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Tuesday, January 19, 2010
Today's News Headlines
* Minerven counting losses after strike - Venezuela
* Junior roundup: Luna Gold, Aura Silver, Creston Moly, Rodinia, Cone Mine Exploration - Regional
* Osinergmin doles out US$28mn in fines in 2009 - Peru
* Government lifts mining suspensions in Azuay - Ecuador
* Fortuna: Callyoma output rises in 2009, San José on track - Mexico, Peru
* Vale seen diversifying fertilizer operations - Brazil
* Guyana Goldfields aims to raise US$68mn via offering - Guyana
* Aura enters bought deal agreement with Canaccord - Regional
* Andes Gold completes Roman purchase - Ecuador
* Frontera receives default notice on series 1 notes - Mexico
* IN BRIEF Vale redeems US$150mn in export securitization notes - Brazil
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* Minerven counting losses after strike - Venezuela
Venezuelan state gold company Minerven is counting its losses after workers went on strike for 10 days earlier this month, company president Luis Herrera told BNamericas.
"If no one is working, there will be losses and we are calculating exactly how much was lost," Herrera said without providing any further details.
As far as BNamericas could find out, Minerven produces an average of 600oz/d, which when multiplied by the 10 days that the strike lasted, results in major losses. At current gold produces, the loss would be some US$7mn.
THE STRIKE
More than 1,200 workers reportedly went on strike to demand that work conditions and safety be improved, the debt with supplier companies be paid off and that Herrera step down because of alleged corruption.
However, Herrera did not confirm this and assured that the protest "was an illegal strike and an agreement was reached so that workers can restart activity."
According to the official, workers only requested that there be no punishment for the strike, which started on January 5, before restarting work.
Minerven, a subsidiary of state heavy industry holding company CVG, is currently carrying out studies in search of new gold mining areas.
By Harvey Beltrán
Business News Americas
* Junior roundup: Luna Gold, Aura Silver, Creston Moly, Rodinia, Cone Mine Exploration - Regional
Vancouver's Luna Gold (TSX-V: LGC) has completed a senior secured debt facility worth US$15mn with Australian merchant bank RMB Resources, the former said in a statement.
Luna has the Aurizona gold development project in Brazil's Maranhão state. The company said it has received approval to build a 69kV transmission line for the project from Brazilian power utility Cemar.
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Ottawa-based Aura Silver Resources (TSX-V: AUU) reported the final assays from its Taviche silver-gold JV property in Mexico extend known mineralization at the Higo Blanco trend.
Step out drilling returned "strong" mineralization in 17 of 22 holes, including 26.3m grading 74.8g/t silver equivalent and 5.15m of 145g/t silver equivalent. Taviche is a JV with Intrepid Mines (TSX, ASX: IAU) and is in Oaxaca state.
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Vancouverite Creston Moly (TSX-V: CMS) reported it has signed contracts for a 5,000m drill program and an 18km induced polarization survey on its El Crestón molybdenum project in Mexico, with work due to start later in January.
The company also said a recently completed mapping and sampling program at El Crestón outlined seven areas with potential to host significant mineralization.
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Torontonian Rodinia Minerals (TSX-V: RM) reported it has entered into an agreement with Rio Tinto Minerals subsidiary Borax Argentina to acquire three lithium brine projects in Argentina's Salta province: Salar de Diablillos, Salar de Centenario and Salar de Ratones.
Rodinia has the Clayton Valley lithium property in Nevada, as well as four uranium exploration properties in Arizona and one in Utah.
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Brazil-based Cone Mine Exploration reported it has acquired 147,863ha of mine exploration rights in Bahia state with an eye to identifying iron ore, copper, titanium, zinc, nickel and vanadium mineralization.
The projects are divided into six blocks, four of which sit in the southern part of the state, one in the center and one in the north. The company aims to create JVs for exploration of the areas.
By Business News Americas staff reporters
* Osinergmin doles out US$28mn in fines in 2009 - Peru
Peru's energy and mining watchdog Osinergmin handed out fines totaling some 80mn soles (US$27.8mn) last year, with the bulk going to mining and hydrocarbons companies in the production or exploration phases, state news agency Andina reported.
"During 2008 Osinergmin imposed fines in the order of 80mn soles for different infractions, and we estimate that fines in 2009 will reach a similar sum," the entity's president Alfredo Dammert was quoted as saying.
However, water pollution caused by mining companies and air pollution from refineries has dropped in recent years, Dammert said, adding that 80% of miners are in compliance with tailings quotas for controlling ground contamination.
Osinergmin began supervising mining companies two years ago, and in that time numerous improvements have been made among the nearly 100 firms that fall under its watch.
"There were large companies like Southern [Copper (NYSE: PCU)] or Shougang [Hierro Perú] that before had a few [cases of] non-compliance but these have now been rectified, and many of the mid-size miners have also improved while others remain under supervision," said Dammert, according to Andina.
By Business News Americas staff reporters
* Government lifts mining suspensions in Azuay - Ecuador
The Ecuadorian government has lifted the suspensions on several small mining operations in Azuay province, non-renewable natural resources minister Germánico Pinto Troya said in a statement.
The ministry decided to end the suspensions after concessionaires agreed to comply with all technical, legal and environmental rules, and reach an agreement with mining operators on contracts, the statement said.
According to Pinto, the decision is part of a larger change in national mining policy, with the state now in charge of community relations, as well as small and artisan mining, for which a special mining program has already been set up.
Under this program miners will receive professional training, technical assistance and credit, and will be able to partner with the national mining company (ENM) to develop projects under better conditions.
In another move to help small and artisan miners, mercury use will be eradicated, the report added.
The concessions that were suspended because of environmental damage and lack of an environmental management plan include Pliglio, Condominio Minero Las Paralelas, Papercorp and Barranco Colorado, all located in San Gerardo in the Ponce Enríquez district of Azuay.
By Business News Americas staff reporters
* Fortuna: Callyoma output rises in 2009, San José on track - Mexico, Peru
Canada's Fortuna Silver Mines (TSX, Lima: FVI) posted production of 1.69Moz silver, 28.4Mlb (12,882t) zinc and 25.1Mlb lead at its Callyoma mine in Peru for 2009, representing increases of 96%, 22% and 52%, respectively, from 2008.
The higher output was a result of growing throughput, silver grades and recoveries, Fortuna said in a statement. Last year was Callyoma's third in operation.
The mine is slated to produce similar levels of silver, zinc and lead in 2010, as well as 1Mlb of copper. Red metal output was 189,000lb in 2009 and nothing before last year.
Preliminary figures show revenue of more than US$50mn for 2009, compared to 2008's US$26.3mn, the statement said.
SAN JOSÉ
Fortuna is on track to publish a prefeasibility study and start construction activities during Q1 at the San José silver-gold project in Mexico's Oaxaca state.
Commissioning is forecast for 2011, the company added.
Fortuna recently secured a US$20mn credit facility to help fund the project and in December received permits that would allow construction to start on a 1,500t/d operation.
Fortuna started trading on the Toronto Stock Exchange's main board on Monday, moving up from the venture exchange.
By Business News Americas staff reporters
* Vale seen diversifying fertilizer operations - Brazil
Brazilian mining giant Vale's (NYSE: VALE) interest in fertilizer company Fosfertil, among other assets of US agribusiness and food company Bunge (NYSE: BG), will lead the company to strongly diversify its fertilizer chain, currently focused on potash.
Vale confirmed Friday (Jan 15) that it is in talks to acquire the fertilizer assets of Bunge in Brazil, including its 42.3% stake in Fosfertil.
Fosfertil produces nitrogen and phosphate-based inputs, important raw materials for the fertilizer industry. Other assets Vale could buy from Bunge include phosphate rock mines and units that produce phosphate and nitrogen-based intermediate fertilizers.
In a statement, Vale estimated the potential deal with Bunge at up to US$3.8bn.
Vale, the world's largest iron ore producer, already had plans to grow organically in the fertilizer market, and the acquisition of a large-sized company seems like a natural option to accelerate this project.
"Vale will be able to expand its operations beyond potash with more agility," said analyst Leonardo Alves at Link Investimentos. He noted Vale currently sells input to be processed in the chemical industry, but that it could add value to its products in case the acquisitions materialize.
Late last year, Vale expressed its intention to become one of the world's largest fertilizer companies within four years.
The miner's plans are in line with demands from the government, which has expressed concern over the country's dependence on the imported input.
Analyst Carlos Kochenborger from Sicredi bank said Vale's strategy makes sense as it will complement the company's business plan.
Analyst Eduardo Roche at Modal Asset said the purchase will make it possible for Vale to grow with lower risk as Bunge is a traditional company in this industry.
Economist Alexandre Gallotti from the Tendências consultancy believes Vale's interest in these assets can be explained by the company's policy of diversifying its product portfolio.
"In the past, Vale was excessively dependent on iron ore, and for that reason it has adopted a strategy to reduce risks," Gallotti said, citing as an example the purchase in 2006 of Canada's Inco, a nickel miner.
By Natalia Gómez and André Magnabosco
http://www.aebrazil.comAgência Estado
* Guyana Goldfields aims to raise US$68mn via offering - Guyana
Toronto-based Guyana Goldfields (TSX: GUY) has entered into an agreement with a syndicate of underwriters to complete its previously announced offering of 10mn common shares at a price of Cdn$6.95 each to raise gross proceeds of Cdn$69.5mn (US$67.8mn), the company reported in a release.
Guyana Goldfields has also granted the underwriters an option to purchase up to 1.5mn additional common shares within 30 days following closing to cover any over-allotments and for market stabilization purposes, the release said.
The company expects the offering to close on or about January 25.
Guyana Goldfields is primarily focused on the exploration and development of gold deposits in the Guiana Shield of South America. In August, the company reported the results of an NI 43-101 compliant preliminary assessment on its Aurora project in Guyana outlining output of 250,000oz/y gold for 16 years for startup capex of US$262mn.
By Business News Americas staff reporters
* Aura enters bought deal agreement with Canaccord - Regional
Vancouver's Aura Minerals (TSX: ORA) reported that it and Zoneplan Limited have entered into an agreement with Canaccord Financial and a syndicate of underwriters which will purchase, on a bought deal basis, 18.0mn treasury common shares and 6.0mn previously issued common shares from the holdings of Zoneplan at a price of Cdn$4.20 each for total proceeds of Cdn$101mn (US$98.3mn).
Aura has granted the underwriters an over-allotment option to purchase additional treasury common shares at the same price to raise further proceeds of up to 15% of the amount raised from the sale of the treasury common shares, Aura said in a release.
The net proceeds, other than the proceeds from the sale of the secondary common shares, will be used for exploration and development of Aura's mineral properties, and for general purposes.
In mid-December Aura reported new drill results from its Aranzazu project in Mexico's Zacatecas state, including 52.5m of 1.56% copper, 1.33g/t gold and 14.8g/t silver, plus 84.0m of 2.19% copper, 0.67g/t gold and 16.1g/t silver.
Aura aims to restart underground mining in the second quarter of 2010 at 2,600t/d and later increase this to 3,000t/d, according to the company's website, adding that Aura mined Aranzazu from June-December 2008 at 1,200t/d.
Aura also has the San Andrés gold mine in Honduras and assets in Brazil.
By Business News Americas staff reporters
* Andes Gold completes Roman purchase - Ecuador
New York-based Andes Gold (Pinksheets: AGCZ) has concluded the acquisition of the Roman gold mine in Ecuador, the company reported in a release.
The mine includes an access road, a site for an expanded work camp and an additional access tunnel that will allow for the mining of two untouched gold veins, the release said.
"The acquisition of the Roman mine will add 40t of ore production a day within four months from this new tunnel access," president Alex Diaz said, adding: "We have increased our estimated reserves with this new asset by 50,000oz."
The deal was finalized on an all cash basis, the statement said without providing an amount.
Andes also operates the Miranda Alto yellow metal project in Ecuador's southern El Oro province.
By Business News Americas staff reporters
* Frontera receives default notice on series 1 notes - Mexico
Mexican-owned Frontera Copper reported it has received a formal default notice from CIBC Mellon Trust, the trustee under the indenture governing its series 1 senior notes.
The notice was due to Frontera's failure to make the December 15, 2009 interest payment on the notes.
According to a company release, Frontera expected to announce its proposed restructuring of the series 1 and 2 notes on Monday.
Frontera and Mexico's Banco Azteca entered into a US$93mn credit agreement in August aimed at providing funds for the restart of the Piedras Verdes copper mine, located in Sonora state. The miner has drawn down US$37mn to date, according to a previous release.
Frontera did not complete on time a restructuring plan for its 2010-11 senior unsecured notes as part of the deal with Azteca. As such, the bank has not allowed further drawdowns and Fortuna does not have the cash to make the interest payment.
Piedras Verdes was shut down in November 2008 due to low copper prices. Output amounted to 11.5Mlb (5,216t) of copper cathode in the third quarter of 2008.
Mexico's Invecture Group owns Frontera.
By Business News Americas staff reporters
* IN BRIEF Vale redeems US$150mn in export securitization notes - Brazil
Brazilian mining giant Vale (NYSE: VALE) will redeem early US$150mn in export receivable securitization notes issued in 2000 and 2003, the company said in a statement.
The early redemption corresponds to US$27.5mn issued in September 2000 at 8.926% annually due in 2010, and US$123mn issued in July 2003, at 4.43% annually due in 2013.
Rio de Janeiro-based Vale is the world's largest iron ore producer and exporter.
By Business News Americas staff reporters
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In-deph interview
* Recently in production and on its way towards growth
Robert Quartermain (part II)
CEO
Silver Standard
http://www.bnamericas.com/interviews/mining/Robert_Quartermain_,part_II,_,Silver_Standard,/170505044
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Main companies covered in today's news
* Fertilizantes Fosfatados S.A.
http://www.bnamericas.com/company-profile/en/Fertilizantes_Fosfatados_S,A,-Fosfertil/170505044
* International Northair Mines Ltd.
http://www.bnamericas.com/company-profile/en/International_Northair_Mines_Ltd,-International_Northair_Mines/170505044
* Colombian Mines Corporation
http://www.bnamericas.com/company-profile/en/Colombian_Mines_Corporation-Colombian_Mines/170505044
* San José
http://www.bnamericas.com/company-profile/en/San_Jose-San_Jose/170505044
* Apogee Minerals Ltd.
http://www.bnamericas.com/company-profile/en/Apogee_Minerals_Ltd,-Apogee/170505044
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