear, primarily due to the gain on the sale of gold bullion.

* Centerra GoldInc. posted net earningsin the first quarter of US$18.1 million, representing a decline of 56% year overyear, while its revenue for the quarter dropped 66% year over year to US$73.2 million.The company's gold production in the quarter totaled 86,444 ounces, down from 170,683ounces produced a year ago, while its gold sales also declined 65% year over yearto 61,744 ounces.

* Arian SilverCorp. securedthe exclusive right to evaluate Tierra Nuevo Mining Ltd.'s Noche Buena gold-silvertailings project in Mexico for a further 120 days for consideration of US$25,000,which will enable further metallurgical test work to be undertaken to define theprocess required to produce a salable gold and silver concentrate.

* Para ResourcesInc.'s high-grade gold mine and mill at El Limon in Colombia has completed recommissioningafter a US$2.5 million refurbishment. The full circuit from crushing to gold productionwill be operational by May 6, at an initial rate of about 40 tonnes per day.

* Crater Gold MiningLtd. installed and commissionedits new custom-made gold processing plant at its High Grade Zone mine at in Papua NewGuinea.

* Chile's gold projects portfolio totals US$1.28 billion thisyear, down 93% compared with 2011, mainly consisting of Exeter Resource Corp.'s Caspiche, KingsgateConsolidated Ltd.'s NuevaEsperanza-Arqueros, AtacamaPacific Gold Corp.'s CerroMaricunga and KinrossGold Corp.'s LaCoipa 7 project, according to data from Chilean copper commission Cochilco.The lower amount of investment in gold is mostly due to the absence of large projects,given the suspension of Barrick GoldCorp.'s Pascua Lamaand the restructuring of Barrick's CerroCasale and Teck ResourcesLtd.'s El Morroprojects, daily Pulso reported.

* Mariana ResourcesLtd. said it closed a private placement of 330 million shares to raise£6 million, to be used mainly for the advancement of the Hot Maden gold-copper project.

BULK COMMODITIES

* Fortescue MetalsGroup Ltd. issued a US$650 million repayment notice for the company's 2019 senior secured termloan, which will be made at par from Fortescue's accumulated cash and will generateinterest savings of US$28 million per year. According to Fortescue CFO Stephen Pearce,the debt repayment of US$650 million, in addition to the US$577 million that thecompany recently paid for 2019 senior unsecured notes, brings total debt repaymentsfor fiscal year 2016 to US$2.3 billion, generating annual interest savings of US$164million.

* Shandong Iron& Steel Co. Ltd.'s net loss attributable to shareholders widenedto 332.9 million Chinese yuan, or 3.95 fen per share, in the first quarter, froma net loss of 190.0 millionyuan, or 2.95 fen per share, posted a year ago. The company produced 490,300 tonnesof steel bars, 347,900 tonnes of plates and strips, and 1.0 million tonnes of othersteel products in the first quarter.

* U.S. Steel Corp.priced its US$980 million aggregate principal amount of 8.375% senior secured notesdue 2021. The notes willbe issued at a price equal to 100% of their face value. The notes will pay interestsemi-annually in arrears on Jan. 1 and July 1 of each year, beginning Jan. 1, 2017.

* Agrium Inc.'snet earnings attributable to equity holders for the first quarter to US$2 million, or 2 cents per share,from US$12 million, or 8 cents per share, in the same period in 2015, due to weakerselling prices across all nutrients. Total sales slipped to US$2.73 billion fromUS$2.87 billion. For the year, the company expects to book diluted earnings pershare between US$5.25 to US$6.25, lower than the previous estimate of US$5.50 toUS$7.00.

* Coal India Ltd.'sproduction in April totaled 40.09 million tonnes, a 3.4% decrease year over year,and shipments dropped 2.5% year over year to 42.45 million tonnes, the first year-over-yearfall in 15 months, Bloomberg News reported.

* Kommersant reported that the European Commissionin May will introduce permissive mechanism whereby importers of steel will haveto ask Brussels for licenses to import rolled products and pipes, in a move expectedimpact most metallurgical companies in Russia.

* London-listed NewWorld Resources Plc's main coal-mining unit, OKD a.s., filed a bankruptcypetition in a Czech court, claiming Europe's first major coal-sectorscalp amid one of the worst-ever market downturns for the fuel and steel-makingingredient. New World Resources said OKD's bankruptcy filing came after discussionswith the Czech government and a group of major creditors "made no meaningfulprogress."

* K+S Aktiengesellschaftissued promissory notes with a volume of €600 million, divided in fixed and variable tranches in maturities fromthree years to seven years. More than 80 investors participated in the notes, whichhold an average interest rate on all tranches of about 1.00% per annum. The proceedsfrom the issue will increase the company's financial flexibility and possibly reducedrawings against its existing credit line.

* North China's Shanxi province, a major coal producing regionin the country, has issueda document that prohibits approval of any new coal mine during the 13th five-yearperiod, in an attempt to cut overcapacity, the National Business Daily reported.

SPECIALTY

* The strategicreview for Rio Tintosubsidiary Energy Resources of AustraliaLtd. determined three near-term strategic priorities for the companyincluding continuation of the progressive rehabilitation of the project area, maximize thegeneration of cash flow from the processing of stockpiled ore, which can potentiallybe sustained until late 2020, and preserve the option for the future developmentof Ranger 3 Deeps via ongoing care and maintenance.

* Gemfields Plcsaid its 75%-owned Kagem Mining Ltd.in Zambia achievedproduction of 7.1 million carats of emerald and beryl, compared to 9.9 million caratsin the year-ago quarter. Production from the 75%-owned Montepuez Ruby Mining Limitada operations in Mozambique increasedto 2.0 million carats of ruby and corundum, from 1.4 million carats a year ago.

INDUSTRY NEWS

* Graham Short, the National Policy Manager for Australia's Associationof Mining and Exploration Companies Inc. saida A$100 million allocation to Geoscience Australia to further innovation in miningis "excellent news" and the reduction in corporate tax for Australianresident companies to 25% by 2026/27 is "a significant step in the right direction."

* Revenues obtained through the Brazilian mining royalty scheme,Financial Compensation for the Exploration of Mineral Resources, totaled 158.2 millionBrazilian reais in April, up 43.6% compared to the same month in 2015, accordingto National Department of Mineral Production figures, Notícias de Mineração reported.

* Mining production in Mexico fell 6.5% in February, the largestdrop since November 2013, and down 4.5% compared with February last year, accordingto national statistics institute INEGI figures, daily Vanguardia reported.

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