Tag Archives: Mining

>Mongolia plans to issue first sovereign bonds


>

The money has not yet come in, but the debt has already started…

Mineral-rich Mongolia plans to issue first sovereign bonds – FT.com

Mongolia plans to issue its first sovereign bonds this month, marking a milestone for capital markets in this resource-rich democracy.


The newly created Development Bank of Mongolia will issue $700m in sovereign bonds to fund lending programmesin areas that include infrastructure, industry, energy and roads. 

the issuance would take place in tranches beginning this month, with the first slice likely to be $100m.

The bond will be in tugrik, the Mongolian currency, which has appreciated by 1.6 per cent against the dollar since January.
investment in the mining sector has soared in the past two years along with global commodities prices.

Government revenues from the mining sector are set to jump next year as the Oyu Tolgoi copper and gold mine comes online, and politicians in Ulan Bator are looking for ways to manage the coming influx into state coffers.

The Development Bank is being set up with training from the Korean Development Bank and the Development Bank of Japan. 
yields on the bonds could be quite low, perhaps 6-8 per cent.


Mongolian sovereign debt has a B1 non-investment grade rating from Moody’s


Read the full article here: FT.com / Capital Markets – Mineral-rich Mongolia plans to issue first sovereign bonds

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>Canadian Miners Don’t Love the London Stock Exchange – Deal Journal – WSJ


>Canadian Miners Don’t Love the London Stock Exchange
– Deal Journal – WSJ:
“By Phred Dvorak and Edward Welsch

When the London Stock Exchange Group Ltd. announced its proposed takeover of Toronto’s bourse, one of the supposed benefits was access–for Toronto-listed firms–to London’s deep pools of capital.

EPA/Adrian Bradshaw

That’s a topic dear to the hearts of roughly 1,500 cash-hungry start-up miners that populate the Toronto bourse and its venture affiliate. Those “junior miners”–and their constant need for money to drill, test and explore — have made the Toronto Stock Exchange, operated by TMX Group Inc., the mining-finance market of choice.

So what do those juniors think about the proposed deal? Not much, according to some of the attendees Deal Journal interviewed at the Prospectors & Developers Association of Canada conference in Toronto, the world’s largest gathering of small-cap miners.

Kerry Knoll, chairman of Canada Lithium Corp., with some $140 million in market cap, looked into listing on the LSE’s AIM market for smaller firms a few years ago and found it a much more expensive proposition than going public on the Toronto bourse. If London controlled the Toronto exchanges as well, the combined entity could raise the cost of listing in Canada, Knoll worries: “I would fear they’d bring that (higher-cost model) here and really put a crimp in our incubator.”

LSE and TMX executives selling the deal in recent weeks have said the Toronto exchange would remain Canadian-operated and regulated, and would benefit capital-seeking firms by offering truly global scale.

But David McPherson, president of Pure Nickel Inc., at some $14 million market cap, said he’d worry the interests of small, Canadian firms like his may get lost in a bigger exchange.

Pure Nickel raised money on the Toronto Venture Exchange, TSE’s junior market, in 2007 to buy land. It moved up to Toronto’s big board later that year. It’s already raised money from London institutional investors, but it doesn’t expect any additional U.K. retail-investment opportunities from a TSX-LSE combination.

“All I see is the risk that we could become insignificant in a much larger exchange,” he said.

But there are some fans, including Graham Downs, the CEO of ATAC Resources Ltd., market cap north of $600 million, thanks in part to a new discovery of gold in the Yukon.

“There’s a big resource component of the London Stock Exchange, but they are so focused on Africa and all these other places that they know,” Downs says. “They don’t have a lot of access to us, so I think it’ll open more pockets [of money] to Canadian ventures.”

Even though money may initially flow more toward London than Canada while the market finds its equilibrium, Downs says, in the end there will be a bigger pool of capital available to the best companies.

“If you’ve got good projects, if you’ve got a quality team, the money will find you,” he says.

Canadian Miners Don’t Love the London Stock Exchange – Deal Journal – WSJ

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>Openness can help lift the curse of resources


>Openness can help lift the curse of resources
By George Soros
FT.com

Published: March 3 2011 22:13 | Last updated: March 3 2011 22:13

The natural resources sector has the potential to generate billions of dollars in revenues that can be used for poverty reduction and sound investment. For decades, however, management secrecy has allowed corruption to thrive in countries such as Angola, Cambodia, and Guinea. According to Nigeria’s own corruption agency, up to $400bn of oil money has been stolen or wasted over the past 50 years. And in Libya, in particular, we now see a population rising against rulers whose control has been financed by the immense revenues they manage, and mismanage, in secret.

Ending this problem and letting new democracies flourish will, of course, not be easy. The resource curse undermines the investment climate, raises costs for companies, threatens energy and mineral security, and consigns millions of citizens in resource-rich countries to poverty. But evidence suggests that transparency in extractive industries can play an important role.

In 2002, I helped to launch the Publish What You Pay coalition, a global network of civil society organisations that has advocated for better management of oil, gas and mining revenues, and worked to ensure monies received are invested in schools, hospitals and poverty reduction. The coalition recruits oil companies, which then pledge to reveal what they pay to the governments and leaders of the states in which they operate, allowing them to be held accountable. In Liberia, this approach has seen moves towards new transparency standards, including openness on payments and contract terms – amazing progress in a country better known for former president Charles Taylor’s macabre violence and blood diamonds.

There are further positive signs from the Extractive Industries Transparency Initiative, an alliance to improve standards of transparency on a voluntary basis. Azerbaijan’s credit rating improved in part because it played a constructive role in the initiative. This week, after the first democratically held elections in its history, Guinea rejoined the initiative too, because its leaders know that with EITI membership comes a better investment climate.

Now, governments that regulate stock markets are going one necessary and long-awaited step further, in establishing mandatory listing rules. In July 2010, the US passed the Dodd-Frank Act, which requires all oil, mining and gas companies registered in the US to report payments to foreign governments, both by country and by project. Companies as diverse as PetroChina, BHP Billiton and BP will have to comply. Similarly, Hong Kong recently improved the disclosure of its companies’ payments as a condition of listing on its exchange.

The French and UK governments have also indicated support for new European oil and mining rules. EU revenue transparency legislation could build on US plans to move towards a new global transparency standard. The London Stock Exchange is one of the world’s most important financial markets, hosting more than £1,000bn worth of oil, gas and mining capital. It should follow others’ lead and change its rules too.

All of these measures hold great promise. Africa is the new frontier for investors in the natural resources sector, holding a 10th of the world’s oil reserves, 40 per cent of its gold and significant reserves of other minerals vital for modern industrial economies. The Middle East, meanwhile, could soon develop a string of prosperous democracies. Those promoting greater transparency in the natural resources industries are helping to reinforce powerful historical forces, which will unlock transformational sums of money to improve the lives of millions of people in some of the most fragile countries in the world.

The writer is chairman of Soros Fund Management LLC and founder of the Open Society Foundations

Copyright The Financial Times Limited 2011. 
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(BN) Copper Faces 2-Year Shortage, Peak Over $10,000, Trafigura Says


(BN) Copper Faces 2-Year Shortage, Peak Over $10,000, Trafigura Says
2010-12-07 09:29:56.282 GMT

By Claudia Carpenter
Dec. 7 (Bloomberg) — Copper supplies will lag demand for
at least the next two years, with prices peaking over $10,000 a
metric ton in the second quarter next year, according to
Trafigura Beheer BV, which considers itself the world’s second-
largest trader of industrial metals.
Copper will move from a balanced market this year to
shortages of 800,000 tons in both 2011 and 2012 at current
prices, Simon Collins, head of refined metals at Trafigura in
Lucerne, Switzerland, said in an interview yesterday. That’s
even before demand climbs as exchange-traded funds backed by the
metal are introduced, he said.
Such funds “will result in higher prices, which in turn
will affect price-sensitive demand and price-sensitive supply,”
Collins said. “Consumers are concerned about an ETF.
Inventories are already relatively low.”
Copper prices are up 21 percent this year, and reached a
record $8,973.50 a ton today, partly as manufacturers and other
buyers who anticipate shortages build inventories to meet demand
for next year, Collins said. Imports into China, the world’s
largest consumer, typically are strongest in the second quarter,
helping to boost copper prices and leading gains in lead, nickel
and aluminum, he said. Copper stockpiles tracked by the London
Metal Exchange have slid 30 percent this year.
In 2006, the copper market was also forecast to have a
large deficit when higher prices brought the market further into
balance than originally estimated, Collins said. If prices rise,
next year’s deficit may be only 400,000 tons, he said.
Copper Trading
Trafigura trades about 1 million tons of copper a year,
Collins said. Glencore International AG is the largest trader of
industrial metals, according to Trafigura estimates.
Trafigura is preparing for more metals demand by customers
and increasing its warehouse capabilities through its subsidiary
NEMS, with plans to expand in the U.S. next year for the first
time with storage facilities in Baltimore and New Orleans, as
well as in China, Collins said. He declined to give an estimate
of the investment.
Copper demand may rise if JPMorgan Chase & Co., BlackRock
Inc. and ETF Securities Ltd. start ETPs backed by the metal, in
line with plans announced by all three companies in October.

For Related News and Information:
Top commodities: CTOP <GO>
Top shipping: SHIP <GO>
Searches: NSE <GO>
Commodity curves: CCRV <GO>
–Editors: Dan Weeks, John Deane.
To contact the reporter on this story:
Claudia Carpenter in London at +44-20-7330-7304 or
ccarpenter2@bloomberg.net
To contact the editor responsible for this story:
Claudia Carpenter at +44-20-7330-7304 or
ccarpenter2@bloomberg.net

Supply Squeeze of Physical Gold and Silver May Be Heating Up | Coin Update News


Within the past 48 hours, as gold and silver have broken to new highs (ignoring inflation), there are some indications that demand for physical precious metals may be on the rise.

Supply Squeeze of Physical Gold and Silver May Be Heating Up

My company does not deal with the customers who make purchases of tens to hundreds of millions of dollars at a time. Such buyers normally deal direct with the major brokers in London or New York. Instead, our median purchaser of gold and silver bullion-priced products probably spends less than $5,000 per transaction. We do have a number of customers who regularly spend five or six figures and the occasional seven figure deal, but my company’s total volume is unimportant when compared to total global precious metals trading.
Still, we are in constant communication with several primary distributors of products for the US Mint and other world mints that issue bullion products. We also keep in touch with a number of other wholesalers across the country. If there is a change in product availability or price level, we learn about it quickly.
Today my company enjoyed one of its five highest retail sales days of the past 30 years. As we were contacting wholesalers to replenish our inventories, we picked up what may be significant indicators that a supply squeeze of physical gold and silver could be heating up.
Three different wholesalers who are primary distributors for the US Mint told us that they have experienced a sharp increase in demand for physical silver coins and ingots in the past 48 hours.
When we tried to purchase a quantity of South Africa 1 Ounce Gold Krugerrands, we were also in for a shock. Yesterday, these coins were available pretty much everywhere, with wholesalers competing to sharpen their pencils to shave their ask price. Today, two of the wholesalers were completely out of Krugerrands for live delivery. Our cost to purchase these coins increased almost 0.5% more above the gold value than they did just the day before!
One more indicator of a potential supply squeeze is the “spot” price quoted by wholesalers. For protection in volatile markets, wholesalers often use two different spot prices, depending on whether they are buying or selling. For our last large silver order today, the distributor used an ask silver spot price that was eight cents higher than its bid spot price. Previously this company had used the same spot price for both buying and selling or had a maximum spread of just four cents for silver.
Our suddenly zooming retail demand and reports that this may be happening across the country, if it continues for a few more days, could spark another buying frenzy such as we experienced in late 2008. Two years ago, availability was so tight that it was not unusual for customers to have to wait at least a month after making payment to receive their merchandise. In 2008, premiums soared for just about any live physical gold and silver. At the peak, bags of US 90% Silver Coins were selling retail for about 40% above their intrinsic metal value!
Along with my expectations of higher gold and silver prices, I have also predicted that supplies of physical metals would dry up. This may be now occurring. However, we cannot be sure until we see the pattern continue for another couple of days. Should this pattern continue through next Tuesday afternoon, I would recommend not waiting any longer to establish your position in precious metals. To be extra safe, you may now want to wait even that long.

Supply Squeeze of Physical Gold and Silver May Be Heating Up | Coin Update News

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Rio’s sights fixed on Ivanhoe and Mongolian mine


Rio’s sights fixed on Ivanhoe and Mongolian mine

By William MacNamara
Published: September 22 2010 22:15 | Last updated: September 22 2010 22:15

Rio Tinto is creeping its way towards control of Canada’s Ivanhoe Mines at a slow but relentless pace, drawing investors’ attentions away from a multi-billion dollar mining transaction that could be as significant for Rio as Canada’s PotashCorp looks to be for BHP Billiton.
Oyu-Tolgoi-graphicOver the past six months a conflict has erupted between Rio and Ivanhoe, developers of a new copper project in Mongolia that many analysts consider to be one of the best in the world. With a stake in Ivanhoe that rose to 35 per cent last week, Rio can feel confident that it is best placed for an eventual takeover. It has invested more than $1bn in Ivanhoe and its Oyu Tolgoi mine since 2006.
But under Robert Friedland, the legendary mining entrepreneur, Ivanhoe has been making plain that Rio’s money will not buy its love. It has engaged investment bankers to assess “strategic options”. Over the summer it pushed through a shareholder rights plan, otherwise known as a poison pill, to protect against what it calls “coercive and creeping takeovers”.
The markets are giving credit to Ivanhoe’s manoeuvres. One London-based analyst ascribed the performance of its share price, which hit a 12-month high above C$22 on Wednesday, to investors’ intrinsic faith in Mr Friedland’s “wiliness” and record of coming out ahead.
The Toronto-listed shares have stayed elevated since July when the company adopted the poison pill, causing Rio to launch arbitration against Ivanhoe. It cancelled a restriction against selling more than 5 per cent of its shares to a strategic partner. But despite Ivanhoe’s much-advertised search for alternative options all year, no third-party offer has materialised. “This is completely in keeping with Robert’s personality,” said one banker who has worked for Ivanhoe. “He wants the best deal for his shareholders. He wants to make sure that Rio does not have a 100 per cent stranglehold on his company.

Kicking off Mongolia mining fever

Ivanhoe’s Robert Friedland is a legend in the mining industry. The superlatives he enjoys range from “best entrepreneur” to “biggest genius” to “luckiest stiff”.
This last tag refers to his big break in the 1990s. Mr Friedland was a large investor in an exploration company called Diamond Fields Resources. In the course of exploring for diamonds in Canada’s Labrador province the company struck a motherlode deposit of nickel. The company’s sale to Inco netted Mr Friedland a fortune that helped him launch Ivanhoe.
In 2000 Ivanhoe took over an exploration programme in Mongolia, then an unpromising mining zone, from BHP Billiton. Ivanhoe spent several years proving that the Oyu Tolgoi copper-gold deposit is one of the biggest and world’s best new sources of copper.
Mr Friedland evangelised the promise of Mongolia to investors with his Steve Jobs-like knack for the grand narrative. He laid the groundwork for the Mongolia fever that has swept the mining industry since Oyu Tolgoi won government approval in October 2009.
An early convert to his vision for Oyu Tolgoi was Tom Albanese, currently chief executive of Rio. In 2006 Mr Albanese headed Rio’s copper and exploration division, and he led the deal that created the Rio-Ivanhoe partnership. Both men appear to have an affinity for Oyu Tolgoi.
They also are known to be personally friendly in spite of the widening rift between the two companies. Over the summer Mr Albanese stayed at Mr Friedland’s home in Ulan Bator, the Mongolian capital.
Ivanhoe and Oyu Tolgoi stand to be the most important venture of Mr Friedland’s career. That, say some, is why this owner of 20 per cent of shares wants to ensure a good outcome. Seeing the project through and possibly selling at a premium might also expunge his reputation as Toxic Bob, a name he earned in 1993 when one of his early gold projects leaked cyanide, causing an environmental disaster.

“He has gotten hundreds of millions of dollars from Rio so far,” the banker continued, “but the [Oyu Tolgoi] copper deposit is clearly worth billions.”
Rio’s rigid agreements with Ivanhoe, which owns 66 per cent of Oyu Tolgoi, may give the Canadian miner less flexibility than is appreciated. In 2006, when its Mongolian project carried heavy political risk, it agreed a financing deal with Rio that essentially gave the Anglo-Australian miner a path to ownership that it could exercise in 2011. Over the years Rio has released project financing in return for tranches of equity. Over the past year it has raised its stake from 19.7 per cent to 34.9 per cent. In Canadian law there is no level above which an shareholder must make a bid for the full company.
Rio’s agreements with Ivanhoe, however, stipulate a maximum stake of 47 per cent until October 2011, when a “standstill agreement” preventing takeover moves lapses.
It is toward that October 2011 date that both companies are hurtling, amid attempts to outmanoeuvre each other. Ivanhoe has pushed back the date of the standstill agreement by adopting a poison pill. So far the companies have not yet agreed on a Canadian arbitrator to hear Rio’s request that the defence be struck down.
Today the Oyu Tolgoi mine is taking shape in a bleak area of Mongolia’s south Gobi desert. Mongolia has become one of the world’s leading frontiers for metals and mining, largely because its rich deposits of copper and coal lie so close to the border of China. Oyu Tolgoi’s strategic position has led to speculation that Ivanhoe could find a white knight in a state-owned Chinese company.
But the 2006 agreement gives Rio right of first refusal over any offer made from a third party. This places Ivanhoe in the dangerous position of offering its shares to a bidder, only to see Rio pre-empt and possibly move to immediate control of the company. Ivanhoe’s best tactic, said one person involved in the 2006 deal, may be to find a bidder whose offer is so high that Rio cannot follow.
“Whether all this momentum is leading to anything all depends on if Robert Friedland finds his $40 [per share] man,” the person said, referring to an offer of C$40 per share compared with Thursday’s price of about C$20 per share.
Chinalco, the Chinese state-owned aluminium producer, is one potential bidder for Ivanhoe, as it is attempting to diversify out of aluminium. Chinalco, however, is also Rio’s largest shareholder. That raises the possibility that Chinalco would be more likely to join with Rio to take control of the group than pay a high premium to buy Ivanhoe on its own.
“There aren’t that many players who can play,” said one Canadian banker familiar with both companies. “This project is about the big boy miners and governments. It’s about countries as big as China and companies as big as Rio or BHP. The permutations are very small.”

FT.com / Companies / Mining – Rio’s sights fixed on Ivanhoe and Mongolian mine

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Eurasian Natural Resources (ENRC-LSE): DRC Assets Acquired, Including Kolwezi; Potential Negative to Sentiment – BMO Comment


Eurasian Natural Resources (ENRC-LSE): DRC Assets Acquired, Including Kolwezi; Potential Negative to Sentiment – Negative
Rating:   Market Perform
Price:     £8.66
Target:   £10.50
Description: cid:image007.gif@01CB42A0.411A3BF0
The acquisition of DRC copper-cobalt assets from companies associated with the Gertler Family including the exploration licence for First Quantum’s Kolwezi project (currently in international arbitration) is expected to generate negative market sentiment. Further, it may open up potential future legal issues with respect to the ownership of Kolwezi, plus suffer potential ill-will from the community of global mining companies in future. ENRC has announced the acquisition of a 50.5% interest in DRC-focused Camrose Resources. The stake was purchased from Silvertide Global, Zanette and Cerida Global, all held by the Gertler Family Trust. Total consideration is US$175M, comprising US$50M in cash and US$125M in promissory notes payable in 9-24 months.