Mining Breaks

Hopes for a future new sizeable base metals development close to Australia’s historic Broken Hill mining centre will be boosted by plans to establish an alliance comprising listed explorers Castillo Copper and Impact Minerals with privateer investor Squadron Resources.
The non-binding MoU proposes a Broken Hill Alliance that will comprise nine tenements that surround Broken Hill’s world-class zinc-lead-silver deposits. Each partner will hold 33.3% of the alliance.
Castillo MD Simon Paull says the large footprint and high base metals prospectivity with several known priority exploration targets deliver material upside potential.
Impact will retain rights to nickel-copper-PGM mineralisation and associated metals on its holdings.

A 98% increase in gold production with lower costs and higher realised prices have translated into massive increases in Dec half-year (H1FY20) profit and cashflow for growing West Australian producer Silver Lake Resources.
The acquisition of Doray Minerals and full period contribution from the Deflector operation lifted first half production to 132,879oz gold equivalent, from 66,966oz a year earlier, at AISC of $A1,223/oz (H1FY19: $1,467/oz). Sales reached 127,459oz AuEq (69,947oz) at $2,108/oz ($1,713/oz), boosting revenue to $258.8M ($119.8M).
EBITDA was $116.8M ($24.7M) and normalised NPAT $48.7M ($4M), with operating cashflow of $98.6M ($29.7M).
Silver Lake’s cash and bullion balance is $186.1M ($104.3M), with no debt, ahead of upgraded FY20 guidance of 240,000-250,000oz at AISC of $1,300-1,350/oz.

START THE WEEK: WHAT YOU NEED TO KNOW
At a time when the mining sector is coming under unprecedented pressure around the globe, the launch by the International Council on Mining and Metals of an enhanced statement of principles demanding more transparency of its members is an important step.
ICMM’s chief operating officer Aidan Davy says the changes recognise society’s higher expectations of industry against a broad range of environmental, social and governance challenges by establishing a higher benchmark for responsible mining practices.
“Mining and metals are critically important to society – as a catalyst for sustainable social and economic progress and as essential materials for the technologies needed to address climate change – but they must be produced responsibly,” Davy says.
“ICMM’s mining principles will support our members to supply the increasing demand for metals and minerals while giving confidence to customers and other stakeholders that they have been produced responsibly.”
All of ICMM’s members, comprising 27 mining and metals companies who together are responsible for over 650 mineral assets in more than 50 countries as well as 36 regional and commodity associations, are required to adhere to newly enhanced measures for site-level validation for all their assets.
A different response to societal pressure is the launch of a new advertising campaign by the resources sector in Western Australia that seeks only to convince the community in Australia’s No 1 mining state of its economic performance.
Under the theme “The resources sector powers WA”, the state Chamber of Minerals and Energy campaign focuses its message on the economic and employment benefits of mining.
“This campaign aims to start a conversation in the community about these benefits, whether it’s employment and career opportunities and the royalties and taxes paid to governments that are then invested in infrastructure and services,” chief executive Paul Everingham says.
His contention that most West Australians are unaware of the economic and social significance of mining is at least arguable. A contrasting case could be made that the wider community recognises the sector’s financial power but needs to be convinced that miners accept full responsibility for the environmental and community impacts of their activities.
If that’s correct, the ICMM approach seems a more productive one.

YOU MAY HAVE MISSED
(Note that some of the following articles may be accessible only by subscribers)

• NEWMONT ACQUISITIONS TAKE FY19 PROFIT TO $2.87B 
• RECORD FY19 FOR KIRKLAND LAKE GOLD WITH MORE TO COME 
• ANGLO AMERICAN FY19 PROFIT STEADY, MOST COMMODITIES DOWN 
• POST-DISASTER SHORTAGES TRIGGER VALE REVENUE GROWTH 
• ANGLOGOLD ASHANTI STRONG PERFORMANCES LIFT FY2019 CASHFLOW 
• DIDIPIO CLOSURE, IMPAIRMENT HAMMERS OCEANAGOLD FY19 PROFIT 

COMMODITIES
LME ($US), Feb 21 –
Aluminium 1,677.00
Copper 5,702.00
Zinc 2,086.50
Nickel 12,440.00
Lead 1,881.00
Tin 16,525.00
Cobalt 33,500.00
Gold 1,646.30
Silver 18.550

COMEX ($US), Feb 21 –
Gold 1,645.90
Silver 18.54
Copper 2.6105
Platinum 976.90
Palladium 2,611.80

LBMA price data ($US), pm Feb 21 –
Gold 1,643.30
Silver 18.56000
Platinum 976.00
Palladium 2,690.00

NYMEX ($US) 62% Fe CFR China, Feb 21 –
Iron ore 86.42

CALENDAR
Conferences –
Mar 1-4: PDAC 2020, Toronto (Canada)

Companies –
Feb 24: Macmahon H1FY20, Perth (Australia)
Feb 27: Austin Engineering HY, Brisbane (Australia)
Feb 27: Impala Platinum HY, Johannesburg (South Africa)

Public holidays –
Feb 24: Zhonghe Festival (China)
Feb 24: Independence Day (Estonia)
Feb 24: Republic Day Holiday (Guyana)
Feb 24: Emperor's Birthday Observed (Japan)
Feb 24: Defender of the Fatherland Day Observed (Russia, Kyrgyzstan)
Feb 24: Gyalpo Losar (Nepal)
Feb 24: Dragobete (Romania)
Feb 25: National Day (Kuwait)
Feb 25: People Power Anniversary (Philippines)
Feb 26: Liberation Day (Kuwait)
Feb 27: National and Liberation Day Holiday (Kuwait)
Feb 27: Independence Day (Dominican Republic)
Feb 28: Peace Memorial Day (Taiwan)
Mar 1: Baba Marta (Bulgaria)
Mar 1: Patriots' Day (Mongolia)
Mar 1: Heroes' Day (Paraguay)
Mar 1: Mărțișor (Romania)
Mar 1: Independence Movement Day (S Korea)

Higher iron ore prices, triggered mainly by supply disruptions that followed its Brumadinho mine disaster, have ironically resulted in Brazilian mining giant Vale generating higher revenue in FY2019 than in the year before the tailings dam collapse now believed to have killed 270 people.
While Vale is stressing the comprehensive compensation, rehabilitation and operational measure it has taken since the disaster, its net operating revenues rose in the year to Dec 2019 to $US37.57M from $36.58M a year earlier.
Proforma EBITDA, excluding expenses related to Brumadinho, rose to $17.99B (FY2018: $16.6B) – a result that includes $5.99B attributed to the higher prices offset by $2.8B due to lower volumes.
Adjusted EBITDA was $10.59B ($16.6B) and the company fell to a net loss of $1.68B (profit $6.86B).

Higher gold prices and improved efficiencies have helped international major AngloGold Ashanti meet guidance on key operating metrics for the seventh straight year and nearly double free cashflow to $US127M in FY2019.
Record production from the Kibali (DR Congo), Tropicana (Australia) and Iduapriem (Ghana) mines enabled group gold production for the year to meet guidance at 3.28Moz at AISC of $992/oz, compared to 3.4Moz at $976/oz in FY2018. Gold income totalled $3.99B (FY2018: $3.81B) on sales of 3.27Moz (3.41Moz) at $1,387/oz ($1,261/oz). Headline earnings came in at $379M ($220M) and adjusted EBITDA at $1.72B ($1.48B) while the net attributable result was a $12M loss ($133M profit).

The world’s biggest gold producer Newmont has lifted Dec 2019 year (FY/CY19) net income from continuing operations to $US2.87B from the previous year’s $380M, primarily due to the gains recognized by the formation of the Nevada Gold Mines J/V with Barrick Gold, higher production from the recently acquired Goldcorp assets and higher average realized gold prices.

The failure of OceanaGold to restore production from its Didipio Gold Mine in the Philippines and a $US32M impairment has seen its Dec 2019 year (FY/CY19) net profit plummet to $14.5M from the previous year’s $121.7M.
The bottom line was on revenue down to $651.2M from $772M, due primarily to the lack of H2 19 sales from the blockaded Didipio mine, where processing was suspended in Oct 2019 while the company seeks govt renewal of its financial/technical assistance agreement.
EBITDA fell to $214.2M from $363.7M and cash flow to $204.3M from $346.2M on gold production from Oceanagold’s US, New Zealand and Philippines operations plunged to 470,601oz from 533,300oz and copper to 10,255t from 15,000t, with AISC jumping to $1,061oz from $767oz and cash costs to $733oz from $489oz.
The company finished FY19 with available liquidity of $99M, including $49M cash and $50M in undrawn credit facilities.

Chinese privately owned miner Goldsea Group aims to add the Sandstone gold project in WA’s East Murchison mineral field to its Australian portfolio, announcing an all-cash takeover offer for Alto Metals.
The offer through Goldsea Australia Mining of 6.5cps, 103% above its last sales, values Alto at $A21M. Alto holds 100% of the Sandstone gold project covering 800sqkm about 600km N of Perth.
Goldsea says it’s chosen to make the offer directly to shareholders after unsuccessful attempts to engage with the Alto board. The offer is financed by CEO Jiang Li’s cash holdings and his privately owned Singapore J&Y Investment.

Kirkland Lake Gold has completed a record operating/financial Dec 2019 year (FY/CY19), more than doubling net earnings to $US560.08M from the previous year’s $273.9M on revenue up 51% to $1.38B.
The result was on record gold output up 35% to 974,615oz from the company’s 3 Canada/Australia operations, with more to come in the current FY/CY20 following the recent Detour Gold acquisition lifting gold expectations to 1.47Moz-1.54Moz from 950,000oz-1Moz.

The dream of establishing a pumped hydro power project on the site of the Kanmantoo copper mine 45km SE of Adelaide in South Australia is over, after miner Hillgrove Resources and energy specialist AGL agreed to terminate their April 2019 binding agreement.
The companies have been unable to agree on a way forward on what would have been a $A31M plan to establish a 250MW generation project utilising Kanmantoo’s just-completed Giant openpit and a new storage pond simultaneously with the start of underground mining.
Hillgrove says it will now progress additional drilling, mine design and studies beneath the Giant pit.

Lower copper prices, higher tolling/production costs and an extreme drought in Chile have pushed Amerigo Resources’ 100% owned Minera Valle Central copper-molybdenum operation (MVC) near Rancagua, Chile, to a Dec 2019 year (FY/CY19) net loss of $US9.4M from the previous year’s $10.5M profit.
The bottom line was on revenue down to $119.8M from $136.8M for gross profit plunging to $403,000 from $24.97M, with cash flow from operating activities, before changes in working capital, down to $9.8M from $27.79M.
The result was despite copper production up 7% to 69.8Mlbs, but molybdenum down to 1.4Mlbs from 1.9Mlbs and cash costs up to $1.82/lb from $1.56/lb.
The company finished FY/CY with cash/equivalents down to $7.16M from $21.3M and borrowings down 16% to $55.8M.

Attributable gold production plunging to 762,000oz from 882,000oz, along with a $US395M impairment charge, has seen IAMGOLD blow its Dec 2019 year (FY/CY19) net loss, including discontinued operations, out to $412.6M from FY/CY18’s $28.2M loss.
The net loss from continuing operations was out to $373.3M from a $31.4M loss, primarily due to a $395M impairment charge on the Westwood Mine, Canada, partially offset by a $122M impairment reversal on the Essakane Mine, Burkina Faso.

Japanese-owned CBH Resources has stepped up as exploration partner for Mithril Resources’ relatively unexplored Billy Hills project in Western Australia’s Kimberley region, committing to spend $A4M over 5 years to earn 80%.
Billy Hills, 25km east of Fitzroy Crossing, contains high-grade targets including the Firetrail prospect where Mithril’s rock chip samples returned up to 30.3% zinc, 127g/t silver and 3% lead.
MD David Hutton says the deal fits Mithril’s strategy of introducing farm-in partners to its Australian projects while it focuses on its Copalquin gold-silver project in Mexico.
CBH, wholly owned by Japanese refiner Toho Zinc, has Zn-Pb-Ag interests in NSW with the Rasp mine at Broken Hill and the recently mothballed Endeavor mine at Cobar.

Strong precious metals/iron ore prices offsetting weakness in diamonds/coal has seen international mining major Anglo American generate a steady Dec 2019 year (FY/CY19) shareholder attributable profit of $US3.54B, the same as the previous year.
The result was on revenue up 8% to $29.87B, with underlying EBITDA up 9% to $10B, but free cash flow down 26% to $2.32B.

Development costs of its 100%-owned Mardie salt and sulphate of potash project on Western Australia’s Pilbara coast have overcome higher royalty income for BCI Minerals from the Mineral Resources-operated Iron Valley mine in the Dec half-year.
H1FY20 revenue from continuing operations rose to $A39.4M, from $19.77M a year earlier, resulting in an attributable net loss of $4.13M compared to its H1FY19 profit of $15.6M. Total EBITDA was negative $3.2M (H1FY19: positive $15.3M).
MD Alwyn Vorster says BCI is targeting a final development decision for Mardie by the Sept 2020 qtr, with construction starting early in 2021.

Flake graphite developer Volt Resources remains confident of success for its $US15M Mauritian note issue to fund stage 1 development of its Bunyu graphite project in Tanzania after extending its deadline from Feb 20 to April 24.
The note offer, which comes with a $15M greenshoe option, is the first offer of securities on the Mauritian Stock Exchange.
CEO Trevor Matthews says the extension will provide more time for potential investors to complete their investment due diligence following a three-week roadshow in Mauritius, Kenya, South Africa and the Middle East. “We are pleased with the positive feedback received to date from potential investors,” Matthews said.

West Australian underground mining contractor Barminco expects to commence mining next month after the confirmation of its contract worth about $A200M at Panoramic Resources’ Savannah nickel-copper-cobalt project.
The award of the 3-year contract implements Panoramic’s switch from owner-mining at the struggling East Kimberley mine.
Barminco, a member of the diversified mining services Perenti Group, will be responsible for mine development, production and haulage.

The costs of care and maintenance plus asset impairments totalling $A25.5M following the decision to shutter its Nifty copper mine in Western Australia have pushed the Dec half-year (H1FY20) net loss out to $61.6M for Metals X.
The result, which compares to a $36.1M loss in H1FY19, also includes an $8.3M adjustment in rehabilitation provisions at its 50%-owned Renison tin mine in Tasmania.
EBITDA was negative $12.6M (negative $15.3M).
Exec chairman Patrick O’Conner raised hopes of an eventual revival of the Nifty mine, saying its large copper endowment, exploration potential and infrastructure provide excellent leverage to any improvement in prices.

Results of recent auger drilling and testing have upgraded the total inferred and indicated resource at Australian explorer Diatreme Resources’ Galalar silica project in Qld by 26% to 38Mt of <99% silicon dioxide.
The project’s potential as a source of premium quality silica sand for growing Asian markets is further enhanced by the resource remaining open to the north and east.
CEO Neil McIntyre says the upgrade is a significant boost for Diatreme’s plans to develop a new silica sand mine at Galalar in partnership with traditional owners Hopevale Congress.