Global resources news

NEWS ENDEAVOUR AND TERANGA COMBINE TO CREATE WEST AFRICAN GOLD GIANT

Endeavour Mining and Teranga Gold have agreed a merger deal worth US$1.86 billion that will create a global top 10 gold producer with plans to make a secondary listing on the London Stock Exchange.

The TSX-listed miners had earlier confirmed talks were taking place on a potential merger, which would consolidate a collection of gold assets across West Africa, including producing mines and development projects.

Despite an initial jittery response from investors, the tie-up will provide Endeavour shareholders with 66% of the combined entity, with Teranga’s receiving the remaining 34%.

Teranga will also get three seats on the board to Endeavour’s seven.

Endeavour will pay a 5.1% premium for Teranga’s shares. “Teranga had a very strong run over the past 12 months, so we’re not trying to buy cheap – we’re just trying to make the right deal that satisfies both sets of shareholders,” said Endeavour CEO Sébastien de Montessus.

The merged company will boast average annual gold production of more than 1.5 million ounces with production costs of around US$850 per ounce. The deal resembles Endeavour’s second major acquisition this year after it bought Semafo in March.

Mining, oil & gas and renewable energy news from around the world IRON ORE PRICE CLOSES IN ON EIGHT-YEAR HIGH, BOOSTING AUSTRALIAN PRODUCERS

The iron ore price has continued its meteoric rise of late, surging by 5.8% during trading on Monday December 7 to US$145 per tonne – its highest level since March 2013.

The upward price movement has been driven by two factors; supply side issues out of Brazil following the release of reduced output forecasts by key iron ore producer Vale SA, and strong demand emerging from China.

Iron ore port stocks in China – the world’s biggest buyer of the commodity, at roughly 70% of demand – have contracted for three consecutive weeks to December 4, in an indication of growing deficit conditions in China.

And on the supply side, prices have been buoyed by Vale’s recent forecast announcement. The Brazilian mining giant expects to miss a previously lowered 2020 target of at least 310 million tonnes of iron ore.

The perfect storm of rising Chinese demand expectations and lower supply from a key global supplier have boosted Australia’s three largest iron ore producers – BHP, Rio Tinto and Fortescue Metals Group (FMG).

FMG has made the biggest gains this year, with chairman Andrew Forrest seeing his company’s stock rise by 90% since January. The iron ore price has also increased by 56% to be the best performing commodity of 2020.

NEWS BIDEN’S $2 TRILLION INFRASTRUCTURE PLAN TO BUTTRESS METALS PRICES

US President-elect Joe Biden’s pledge to spend $2 trillion on infrastructure is expected to support base and battery metals prices, as the world’s biggest economy embarks on a metalintensive ‘green revolution’.

The details of the much-needed green infrastructure plan will be debated in Congress over the coming months on the back of multiyear highs for industrial metals, which have been boosted by an economic rebound in top metals consumer China and optimism around COVID-19 vaccines.

“Biden’s $2 trillion proposed green stimulus would undoubtedly be positive for metals demand… (but) the election outcome means our base case view is that Biden will have to rein in his green spending ambitions,”

said Jumana Saleheen, chief economist at consultancy CRU Group.

Some of the proposals in the plan include providing subsidies for electric vehicle (EV) purchases, adding 500,000 new charging stations and converting 500,000 school buses to zero emissions.

The charging stations and that number of battery electric buses would alone require nearly 200,000 tonnes of copper according to Jefferies, while renewable energy requires an estimated five times more copper than conventional sources.

Mining, oil & gas and renewable energy news from around the world CHINA’S TIANQI LITHIUM TO SELL AUSTRALIAN UNIT TO NICKEL FIRM IGO LTD

Chinese mining giant Tianqi Lithium will receive a sorely needed cash boost after agreeing the sale of 49% of its Australian unit to nickel-gold firm IGO Ltd, for a sum of US$1.4 billion.

Through the deal, IGO – Australia largest independent nickel producer – will assume a 24.9% interest in the Greenbushes lithium mine in Western Australia and a 49% share in the Kwinana lithium hydroxide plant South of Perth.

Greenbushes, which is 49% owned by US-based lithium giant Albermarle, is the world’s largest and lowest cost hard rock lithium mine with an output of 764,000 tonnes of spodumene concentrate in 2019.

The deal comes as a boon to Tianqi after it announced last month that it might not be able to repay $1.9 billion of debt due on December 28. The firm has been plagued with balance sheet issues since it acquired a $4.1 billion stake in Chilean miner SQM in 2018. Lithium carbonate prices have dropped by more than 70% since the acquisition.

“This transaction also facilitates a recapitalisation of our balance sheet that will position us strongly for the expected recovery in the lithium sector,” Tianqi founder and chairman Jiang Weiping said.