Weekly Mining & Projects Roundup

We expect the Bloomberg World Mining Index to remain locked in a secular downtrend over the coming months. Despite the recent growth bounce in China, we continue to believe that the hangover effects of China's economic stimulus are yet to be felt, and cooling credit growth is likely to reveal these effects by H114 ( see 'Can Reforms Prevent The Credit Hangover?', December 18, 2013). In our view, 2014 will be another disappointing year for industrial metal prices, with upside limited by healthy supply, only moderate demand growth and a stronger US dollar. Iron ore and copper prices would be most negatively affected due to the sharp slowdown in Chinese fixed asset investment and dominance of China in the seaborne market.

With the boom years in commodity prices behind us, we believe mining equities are in for a protracted period of pain. The wave of asset writedowns and divestitures that took place over the course of 2013 should continue in the coming quarters. Mining companies will be forced to reallocate their scarce capital more judiciously by focusing on the development of brownfield projects rather than greenfield mines. Amidst the capital drought and escalating cost base in the mining space, the rising tide of global asset disposal will pave the way for more mergers and acquisitions, while the gold sector undergoes rapid consolidation as a result of the meltdown in gold prices ( see 'Gold To Average US$1,150/oz In 2014', December 20).

Key Development: Asia

Limited Respite
Bloomberg World Mining Index

We expect the Bloomberg World Mining Index to remain locked in a secular downtrend over the coming months. Despite the recent growth bounce in China, we continue to believe that the hangover effects of China's economic stimulus are yet to be felt, and cooling credit growth is likely to reveal these effects by H114 ( see 'Can Reforms Prevent The Credit Hangover?', December 18, 2013). In our view, 2014 will be another disappointing year for industrial metal prices, with upside limited by healthy supply, only moderate demand growth and a stronger US dollar. Iron ore and copper prices would be most negatively affected due to the sharp slowdown in Chinese fixed asset investment and dominance of China in the seaborne market.

Limited Respite
Bloomberg World Mining Index

With the boom years in commodity prices behind us, we believe mining equities are in for a protracted period of pain. The wave of asset writedowns and divestitures that took place over the course of 2013 should continue in the coming quarters. Mining companies will be forced to reallocate their scarce capital more judiciously by focusing on the development of brownfield projects rather than greenfield mines. Amidst the capital drought and escalating cost base in the mining space, the rising tide of global asset disposal will pave the way for more mergers and acquisitions, while the gold sector undergoes rapid consolidation as a result of the meltdown in gold prices ( see 'Gold To Average US$1,150/oz In 2014', December 20).

In For More Pain
Select Mining Equities - % Chg. Over Past Month (LHS) & Past 12 Months (RHS)

Key Development: Asia

India: Coal Production Struggles To Continue - In a bid to attract global miners into the coal sector, the Indian government has requested Coal India Ltd (CIL) to identify at least six large mines to be offered under the public-private partnership (PPP) contracts. CIL, which accounts for 85% of India's coal production, has been asked to identify mines with output capacities of at least 10-15 mn tonnes per annum (mntpa). Under the PPP model, CIL would support the private company with requisite clearances such as forest, environment, land acquisition and rehabilitation. While this development is a positive step towards opening up the coal sector for foreign investment, we believe the shortfall of coal production in India will remain a key concern over the medium term. Coal consumption in the country has continued to outstrip production over the past decade, to reach a structural deficit of 97.4mn tonnes (mnt) in 2012. In our view, significant regulation and bureaucratic hurdles will continue to limit production growth in the coming years. Furthermore, considerable numbers of coal deposits are located in protected forests or conflict-laden tribal lands, making output expansion an extremely difficult process. Despite our forecast for India's coal output to increase at an average clip of 5.6% per annum between 2013 and 2017, we believe the country will become increasingly reliant on coal imports over the coming years due to a persistent shortfall in production.

Coal Deficit Here To Stay
India - Coal Production, Consumption & Balance (mnt)

Key Development: Africa

Niger: Resource Nationalism To Prolong Deadlock - We expect the deadlock in negotiations between the Nigerien government and the French firm Areva to endure indefinitely as the government's determination to boost its revenue from the mining sector leaves Areva in a difficult position. Areva is looking to renew its 10-year mining licences for two uranium mines, Somair and Cominak. The Nigerien government wants to increase royalties on uranium exports to as much as 12% of sales, depending on profits, in accordance with the 2006 mining law. This would mark a considerable increase from the current 5.5%. However, Areva insists that such a hike would make its business unprofitable; uranium prices have been falling since the Fukushima nuclear disaster in March 2011, after which a number of countries, such as Germany, rejected nuclear power. The tension between the French company and the Nigerien government has the potential to deter new entrants to Niger's mining sector, as this example of rising resource nationalism is likely to give investors cause for concern.

Uranium & Radioactive Elements Dominate
Niger - Exports By Type (2011)

Key Development: Americas

Brazil: Positive, Though Slower, Iron Ore Production In Coming Years - We forecast continued iron ore production growth in Brazil despite our forecast for prices to average lower at US$115/tonne in 2014. This is largely due to various firms proceeding with iron ore projects over our forecast period despite prospects of softening Chinese demand. Vale, the world's largest iron ore producer, will lead Brazilian firms as it seeks to focus its investment on core iron ore assets where it can achieve better economies of scale and still achieve solid profits. Our forecast calls for Brazil to remain the world's third largest iron ore producer through our forecast period, behind Australia and China. We forecast production to reach 486mnt in 2017, marking average annual growth of 4.6% from 2014 to 2017. We note that the distribution of growth is now weighted towards the latter years of our forecast due to our expectation for projects to come online later than scheduled.

Boom Of Mid-2000s Over
Brazil - Iron Ore Production & Growth
Projects & Developments This Week
Country Company Mine Commodity Update
Africa Armadale Mpokoto Gold Armadale has reported a 35% increase in total Mineral Resource to 510,000oz gold from 11.2mnt @ 1.42g/t Au at a cut-off grade of 0.5g/t at Mpokoto
Argentina Argentex Mining Corporation Pingüino Silver, Gold Argentex has announced drilling results from additional 36 holes of its 58-hole, 3,003m 2013 Phase IX drill programme. The programme returned high grade gold intersects in Ivonne Norte Vein, continuing on from those discovered in the Savary Vein in 2012
Australia MMG Dugald River lode Zinc Dugald River lode will miss its start up date because of technical issues. The mine was supposed to start yielding zinc in late 2015 and partially replace lost output from the nearby Century mine
Australia Gold Road Resources Gruyere (Dorothy Hills) Gold High-grade gold mineralisation intersected in RC hole 13GYRC0053.Strike length at Gruyere Prospect to 1,600 metres, open to north and south and at depth. Best gold intercepts from hole 13GYRC0053 are 30 metres at 3.51 g/t Au from 108 metres
Australia Antofagasta plc Punt Hill Copper, Gold A wholly-owned subsidiary of Antofagasta has opted to proceed to next stage of Farm-In Option Agreement at its flagship Punt Hill project. Antofagasta can earn a 51% interest (Phase 1) in the project by expending US$4mn over four years
Australia Ramelius Resources Limited Vivien Gold Further high grade gold intersections have been returned from recent exploration drilling at Vivien Gold Project
Australia Whitehaven Coal Maules Creek Coal - Thermal Whitehaven Coal won a court fight against environmentalists who sought to overturn the Australian government's approval of its biggest growth project, the Maules Creek mine
Brazil Colossus Minerals Serra Pelada Gold, Platnum, Palladium Colossus provided preliminary resource estimate for its Serra Pelada Mine. Indicated resources stand at 557,000 tonnes, with Inferred resources of 88,000 tonnes. The estimate is based on 248 surface holes drilled during 2007-2012 and 26 underground holes drilled in 2013
Burkina Faso Riverstone Karma SA Karma Gold The Burkina Faso Council of Ministers has approved the issuance of the Karma exploitation permit to Riverstone Karma SA, True Gold Mining's subsidiary. The exploitation permit will allow True Gold to develop the Karma mine
Canada Prophecy Platinum Wellgreen (PGMs), Nickel, Copper Prophecy Platinum, which is focused on developing its Wellgreen platinum group metals (PGMs)/nickel/copper project has changed its name to Wellgreen Platinum, in anticipation of making the progression from being an explorer to that of developer
Canada Pretivm Resources Inc. Brucejack Gold Measured and Indicated Mineral Resources total 8.7 million ounces of gold at a grade of 17.6 grams of gold per tonne
Canada Copper Fox Metals Inc. Schaft Creek Copper, Gold, Molybdenum, Silver Drilling Highlights: DDHSCK 13-432 intersected 0.399% copper, 0.444g/t gold, 4.39g/t silver and 0.028% molybdenum over interval of 76.5m. DDH SCK-13-433 intersected two mineralization zones. DDH SCK-13-435 intersected 357.8m interval that assayed 0.363% copper, 0.108g/t gold, 1.26g/t silver and 0.023% molybdenum
Canada Lithium Corp. BC Sugar Graphite Lithium Corp. has received final assays from its October 2013 prospecting and geological program at BC Sugar property. Several graphite prospects have been discovered in a belt of metamorphic rocks which stretches at least 13 kms through the claim block
Chile Orosur Mining Inc. Talca Orosur has announced the completion of the sale of its Talca properties to ALTOVALSOL Limitada for US$8mn and retained 2% NSR
Chile Silver Standard Resources Inc. Challacollo Silver Silver Standard Resources Inc. has entered into a definitive agreement with Mandalay Resources Corporation to sell 100% of its Challacollo project
Colombia Continental Gold Limited Buriticá Gold, Silver Continental has announced results for 17 diamond drill-holes and underground sampling from the Yaraguá and San Agustin vein systems. Drill-holes were successful in extending Yaraguá and San Agustin systems, whereas drilling and underground sampling infilled vein families in western Yaraguá
Democratic Republic of Congo Ivanhoe Mines Kipushi Copper, Zinc, Germanium, Lead, Precious metals Ongoing dewatering programme has achieved its critical first objective of restoring access to the main underground working level before end-2013
Egypt Centamin Sukari Gold Total measured and indicated resource has increased to 13.4mn ounces of gold, up from 13.1mn ounces. However, the total combined openpit and underground reserve was down 19%, containing 8.2mn ounces of gold
Eritrea Sunridge Gold Corp. Asmara Gold Sunridge Gold Corp. has announced the summary of the Social and Environmental Impact Assessment (SEIA) report for the Asmara Project located in Eritrea has been submitted to the Ministry of Energy and Mines
Gabon Anglo American Mebaga Iron Ore Anglo American has struck an exploration deal in Gabon which could hand it ownership of the Mebaga iron-ore project. Under the deal, Anglo will fund the exploration of the Mebaga project and surrounding areas for up to two years
Liberia Aureus Mining New Liberty Gold Aureus Mining will pour first gold at its Liberia project in the first quarter of 2015, slightly later than previously forecast
Mexico Primero Mining Corp. Cerro del Gallo Gold, Silver, Copper Primero Mining Corp. has announced the closing of its acquisition of the remaining 30.8% interest in its Cerro del Gallo development project from a subsidiary of Goldcorp Inc.
Mexico Pan American Silver La Colorada Silver Pan American Silver has decided to move on with the expansion of its La Colorada mine, in Zacatecas, Mexico, to lift silver output to about 7.7mn ounces by 2017
Mozambique Baobab Resources Plc Tete Iron Ore, Vanadium The 2013 drilling campaign has been successfully completed for an aggregate total of 5,940m (diamond and RC), bringing the total metres drilled at the Tenge/Ruoni prospect since 2011 to 41,175m
Peru Dynacor Gold Mines Inc. Manto Dorado Gold, Silver, Copper Four holes, HDD01-350, HDD02-350, HDD03-350 and HDD04-350, have been drilled from an underground drilling station into the Manto Dorado. High gold grades and polymetallic mineralization were obtained in all four drill holes
Senegal Stratex International Plc Dalafin Gold Drillhole FARC-07 returned 7m @ 86.39 g/t Au from 19m and 1m @ 10.19 g/t Au from 36m. FADD-01 returned 4.5m @ 0.85 g/t Au from 8.6m; 19.0m @ 2.20 g/t Au from 68.6m
Tanzania Stratex International Plc Tembo Gold One diamond drill rig recommenced drilling on the Tembo project. Drilling at the Project will initially focus on the Ngula 1 target, to follow-up on high-grade intersections previously identified by TGC, the best being 15.00 m @ 22.81 g/t Au
United States Tertiary Minerals plc MB Fluorspar Results from first 10 holes drilled in Southern Area confirm potential for definition of open-pit mineable fluorspar resource. Thick zones of mineralisation intersected between surface and the maximum depth of drilling (125m) - all holes end in mineralisation
United States Klondex Mines Fire Creek Gold Three of the four holes intercepted mineralisation outside the current mineral resource model that was in line with the underground workings. These intercepts included grades from the surface drilling range from 16.3 g/t of gold, to 5.1 g/t of gold
United States Rio Tinto Pebble Copper, Gold Rio Tinto is considering the sale of its stake in Canada's Northern Dynasty, owner of the undeveloped Pebble copper/gold project, in Alaska.
United States Aurcana Corp Shafter Silver Aurcana has decided to shutter the Shafter mine citing the current economic conditions and low silver prices as the main factors influencing the board's review of the development and mining operations
Source: BMI, Company Announcements

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Sector: Mining
Geography: Global, Brazil, India, Niger
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