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Sherritt International $3.99 • SEPTEMBER 28-OCTOBER 4, 2015 • VOL. 101, NO. 33 • SINCE 1915
Randgold, AngloGold to revive Obuasi invested US$600 milIn what would become lion into the mine from their third partnership its corporate funds and in a decade, Randgold pumped another Resources (LSE: RRS; US$500 million into the NASDAQ: GOLD) and operation from funds AngloGold Ashanti generated by the mine (NYSE: AU) have signed itself.) an investment agreeIn May 2014, Angloment to consider setting up a joint venture that BY TRISH SAYWELL Gold announced that Obuasi would be manwould redevelop and aged as a special project operate the iconic but troubled Obuasi gold mine in to address operational challenges, and in December susGhana. Randgold will lead and fund a pended underground producdevelopment plan for Obuasi that tion and retrenched the mine’s will build on an internal feasibility entire workforce. It pushed study AngloGold finished earlier ahead with a decline ramp, howthis year. The development plan ever, as well as processed tailwill look at ways to create a more ings and above-ground stockefficient and mechanized opera- piles, while embarking on the tion, and will be submitted to the feasibility study. Obuasi — a large, high-grade boards of both companies for apgold deposit, 320 km northwest of proval by Jan. 31, 2016. “Obuasi is a world-class re- the capital Accra in Ghana’s source — we now have to see if we Ashanti region — has proven and can convert it into a world-class probable reserves of 24.5 million mine,” Randgold’s CEO Mark Bris- tonnes grading 6.70 grams gold tow said in a press release an- per tonne for 5.29 million oz. The mine has produced 5.6 milnouncing the agreement. AngloGold acquired Obuasi in lion oz. gold over the past 15 years 2004 when the company merged at total cash costs of US$519 per with Ashanti Goldfields, but has oz., according to an analysis by impaired the value of the asset BMO Capital Markets’ mining at various stages of its ownership analyst Andrew Breichmanas. by US$1 billion. (AngloGold has See RANDGOLD, Page 11
Optimists see ‘gems’ in besieged coal markets BY MATTHEW KEEVIL
VANCOUVER — Attending the Coal Association of Canada’s annual gathering here in downtown Vancouver, it’s clear its a pretty terrible time to be in the coal business, and that goes for both the metallurgical (met or coking) and thermal sectors of the industry. Green energy reforms in the U.S. have made thermal coal a bit of a dirty word, while industrial slowdowns in Asian economies — which played a large part in the coking coal boom of the late 2000s — haven’t helped the matter. Worldwide industrial demand growth drove large-scale mergers and acquisitions among U.S. producers and integrated miners looking to capture strong margins, as met coal prices hit highs in 2011. The global economic recession, however, has triggered a slew of bankruptcies, as producers find themselves over-leveraged in tough markets. U.S. coal miners Alpha Natural Resources, Walter Energy
TNM Sep 28 2015 Issue.indd 1
and Patriot Coal have all filed for bankruptcy protection this year amid an industry slump that has driven quarterly benchmark prices for steelmaking coal to a 10-year low. Prices for met products have fallen 72% over the past four years, from a high of US$331 per tonne in 2011 to nearly US$90 per tonne in early July. During his conference presentation, Virginia-based FBR Capital Markets’s managing director Kurt Oehlberg described the coal industry as undergoing its yet another “transformation” that historically involves volatile commodity swings and prolific dealmaking. Oehlberg argued that the time is ripe for new coal outfits to find “gems in the rough” that could pay dividends when markets recover. “There were, unfortunately, a lot of transactions completed at very difficult or very high-priced times in the met coal market. We’re now in a challenging environment to try to stay alive. Discipline remains the See COAL, Page 13
Cancels dividend, cuts capex
Editorial 3
Burkina Faso stung by instability
Agnico Eagle Mines 4
Keeps drills turning in Mexico
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Pretium lands US$540M to build Brucejack
PRETIUM RESOURCES
Pretium Resources’ Brucejack gold project in northwestern British Columbia. BY MATTHEW KEEVIL
VANCOUVER — Pretium Resources (TSX: PVG; NYSE: PVG) is proving that struggling equity markets and global economic woes can’t keep a good project down. On Sept. 15 the company announced terms for a US$540-million construction financing that
sets the stage for commercial production at its high-grade Brucejack gold property in northwestern B.C. The capital raise provides access to US$340 million at closing and will fund a “substantial portion” of the costs to develop an underground operation on Preti-
Sawiris-backed La Mancha to buy 30% of Endeavour Mining BY TRISH SAYWELL
La Mancha, a privately held investment company controlled by the family of Egyptian billionaire Naguib Sawiris — who earlier this month tweeted that he wants to buy an island in Europe to provide a home for refugees fleeing wartorn Syria — is taking a 30% stake in Endeavour Mining (TSX: EDV; US-OTC: EDVMF). Sawiris controls the Orascom Group — one of Egypt’s largest and most diversified conglomerates, with interests in telecommunications, fertilizers, real estate and construction — and is best known in Canada (before his tweet on Sept. 3 that went viral) for providing some of the funding for launching Wind Mobile as a competitor to the country’s largest wireless carriers. Sawiris’ holding company Orascom World Investment acquired La Mancha for $500 million in 2012, and the privately held company’s investment in Endeavour underscores his commitment
to “the future of Africa and the gold mining industry.” “By combining our African assets and management skills, we will grasp future opportunities to create a leading African gold producer,” Sawiris said in a prepared statement on Sept. 21. “My strategic goal is to create value with a long-term approach. The Endeavour board and management shares this objective, and has a successful track record of building and acquiring assets in Africa.” Under the transaction, Endeavour will acquire La Mancha’s 55% stake in the Ity gold mine in the Côte d’Ivoire, US$63 million in cash and 3,500 sq. km of regional exploration properties in the West African nation. The deal also includes an in-principle commitment from La Mancha of up to US$75 million more funding to support growth “beyond immediate priorities.” In exchange, La Mancha will be given 177.1 million Endeavour shares, or 30% of the
um’s Valley of Kings and West zones. Orion Mine Finance and Blackstone Tactical Opportunities will provide the cash, which is comprised of a US$350-million credit facility; US$150-million prepayment under a callable gold and silver stream agreement; and a US$40-million private placement. The streaming component applies to 8% of life-of-mine precious metal production of 7.1 million oz. refined gold and 26.3 million oz. refined silver. Orion and Blackstone also signed up for See PRETIUM, Page 2 PM40069240
See ENDEAVOUR, Page 14
15-09-23 5:12 PM