Base Metals News - Metals Place

Gold rebounds as dollar drops lower

2010-02-09T19:35:43Z

Gold futures gained more than 1% on Monday, as soothed nerves over European debt woes pressured the dollar, lifting gold's appeal as a hedge.

Gold for April delivery rose $13.40, or 1.3%, to finish at $1,066.20 an ounce at the New York Mercantile Exchange. It earlier rose to an intraday high of $1,074.30 an ounce.

The move marked a rebound after gold lost more than $65 an ounce during a three-session losing streak.

"We're seeing a normal consolidation after last week's big sell-off but it lacked any kind of fire," said Bill O'Neil, managing partner at commodities brokerage Logic Investment Services.

Gold over the past year has shown strong correlations with equities, rising alongside gains in stocks and other commodities, and moving inversely to the U.S. dollar.

Martin Hennecke, an associate director at Tyche Group Ltd. in Hong Kong said demand for gold could rise as investors find out that U.S. and German bonds are not safe havens from Greek, Portuguese and Spanish bonds.

"With the safety of U.S. and German debt soon starting to become questioned, the default-and-inflation-proof asset class of precious metals will most certainly become an increasingly popular investment alternative again," he said in e-mailed comments.

U.S. stocks failed to hold onto gains Monday. The Dow Jones Industrial Average fell 103 points to 9,908, the S&P 500 fell 0.9%, while the Nasdaq Composite dropped 0.7%.

Supporting commodities, the dollar index edged lower for most of the session, even as it reversed to post minor gains in late trade.

March silver gained 26 cents, or 1.7%, to $15.09 an ounce. Copper was up 5.25 cents, or 1.8%, to $2.91 a pound.

Palladium rose $6.35, or 2.4%, to $407.65 an ounce and April platinum rose $5.90, or 0.4%, to $1,481 an ounce.

Gold futures dropped more than $10 last Friday, as the U.S. dollar rose to eight-month highs against the euro on fears about high debt levels in several European countries, including Greece, Spain and Portugal.

Metals conundrum, scandium surpise

2010-02-09T19:18:03Z

Last night at the London Metal Exchange all but one of the base metals (tin was the disappointment) showed strong gains, rebounding after the big falls at the end of the last week and helped by an easing in the greenback. Zinc sprinted away to put on 4.3 per cent, copper the next biggest winner with a 2.7 per cent gain.

This not only reflected good sessions on the European exchanges, but followed some good Asian buying yesterday. China was notably buying up copper.

Then Wall Street puttered along in low gear, until the end of the day saw it close well off, 103 points down on the session at 9908. The significant point is that commentary out of New York put the drop down to concerns about Europe (particularly the growing financial crises in Greece, Portugal and Spain) trumping any good US news.

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Australia is very lucky to be tied to China's apron-strings, not Europe's.

Tin's fall last night was a bit of a worry, especially after that metal shed 10 per cent of its value last week. And last night's gainers should also be seen against a backdrop of some serious losses over last week - 8 per cent in the case of zinc and nickel, 7 per cent for copper and 5 per cent for aluminium.

On the European story, the latest report from the commodities people at BNP Paribas highlights that Germany's December factory orders were disappointing, contracting by 2.3 per cent month-on-month. "This data suggests that growth in production will likely fade in coming months (orders lead production)," said BNP. We'll know more on Thursday night when German and Eurozone GDP figures for the fourth quarter of 2009 hit the screens.

And another thing: all the base metals are at or near their 52-week highs in terms of stockpiles at the LME.

BNP also points out that all precious metals lost ground last week. Many eyes were on gold (down 1 per cent on the week) but the worst performer was silver, which shed 6 per cent. It was all the fault of the US dollar, of course, the euro falling to $US1.3674 - the lowest the euro has been since last May.

While the metals are a conundrum, how about investors seeing the US dollar as a safe haven? In a world like that, you can still probably sell the occasional improbable story.

Angloplat earnings down 95 percent to 297 cents

2010-02-09T19:13:26Z

Anglo Platinum (Angloplat), the world's largest platinum producer, on Monday reported a 95 percent fall in diluted headline earnings per share to 297 cents for the year to end December 2009 from 5 586 cents in the year to end December 2008.

Headline earnings decreased by 95 percent to R710 million, or 298 cents, from R13.29 billion, or 5 609 cents a share, a year ago.

The company's refined platinum production was up 3 percent to 2.45 million ounces.

Refined platinum sales for the year amounted to 2.57 million ounces compared to 2.22 million ounces in 2008, representing an increase of 16 percent.

The increase was due to unsold metal at the end of 2008 being available for sale in 2009 and the achievement of higher refined production volumes.

Net sales revenue decreased by R14.1 billion to R36.7 billion, primarily the result of lower US dollar metal prices achieved on metals sold, which accounted for R21 billion, offset by higher volumes of metals sold increasing revenue by R7 billion.

Operating profit dived 95 percent to R921 million from R17.65 billion last year while profit for the year fell 79 percent to R3.13 billion from R14.66 billion a year ago.

No dividend was declared and the company said payments would be resumed when market conditions and the operating environment permit.

The company said the main factors contributing to the dive in headline earnings were lower US dollar prices realised on metals sold, offset by higher sales volumes and the receipt of insurance income.

Headline earnings exclude profits of R2.5 billion realised on the conclusion of Anglo Platinum's BEE transactions with Anooraq Resources Corporation and Mvelaphanda Resources.

Basic earnings per share, which include the profits on the transactions, amounted to 1 269 cents, down 79 percent on 2008's 6 011 cents.

"While the global financial crisis that started during the last quarter of 2008 curbed demand for platinum group metals (PGMs) and caused prices to decline significantly, the second half of 2009 brought early signs of economic recovery, with a consequential increase in demand and recovery in prices with platinum increasing by 60 percent from $922 per ounce at the beginning of 2009 to $1 475 at end December 2009," Angloplat said.

The average prices achieved on platinum, palladium, rhodium and nickel sales for the year were $1 199 per ounce, $257 per ounce, $1 509 per ounce and $14 424 per tonne respectively.

The 2009 average rand basket price achieved was R14 115 per platinum ounce, a reduction of 37 percent when compared with the R22 348 price in 2008.

The company's focus on cost management, inbound supply chain projects and asset optimisation initiatives started to bear fruit during the year with the cash operating cost per equivalent refined platinum ounce remaining essentially flat at R11 236 compared with 2008.

"This was achieved despite upward inflationary pressure caused by wage and electricity tariff increases in excess of consumer price inflation," Angloplat said.

Cost of sales increased by 3 percent to R34.7 billion.

Net debt at the end of 2009 increased to R19.3 billion from R13.5 billion at the end of December 2008.

While operating activities produced a positive cash flow of R4.7 billion, this was down 73 percent from 2008 and funding of some R9.7 billion of capital expenditure was largely through increased debt.

This cash outflow was mitigated by the proceeds from the successful conclusion of the BEE transactions with Mvela and Anooraq.

During the second half of 2009, the company said that it was considering balance sheet restructuring options and has consequently announced its intention to issue equity to the value of R12.5 billion in a rights offer.

"After considering the current level of Anglo Platinum's debt, our Board believes that raising additional equity through a rights issue will provide the company with a more balanced capital structure," Angloplat said.

The proceeds from the rights offer will be used to repay long-term debt.

As at end December 2009 Anglo Platinum had gross debt of R23 billion, of which R20 billion was outstanding under facilities provided by our largest shareholder Anglo American and R3 billion outstanding under facilities provided by other financial institutions.

"Anglo Platinum experienced very challenging market conditions during 2009 but used the opportunity to reconfigure the cost base, improve production and take a significant step forward in safety efforts," Angloplat said in its results commentary.

"While our financial results are significantly below those of previous years, our operating performance improved and we increased production and sales while keeping unit costs essentially flat," it said.

As part of the restructuring process, Angloplat optimised the source of ounces across its portfolio.

This included placing three of its high cost shafts into 'care and maintenance' indefinitely.

These shafts included Siphumelele 3 shaft, Siphumelele 2 Shaft, and Khuseleka 2 Shaft at Khuseleka Mine.

Overall the company reduced its labour complement by 15 752 people during the year or by 18 786 people from October 2008.

Looking ahead, Angloplat said it expects the platinum market in 2010 to return to a position of deficit as a result of a moderate increase in supply but a significant recovery in demand.

"South African production is expected to remain constrained as producers adapt to a safer working environment and as lower rand metal prices result in production being restricted at high cost operations across the industry," the company said.

Given the market conditions Angloplat said it believes that the appropriate level of production for 2010 is 2.5 million ounces of refined platinum.

It said it is also aiming to produce this volume at a unit cost of just over R11 000 an ounce, the same level as in the preceding 2 years and with labour reductions largely complete, the company said it would spend the year working on improved productivity.

Katanga Mining books earnings of US$15.3m, reverses year-ego loss

2010-02-09T19:09:26Z

Boosted by higher revenues, Katanga Mining Ltd. swung to profitability in the fourth quarter but remained in the red for all of last year.

The company, which has mining operations in the African country of Congo and keeps its books in U.S. dollars, earned US$15.3 million on revenues of $100 million for the period ended Dec. 31. It did not disclose per share information in announcing its earnings Monday.

Katanga said revenues were generated from the sale of 10,275 tonnes of copper and 680 tonnes of cobalt.

In the year-ago period, Katanga recorded a loss of $1.2 billion or $5.98 a share when the company booked impairment charges of $1.2 billion on mineral properties and inventories, according to documents filed with Canadian regulators.

Revenues for the same quarter last year totalled $13.3 million.

For all of 2009, Katanga lost $108 million, narrowing a loss of $1.7 billion in 2008.

Its revenues for the full year were $285.5 million, up from $210 million.

Katanga is forecasting production of 82,000 tonnes of copper and 5,500 tonnes of cobalt for 2010.

Shares of the miner were up seven cents to 71 cents on the Toronto Stock Exchange in afternoon trading.

Vanadium continues to ride on the positive

2010-02-09T18:54:54Z

January 2010 can clearly be recorded in the books as a good month for vanadium and its associated alloys. The end of the month saw the price of ferro-vanadium ending up at US$ 6 per kg more than the opening price at the start of the month - from $24/$28 per kg to $26-$29 per kg.

Traders have explained the spurt as increased enquiries in this minor metal, leading, in turn, to a shortage in supply. February started off on a similar sentiment but towards the end of the first week, prices in almost all the 3 major markets have stabilised. The Asian markets, especially the Chinese, saw prices tail off as traders started winding down for the Chinese new year. European and the US markets, too, may not see much activity in the coming week.

The past week also saw some positive developments on the mining front. But before we get into that, as promised, here is an update on the political events in South Africa, where there is talk of nationalising its mines:

News agency Bloomberg reports that the youth wing of South Africa's ruling African National Congress (ANC) has been in contact with Anglo American Plc about its proposal to nationalize the country's mines. Quoting a ANC Youth League leader Julius Malema, the report says the league is more than convinced that the nationalization of mines would "happen in our lifetime," Malema told reporters after a weekend meeting to discuss the proposal. Malema is a member of the ANC's policy-making national executive committee.

South Africa is the world's biggest producer of platinum, ferrochrome, manganese and vanadium and the third-biggest supplier of gold. But Anglo American, one of the biggest investors in the South African mining business, has said any move by the government to "impair" the industry would have "serious economic costs", the report said. A company spokesman could not confirm nor deny whether whether the company has held talks with the league on the policy proposals.

In another dispatch on February 2, Bloomberg quoted South African Mines Minister Susan Shabangu as saying, "It won't nationalize mines in my lifetime." The same report carries on to say that traders, analysts as well as those in the actual business of mining in SA have, as of now, not shown any signs of panic by the treats of nationalization, perceived to be less of a risk to mining companies in South Africa.

At Vanadium investing news, we feel that nationalisation has its own set of problems but then again, it is the right of every nation to decide/change its policies to suit its own interests.

Speaking of SA, miningweekly.com reports from Johannesburg that Swiss-based diversified miner Xstrata that produces ferrochrome in a joint venture with Merafe Resources in South Africa, has reported that production had decreased by 30 per cent in 2009 compared to the previous year as a result of the venture's curtailment of up to 80 per cent of production capacity in late 2008 and early 2009, in response to the poor market conditions.

Ferrovanadium volumes fell by 37 per cent in 2009 owing to the suspension of production at Rhovan project - Xstrata's integrated vanadium operation in South Africa - during the third quarter for extended maintenance. The operation returned to full production in mid-October.

Moving on to other news… the past week saw the publication and announcements of several reports relating to several assays and initial surveys, most of them positive, likely to have an impact on vanadium prices.

Energizer Resources Inc (formerly Uranium Star Corp) (OTCBB: URST) announced that it had completed and filed its compliance technical report (SEDAR and EDGAR) for the explored portion of its Green Giant Vanadium Project in Madagascar.

The report was prepared by PEG Mining Consultants and confirmed that the exploration programs completed in 2008 and 2009 had established that at least two large-scale vanadium deposits exist on the Green Giant Property and that the Property merits an aggressive resource definition exploration program consisting of exploratory and infill diamond drilling over vanadium-bearing zones.

The company's recently reported and favourable assay results confirmed that the Manga zone has a high-grade core that is open along strike and at depth, and had been defined over a strike length of 500 metres. The 2010 drill program was expected to commence in May at the end of rainy season, and will focus on expanding the Manga zone over a strike length of 3,000 metres.

Energizer Resources Inc is an exploration company with assets in Madagascar (Vanadium) and Northern Quebec (Uranium).

Southern Uranium (ASX:SNU) has reported positive drill results as it found an outcropping of vanadium mineralisation at Calvert Hills in the Northern Territory. The Calvert Hills Joint Venture Project under tenement EL24837 is situated 100km west of the Westmoreland uranium field and has similar geological and structural ingredients for shallow-covered unconformity-style uranium deposits.

Southern Uranium has identified prospective locations similar to the Westmoreland setting but under cover by integrating modern geophysical techniques.

As previously reported, a four hole drill program was completed under collaborative drill funding from the NT Government at the end of the September Quarter.

The positive drill results encouraged the prospecting of similar geophysically delineated areas, resulting in the discovery of the Vanadis vanadium prospect.

Southern Uranium Limited is a listed resources company focused on copper gold and uranium exploration within its Australian tenements.

Cardero Resource Corp , listed on the Toronto Stock Exchange (CDU), as also on other stock exchanges, is commencing drill programs on both, its Longnose Iron-Titanium deposit and TiTac Iron-Titanium-Vanadium deposit, located in north-eastern Minnesota, USA. Previous work by BHP Minerals, a precursor to BHP Billiton (the world's largest mining conglomerate), had estimated that the Longnose deposit contained 27.57 million tonnes at 21.3 per cent titanium dioxide (TiO2).

This historical resource estimate is considered relevant by the company, both for the purposes of the company's decision to initially acquire the property and to guide the company in formulating its resource definition and exploration program for the project. The current drill program will seek to verify the historical resources and includes re-sampling, re-analysis and an independent NI 43-101 resource calculation, which will be completed by SRK Consulting (Canada) Inc.

Parallel with this work, planned metallurgical work will build on work previously completed by Pickands-Mather, Hazen Research and the Natural Resources Research Institute (NRRI). Results are anticipated by mid-2010.

A statement issues by the company said Cardero's focus through 2010 will be to realise the considerable value it believes is locked in its remaining iron ore assets in the Marcona District of southern Peru, the Baja district of Mexico and in Minnesota, USA, while continuing to progress its base and precious metal exploration projects in Argentina and Mexico and aggressively seek out and potentially acquire new advanced stage projects.

According to Marketwire, Apella Resources Inc (TSX VENTURE: APA) has reported that a further 1000 metres of diamond drilling on the Iron-t project had commenced. This program is a follow-up due to the positive findings from the previous round of drilling, results of which were released December 15, 2009.

Quoting Patrick D O'Brien, ICD.D, chairman, the report said Apella's recent mineralized drill intersects at Iron-T were suggestive of a significantly enriched Vanadium-Iron-Titanium system.

The Bell River Complex which hosts the Iron-t may be compared to the Lac Dore layered igneous complex (in part owned by Apella) in the Chibougamau district of Quebec, some 250 kms east, and to the Bushveld layered complex of South Africa, the world's most significant source of Vanadium.

At the Iron-T the Vanadium rich horizons are well defined on the ground and aeromagnetic surveys by their highly magnetic susceptibilities. Apella anticipates that at the Iron-T near Matagami the potential is excellent to substantially exceed the known mineralization of the Lac Dore deposit at Chibougamau of which Apella also controls a considerable interest.

Apella was in the news last week for another reason too. The company has been accepted as an associate member of the vanadium specific organization - The Vanadium International Technical Committee (VANITECH), headquartered in Kent, UK. VANITEC is a technical and scientific committee which brings together representatives of companies involved in the mining, processing and manufacture of vanadium-containing products for use mainly in the metals and materials manufacturing and chemical industries, world-wide.

Its objective is to promote the use of vanadium bearing materials and thereby to increase the consumption of vanadium. There are 16 current members of VANITEC.

Canadian Government moving forward with prosperity review process

2010-02-08T08:09:59Z

Taseko Mines Limited welcomes the decision by the Federal Review Panel to move forward with public hearings on the proposed $800 million Prosperity Gold-Copper mine near Williams Lake, BC.

"The decision represents the achievement of another important milestone in the development of Prosperity," said Taseko President and CEO Russell Hallbauer.

Over these past many months the Company has provided the Federal Panel with additional information and clarification on matters of specific interest to them. The Panel has determined this information, along with the many volumes of material already submitted in our Environmental Impact Statement, is sufficient to now move to the public hearing phase of the review process.

Mr. Hallbauer added, "Last month the Provincial Government, which has authority and responsibility for mine development in British Columbia, approved the project and we fully expect the Government of Canada to also approve the project once the review process concludes."

Public hearings, the primary purpose of which is to obtain information from interested parties, are set to begin March 22 in Williams Lake, BC. Once the hearing process concludes, the Panel will have 60 days to write and submit their findings to the Federal Minister of Environment.

URSA Major Minerals starts mining operations at Shakespeare Nickel Mine, Sudbury Area

2010-02-08T07:33:21Z

URSA Major Minerals Incorporated is pleased to announce that the Company has started mining operations at the Shakespeare Nickel Copper Mine located 70 km west of Sudbury, Ontario.

The Company has mobilized contractors to the site this week. Mining and crushing operations are currently underway. The Company plans to begin truck haulage in February to deliver 200,000 tonnes of ore for processing at Xstrata's Sudbury operations in 2010. Based on previous ore grades and metallurgical results it is expected that the 200,000 tonnes of ore should produce contained metals in concentrate of approximately 1.1 million lbs of nickel, 1.7 million lbs of copper, 55.7 thousand lbs of cobalt and 3,100 ounces of precious metals. The recovered and contained metals are subject to smelter recoveries and to further smelter deductions. Guidance on costs will be released once all contracts are finalized.

Richard Sutcliffe, URSA Major's CEO stated "The significant improvement in nickel, copper and platinum prices over the past year and the ratification of Xstrata's labour contract in Sudbury earlier this week allows URSA Major to move forward into commercial production. The cash flow from the Shakespeare Mine combined with our successful exploration record will place URSA Major in a strong position for growth. We have an active exploration program in the Sudbury area and are currently planning to resume drilling shallow, high-grade, massive sulphide targets at the past-producing Nickel Offsets property."

URSA Major is a Canadian mining company with two nickel sulphide projects containing significant 43-101 compliant nickel/copper reserves and resources. The Company is focused on becoming a mid-tier nickel producer and growing its nickel, copper and platinum group metal (PGM) deposits through exploration and development, primarily in Ontario, Canada. At the Shakespeare Mine, located 70 km west of Sudbury, the Company has completed a positive feasibility study on a 4,500 tonne/day open pit mining operation and on-site processing plant. The project has a diluted Probable Reserve of 11,828,000 tonnes grading 0.33% nickel, 0.35% copper, 0.02% cobalt, 0.33 g/t platinum, 0.36 g/t palladium and 0.18 g/t gold. URSA Major has an option to earn a 70% interest in the past-producing Nickel Offsets mine, a 100% interest in the Shining Tree nickel deposit, and has recently acquired PGM exploration properties in the Thunder Bay area, Ontario.

Nevsun raising $117m in private placement; to issue 52m common shares

2010-02-08T07:28:23Z

Nevsun Resources Ltd. says it plans to raise $117 million in a private placement aimed at developing its Bisha gold and base metals mine in Eritrea.

The private placement of 52 million shares at $2.25 per share is scheduled to close on or before Feb. 19. Other details were not given.

"The company is confident the funds from this private placement, together with its existing cash and the ongoing one-third contribution by the state of Eritrea to Bisha will be sufficient to see the Bisha project through to cash-positive operations," Nevsun said in a news release.

"The funding arrangements are in excess of estimated costs to complete so as to provide a reasonable cushion in the event of unforeseen events," it said.

The government-owned Eritrean National Mining Corp. has "reliably" provided its one-third contributing share of financing to Bisha as the project has progressed, Nevsun said.

Last month, Nevsun described the project as "very well advanced" approaching 50 per cent complete with costs now estimated to be about $260 million, close to the original budget of approximately $250 million.

Nevsun stock was up 12 cents or more than 5.6 per cent at $2.24 at midafternoon Thursday on the Toronto Stock Exchange in trading that saw more than 4.2 million shares change hands.

Vale sending nickel off to Welsh refinery

2010-02-08T07:19:40Z

The first shipment of nickel concentrate to be processed into matte at Copper Cliff Smelter Complex since a strike by Steelworkers began seven months ago is on its way to Vale Inco's refinery in Clydach, Wales.

Six or seven truckloads of matte left Sudbury on Thursday afternoon to be processed into high-quality nickel at the Welsh refinery, said Vale Inco spokesman Steve Ball.

"This is a milestone for us," Ball said Friday.

Because of that, Vale Inco has sent a memorandum to staff acknowledging their efforts in turning out the product.

Vale Inco announced early in the strike it intended to resume partial production at some Ontario operations.

More than 3,000 members of USW Local 6500 in Sudbury and 130 with Port Colborne's Local 6200 have been on strike since July.

Another 200 or so Steelworkers at Vale Inco Newfoundland and Labrador have been on strike since Aug. 1 in a separate labour dispute.

After months of preparation, the Sudbury smelter began operating last week due to the efforts of management, nonunion staff, unionized office and technical workers and outside contractors.

This is the first time in the more than 100-year history of the nickel company that production has resumed during a strike or lockout.

"For us, it's a clear demonstration that we're committed to generating revenue," said Ball.

Normally, the matte processed from nickel concentrate would be refined at Vale Inco's Sudbury nickel refinery just down the road from the smelter, but that is not one of the plants the company has restarted during the strike.

Early on, Vale Inco began mining a vein of copper ore at Coleman Mine in Levack and at Garson Mine. That ore is being crushed and processed at Clarabelle Mill.

This week, Vale Inco announced its intention to ramp up to full production at Coleman by mining a nickel-rich vein there and to restart Creighton Mine.

At least 200 outside replacement workers will be hired to do that work.

Only one of two furnaces is operating at the smelter complex, so production will be half the usual volume or less, Ball said.

The shipment of matte to Clydach is not a milestone USW Local 6500 president John Fera is celebrating.

He questioned the cost of shipping the heavy metal product to Wales, saying it belies Vale Inco's stated intention to remain profitable in all cycles.

Vale Inco has been "saying all along that they have to be profitable in all quarters," said Fera. "Maybe we should ask Vale Inco the cost per pound to get that (matte) shipped over to Clydach, Wales.

"Their story about their finances and being profitable seems to be a lot of bull," he said.

There has been speculation in the community about whether the smoke trickling out of Vale Inco's trademark Superstack the last couple of weeks was a result of the smelting process.

Ball said the shipment Thursday is an indication that inside workers were not simply "burning pallets" as some critics have suggested.

Teck Resources' sale of Waneta Dam gets approval nod news

2010-02-08T07:14:59Z

Canada's mining major, Teck Resources Ltd (Teck) has received the approval of British Columbia Utilities Commission for the sale of its one-third interest in the Waneta Dam to British Columbia Hydro and Power Authority (BC Hydro) for C$825 ($768 million).

The commission had concluded that the expenditure proposed by BC Hydro in connection with the transaction is in the public interest, a statement issued by Teck yesterday said.

This approval was a condition of closing of the transaction. Teck expects to complete the transaction within the next 10 business days.

The Waneta Dam is located on the Pend d'Oreille River near the city of Trial in southern British Columbia near to the US border, and houses a 490 megawatt (MW) power plant.

Through the deal, BC Hydro expects to get about 1,000 gigawatt-hours per year of power as part of the province's campaign to make itself energy self-sufficient by 2016.

Vancouver-headquartered Teck is Canada's largest mining, mineral processing and metallurgical company and a dominant global player in the production of copper, zinc, molybdenum, gold, specialty metals and metallurgical coal, apart from its interests in oil sands.

London Metal Exchange Chairman, Donald Brydon, to step down

2010-02-08T07:02:25Z

The London Metal Exchange announces that its Chairman, Donald Brydon, is to step down in the next few weeks to concentrate on his roles with Royal Mail and Smiths Group. Donald Brydon was appointed Chairman in September 2003 and since that time has presided over a capital restructuring, the first dividend payment and a significant growth in traded volumes and new contract launches. A search is underway for his successor.

Donald Brydon said, "It has been a privilege to have presided over the successful evolution of the LME in the last few years. I am particularly pleased that the LME was able to navigate through the recent financial crisis without any difficulty and with a significant increase in volumes traded. It has an excellent management team and I am confident of its continued success."

Martin Abbott, LME Chief Executive, said, "The LME has undergone significant change during Donald Brydon's time as Chairman. The company is more professional than ever and the move to a commercial model has transformed the business. Donald's strong leadership and broad experience has been much appreciated by the board and staff of the Exchange and we will be sorry to see him go. We have known for some time that a successor would be required and the process of finding the right person is well advanced; we are confident the management process and systems that Donald put in place will ensure a smooth transition to a new Chairman."

Strike ends at foundry in Manitowoc

2010-02-08T06:53:27Z

Workers at Wisconsin Aluminum Foundry ended their strike but did not win a successor clause that would protect their jobs and benefits if the company were sold.

Scott Keehan is president of the Glass, Molders, Pottery, Plastics & Allied Workers union Local 301. He tells Action 2 News the Steelworkers Local 125 reached an agreement on a proposal that does not contain a successor clause, and voted Wednesday to return to work.

Steelworkers Local 125 has 360 workers at the plant, whereas Local 301 has 38 workers, and ten of them are laid off, Keehan said.

Keehan said the company also planned on Friday to explore hiring replacements.

Given those factors, Local 301 workers voted to accept an offer from the company, which also does not contain a successor clause.

Aleris International files plan of reorganization

2010-02-08T06:39:41Z

Aleris International, Inc. a global leader in aluminium rolled products, extrusions and recycling, announced today that it filed its proposed Plan of Reorganization (Plan) and related draft Disclosure Statement with the U.S. Bankruptcy Court in Delaware. With this filing, Aleris and its wholly-owned U.S. subsidiaries co-debtors are positioned to emerge from chapter 11 protection by mid-year.

The Plan has substantial support from Aleris's creditors, as demonstrated by an Equity Commitment Agreement executed by certain investment funds managed by Oaktree Capital Management, L.P., affiliates of Apollo Management, L.P. and Sankaty Advisors, LLC, respectively ("the Backstop Parties"). Pursuant to the Equity Commitment Agreement, the Backstop Parties have committed to backstop a rights offering of equity and debt of up to approximately $690 million. Such creditors hold over 67% of Aleris's U.S. Roll-up Term Loan. Proceeds of the rights offering will be used to provide working capital to the Company and to fund payments under the Plan, including repayment of the debtor-in-possession financing, payment of administrative expenses, and funding of distributions to prepetition creditors.

"The filing of the Plan of Reorganization with this level of creditor support represents a major milestone in our ongoing efforts to position Aleris to emerge from chapter 11 with financial stability and an operationally sound and competitive foundation for the long term," said Steven J. Demetriou, Aleris Chairman and CEO. "Since our filing last February, we have made significant improvements to our operations worldwide, reducing overhead, manufacturing costs and global headcount, as well as achieving significant productivity and customer service improvements. When Aleris emerges from chapter 11, we will have eliminated all of our term loan and unsecured debt and will have a strong balance sheet, significantly reduced operating costs and greater financial flexibility. The strong financial support and equity ownership commitment from the Backstop Parties demonstrate confidence in Aleris's future."

Demetriou continued, "As the economy recovers, and as our customers' businesses improve, we will be well-positioned to resume a path of growth and continue to build Aleris into a global aluminium enterprise for the long-term benefit of our customers, suppliers, business partners and employees. We greatly appreciate the continued support and hard work of our employees around the world during this restructuring process. Because of their commitment to the business, we have fully satisfied the needs of our existing customers without interruption while establishing relationships with new ones. We would like to thank both current and new customers, suppliers and other business partners for their continued loyalty during this process. While we remain cautious in the near term due to continued uncertainty in the global economic environment, our restructured balance sheet, enhanced liquidity, operational improvements, and cost control will position Aleris well for long-term growth."

The Bankruptcy Court has set the hearing to consider approval of the Disclosure Statement for March 12, 2010 at 9:30 a.m. EST. Following Bankruptcy Court approval of the Disclosure Statement and related voting solicitation procedures, the Company will solicit acceptances of the Plan and seek its confirmation by the Bankruptcy Court.

Key elements of the Plan of Reorganization, as currently proposed and subject to approval by the Bankruptcy Court, are as follows:

* Holders of U.S. Roll-up Term Loans, European Roll-up Loans and European Term Loans will have the option to receive cash, or equity in Aleris and rights to participate in the rights offering for equity and notes;
* The Backstop Parties have committed to invest up to $690 million in the reorganized company, subject to customary conditions;
* The reorganized company will emerge from chapter 11 as a privately held enterprise majority owned by existing creditors led by the Backstop Parties, which are the largest providers of the Company's Debtor-in-Possession ("DIP") Term Loan financing;
* All administrative expenses, including 503(b)(9) trade claims, will be paid in full;
* The Plan establishes a "convenience class" in which holders of unsecured claims other than debt claims whose claims are allowed at or reduced to $10,000 may recover 25% or 50% of their allowed claims (depending upon the amount of the 503(b)(9) administrative expenses paid);
* Other holders of general unsecured claims, including unsecured debt claims, will be entitled to share in a cash pool of $4 million; and
* The Company will have a minimum of $233 million of liquidity through cash and an anticipated $500 million asset-backed revolving credit facility upon emergence.

In order to facilitate the global restructuring of all of the debt on Aleris's balance sheet, Aleris today simultaneously filed a voluntary petition for relief under chapter 11 as well as a Plan of Reorganization for its German holding company subsidiary, Aleris Deutschland Holding GmbH ("ADH"), in the U.S. Bankruptcy Court in Delaware. ADH and its obligations are included as part of the overall Aleris Plan of Reorganization described above. ADH is a non-operating holding company and has no employees or operating assets and conducts no commercial business. Accordingly, ADH's filing will have no impact on Aleris operations in Germany or elsewhere in Europe, which continue to operate outside of the U.S. bankruptcy process, without interruption.

As previously announced, on February 12, 2009, Aleris International, Inc. and its wholly-owned U.S. subsidiary co-debtors filed petitions for voluntary reorganization under chapter 11. This action was taken as a result of financial constraints related to the deteriorating global economic situation, declining industrial demand, and a swift drop in aluminium prices. The Company's European, Asian, South American, and Mexican operations were not included in the filing and have continued to operate as usual outside of the chapter 11 process. Imsamet, Inc., headquartered in Goodyear, AZ, and HT Aluminum Incorporated, headquartered in Hammond, IN, also were not included in the chapter 11 filing.

This press release is not intended to be, and should not in any way be construed as, a solicitation of votes on the Plan. The information contained in the proposed disclosure statement should not be relied on for any purpose until a determination by the U.S. Bankruptcy Court is made that the proposed Disclosure Statement contains adequate information, as required by the U.S. Bankruptcy Code.

This press release is not an offering of the rights or equity or debt securities to be offered pursuant to the rights offering. Such securities will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States unless registered under such Act or pursuant to an applicable exemption there from.

Grupo México's 2009 consolidated income down 17.6% to $887m

2010-02-08T06:33:09Z

Grupo México posted 2009 consolidated net income of US$887mn, a drop of 17.6% from US$1.08bn in 2008, according to the group's quarterly results released Friday.

Sales last year declined 19.9% to US$4.83bn from US$6.03bn the previous year, partly due to lower average metals prices.

Ebitda was US$2.13bn with a margin of 44.0% in 2009, compared to US$2.90bn and a margin of 48.1%, according to the results.

Cost of sales for 2009 was US$2.55bn, 14% lower than 2008, thanks to greater productivity and operating efficiency, lower fuel prices and benefits gained on exchange rates.

Last December, Grupo México concluded the restructuring of US copper miner-smelter Asarco, awarded to the holding company by a bankruptcy court in Texas.

On December 9, Grupo México contributed US$705mn in cash and secured financing for US$1.50bn to capitalize Asarco. In addition, Asarco contributed US$1.36bn from its own cash and made payments to its creditors, amounting to US$3.56bn in total.

A one-year promissory note was also delivered to the asbestos creditors for US$280mn.

With the integration of Asarco, Grupo México has positioned itself as the number one company in copper reserves worldwide, according to the report, ahead of Chile's Codelco and Freeport-McMoRan (NYSE: FCX) of the US.

Grupo México controls US-based Southern Copper (NYSE: PCU) and has world-class mines in Mexico and Peru.

Geo Minerals finds copper at prospect in Arizona

2010-02-08T01:54:32Z

Geo Minerals Ltd. announced initial drilling results for the Copper Springs porphyry copper prospect located in south-central Arizona. Geo has a letter of intent with Bronco Creek Exploration Inc. ("BCE"), a wholly-owned subsidiary of Eurasian Minerals, to earn a 100% interest in the project, with BCE serving as project operator.

The Copper Springs property, located approximately 90 miles east of Phoenix, consists of more than 5,000 acres in the Globe-Miami District - home to current mining operations by Quadra, BHP Billiton, Freeport-McMoRan, and others, with a combined district production and reserves of approx. 16 Mt of copper metal (Maher, 2008). New geologic work has led to the recognition that the district's known copper deposits are the faulted, tilted, and dismembered portions of a cluster of large porphyry copper-molybdenum systems centered on a Laramide-age granitic pluton. Of the porphyry centers identified in the district, the Copper Springs porphyry center - the southernmost center - has the largest exposed root zone alteration footprint and the largest, most productive capping vein system. The Geo-BCE property lies between the root zone exposed to the west and the capping vein system exposed to the east in the Globe Hills. A fault-bound structural block containing intense quartz-sericite-pyrite alteration and related copper mineralization that represents the productive intermediate levels of the Copper Springs porphyry center lies along the western boundary of the Geo-BCE property. Geo is targeting similar structural blocks interpreted to contain the bulk of porphyry copper mineralization within the Copper Springs center. These blocks are projected to lie beneath gravel cover rocks within the Geo-BCE property position.

A total of 1,189 meters (3,900 feet) of air-rotary and mud-rotary drilling was completed in two vertical drill holes, CSN-05 (518 meters) and CSN-06 (671 meters). Drill hole CSN-05 encountered unconsolidated gravels to a depth of 518 meters. Rock chips containing native copper were encountered in several intervals within this hole. Drill hole CSN-06 was collared 460 meters to the west-northwest of CSN-05, and encountered similar unconsolidated gravels to a depth of 430 meters. Between 424 and 431 meters depth, a volcanic tuff was encountered which may represent the Apache Leap Tuff, a regionally extensive mid-Tertiary volcanic rock that post-dates and often overlies the faulted and rotated blocks of Laramide porphyries. The presence of the volcanic rock in addition to a change in the characteristics of the recovered material suggested that an older Tertiary conglomerate had been intersected. This second conglomeratic unit, interpreted to be the Whitetail Conglomerate, continued for the remainder of the drill hole. At 482 meters, native copper was encountered along fractures and mineral boundaries in granitic fragments within the conglomerate. These native-copper-bearing granitic fragments continued for the next 189 meters, at which point drilling operations ceased due to technical challenges for the equipment on site. Drill hole CSN-06 was cased to 518 meters for future re-entry.

In this region of Arizona, conglomerates were often deposited upon structural blocks containing porphyry systems during extensional faulting and rotation during the mid-Tertiary period. In several porphyry copper mining districts in the region, the Whitetail Conglomerate and correlative formations comprise the oldest cover rock sequence, and often immediately overlie porphyry copper deposits and may host exotic copper mineralization. Samples from the mineralized interval in CSN-06 have been selected for assay.

Company president and chief executive officer Mike England states: "Geo Minerals is encouraged by these early stage drilling results at Copper Springs. We are excited at the prospects our continuing efforts in Arizona may bring."

Phase two work is expected to resume in the near future.

Blackwell officials accept $54m settlement with Freeport over contamination

2010-02-08T01:48:10Z

Blackwell officials have accepted a $54 million settlement in a lawsuit against an international mining company whose entity was blamed for pollution in the northern Oklahoma city.

The city sued Freeport-McMoRan Copper & Gold Inc. in October, alleging that area soil and groundwater were contaminated with lead, zinc, cadmium and arsenic as a result of mining operations by Blackwell Zinc Co. from 1916 to 1974.

According to a statement released Friday, Freeport-McMoRan will be reponsible for remediating soil and groundwater in accordance with Oklahoma Department of Environmental Quality requirements.

A spokesman for Phoenix-based Freeport didn't immediately return a message seeking comment.

Blackwell Mayor Mark Cordell called the settlement "historic in scope," and said the settlement will be used to develop groundwater, smelter material and soil management programs.

Proposed copper-nickel mine draws 'extraordinary' interest

2010-02-08T01:46:37Z

State and federal regulators will take several months to review voluminous public feedback about the PolyMet project.

More than 3,500 comments in 45 days. The Minnesota Department of Natural Resources has received a mini tidal wave of letters, e-mails and oral comments about a proposed copper-nickel mine in north-eastern Minnesota. It's not a surprise, since everything about the $600 million PolyMet project is big.

"This is certainly an extraordinary level of comments," said Stuart Arkley, the project's environmental study manager. "Normally a couple hundred might be considered a lot."

The comment period ended Wednesday for the lengthy environmental impact study for the PolyMet mining and ore processing project near Hoyt Lakes.

The U.S. Army Corps of Engineers is the federal partner with the DNR in preparing the study, which began nearly four years ago.

The draft report must be finalized before the mine can receive any of the mining, water, air and wetlands permits needed to begin construction.

Arkley said it will take months to organize and respond to the comments, which range from short e-mails to lengthy, point-by-point critiques, some of them by expert scientists.

Those in favour of the project include labor unions and nearby Iron Range communities such as Virginia that would benefit from 400 new jobs and additional spending. U.S. Sens. Amy Klobuchar and Al Franken and Rep. James Oberstar also approve of the mine.

The project would open a new kind of mine and refurbish the mothballed LTV taconite processing plant nearby to produce copper, nickel and the precious metals cobalt, platinum, palladium and gold. It would be the first large nonferrous mine in the state that processes sulfide rock.

Environmentalists said that the draft environmental study, detailed as it is, does not adequately address concerns that the open-pit mine and processing operation would increase mercury in fish and contaminate rivers and groundwater with acidic runoff from waste rock. They also want stronger financial guarantees that the company will pay for water treatment and environmental protection for decades.

"PolyMet is the first in a long list of new proposed mining operations in Minnesota," said Scott Strand, executive director of the Minnesota Center for Environmental Advocacy. "We have to get this first one right."

PolyMet officials have said that the mine will have minimal effect on the environment and will use state-of-the-art technology to process the ore and manage the waste rock.

Codelco registers products under REACH regulations

2010-02-08T01:22:54Z

Bloomberg reports that Chilean state company Codelco became the first copper miner in the world to register its products before the European Chemicals Agency (ECHA) in order to meet its obligations under the EU's REACH regulation, which deals with the registration, evaluation, authorization and restriction of chemical substances, the company said in a release. With the move, which was conducted through the European Copper Institute, Codelco aims at securing regulatory approval for its products entering the EU market.

According to the REACH regulation, the first stage was to pre-register substances prior to January 2009. Codelco is currently at the second stage of the process, with its registered products to be analyzed and evaluated to set their risk assessment. Those companies not complying with stage two of the process will not be allowed to sell their products in the European market starting January 1, 2011.

Products registered by Codelco included high-grade copper metal (99.9%), another 16 copper derivates and two substances that are not yet produced and which are molybdenum and rhenium byproducts. The company said that after registration, which occurred on January 27, the European agency would spend six months evaluating the items and then approve or reject the products from entering the EU.

Metals prices heading for the roof

2010-02-08T01:19:06Z

Speakers at the Mining Indaba in Cape Town this week seemed as one in warning of a near-term supply-demand squeeze and some solid price increases for a swathe of metals.
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They made the point that China and India will be central to minerals demand growth. And among the so-called rare-earth metals that are crucial to many of today's high-tech products, China is the leading producer and is curbing exports unless they are already processed into manufactured products. As consultant Jack Lifton saw it, stronger demand has not (and cannot) lead to greater production.

Many of the metals that are needed for items such as solar panels, super-conductors and jet engines are produced as by-products of lead, zinc, copper, manganese or aluminium mining. There is no chance of increasing production of indium, gallium, germanium, rhenium, thorium and tellurium from primary mines.

It is not the same for copper, the metal showing the second-highest price increase over the past year - lead was first and zinc third. These are metals that better reflect the state of demand in the real economy.

Chinese demand is growing and, there are supply constraints. New mines cannot be brought on stream at the flick of a switch. Iron ore is in much the same boat. Price rises will be far more restrained than they were a year or two ago.

Chinese factor behind up and down of gold

2010-02-08T01:11:24Z

Currently, the metal markets are correcting as most pundits are calling for a bubble collapse in all commodities. The prices of metals both precious and base moved up rapidly throughout 2009 resulting in rapid gains.

The market needed a healthy correction from these fantastic gains and late January has been the time for it possibly compounded by the Chinese New Year holidays beginning February 14, 2010. Rising stockpiles in the LME warehouses have also contributed to the correction in base metals.

As usual, the drop in metal prices is accompanied by a strong U.S. dollar as the speculative funds and investors divest themselves of commodities and stocks to buy U.S. dollars, a well-established market play that continues to reward the big speculators regardless of the fundamentals.

The current slide in commodities and stock markets was ignited by China's announcement on January 13, 2010 that it would tighten the banks' reserve requirements by ½ of a percentage point which is perceived as a sign of further monetary tightening creating fear that the Chinese economy will slow further cutting off global recovery. China's economy grew at only 6% in 2009 furthering the belief that China's growth is slowing. The basic fundamentals of supply and demand argue for China and India to continue their modernization and put further pressure on demand for metals. Those same fundamentals as well as the following list are the basis for our continuing emphasis on a 30 year bull market:

Iron production and sales continue to escalate as major producers such as Rio Tinto Ltd./LLC, BHP Billiton and Fortrescue Metals Group step up the world production of iron in 2010 and 2011. China now consumes over 50% of all iron production.

Steel demand and prices continue to strengthen.

China Investment Corp., a Sovereign wealth fund, has invested approximately $50 billion in mining as the $300 billion dollar fund moves out of the financial sector.

Other Sovereign funds are shifting portfolios away from financials to commodities and natural resources. Vast sums of 10's of billions of dollars are and will be invested in mining related activities.

Gold continues to be the first choice by wealthy individuals (and now funds) as a safe haven. Commodities, especially metal, are now beginning to attract these same investors.

New mines can take up to eight years to develop which will restrict the supply side.

The Western world appears to be intent on stifling the development of new mines rather than encouraging investment. In today's world, mining companies have proven to be good corporate citizens concerned about the environment, the creation of jobs, and adding to the wealth of their jurisdictions. To continue to stifle the advancement of mining in the free world only makes us vulnerable and dependent on more hostile countries that are building their minerals wealth.

China will become more aggressive in securing mineral resources off shore for their decades of modernization. India will soon become a serious competitor with China in this regard.

Idled mine capacity has now been reinstated with existing brownfield operation (especially in iron and manganese) substantially maximizing production.

Large LME stocks of metals work well for the major consumer China to mediate the rise and volatility of base metal prices, otherwise China could purchase those stockpiles with ease.

If we monitor and follow the lead that China is adopting there should be little doubt that China is concerned about future supply and taking steps to secure the metals it requires offshore.

2009 has been the best year for commodities since the early 1970's as the vastly oversold sector from precious, base and specialty metals rapidly appreciated in price reversing the fortunes of some of our largest mining giants around the world as well as focusing attention on the continuing demand by China for all metals.

Gold

Gold, the leader of the metals pack, recorded a record high of $1,226/oz. in 2009. 2010 should see a breakthrough of $1,500/oz. on its way to $2,000/oz. Eventually as the world turns to a new gold backed currency the price of gold will be pegged at much higher prices. The realization that gold is the safest haven in these economic times has finally crystallized and will underpin the gold market for years to come. China is again taking the lead not only in world gold production but consumption as well. China narrowly beat out India in household consumption at 432 tonnes versus 422 tonnes. Now that China encourages its citizens to invest in precious metals as well as central bank purchases it will be a driving force in the future price of gold.

More and more central banks are increasing their purchases of gold as western banks are selling less. The fundamentals of supply and demand have had demand overpowering supply and only central bank selling has filled this short fall. There will come a time when the only gold available for sale will be from producers with receding production and reserves, who will want to sell their gold assets and for what? ...Paper? Dehedging of gold also will put upward pressure on the gold price as the total world hedge book drops to 11.5 million ounces.

Financing

North American gold financings came close to $20 billion in 2009, not accounting for base and specialty metal financings. This is the tip of the iceberg when you think of huge amounts of cash from individuals, institutions, sovereign funds and now China's mandate for their resource companies to invest offshore, all to be utilized by metal companies in exploration, development and production.

Although the metal prices have been correcting for the past few weeks with the indication the bottom has been reached, on January 29, 2010 the prices are all up with the exception of molybdenum since my last letter dated August 5, 2009.

Rare earths metals

China has been cutting exports of rare earth metals for several years and the threat of further reductions in rare earths could compromise the growth of the green economy. The western world is on notice that their reliance on China is coming to an end. As China builds out its own economy and requires more and more metals including rare earths one must assume those days are not too distant when strategic metals will no longer be available for export.

Not that China is trying to squeeze the West, but will no longer have the capacity to meet their own needs. The US Government has addressed the situation by providing incentives for industry (Restart Bill) to locate and develop their own resources of rare metals. In the U.S. the time it takes to permit and construct new developments may not coincide with the closing of the door to export from China. This will create a desperate scenario for crucial sectors of our economic advancement.

Are rare earths the only segment which could become affected if China's need for metal continues to grow? There are other strategic metals that are controlled by China that should also raise alarm bells with the rest of the world and could affect our standard of living, progression of manufacturing, the military and economy as a whole.

China depends on the rest of the world for their supply of iron, manganese, copper and oil just to name a few where they have inadequate production. Some of the metals that China exports and controls as well as rare earths are electrolytic manganese and magnesium.

The Chinese production of electrolytic manganese metal (EMM) from dwindling low grade domestic resources of manganese with a production cost of approximately US$0.95/lb. to produce. China produces 97.44% of the worlds' supply of 2.5 billion lbs. per year. Electrolytic manganese production and demand have grown 26%/year for six years up until 2008. Outside of China the rest of the world utilizes approximately 350,000 T's (770 million lbs. per year). The world is almost totally dependent on China for their EMM requirements. EMM's greatest use is in upgrading alloys of steel 47%, aluminum industry 32% and electronics such as batteries 14%.

Magnesium - China controls 78% of the worlds' magnesium utilized in strengthening and weight reduction in fabricating steel.
Rare Earths - China controls the production of rare earth metals required in hybrid vehicles and numerous high tech applications.

The Rare Earth metal scarcity shows how quickly the world could be turned into turmoil. We should be concerned about this and the other critical aspects of strategic metals that one country monopolizes.

The prices of these metals will obviously go much higher either through price increases or higher export duties.

It is now time for governments to pre-empt rather than be reactive to the situation with rare earth metals and develop alternative sources of supply.

The three "M's"

Earlier I talked about the increasing demand for iron for steel fabrication. As steel production increases it will create a demand for specialty metals thereby positively affecting the prices of all strategic metals including the three "M's", Manganese, Magnesium and Molybdenum as well as cobalt, niobium, tungsten, vanadium and titanium.

Production and prices of the three "M's" are:

The general direction for all metals, precious, base and specialty will continue upward as more money than we have ever experienced chases metal commodities and metal stocks while production and reserves dwindle.