Mining Breaks

START THE WEEK: WHAT YOU NEED TO KNOW
Continued buying by central banks and sustained growth in gold-backed exchange-traded funds remain the key drivers of the increase in global gold demand by 8% to 1,123t in the June 2019 quarter (Q2), the World Gold Council reported in its August Gold Demand Trends report. Combined with the March quarter, gold demand for the first half of the year increased to 2,181.7t – also an 8% margin.
Central banks bought 374.1t for the first six months of the year, the largest net H1 increase in global gold reserves in the WGC’s data series. Buying continued to be spread across a diverse range of largely emerging market countries.
Holdings of gold-backed ETFs grew 67.2t in Q2 to a six-year high of 2,548t, with the main factors cited as continued geopolitical instability, dovish commentary on monetary policy from central banks and the rallying gold price.
“June was a big month for gold,” said Alistair Hewitt, the WGC’s head of market intelligence. “The price broke out of a multi-year trading range to hit a six-and-a-half year high and gold-backed ETF assets-under-management grew by 15% - the largest monthly increase since 2012.”
Hewitt said the factors underpinning ETF inflows and central bank buying, including looser monetary policy and geopolitical uncertainty, were expected to continue. Consumer demand might be a bit soft as people adapted to the higher price level.

DATADIGGING: THE JUNE 2019 REPORTS
Click here to explore our coverage of the June quarterly, half yearly and full year reports  

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

• $679M IVANHOE MINES DEAL DONE TO BRING ON 3 AFRICAN PROJECTS
• CADIA RECORDS DELIVER STRONG YEAR FOR NEWCREST AHEAD OF RED CHRIS ACQUISITION 
• MALAYSIA GOES WITH SCIENCE FOR CONDITIONAL RENEWAL OF LYNAS OPERATING LICENCE 
• CHINESE ZHEJIANG HUAYOU WALKS AWAY FROM $66.3M DRC COBALT DEAL 
• TOP HIGH GRADE PHILIPPINES NICKEL EXPORTER EXPECTED TO CLOSE THIS YEAR? 
• ACACIA ABLE TO RESUME NORTH MARA EXPORTS BUT PROCESSING HALTED 

COMMODITIES
LME ($US), Aug 16 –
Aluminium 1,755.50
Copper 5,710.00
Zinc 2,264.50
Nickel 16,090.00
Lead 2,050.00
Tin 16,805.00
Cobalt 31,500.00
Gold 1,513.40
Silver 17.160

COMEX ($US), Aug 16 –
Gold 1,523.60
Copper 2.587
Silver 17.085

NYMEX ($US) 62% Fe CFR China, Aug 16 -
Iron ore 93.61

CALENDAR
Conferences –
Aug 18-21: Copper Cu2019, Vancouver (Canada)

Companies –
Aug 20: BHP FY results, Melbourne (Australia)
Aug 22: Mineral Resources FY, Perth (Australia)

Public holidays –
Aug 19: Independence Day (Afghanistan)
Aug 19: Bridge Public Holiday (Argentina)
Aug 19-20: National Day (Hungary)
Aug 19: Crown Princess Mette-Marit's Day (Norway)
Aug 20: Independence Restoration Day (Estonia}
Aug 20: Eid-e-Ghadir (Iran)
Aug 21: Ninoy Aquino Day (Philippines)
Aug 22: Lord Zoroaster Birthday/Khordad Sal (Pakistan)
Aug 24: National Parks Day (Costa Rica)
Aug 24: Janmashtami (India, Pakistant
Aug 24: Flag Day (Liberia)

Ivanhoe Mines has wrapped up its $C679M ($US509M) 2nd major strategic equity investment to bring on the company’s 3 principal nickel-copper-gold-zinc-platinum-palladium projects in DRC and South Africa.
$612M ($459M) is from CITIC Metal Co, one of China’s leading international resources companies, giving CITIC 29.4% of Ivanhoe; with another $67M ($50M) from Zijin Mining after exercising its anti-dilution rights to retain 9.8%.

China’s biggest cobalt refiner Zhejiang Huayou Cobalt’s overseas unit is pulling out a deal to invest $US66.3M in a cobalt mine in the Democratic Republic of Congo (DRC) after prices of the metal slid, Reuters reports.
Huayou Int’l Mining had agreed to take a 51% stake in Lucky Resources, whose wholly owned subsidiary New Minerals Investment holds the mining licence. Prices of cobalt have fallen by around 66% from their April 2018 peak to $32,600t on the LME. 
Huayou operates the PE527 copper-cobalt mining permit in the DRC.

The Philippines’ top exporter of high-grade nickel ore is expected to shut its mining operations soon as ore deposits at a project in the southernmost province of Tawi-Tawi are nearly depleted, a ministry official has told Reuters.
SR Languyan Mining Corp will most likely shut later this year, according to Jaynul Ali Sambarani, head of mines and geoscience services at the Ministry of Environment and Natural Resources for the Bangsamoro Autonomous Region of Muslim Mindanao.
The closure will likely reduce the Philippines’ monthly exports of nickel ore to top metals consumer China by 300,000t-400,000t, based on estimates by the Mines and Geosciences Bureau (MGB). The country is China’s second-biggest supplier of nickel ores, with latest industry data showing Tawi-Tawi is the Philippines’ biggest exporter of high-grade nickel ore to China, with shipments in H1 18 reaching 2.34M wet metric tonnes, 88% of total exports.

Beleaguered Tanzanian gold producer Acacia Mining has been able to resume sales from its North Mara mine after receiving export permits from the country’s Mining Commission for the first time since July 9. Acacia says income from the sales will enable it to meet its financial obligations for an extended period.
However, a separate environmental prohibition notice on using its tailings storage facility means Acacia has had to cease all gold production at the North Mara processing plant.
It’s been able to continue mining, but all mined ore is being added to stockpiles in the hope it can resolve the latest dispute.

Tiger Resources has lined up to $US30M in three tranches to support the planned capital enhancements at its Kipoi copper project in DR Congo through a funding facility with unlisted Australian coal producer QMetco.
QMetco may also provide marketing services for marketing services of all Kipoi saleable commodities for 12 years after expiry of Tiger’s current copper cathode offtake agreement with Gerald Group.
Tiger says the QMetco facility will allow it to continue discussions with senior lenders on a comprehensive debt restructure.

A $A3M over-subscribed placement to professional and institutional investors will support Black Rock Mining through the financing and final permitting activities to progress its 100%-owned Mahenge graphite project in Tanzania to construction-ready status.
CEO John de Vries says the support from cornerstone investors for the placement of 42.9M shares at 7cps, a 7.9% discount to its closing share price, will enable Black Rock to have the project construction-ready when the structure of the Tanzanian government’s participation is finalised.
Directors and management have subscribed for 6M shares in the placement.

RNC Minerals June 2019 qtr (Q2 19) loss has blown out to $C16.2M from Q1 19’s $3.3M loss, despite production from its nickel-to-gold Beta Hunt mine at Kambalda in Western Australia jumping to 11,056oz from 3,716oz on a gold mined grade down to 2.59g/t from 3.36 g/t.
Gold sales were up to 8,187oz from 6,375oz, albeit with cash operating costs sold also up to $US1,282oz from $1,076oz and AISC to $1,329oz from $1,174oz, generating revenue of $17.2M from $10.8M, but with adjusted EBITDA out to a negative $5M from a negative $1.8M. Beta Hunt also produced 150t of nickel-in-conc.
RNC acquired the Higginsville Gold Operations, 14km from Beta Hunt, on June 10, 2019, for $A50M in cash/shares with production beginning from the Baloo open pit in early Aug.

Despite gold production from its 3 operations in Brazil up 12% to 18,366oz, Jaguar Mining’s June 2019 qtr (Q2 19) net loss has gone out to $US2.2M from Q1 19’s $1.8M loss.
Output from the Pilar mine jumped 19% to 10,543oz and Turmalina was up 4% to 7,823oz, with cash operating costs down to $786oz from $870oz and AISC to $1,366oz from $1,428oz.
The bottom line was on gross profit up to $5.8M from $3.2M, operating cash flow jumping to $7.5M from $2.5M and adjusted EBITDA of $6M from $3.6M. At June 30, 2019, the company had $5.2M cash, compared to $6.3M at Dec 31, 2018.

Gold ore processor for small-scale Peruvian artisanal miners, Dynacor Gold Mines, has seen its 33rd consecutive qtr of profits slump to $US757,000 for the June 2019 qtr (Q2 19) period from Q1 19’s $1.2M profit.
The bottom line came despite gold production up 13.1% to 18,095oz, but sales easing to $22.7M from $22.9M for operating income down to $1.4M from $1.8M, EBITDA to $2M from $2.46M and cash flow from operating activities before change in working capital items down to $1.6M from $1.9M.
The company is expecting to lift FY/CY2019 gold production to 88,000oz-92,000oz from FY/CY18’s 81,314oz. Dynacor finished Q2 19 with $13.2M cash, compared with $13.9M at FY18 year-end.

Peru focussed artisanal/small scale ore purchaser/processor Dynacor Gold Mines has come up with a new plan to increase gold production to 88,000oz-92,000oz, starting with 44,000oz-46,000oz in the 2nd half of 2019 (H2 19), up 30% on H1 19 and easily topping FY/CY18’s 81,314oz.
The plan includes an agreement authorizing a group of small scale local miners to carry out underground extraction work on the company’s Tumipampa exploration project, which has already seen 15 new high-grade deliveries of 544t averaging 1.44g/t Au to Dynacor’s processing plant near Chala. Other similar mining operations have either begun operations or are under negotiation.

K92 Mining has lifted Dec 2019 year (FY/CY19) gold equivalent production expectations from its Kainantu mine in Papua New Guinea to 72,000oz-80,000oz AuEq from 68,000oz-75,000oz and cut cash costs to $US560oz-$600oz AuEq from $580oz-$620oz AuEq and AISC to $720oz-$760oz from $780oz-$820oz.
The improvements come despite a June 2019 qtr (Q2 19) output fall to 19,652oz AuEq from Q1 19’s record 19,788oz from the Kora North deposit, with gold production down to 18,980oz from a record 19,125oz, but copper jumping to 261,800/lbs from 264,114/lbs and silver to 6,894oz from 5,564oz. However, cash costs also rose to $551oz from $377oz Au and AISC to $681oz from $533oz Au.
Net income was steady at $5.28M from $5.1M, with revenue the same at $23.3M from $23.9M.

TSX-V listed Xiana Mining has lifted June 2019 qtr (Q2 19) copper-in-conc production from its recently acquired, 4-mine operation Minera Altos De Punitaqui (MAP) in Chile, 22% on Q1 19 to 3.86Mlbs, including 10,400oz silver and 1,700oz gold.
C1 cash costs fell to $US2.55/lb from $3.04/lb, on total ore mined up 18.1% to 140,603t, but with the conc grade down 3.7% to 21.9% for revenue up 13% to $10.7M and EBITDA of $663,000.
The results cover the 2nd complete qtr of operational results for MAP since the company was acquired from global trader/miner Glencore in Nov 2018.

US commodity trader Gerald Group’s SL Mining is planning to seek arbitration in an international court against the Sierra Leonean govt in relation to a dispute over iron ore exports, Reuters reports.
The govt banned exports from SL’s Marampa mine last month because it said the company had failed to keep up the mine’s agreed work schedule or make royalty payments, a claim SL Mining denies.
Mines Minister Foday Rado Yokie says that as a sign of good faith he would be willing to lift the export ban if SL pays a $US1M bond for uncompleted work, an offer SL director Alejandro Skidelsky describes as attempted extortion. He says the company has already served notices of disputes in respect of its rights to bring matters to international arbitration.
SL estimates its Marampa concession holds about 1Bt of iron ore with the potential for production over the next 30-years.

Under voluntary administration Gascoyne Resources’ July month gold production at its 100%-owned Dalgaranga mine in Western Australia, has slipped to 6,012oz from the previous month’s 6,561oz, topping 6,000oz for the 2nd consecutive month.
The result was on processing 241,000t at 0.85g/t Au and 90.9% recovery, compared with June’s 275,000t at 0.84g/t on 88.7% recovery, following May’s 4,332oz and 4,893oz in April, resulting in a June 2019 qtr (Q2 19) up to 15,787oz from Q1 19’s 12,216oz.
Record gravity metal recovery up to 11.4% from June’s 3.4%, was primarily from the 2nd half of the month when treating a higher component of transitional and fresh ore. New life of mine plan is being developed and an updated mineral reserve is expected in early Sept.

Rare earths miner and processor Lynas has had the operating licence for its Malaysian advanced materials plant renewed, but for an initial six months rather than the available 3-year term.
The renewal is conditional on Lynas establishing a permanent storage facility for the plant’s water leach purification residue within 6 months and relocate the cracking and leaching stage of operations – which creates radioactive waste – to Australia within 4 years.
CEO-MD Amanda Lacaze says the science-based demonstration should end the politicisation of the company’s operations.

Australian underground coal mining contractor Mastermyne aims to expand its service range with conditional agreement to acquire longwall specialist Wilson Mining Services for $A7.6M cash and shares.
CEO Tony Caruso says WMS’s pioneering work supplying and installing cavity fill and injection products for longwall mining are a smart bolt-on for Mastermyne’s suite of services.
The transaction is due for completion by late Aug. The acquisition is expected to generate about $30M incremental annual revenues at an EBITDA margin of 10-14%.

Australian mining leader Newcrest is ready to begin implementing plans to unlock significant further value after completing its acquisition of a 70% interest and management of the Red Chris mine in BC, Canada.
Newcrest is paying about $US825M cash including near-term debt and working capital adjustments to Imperial Metals, which retains 30%.
Red Chris is targeted to produce 72-76Mlb copper and 36,000-38,000oz gold from its single openpit in 2019.
MD-CEO Sandeep Biswas is working to a transformation plan to optimise the openpit and processing plant and use its block cave mining expertise to study underground options for the project.