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Anglo American Sells Norte unit in Chile $3.99 • AUGUST 31-SEPTEMBER 6, 2015 • VOL. 101, NO. 29 • SINCE 1915
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Odds ‘n’ sods
How to get a police escort to your prospect
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Eldorado Gold halts Greek ops as ministry revokes technical study
Stillwater Mining
Weak PGM prices lead to layoffs
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Arena attracts
JOGMEC,
B2Gold BY TRISH SAYWELL
BY SALMA TARIKH
Haywood Securities analyst Kerry Smith says Greece’s energy minister Panos Skourletis was on a “fishing expedition” when he revoked the technical studies on Eldorado Gold’s (TSX: ELD; NYSE: EGO) Skouries and Olympias gold projects in the Halkidiki Peninsula of northern Greece, forcing the company to halt its operations in the country and lay off workers. Eldorado reported the suspension on Aug. 19, based on test work by Outokumpu-spinoff Outotec on Olympias’ third-phase, flashsmelting process (Metals giant Outokumpu invented flash smelting in the 1940s.) The Ministry of Energy claims the company violated its contract by conducting pilot-scale test work in Finland, and not Greece. The test work is part of the technical studies for Skouries and Olympias, which
Surface facilities at Eldorado Gold’s Stratoni underground silver-lead-zinc mine in northern Greece. make up the basis of other permits Eldorado needs to build the assets that are crucial for its growth. Smith says he’s never heard of a requirement in the permitting process for companies to do test work at-site, especially when Halkidiki has no expertise in flash
INTERVIEW
Market insights from Sprott’s Rick Rule BY LESLEY STOKES
At the Sprott/Stansberry Natural Resource Symposium — held in Vancouver in late July — Rick Rule, chairman of Sprott U.S. Holdings Inc., spoke with The Northern Miner about the state of the mining industry and its future. The Northern Miner: When will the bear chew the juniors right to the bone? When is that point of no return? Rick Rule: I would’ve told you 2014, but I was wrong. What I didn’t anticipate about this market is that I didn’t take into account the strength of the bull market. Bear commodity markets end one of two ways: either through demand creation or supply destruction. Demand creation occurs when the price of the commodity gets so low, the utility to consumers is high enough that demand returns, and there’s economic recovery. The other is supply destruction, the same kind we had at the turn
TNM Aug31 2015 Issue.indd 1
of the century. We destroyed resources through the 1990s and ate through production capacity to the extent that when demand came back a little bit, the industry couldn’t supply, and we had those price spikes in 2002 to 2006. But what happened in the 1998 to 2002 bear market is that the juniors went into it already weak, whereas now they went into it incredibly strong. Juniors today had gorged on cash in the last decade and the amount of destruction they could absorb was greater than what I had anticipated. TNM: What are some things this bear market has taught us? RR: Those who run the juniors, from worst to best, are characteristically entrepreneurs and are extremely optimistic people. And the mistake that they made — and the mistake that I made on their behalf — is that they confused the optimal capital market conditions with being normal. And the juniors believed the marSee RICK RULE, Page 13
smelting. If this was the case authorities would have flagged this issue earlier, Smith argues, noting Eldorado has had permits for both projects for some time. “There have been a number of appeals against the permits. The Council of State, which is their
ELDORADO GOLD
equivalent to the Supreme Court, has upheld the permits ... probably three times.” Smith says. “It’s not like there have not been challenges to the legitimacy of the permits, and it has been upheld every time. “I kind of feel like [Skourletis] See ELDORADO, Page 2
Endeavour hits pay dirt at Agbaou BY LESLEY STOKES
VANCOUVER — West Africafocused Endeavour Mining (TSX: EDV; US-OTC: EDVMF) has been on the hunt for valuable oxide resources at its flagship Agbaou gold mine, 80 km south of Yamoussoukro, Côte d’Ivoire, and exploration results from the company have hit right on target. The latest exploration and infill drilling intercepted continuous grades, such as 10.2 metres at 3.5 grams gold per tonne and 13.3 metres at 2.8 grams gold along the same shear zones that host the orebody at the producing West pit. Exploration also expanded mineralization at the parallel-trending Gamma zone to 600 metres, boasting intercepts of 12.2 grams per tonne over 9.4 metres. Whereas drilling at the Beta zone, southwest of the operations at North pit, returned 16.5 grams gold over 8.3 metres. CEO Neil Woodyer said in a release that the drilling “confirms the exciting potential we have to continue to extend mine life at Agbaou,” and these ounces will be brought into reserves by year-end.
The exploration success builds upon another stellar quarter for Endeavour, which tabled after-tax net earnings of US$33 million for the second quarter, despite realized gold prices falling 2.1% from the previous quarter to US$1,193 per oz. gold. The company finished off the quarter with US$52.7 million in the bank, and used the healthy earnings to pay down its revolving credit facility by another US$20 million — the second voluntary payment made this year — dropping the balance to US$260 million. Ota Hally, Endeavour’s chief financial officer, tells The Northern Miner in a phone interview that the company aims to keep all-in sustaining costs (AISC) for gold below production guidance of US$980 per oz. at its four gold mines: Agbaou in Côte d’Ivoire, Nzema in Ghana, Tabakoto in Mali and Youga in Burkina Faso. “When gold prices are high it sends miners scrambling, and everyone gets preoccupied on throughputs,” he says. “Whereas
Since the beginning of the year, prospect-generator Arena M inerals (TSXV: AN) — whose shares traded at only 17¢ at press time — has enticed two heavyweight players in the mining industry to sign option agreements on parts of its 1,492 sq. km Atacama copper property near Antofagasta, Chile. In July, Japan Oil, Gas and Metals National Corp. (JOGMEC) signed an option agreement to acquire up to a 60% stake in 100 sq. km of the property by spending at least US$16 million in two stages over six years. The hectares under option are collectively referred to as the Baquedano NE project, and include three claim blocks — Carmen Alto, Pampa Union and Cerro Guacate Sur. Under the deal, JOGMEC will pay US$630,000 to Sociedad Quimica y Minera de Chile (NYSE: SQM) — the underlying property owner — on behalf of Arena during the option period. JOGMEC will also make an initial US$125,000 payment to Arena. The joint-venture partners announced earlier that JOGMEC would kick-off a US$2.7-million, 12,600-metre drill program for completion within the first term of the option agreement, or before See ARENA, Page 2 PM40069240 – PAP Registration #09263
See ENDEAVOUR, Page 14
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