Mining News: ‘When will risk capital drought end?’
Question dominates conversation, speculation among miners and other participants in four-day 2013 Cordilleran Roundup in January
For Mining News
The annual Cordilleran Roundup Mining Convention is held in Vancouver at the end of January each year, and this year’s convention was unlike any of the nearly 20 such conventions I have attended.
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The norm for this convention is a sort of anticipatory excitement that permeates every facet of the event. Mineral exploration is the focus of this gathering, and explorationists are by and large optimistic people. While there was no lack of optimism at the 2013 convention, if you stuck your nose into just about any conversation during the four-day event, the overwhelming majority of those conversations can be summarized by the question: “When will the risk-capital drought end?” With commodities demand up and increasing, commodities prices strong and stable and worldwide production of most metals outstripping replacement rates of those metals, there is wide consensus that the drought will have to end sometime soon. However, no such consensus could be found for just when and under what circumstances that drought will end. It was clear that good projects will continue to get funding. It was equally clear that high-risk projects will struggle to find financing, whether it is financing derived from mine cash flow or financing derived from capital markets. Jurisdictional risk is fast becoming a key aspect of the mineral investment decision-making process. And access and infrastructure are now looked at on Day One as go/no-go factors of a project’s viability. Wherever your exploration philosophy falls on the half-empty- to half-full-glass spectrum, 2013 promises to be an interesting year.
Western AlaskaTeck Resources Ltd. and partner NANA Regional Corp. announced fourth quarter and year-end 2012 results from its Red Dog mine. In the fourth quarter the mine produced 142,300 metric tons of zinc in concentrate and for the year the mine produced 529,100 metric tons of zinc in concentrate. Zinc ore grade for the year was down slightly at 18.2 percent and mill recoveries were steady at 81.3 percent. The mine also produced 26,300 metric tons of lead in concentrate during the fourth quarter and 95,400 metric tons of lead in concentrate for the year, both significant increases over 2011 production. Lead ore grade for the year decreased slightly to 4.6 percent while mill recoveries increased significantly to 57.7 percent compared to 45.9 percent for 2011. Operating profit after depreciation, amortization and price adjustments for the fourth quarter was US$140 million, compared with US$144 million in 2011. Operating profit after depreciation, amortization and price adjustments for the year was US$361 million, compared with US$496 million in 2011. Revenue and production were down due to lower ore grades from the Aqqaluk pit, higher royalties and slightly lower mill availability. Mill throughput for 2012 was 3,576,000 metric tons of ore compared to the record 3,673,000 metric tons the previous year. During 2012 the mine paid partner NANA Development Inc. and the State of Alaska royalties of US$137 million versus royalties of US$129 million in the year-previous period. In addition, the net profits royalty paid to NANA Development Inc. increased to 30 percent in the fourth quarter of 2012 from its previous level of 25 percent.
NovaGold Resources Inc. reported year-end results from its activities at the Donlin Creek project, a 50-50 joint venture with Barrick Gold on lands leased from Calista Corp. Its on-going permitting efforts to complete an environmental impact statement through the National Environmental Policy Act are proceeding as planned. Some pleasantly surprising news was that the project’s expenditures for 2012 came in at US$33.6 million, well under the approved US$37.2 million budget for the project. The approved budget for 2013 is US$30 million for permitting, engineering, environmental, community development and overhead. During 2013 the partners intend to advance the permitting process through public scoping, complete the Preliminary Draft Environmental Impact Statement, and receive comments from the Federal and State agencies in preparation for issuance of the draft EIS in 2014.
Graphite One Resources Inc. announced 2013 exploration plans for its Graphite Creek project north of Nome. The exploration program for 2013 includes drilling, permitting, environmental studies, metallurgy, engineering, reporting and community relations initiatives. The company also released a Canadian NI 43-101 technical report on the project outlining details behind their recently released resource estimate on the project.
Interior AlaskaKinross Gold announced year-end 2012 results from its Fort Knox mine. Total 2012 production was up significantly over 2011 totals due to higher average ore grades. The mine produced 119,582 ounces of gold in the fourth quarter at a cash cost of US$493 per ounce while year-end totals were 359,948 oz of gold produced at a cost of US$663 per ounce. During the fourth quarter the mill processed 9.803 million metric tons of ore grading 1.03 grams per metric ton gold. Mill recoveries were 84 percent for the fourth quarter. For the quarter, the mine placed 6,530,000 metric tons of ore grading 0.30 g/t gold on the valley leach facility and for the year, the valley leach received 29,859,000 metric tons of ore grading approximately 0.31 g/t gold. The company also tabled year-end 2012 resource updates that included proven and probable reserves of 237,745,000 metric tons grading 0.47 g/t gold, equivalent to 3,609,000 oz of gold. The mine also tabled measured and indicated resources of 99,824,000 metric tons grading 0.43 g/t gold, equivalent to 1,375,000 oz of gold. Inferred resources at Fort Knox deposit included 13,605,000 metric tons grading 0.47 g/t gold, equivalent to 206,000 oz of gold and inferred resources at the Gil deposit were 1,348,000 metric tons grading 0.75 g/t gold, equivalent to 33,000 oz of gold.
Alaska RangePure Nickel Inc. announced results from its 2012 exploration program at the MAN project, Alaska. The US$4.2 million 2012 exploration program was funded by joint venture partner, Itochu Corp. The work program included collection of 3,010 soil samples, detailed mapping, 48 line-kilometers of induced polarization geophysical surveys and 2,233 meters of diamond core drilling. The work identified several new sulfide occurrences on the Alpha complex, with a number of soil geochemical and geophysical anomalies still to be tested. Of the eight drill holes completed, seven targeted soil or geophysical anomalies, and one hole was drilled to investigate magmatic stratigraphy. Anomalous nickel-copper-platinum group element mineralization was intersected in hole PNI-12-063 in the southern part of the Alpha complex. The best interval from this hole returned 80.95 meters grading 35 parts-per-billion gold, 106 parts-per-billion platinum, 174 parts-per-billion palladium, 0.17 percent copper and 0.25 percent nickel. A limited gold prospecting program also was completed to locate the lode source of the placer gold occurrences in the area. Significant results include a sample of glacially transported material assaying 14.0 g/t gold and 4.6 percent nickel. Follow-up work is planned in this area in 2013.
Northern AlaskaNovaCopper Inc. announced an initial industry compliant mineral resource estimate for the South Reef zone of the Bornite project. At the base case 1.0 percent copper cutoff grade, the South Reef zone is estimated to contain an inferred resource of 43.1 million metric tons at 2.54 percent copper, or 2.4 billion pounds of contained copper. Including the South Reef zone and the previously announced Ruby Creek zone, the Bornite project is estimated to contain 179 million pounds of copper (6.8 million metric tons grading 1.19 percent copper) in the indicated category and 3.3 billion pounds of copper (90.8 million metric tons grading 1.64 percent copper) in the inferred category. The South Reef zone contains significant tonnages of very high-grade copper (+2 percent), suggesting parts of the South Reef zone could potentially be starter areas for an underground mining operation. The company plans to resume drilling during the second quarter of 2013 with the goal of expanding the resources at the project and to further delineate zones of higher-grade copper mineralization. Total expenditures for 2012 at Bornite were about US$15.3 million.
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