Canadian Oil Sands CEO announces retirement Marcel Coutu stepping down after 12 years at Syncrude partner

CALGARY — The president and chief executive of Canadian Oil Sands Ltd., Marcel Coutu, will retire as of the end of 2013, the company announced Tuesday as it released second-quarter results.

“I believe COS is well positioned for continued success; it’s therefore a good time for me to pass the leadership of this great company on to a successor,” said Coutu in the news release.

The company was an energy trust 12 years ago in August 2001 when Coutu came aboard.

It has grown from $2 billion in market cap and a 21.74 per cent Syncrude interest to a $10-billion company with a 36.74 per cent Syncrude interest.

The company said it has launched a search for a successor, noting that Coutu has agreed to provide consulting services for one year after retirement.

Canadian Oil Sands reported cash flow of $343 million, or 71 cents per share in the three months ended June 30 versus $245 million or 51 cents in the second quarter of 2012, reflecting higher realized prices and higher sales volumes.

Net income doubled to $219 million from $101 million.

Iamgold announces maiden resource for West African project

Canadian gold miner Iamgold on Monday announced a maiden National Instrument 43-101-compliant resource estimate for its Boto gold project, in eastern Senegal.

The miner said the discovery of the new Malikoundi zone in 2012, had significantly expanded its exploration-drilling programme, culminating in the first mineral resource estimate for the project.

The resource estimate, which includes resources calculated for the Boto 2, 4, 5 and 6 deposits, as well as the new Malikoundi deposit, comprised 22-million tonnes of indicated resources averaging 1.62 g/t gold for 1.14-million ounces, and 1.9-million tonnes of inferred resources averaging 1.35 g/t for 81 000 oz.

A significant portion of the estimate derived from the newly discovered Malikoundi deposit, which overall displayed higher grades than most of the previously discovered zones, Iamgold stated.

“The Malikoundi discovery is a testament to the effort and persistence of the exploration team to take this project to the next level and is the cornerstone of the current resource estimate. With several of the deposits, including Malikoundi still open along strike and at depth, we plan to continue the drill programme with the goal of expanding the existing mineral resource inventory,” senior VP for exploration, Craig MacDougall, said.

The mineral resource incorporated assay results from 423 diamond- and reverse-circulation drill holes totalling 56 832 m. A preliminary openpit optimisation algorithm was run on the estimated grade block model to constrain the resource and to support the Canadian Institute of Mining, Metallurgy and Petroleum requirement that mineral resources have ‘reasonable prospects for economic extraction’.

The resource estimate assumed a long-term gold price of $1 500/oz.

Iamgold said only mineralisation contained within the preliminary pit shell was included in the resource estimate.

Gem Diamonds lowers production guidance for 2013

London-listed Gem Diamonds on Monday lowered its 2013 production guidance for the Letšeng mine, in Lesotho, to between 95-million carats and 105-million carats recovered and sold, as tons of ore treated were lower than planned, owing to the installation of the secondary and tertiary cone crushers in the treatment plants.

In March, the firm’s guidance for Letšeng, in which the Lesotho government holds a 30% stake, was between 115 000 ct and 130 000 ct recovered and between 110 000 ct and 125 000 ct sold.

The installation of the crushers formed part of the company’s expansion of Letšeng, known as Project Kholo, which proposed to increase throughput to at least 10-million tons a year from 5.6-million tons a year, doubling the yearly carat output to 200 000 ct.

The cone crushers in the treatment plants would increase revenue by reducing diamond damage. The project was also aimed at improving recovery, as well as reducing real operating costs of $2/t.

This expansion, together with the lower grade ore from the Main pipe and mining in an area with high internal basalt content, resulted in lower carats recovered.

CEO Clifford Elphick said Gem Diamonds was focused on moving mining operations at Letšeng mine to the higher value, higher-grade Satellite pipe, which would boost revenue during the second half of 2013.

The company said waste stripping progressed well during the period under review, which would release Satellite ore for treatment in the latter part of the second half of the year. Although higher-grade recoveries were expected in the second half, Gem Diamonds pointed out that it would not be sufficient to recover the full shortfall.

The company recovered 42 268 ct in the first half of 2013, down 26% on the 57 234 ct recovered in the second half of 2012. Gem Diamonds sold 47 065 ct for $81.9-million, compared with 48 892 ct, which earned it $82.6-million in the final six months of 2012.

A total of 249 ct, valued at a rough market value of $3.3-million were extracted from Letšeng for manufacture through the group’s operations in Antwerp, in Belgium. Of the diamonds extracted, $1.1-million remained in inventory at the end of the period, compared with $10.4-million at the end of December last year.

The sale of polished diamonds from Letšeng contributed $4.9-million in revenue, which resulted in additional earnings before interest, tax, depreciation and amortisation of $3.5-million.

Elphick stated that Letšeng continued to demonstrate high quality, following the recovery of three diamonds weighing in excess of 100 ct each during the period under review. The miner sold a 164 ct white diamond for $9-million; a 103 ct yellow diamond for $810 000; and a 100 ct white diamond for $6.45-million.

An average value of $1 741/ct was achieved for the first five tenders of 2013, compared with $1 690/ct in the second half of 2012. Nine rough diamonds achieved a value in excess of $1-million each, while 44 rough diamonds achieved prices greater than $20 000/ct.

Meanwhile, Gem Diamonds’ wholly owned subsidiary, Gem Diamonds Botswana, is continuing the development of the Ghaghoo project and completed the construction of the treatment plant, with commissioning planned for the second half of 2014 to coincide with the ore becoming available.

Mining support infrastructure, camp, treatment plant and other services at Ghaghoo were in place and the first diamonds would be recovered in the second half of next year. Thereafter, a steady state production rate of 230 000 ct/y, at a mining rate of 720 000 t/y, was planned.

The group maintained its strong cash position, with $61.5-million cash as at the end of June, of which $54.6-million was attributable to Gem Diamonds.

South African gold producers declare labour dispute with miners: mediation needed

The Chamber of Mines of South Africa (CMSA)officially declared Monday the wage negotiations with unions representing gold miners have reached the status of dispute and so referred the matter to the Commission for Conciliation, Mediation and Arbitration (CCMA) for mediation.

The news come as the Association of Mineworkers and Construction Union (AMCU), the country’s fastest-growing mining labour coalition, rejected a revised offer of a 5% increase in wages and benefits.

Analysts agree the outcome of the upcoming arbitration may push gold producers to leave South Africa or simply close down all operations, as costs continue to escalate.

According to South African labour laws, if the outside mediation fails, employees are allowed to go on a legal strike.

Earlier this month, the chamber’s chief executive officer, Bheki Sibiya, said a wage negotiation failure would likely destroy South Africa’s largest export industry and the nation’s credit rating.

“Neither the industry nor the country can afford yet another wave of calamitous workplace disorder that delivers additional global uncertainty and becomes the cause of further downgrades of South Africa’s sovereign credit rating,” Sibiya wrote.

South Africa’s two main mining sectors, platinum and gold, are under pressure from spiralling costs and weaker commodity prices. Their representatives have warned than any significant increase in wages will risk more job losses and trigger closures.

Zim sees mineral exports increasing from $1.2bn to $6bn by 2018

The Minerals Marketing Corporation of Zimbabwe (MMCZ) expects mineral export revenue to increase from $1.2-billion to at least $6-billion a year by 2018, a forecast based on continuing mineral discoveries and firming prices on the international market.

MMCZ chairperson Chris Mutsvangwa says the parastatal recently concluded a review of mining receipts and believes that the growth target can be achieved in the next five years. This is despite widespread reservations from players in the mining industry, who argue that, despite the revival of the sector to a point where it has become the driver of national economic growth, companies still face serious problems in accessing funds to inject into their operations.

“We have high-value minerals, such as diamonds, gold and platinum, and we continue to discover more diamonds fields,” says Mutsvangwa.

The MMCZ chairperson says the tightening of export regulations and stemming of the illegal trade in precious minerals will help increase mineral export earnings. He adds that the illegal trade in precious stones like gold and diamonds has been identified among the causes of revenue leakages.

The MMCZ says it is engaged in discussions with the Ministry of Mines and Mining Development to find ways of legalising and formalising the operations of small-scale miners in the gold, chrome and diamond sectors because they are “primarily responsible for using illegal channels to sell and export minerals”.

However, the Chamber of Mines says that, despite gains made by the mining industry since March 2009 – when a government of national unity was installed – the sector is still facing many problems and requires $6-billion for recapitalisation, with the bulk of the funds needed for reviving and stabilising operations, refurbishing processing plants and buying new equipment and machinery.

The sector is also hamstrung by a hostile operating environment, inadequate or rundown infrastructure and the controversial indigenisation and economic empowerment push.

Chamber of Mines immediate past president Winston Chitando says that, despite Zimbabwe’s being blessed with mineral resources, the sector is compromised by government policies that hinder its development. “Mining companies need to operate profitably, like any other company. But it is the economics of the country that must be correct if profits are to be achieved. Economics will determine the extent and level of resources to be extracted.”

De Beers adds some sparkle to reporting season: production up, sales of $3.3bn

World’s top diamond producer De Beers, a unit of Anglo American (LON: AAL), became one of the very few miners to log positive results, reporting “steady” total first-half sales of $3.3 billion.

The company also said it expects the global polished diamond market to grow more than 2% this year driven by improving US demand.

“De Beers expects moderate growth in diamond jewellery demand in the remaining six months of 2013, supported by improving sentiment in the U.S. market,” the firm said in a statement Friday.

“Conditions in India and Japan remain more uncertain due, in part, to the continuing volatility of their currencies,” it added.

Production in the first half of 2013 climbed 7.6% to 14.3 million carats and De Beers said full-year output would be “broadly in line” with the 27.9 million carats in 2012.

CEO Philippe Mellier attributed the higher rough diamond production to improved ore grades at its Orapa and Jwaneng mines in Botswana.

Last year, Anglo American acquired an additional 40% of De Beers from South Africa’s Oppenheimer family, adding to an existing 45% stake.

Lonmin Q3 production dips, maintains guidance

Platinum miner Lonmin met expectations with an 8 percent dip in third-quarter production on Thursday, bruised by strike disruptions, but said it was on track to meet its full-year guidance.

Total platinum in concentrate production was 186,456 ounces, compared to 202,851 ounces a year ago. Platinum sales for the quarter were down 45.9 percent to 81,382 ounces, dented by problems at its Number Two furnace and a shut down of its Number One furnace.

Lonmin, the world’s third-largest primary platinum producer, was at the centre of a wave of South African labour unrest and violence last year that left dozens dead. Lonmin’s finances were left so battered it had to tap shareholders for cash and has been battling to return to full production since.

Miners began wage talks earlier this month – negotiations labelled as the toughest since the end of apartheid in 1994. Already, talks between South African goldminers and workers have stalled after unions declared an official wage dispute.

UK court throws out Anglo American silicosis case

London’s High Court on Wednesday ruled that it had no jurisdiction over silicosis claims filed against Anglo American South Africa (AASA) on behalf of thousands of former gold mine workers, forcing the ex-miners to turn to South African courts. 

The claimants filed their case in London in September 2011, arguing that AASA’s London-based parent company, Anglo American plc, were liable for the former workers’ contraction of silicosis and silicotuberculosis from excessive dust on AASA mines.

But Judge Andrew Smith disagreed. He, however, allowed the claimants to appeal the decision to the UK Court of Appeal.

UK law firm Leigh Day, which represented the former miners, said in a statement that many of the claimants had no option but to discontinue their UK claims and pursue their cases in South Africa.

“The claimants wish to sue in England owing to the possibility of obtaining higher damages and speedier court procedures, and because claimants’ lawyers’ ‘success fees’ are paid by a defendant rather being deducted from claimants’ compensation,” said local attorney Zanele Mbuyisa, who works closely with Leigh Day.

“Most of the claimants intend awaiting the outcome of the UK Court of Appeal decision. However, if they wait for the result of an appeal, and the appeal is ultimately unsuccessful, they might fall foul of a law that imposes a three-year time constraint on starting litigation in South Africa,” she commented.

Following the ruling, Leigh Day said it would, in cooperation with South Africa-based Mbuyisa, shortly begin a rolling process of filing cases against AASA in Johannesburg.

The first 50 claims were expected to be filed within days. 

“Urgent compensation for dying, sick and impoverished silicosis victims is essential,” said Mbuyisa.

The new cases would follow on the heels of the President Steyn miners’ test cases against AASA, on which Leigh Day and Mbuyisa had been working in conjunction with the Legal Resources Centre and Legal Aid South Africa since 2003.

A study published in the American Journal of Industrial Medicine in 2008 found a 25% prevalence of silicosis in ex-miners from Lesotho who had been employed as long-term miners on AASA’s President Steyn mine.

Ten of the test cases were scheduled for a public arbitration hearing in Johannesburg in May 2014, and would be highly influential in establishing the principles of liability of the gold mining industry.

Leigh Day attorney Richard Meeran added that the UK High Court ruling was a “pyrrhic victory” for Anglo American. “The evidence against the industry is strong and, having been involved in this silicosis litigation intensively from its inception nine years ago, we fully intend to see it through to its conclusion in order to secure justice for the victims,” he said.

An AASA spokesperson told Mining Weekly Online on Thursday that it believed that the UK judge “correctly found that the English court does not have jurisdiction to hear this claim”.

AASA, which is registered in Johannesburg, was the head office company of the Anglo American group until 1998 when the group underwent a restructuring including the establishment of Anglo American plc and London-based headquarters.

CME urges WA miners to arrest exploration decline

The Western Australian Chamber of Minerals and Energy (CME) has called on miners to stop the ongoing decline of mineral and petroleum exploration in the state, after recording a decline for a third consecutive quarter.

“While the decline over three quarters in exploration expenditure is likely due to the weak commodity price and high-cost environment, every effort should be made to arrest this decline,” said CME acting CEO Nicole Roocke.

During the quarter ended March, total mineral and petroleum exploration declined by 22% to A$1.14-billion compared with the previous quarter, after falling 4% in the December quarter.

This is the third consecutive quarter mineral exploration has declined. Compared with the corresponding quarter a year ago, mineral exploration is now 14% lower.

CME has been calling for incentives similar to the Canadian flow-through share scheme, such as a minerals exploration tax credit, to boost the sector.

“To establish a future pipeline of projects we rely upon increasing the current level of exploration activity here in Western Australia,” said Roocke.
 
“Notwithstanding the transition under way in many major projects from construction to operational phase the future pipeline of projects relies upon increasing the current level of exploration activity here in Western Australia.”

She noted that policies such as the Western Australian government’s Exploration Incentive Scheme were welcomed by the resources sector and would deliver a significant return to the people of Western Australia.

“As we move closer to a federal election, CME looks forward to a serious policy discussion across all major political parties about how to reduce the costs of doing business and strengthen the Australian resources sector’s international competitiveness,” Roocke added.

The economy, as a whole, continued to grow for both the quarter and the year, with increases in gross domestic product of 0.6% and 2.5% respectively.

During the March quarter, production for several commodities decreased, with contributing factors including the seasonal cyclonic weather conditions.

Iron-ore production was down by 4.6% during the quarter to 129-million tons, while gold production was down 10% to 43 t. Copper production was down nearly 14% to 50 000 t, while nickel production was down 4.8% to 58 000 t.

Liquefied natural gas production was up nearly 14% to 18.3-million tons, while mineral sands production was also up by 3% to 24 200 t.

The CME noted that the picture for exports in the March quarter was mixed, with the export value of gold decreasing by 5.4% as a result of the fall in the gold price, while the export value of iron-ore increased by 14.9%, owing to higher average export unit value during the March quarter.

Oz Minerals cuts gold production guidance

Oz Minerals will produce less gold this year than previously expected after a landslip slowed operations at one of its mines.

The company cut its production guidance for 2013 from between 130,000 to 150,000 ounces of gold to 120,000 ounces to 130,000 ounces.

The lower guidance is due to a landslip at the company’s Malu mine in South Australia, which hurt production during the June quarter.

Oz Minerals says the landslip reduced safe access to the mining area but the pit returned to normal operation in July.

But the company has retained its guidance for copper production of between 82,000 to 88,000 tonnes, with most of the production to come in the second half of the year.

“As advised previously, production for the year is expected to be weighted to the second half,” it said in a statement.

The company is Australia’s third largest copper producer.

Oz Minerals shares have fallen more than six per cent since the start of trading, down 30 cents to $4.34 shortly after 1100 (AEST).

It has been a difficult couple of years for the miner, who has seen its shares drop from a high of more than $16 in late 2010.