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Moody's shoots credit warning for Vale, BHP; Freeport sells Tenke mine stake for US$2.65B; Northam unloads interest in Trans Hex

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


Moody's shoots credit warning for Vale, BHP; Freeport sells Tenke mine stake for US$2.65B; Northam unloads interest in Trans Hex

TOP NEWS

Moody'sshoots credit warning for Vale, BHP Billiton and JV Samarco

Following the 155 billion Brazilian reais civil lawsuit againstVale SA, and their joint ventureSamarco Mineração SA,Moody's has issued a credit negative warning for the companies, Business News Americasreported."If a federal court ratifies the prosecutor's lawsuit, it would be credit negativefor the three mining companies because the lawsuit would require a nearly immediateUS$2.2bn deposit from the three companies, along with guarantees for the total U$44bn.The suit would also prohibit the companies from selling fixed assets or paying dividends,"Moody's said.

Freeport selling stake in Tenke copper mine to China Molybdenum for US$2.65B

Freeport-McMoRanInc. is sellingits stake in TF Holdings Ltd.to China Molybdenum Co. Ltd.for US$2.65 billion in cash and contingent consideration of up to US$120 million.Freeport owns a 70% interest in TF Holdings and thereby an effective 56% stake inthe Tenke Fungurumecopper mine in the Democratic Republic of the Congo. The company will also negotiatedefinitive agreements exclusively with China Molybdenum to sell its interests inFreeport Cobalt, including the Kokkolacobalt refinery in Finland for US$100 million and the wholly owned copper-cobalt explorationproject in the Democratic Republic of Congo for US$50 million.

NorthamPlatinum divests 20.3% stake in Trans Hex for 81.8 million rand

* Northam PlatinumLtd. has off-loadedits 20.3% stake in diamond producer TransHex Group Ltd. for a total cash consideration of 81.8 million SouthAfrican rand. According to Northam CEO Paul Dunne, the disposal is in line withthe company's strategy to rationalize its asset portfolio.

DIVERSIFIED

* Following the 155 billion Brazilian reais civil lawsuit againstVale SA, and their joint ventureSamarco Mineração SA,Moody's has issued a credit negative warning for the companies, Business News Americasreported."If a federal court ratifies the prosecutor's lawsuit, it would be credit negativefor the three mining companies because the lawsuit would require a nearly immediateUS$2.2bn deposit from the three companies, along with guarantees for the total U$44bn.The suit would also prohibit the companies from selling fixed assets or paying dividends,"Moody's said.

BASE METALS

* Freeport-McMoRanInc. is sellingits stake in TF Holdings Ltd.to China Molybdenum Co. Ltd.for US$2.65 billion in cash and contingent consideration of up to US$120 million.Freeport owns a 70% interest in TF Holdings and thereby an effective 56% stake inthe Tenke Fungurumecopper mine in the Democratic Republic of the Congo. The company will also negotiatedefinitive agreements exclusively with China Molybdenum to sell its interests inFreeport Cobalt, including the Kokkolacobalt refinery in Finland for US$100 million and the wholly owned copper-cobalt explorationproject in the Democratic Republic of Congo for US$50 million.

* The recent approval of the US$5.3 billion extension of 's Oyu Tolgoi copper mine in Mongolia could lead tothe unblocking of other projects in the country and restore investor trust, Reutersreported.

* Meanwhile, Rio Tinto's TurquoiseHill Resources Ltd. is already mulling over potential expansions basedon nearby deposits that are not part of the current mine plan for Oyu Tolgoi, The Australian reported."We don't expect Oyu Tolgoi to stay at current (ore) production for the longterm," said Turquoise Hill chief Jeff Tygesen.

* After the Solomon Islands' Ministry of Mines, Energy and RuralElectrification pledged to run an inclusive and transparent process in the awardingof license on the Isabelnickel deposit in the country, AxiomMining Ltd. said it has submitted an application for a prospecting licenseover the deposit. Earlier in March, the Solomon Islands Court of Appeal that neither nor AxiomMining were entitled to the Isabel nickel deposit.

PRECIOUS METALS

* Silver WheatonCorp.'s first-quarter net income slumped 17% year over year to US$40.9 million, while cashflow from operations rose 28% to US$114 million. Revenues, meanwhile, jumped 44%to US$187.5 million on a 65% increase in silver equivalent sales to 12.8 millionounces, partially offset by a 13% reduction in the average realized prices recordedat US$14.70 per silver equivalent ounce sold.

* In the first quarter, AngloGoldAshanti Ltd. achievedtotal output of 861,000 ounces from continuing operations at an all-in sustainingcost of US$860 per ounce, compared to 928,000 ounces at US$920 per ounce a yearago. The lower production was due mainly to planned reductions from the , Tropicana and Morila mines, as well as an unanticipated drop in productionfrom the Kibalijoint venture.

* Eldorado GoldCorp. will resumeconstruction work at its Skouriesgold mine in Greece following approval of its updated technical study by the Ministryof Energy and Environment.

* Canarc ResourceCorp. agreed in a definitive deal to sell its OroSilver Resources Ltd. unit to EndeavourSilver Corp. for a deemed value of C$10.5 million. The Oro Silver unitholds the El Compasgold-silver mine in Mexico and a five-year renewable lease on the 500-tonne-per-daystate-owned La Plata ore processing plant.

* Rambler Metals& Mining Plc signed an agreement with Maritime Resources Corp.to evaluate the economic potentialof re-opening the gold mine in Newfoundlandand Labrador, which stopped production in 2004 due to depletion of reserves.

* Eskay MiningCorp. said that upon the repayment of a loan relating to its gold project in BritishColumbia, the title to the property has been transferred to the company.

* Azumah ResourcesLtd. reducedthe expected preproduction CapEx at its Wa gold project in Ghana by A$54 million to A$142 million.The ASX-listed company achieved A$28 million in savings by the incorporation ofa contractor mining fleet into the mine plan, while a rescheduling of ore miningduring construction saved some US$33.8 million. However, no changes were made tothe plant design or supporting infrastructure, and the project is still expectedto deliver around 90,000 ounces per annum over a seven-year mine life. "Therecent high-grade discovery at Manwe, the requisition of the high-grade 69,000-ounceJulie West resource, a firmer gold price and improved investor sentiment towardsoverseas gold projects considerably enhances the prospects of securing project financeor a development partner," company Managing Director Stephen Stone said.

* A scoping study into KinMining NL's Leonoragold project in Western Australia showed the project can produce 315,600 ounces of gold over a seven-year mine lifeand will need A$55 million to build based on a gold price of A$1,500 per ounce withpayback in 45 months. The project is estimated to generate net present value ofA$56.3 million, an internal rate of return of 30% and revenue of A$461.6 million.The operation is expected to deliver 30,500 ounces of gold in the first year, peakingat 65,800 ounces in the fifth year and then declining to 10,500 ounces during itsfinal year.

* A preliminary economic assessment for Falco Resources Ltd.'s Horne 5 gold project in Quebec indicated a 12-year undergroundmining operation with attractive economics in the current gold price environment.The study pegs an after-taxnet present value, at a 5% discount rate, of C$667 million and an internal rateof return of 16.0%. Production will average 236,000 ounces per annum, or 3.1 millionounces of gold over the entire mine life with an all-in sustaining cash cost ofUS$427 per ounce net of byproduct credits. The project is estimated to generategross revenue of C$6.8 billion and operating cash flow of C$2.6 billion.

* Havilah ResourcesLtd. said its mining partner, Consolidated Mining and Civil, intendsto resume open pit miningoperations at the Portiagold mine later during the week. Startup was scheduled for normal shift changeoveron May 11, but recent heavy rains delayed access to the site by one day at thisstage, the company said.

* Gold Road ResourcesLtd. was grantedthe mining leases covering its Gruyere, Central Bore and Attila gold projects, allpart of the Yamarnaproject in Western Australia. The company is on schedule to complete its feasibilitystudy over the Gruyere project by the end of this year.

* MHM Metals Ltd.lodged applications forforfeiture, pursuant to the Mining Act 1978, which affect tenements held by StoneResources said it "intends to vigorously defend against the applications."

* A loco operator was killedin a box hole incident at the Rowland shaft within Lonmin Plc's Marikanaplatinum mine in South Africa. An investigation into the incident has started.

* A maiden mineral resourceestimate for RameliusResources Ltd.'s Milky Way gold deposit at the Mount Magnet gold project in Western Australiarepresented a total resource of 5.99 million tonnes grading 1.3 g/t of gold for241,000 ounces of gold.

BULK COMMODITIES

* Indian steel major JSWSteel Ltd. has emerged as one of the seven bidders eyeing 's embattled U.K.steel operations, the Financial Timesreported.

* Following the implementation of Atlas Iron Ltd.'s debtrestructure, S&P Ratings has downgradedthe company's long-term corporate credit rating to selective default from CC andlowered the rating on the company's senior secured notes to default from CC. "Welowered the rating on Atlas Iron because we view the creditors' scheme of arrangementas being a distressed debt exchange, as in our view the creditors received lessthan what was promised on the original TLB," S&P analyst May Zhong commented.

* Pembroke Resources acquiredfrom the Australian subsidiaries of Peabody Energy Inc. and CITIC Resources Holdings Ltd. their interests in metallurgicalcoal tenements that collectively encompass the Olive Downs coal operations in Queensland'sBowen Basin.

* Moody's downgraded the probability of default rating of to D-PD fromC-PD, while its corporate family rating has been affirmed at C. The rating agencyhas also downgraded the rating on the company's €300 million senior secured notesdue in 2020 from Ca to C.

* Intrepid PotashInc. has decided to idle operations and place the Carlsbad West potash project in New Mexico on in July. Thecompany attributed the decision, which will affect about 300 employees, to reducedprofitability in recent months as oversupply and foreign competition in the U.S.potash market has pressured prices.

* In a separate release, Intrepid reported that it to a net loss of US$18.4 millionin the first quarter, from year-ago profit of US$6.5 million. Sales dropped to US$73.3million in the quarter from US$117.0 million a year earlier. Potash sales dropped6% year over year to 218,000 tonnes primarily due to the timing of shipments tocustomers.  Meanwhile, average net realizedsales price per potash tonne fell 40% to US$216 as oversupply and the strength ofthe U.S. dollar resulted in significant price pressure in the markets the Intrepidoperates in.

* Sumitomo Corp.'sprofit attributable to its metal products segment for the year ended March 31 , from ¥32.5billion in the prior year, because of a ¥5.3 billion impairment loss in Edgen Groupand a decrease in earnings of the tubular products business in North America. Thecompany swung to a profit attributable to shareholders of ¥74.55 billion, from aloss of ¥73.17 billion a year ago.

* Sojitz Corp.'sprofit attributable to shareholders for the company's metals and coal segment of ¥4.66 billionfor fiscal 2015, from a year-ago loss of ¥2.74 billion, due to recording gains onthe revaluation of coal business assets, offset by commodity price drops and impairmentlosses on coal and iron ore interests. The company posted profit attributable toshareholders of ¥36.53 billion, up from ¥33.1 billion in the year-ago period. Infiscal 2016, the company expects a profit of ¥43 billion.

* Glencore Plc'sMaru Sky unit acquiredan 8.5% stake in struggling Australian iron ore producer Atlas Iron Ltd. during the latter's restructuring of itsdebt.

* BlueScope SteelLtd.'s steel plant in Delta, Ohio, is expected to lose about 35,000 tonnes of production, for atotal financial pretax cost of about US$5 million, due to an explosion and fireat the South EAF shell. No workers were harmed and the plant is producing steelfrom the second EAF.

* Pan Asia Corp.Ltd. executed a definitive share sale and purchase agreement with for the 100% sale ofits wholly owned Singaporean subsidiary, Innovation West Mantewe Pte. Ltd., whichowns the company's 75% interest in the PTTranscoal Minergy coal project in South Kalimantan, Indonesia. The companyhas also pledged the shares in Innovation West prior to shareholder approval beingobtained.

* Bushveld MineralsLtd.'s wholly owned subsidiary, Bushveld Vametco Ltd., will acquireEvraz Group SA's 78.8%economic interest in Strategic MineralsCorp., which owns the producing Vametco vanadium mine and plant in SouthAfrica, for US$17.2 million.

* The board of Australian iron ore junior Flinders Mines Ltd. recommended that shareholders an improved takeover offerby Todd Corp. Ltd. unitTio (NZ) Ltd. of 2.5 Australiancents per share — 92% over the New Zealand-based bidder's initial cash offer.

* Gladiator ResourcesLtd. said its planned acquisition of a third-party holding significanttenement interests within the Isla Cristalina Belt in Uruguay will after the target firm'sboard failed to approve the transaction.

* Atrum Coal NLhas received the required permitsfrom the government of British Columbia to start bulk sample mining activities atits flagship Groundhoganthracite project in the Canadian province.

SPECIALTY

* Northam PlatinumLtd. has off-loadedits 20.3% stake in diamond producer TransHex Group Ltd. for a total cash consideration of 81.8 million SouthAfrican rand. According to Northam CEO Paul Dunne, the disposal is in line withthe company's strategy to rationalize its asset portfolio.

* Operations at Rio Tinto's Richards Bay operation in South Africa's KwaZulu-Natal provincehave been suspended until further notice after the entrance to the mine was blockedby local residents who demanded permanent jobs and equal business opportunities,Business Day reported.

* Lucara DiamondCorp. said the 812.77-carat, Type IIa diamond named The Constellation,recovered from the Karowemine in Botswana, was soldfor US$63.1 million, or US$77,649 per carat. The company will also retain a 10%interest in the net profit received from the sale.

* American LithiumCorp. agreed to buyall the outstanding shares of a Canadian exploration company that holds optionsover claims to potential lithium deposits across 2,882 acres in Esmeralda County,Nev.

* Canada Rare EarthCorp. struck a deal to acquirea 60% stake in an unnamed company based in Laos that owns a full capability rareearth refinery.

* Latin ResourcesLtd. intends to form a jointventure with Lepidico Ltd.,which will acquire and advance lithium projects in Argentina and Peru. Two jointventure companies, one in Argentina and the other in Peru, will be formed underthe agreement.

INDUSTRY NEWS

* Slovenian Sovereign Holding and three otherstate-owned companies are selling their joint stake of 55% in metal firm Unior,Reuters wrote.

The Daily Dose is updated as of 7 a.m. Hong Kong time, and scans newssources published in Chinese, English, Indonesian, Malay, Portuguese, Russian, Spanish,Thai and Ukrainian. Some external links may require a subscription.

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