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Glencore may lift Volcan stake to 66.30% for US$956M

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 may lift Volcan stake to 66.30% for US$956M

TOP NEWS

Glencore may lift Volcan stake to 66.30% for US$956M

Glencore Plc struck a deal to buy 26.73% of the class A common shares, or voting shares, of Volcan Compañía Minera SAA at US$1.22 each for a total of US$531 million. The Swiss commodities trader intends to make an offer to all of Volcan's shareholders via a public tender offer for up to 48.19% of the total class A common shares at the same price per share. Glencore will spend up to US$956 million for the offer from its own cash reserves, subject to the level of acceptances. Volcan's production forecast of 265,000 tonnes to 275,000 tonnes this year, together with Glencore's planned and shuttered output, could lead to a more controlled price environment for zinc, as the lack of concentration left top producers with little means of influencing market prices, according to Bloomberg News.

Indonesia mulls taxing miners' net profits

Indonesia is considering amending tax rules that may require mining companies operating in the country to pay a percentage of their after-tax profits to central and local governments, Reuters reported, citing documents. Under the new rules, special mining permit holders will pay a 4% tariff on after-tax profits to the central government and 6% to regional governments where the companies operate, the report added.

Adani may divest minority stake in Carmichael coal mine to help raise funds

Adani Enterprises Ltd. may consider off-loading a minority stake in the Carmichael coal operation in Queensland, Australia, to financial institutions and contractors to help raise funds, Reuters reported, citing Jeyakumar Janakaraj, CEO of Adani Australia. The company is seeking to tie up financing for the giant Carmichael project by March 2018, with mine construction scheduled to begin in the next few weeks. Separately, Anglo American Plc CEO Mark Cutifani opposed the idea of government funding to develop infrastructure for the Indian group's coal project unless the same benefit is also given to competitors, The Australian wrote. Cutifani added that the government should instead provide policy certainty to the industry to make it easy to do business.

DIVERSIFIED

* When BHP Billiton Group announced in August that it would look to sell off its U.S. oil and gas unconventional acreage, it said it would be patient. Now the Australian giant might not have a choice in the matter, as industry observers believe that its options are limited. A ready buyer for the BHP assets may not exist either.

BASE METALS

* Assuming a base case of 109 kilograms of copper needed per electronic vehicle, analysts at Sanford C. Bernstein estimated copper demand of 5.5 million tonnes, implying a 24% bigger copper market.

* Chilean state miner Codelco is expected to contribute US$1.46 billion to the government's fiscal revenues this year, up 54.8% on a yearly basis from 2016, according to Finance Ministry estimates, daily El Mercurio reported.

* Indonesia's economic coordinating minister, Darmin Nasution, said the government could directly acquire a 51% stake in Freeport-McMoRan Inc. subsidiary PT Freeport Indonesia without having to go through an IPO, The Jakarta Post wrote, citing a Kompas.com report. "In the Contract of Work, the divestment is implemented not through an IPO," Darmin said. The divestment is related to extending Freeport Indonesia's contract of work.

* A review of the economic model for Galileo Resources Plc's Star Zinc project in Zambia estimated net present value, at a 10% discount, of US$18 million and an internal rate of return of 77% at current zinc prices of US$3,000 per tonne. CapEx was pegged at US$9.1 million with payback in one year. Using cash on hand, the company plans to start a fast-track drilling program to upgrade the current resource and assess the potential of increasing the resource size.

* Andromeda Metals Ltd. retained 100% ownership of its Rover copper-gold project in Northern Territory, Australia, after potential joint venture partner Emmerson Resources Ltd. decided to withdraw from the deal.

* Results from Vast Resources Plc's first phase of drilling at the Carlibaba prospect supported developing a second open pit operation at the Manaila polymetallic mine in Romania with the construction of a metallurgical processing facility on site, which is expected to reduce operational expenditure by up to 25%.

* ArcPacific Resources Corp. and its Korean partners, Nexgeo Inc. and Korea Resources Corp., extended a deed of release and amended agreement related to the Lucky Mike copper project in British Columbia. As a result, ArcPacific's 31% interest in the project will increase to 44%.

* About 97% of the 371 striking workers at Noranda Income Fund's processing facility in Quebec rejected the company's wage and pension offer, Reuters reported, citing United Steelworkers of America. The workers downed tools Feb. 12 over proposed amendments to a pension plan as part of a collective bargaining agreement.

* Americas Silver Corp. shipped the first lead-zinc concentrate produced at the Los Braceros mill, part of its Cosala property in Sinaloa, Mexico, to the port of Manzanillo.

PRECIOUS METALS

* Australian private equity player EMR Capital confirmed speculation that it completed a US$560 million refinancing of the Martabe gold-silver mine in Indonesia. "We can confirm US$560 million was done," Managing Director and CEO Jason Chang told S&P Global Market Intelligence. Chang would not comment on which banks were involved in the refinancing.

* OceanaGold Corp. achieved commercial production at its Haile gold mine Oct. 1. President and CEO Mick Wilkes said the company will ramp up operations and look for incremental improvements at the process plant during the next several months.

* Empire Resources Ltd. achieved first gold pour from its recently commissioned Penny's Find gold mine in Western Australia.

* Vedomosti reported that in late September, the price of palladium overtook platinum for the first time since 2001. According to Thomson Reuters, palladium was worth US$934.5 per troy ounce on the London Metal Exchange on Sept. 30, while platinum was worth US$909.24 per ounce, but the price of palladium fell Oct. 1.

* Falcon Gold Corp. signed a letter agreement for the right to acquire an initial 80% interest in Esperanza Resources SA's gold-silver mineral concessions, which cover over 36,000 hectares in Argentina's La Rioja and San Luis provinces. Falcon agreed to make escalating payments over six years, totaling US$2.6 million in cash and 1.5 million shares.

* Ariab Mining Co. Ltd., a Sudanese company and gold producer, is seeking to list publicly on the Toronto and Dubai stock exchanges, CEO Nasr Elhussein told S&P Global Market Intelligence. According to Elhussein, the listing will likely go ahead in the third or fourth quarter of 2018.

* First Majestic Silver Corp. suspended mining operations at its La Encantada silver mine in Mexico after four miners died at the 790 ramp due to gas intoxication. Operations will resume Oct. 4, but the 790 ramp area will remain closed until authorities complete an investigation into the accident.

* Harmony Gold Mining Co. Ltd.'s Kusasalethu gold mine in South Africa resumed full production following a temporary shutdown in August, African News Agency reported. The operations were suspended pending an investigation after a seismic event killed five workers.

* Metminco Ltd. reduced the number of its shareholders by over 6,900 to 1,294 after buying back 3,875,424 of its shares, or about 3% of the issued share capital.

BULK COMMODITIES

* Roy Hill Holdings Pty Ltd. believes that the issues with its namesake mine that delayed the ramp-up to its target production rate are finally in the rearview mirror. The company began 90-day performance testing, which saw it hit for the first time its run rate of 55 million tonnes per year with the shipping of 4.84 million tonnes from the Roy Hill mine in September. However, CEO Barry Fitzgerald stressed that it was a one-off and Roy Hill has not technically achieved full ramp-up.

* South Africa's Solidarity trade union said it received a favorable three-year wage agreement from the Chamber of Mines following extensive coal industry negotiations, Mining Weekly wrote. According to the report, the wage offer ranges between 5.5% and 7.5%, with a 7.5% increase at Anglo American, Exxaro Resources Ltd. and Glencore and a 7% increase from Kangra Coal Ltd., among other offers.

* Edenville Energy Plc plans to raise £1.25 million through a share sale, with net proceeds to take the company's Rukwa coal project in Tanzania through to full production and the generation of positive cash flows.

SPECIALTY

* Rainbow Rare Earths Ltd. announced its first production guidance for 2017 to 2018 of 3,000 to 4,000 tonnes of run-of-mine ore mined generating 2,250 to 3,000 tonnes of rare earth mineral concentrate sales. The company remains on track to sell first concentrate in the fourth quarter.

* Galaxy Resources Ltd. denied a report from The Australian Financial Review, which said the company secured a lithium off-take agreement with Japan's Panasonic Corp., which supplies batteries to Tesla. Galaxy said it is in informal discussions with a number of companies, including Panasonic, but has not signed any agreements yet, Mining News reported.

* Birimian Ltd.'s pre-feasibility study for the Goulamina lithium project in southern Mali confirmed its potential technical and economic viability and considered five possible development scenarios. The study estimated a project operational mine life of nine to 14 years, processing between 14.0 million tonnes at 1.39% lithium oxide and 20.6 million tonnes at 1.31% lithium oxide. The project is estimated to have a net present value, discounted at 10%, of between US$85.6 million and US$126.4 million.

* Ardiden Ltd. estimated a maiden JORC-compliant mineral resource of 1.23 million tonnes at an average grade of 1.43% lithium oxide for 8,200 tonnes of lithium contained at the North Aubry deposit, part of the Seymour Lake lithium project in Ontario. The resource includes 440,000 tonnes at 1.52% lithium oxide for 3,100 contained tonnes in the indicated category and 790,000 tonnes at 1.38% lithium oxide for 5,100 contained tonnes in the inferred category.

* Mineral Resources Ltd. signed a nonbinding heads of agreement with technology development company Hazer Group Ltd. to jointly build a large-scale synthetic graphite facility. The parties initially plan to construct a pilot-scale facility capable of producing at least 1,000 tonnes per annum of ultra high-purity graphite, which is expected to be commissioned in the middle of 2018.

* European Metals Holdings Ltd. and the Czech government signed a memorandum of understanding over the Cinovec lithium-tin project that stressed, among other things, domestic processing of potential lithium products and a possible government investment in the project.

INDUSTRY NEWS

* Lawmakers in the Philippines endorsed the appointment of Roy Cimatu as the country's environment secretary after his predecessor Regina Lopez failed to secure congressional confirmation, Reuters reported. Lopez imposed a ban on open-pit mining and ordered the closure of 26 mines in the country on environmental grounds.

* Peru's environment ministry modified the country's environmental impact assessment reporting process for exploration projects. From now on, only six types of projects will have to undergo this evaluation, including those involving over 20 drilling platforms and over 10 hectares of drilling works, according to a resolution published in the country's official gazette, El Peruano.

* Brazil's Mines and Energy Minister Fernando Coelho Filho denied claims that the government will increase the financial compensation for mineral exploration tax only to increase government revenue. Coelho insisted the reform aims to bring the Brazilian mining legal framework closer to that of other mining jurisdictions. The change would increase tax revenue by 80%, according to Coelho, news agency Estadão reported.

* "The best time to invest in commodities is now," a fund manager told delegates at The Mining Show in Dubai, United Arab Emirates. "There is a huge disconnect between the equity markets and the commodity markets," said Willem Middelkoop, co-founder of the Commodity Discovery Fund. "It is only a question of time before we see a rerating of commodities and a rerating of commodity equities."

* Large mining players began moving into Afghanistan for initial exploration, S&P Global Market Intelligence learned on the sidelines of The Mining Show in Dubai, United Arab Emirates. Estimates suggest that Afghanistan has mineral resources worth trillions of dollars. However, there is little up-to-date data available, meaning there is a need for extensive exploration work to tap into this wealth.

* In a bid to attract investors and mining companies, Nigeria has come up with a new mining law that promises 100% foreign ownership for up to 25 years, a corporate tax of 20% to 30%, 3% to 5% royalties, tax holidays for an initial three years and exemption from customs tax for mining equipment imports.

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.