Covid-19 hits drilling contractor's bottom line

out the Region, the 2020 discovery program was completed. In addition to the rare earth elements, Quest checks a flowsheet to extract additional value from the large values of Zirconium and Hafnium contained at Silver Fox on the soil.

Under grants from the Defense Logistics Agency (DLA) and the Department of Energy (DoE), the JV affiliate of USA Rare Earth and previous operator, Texas Mineral Resources Corp. (OTCQB: TMRC), demonstrated the capacity to generate high-purity rare earth oxide separation. The work currently underway at the Wheat Ridge facility of USA Rare Earth is to manufacture high purity isolated rare earth oxides, lithium compounds, zirconium, hafnium and other metals from Round Top and for other strategic partners (+99.5 percent). USA Rare Earth will extend this reach to include content from Search's Labrador project under the Partnership Arrangement with Search.

In a media release, Greg Andrews, CEO of Quest, said, "We think our synergies with both our technological cooperation and our expertise would have a good synergy to assist with our objectives of promoting a North American rare earth supply chain." "We are pleased to partner with USA Rare Earth as they improve their Mine to Magnet strategy."

"In the spirit of the U.S.-Canada Joint Action Plan on Vital Minerals Cooperation, we see more ways to collaborate with Quest. In terms of providing our sintered neo magnet plant with all four neo magnet rare earths, Search's Labrador ventures and USA Rare Earth's Round Top project are strongly complementary,' said Pini Althaus, CEO of USA Rare Earth.

Rare earth (neo) magnets used in electric motors for electric cars and generators in wind turbines are driving demand in the rare earth industries. Alloys like neodymium, praseodymium, dysprosium, and terbium are used in the Neo magnets used in these high-temperature applications.

EQUIPMENT

Covid-19 hits drilling contractor's bottom line

For the year, sales fell 10 percent year-on-year to US$172 million, which the firm said was favorable relative to the June quarter's 30 percent downturn.

For the nine months to September 30, income was down 17 percent, or 15 percent after adjusted for foreign exchange impacts. Both the global drilling services and the divisions of global products were affected. Quarterly adjusted EBITDA plummeted 25% to $21 million, although the firm reported a net loss of $13 million for the month. Adjusted EBITDA was down 48 percent to $45 million for the first nine months of the year.

For the time the total after-tax loss was $74 million. The 25 percent growth in total cash from activities to $39 million was a good one. Boart CEO Jeff Olsen said that in his firm, the organization was seeing a return to usual operating levels. "Some areas of the world have identified mining operations as vital resources that have allowed the group to continue serving our consumer base; nevertheless, there are still some sections of our company coping with the direct consequences of the pandemic and to date this has seen lower company sales," he said.

We are pleased to see recent reinvestments in our industry, with major mining houses flagging expanded exploration spending and junior miners now accessing capital through equity raises that enable them to get out and discover the opportunities of tomorrow. "We expect the pace of operation to persist longer into the year and start sooner in 2021 as mining houses seek to reclaim lost land in 2020."

Liquidity was $53 million at September 30, consisting of $30 million in cash and $23 million in lending facilities open. Total debt rose 8 percent to 823 million dollars. Boart shares were flat at A38.5c today, valuing the business at just under $34 million. Since the start of the year the stock has fallen more than 75 percent. www.skillings.net | 31

GLOBAL

South Africa’s mining industry weathered Covid-19

South Africa's mining firms stayed competitive and delivered on all fronts during an incredibly difficult year. Stakeholders gained from increased profitability by strengthening their true social license to act in favor of their workers and the societies in which they reside with mining companies. The COVID-19 storm has been weathered by the mining industry, largely unscathed and definitely stronger than many other industries.

As platinum basket prices rose and investors switched to gold as a safe investment despite worries about the COVID-19 pandemic and global trade conflicts, mining firms continued to reap commodity price increases, supported by a weakened rand. These are some of the highlights from the 12th edition of PwC's SA Mine, a collection of publications published by PwC that illustrate developments in the South African mining market.

PwC Africa Energy Utilities & Services Boss, Andries Rossouw, says: "The mining industry in South Africa appears to be a major contributor to the economy and has in several ways weathered the COVID-19 pandemic, demonstrating healthy profitability and sustaining solid balance sheets."

However, the long-term outlook remains uncertain and there is no agreement about how the pandemic would affect the mining market. The pandemic emphasized the utter need for improved reconstruction, and mining would play a vital role in the recovery.

CAPITALISATION OF THE SECTOR

Total market capitalisation has risen from R840 billion to R1,280 billion in 2020. This sum is a YOY rise of R439 billion (52 percent) from 2019, primarily due to the increase in market capitalization of gold and PGM industry firms.

Gold and PGM accounted for 80 per cent of the examined companies ' market capitalisation this year and appear to lead the business.

FINANCIAL PRODUCTION

For the year ended 30 June 2020, the overall revenue produced by the South 32 | SKILLINGS MINING REVIEW December 2020 African mining industry increased by 4%. It was largely powered by PGMs, gold and iron ore, which for the 12-month cycle witnessed sales rises.

The largest portion of revenue was generated by PGM (28 percent), showing a 56 percent rise from the previous year, overtaking coal for the first time since 2010. Gold mining firms saw a sales boost of 35 percent. Revenue rose by 7% for the 'other mining' divisions.

As of April 2020, the effect of the COVID-19 pandemic was apparent, with industry-wide sales declines being seen.

PGMs and gold from South Africa are primarily extracted in deep-level surface mines and have thus been struck hardest.

The producers of PGM and gold have stated that they plan to hit maximum rate of output by the end of the calendar year. Cash produced from activities after working capital adjustments rose by 50 percent from the previous year for the SA Mine organizations. The main contributors were the gold and PGM industries, adding R24 billion each to the rise in cash produced from operational activities.

With a net rise of 5 percent, capital investment rose. Compared to the previous year, impairments reduced by 50 percent, which culminated in an R5.9 billion income statement fee. The mining companies' average EBITDA margin included in this study was 34 percent, a 1 percent improvement over the previous year.

As a consequence of the growth in PGM and gold prices in the current quarter, net profit rose by 60 percent. With an effective tax rate of 26%, the net tax burden for mining firms was R37 billion. In addition, on the basis of enhanced free cash flows and higher product prices, allocation to shareholders grew to R43 billion (2019: R18 billion).

MANUFACTURING

Output decreased by 8% YOY, with a 44% decrease in performance recorded as a consequence of the pandemic in April 2020, the most important of which was attributed to declines in gold , diamonds and PGM production. Since the relaxation of lockout limits, production volumes rose in May 2020.

AN INCENTIVE TO HELP DEVELOP BACK

The value of prioritizing environmental , social and governance (ESG) issues on the corporate agenda has been gradually acknowledged by corporations and investors. Our research highlights four main ESG priority areas that should be top of mind for any enterprise that wants to better reconstruct and maintain a reasonable transfer to a new environment and boost their social license to operate.

There are: 1) stability in the supply chain; 2) effect measurement; 3) threats associated with the climate; and 4) quality of capital. To determine the degree to which ESG problems are included in decision making, we have reviewed the published accounts of the mining companies considered in this publication.

PwC Assurance Associate and SA Mine 2020 Project Chief, Luyanda Mngadi, comments: Our research reveals that while mining companies are frequently at the forefront of ESG activities, when it comes to establishing goals and assessing themselves, they are poor in their reporting.

The COVID-19 pandemic called for a renewed government and company emphasis on enhancing the lives of citizens and strengthening local communities. As such, this suggests a need for ESG to be taken into consideration in its entirety. The pandemic underlined the utter necessity to 'better build back'. In the recovery, mining can play a key role. It is also unfortunate that capital spending has only risen slightly, considering the increased profitability. Although a conservative attitude is understandable, it is important to eliminate impediments to investment.

In order to ensure stable and cost-competitive power, liberalization of the energy sector is necessary for mining and future profit opportunities. In this sense, we think hydrogen will play a revolutionary function. With the need to streamline procedures and increase accountability for current and future investors, improvements in the regulatory climate can continue. The mining tax setting, with an incentive to incentivize exploration investment, should be viewed as a whole. It will have instant recovery benefits and increase long-term viability by enabling utilities, promoting the supply chain and mine-to-market logistics. It is only feasible to draw investment if the SA mining sector will be cost-competitive with its global peers.

THE HYDROGEN SCENARIO

Hydrogen has been attracting interest in South African mines for quite some time. Several transport projects in the sector have been conducted that are strongly focused on the usage of PGMs in fuel cell catalysts. Although these pilot projects are a successful start to introduce hydrogen technology into mines, the focus of their deployment is very limited, with only the transport component of a mining activity being decarbonized.

There is a much greater ability to exploit hydrogen's cross-sector advantages on a microgrid scale, providing a truly green and resilient mining activity.

Provided that the cost of generating green hydrogen is projected to decline by up to 60 percent within the next decade, now might be the best time for mining companies to recognize the tremendous benefits of hydrogen.

CREATING STAKEHOLDER VALUE

For the nation and its inhabitants, the mining sector tends to bring considerable value. As a consequence of the COVID-19 pandemic, mines were asked to make far greater contributions and support structures in their local areas.

Employees continue to take the big share of value added at 38 percent, as reported in business value added statements, led by government by direct taxes (11 percent), employee taxes (7 percent) as well as royalty (3 percent). www.skillings.net | 33

GLOBAL

Mining cutback would hit Vancouver hardest

According to company leaders, the mining industry of B.C. could shrink by 64 percent over the next 20 years and the greatest financial and employment declines will not be in the outback, but in the financial center of Vancouver.

The Mining Association of B.C., amid a promising rise in commodity prices, with copper increasing above US$ 3 a pound on October 19 for the first time in three years and gold prices flirting with a 20-year peak of over US$ 1,900 a ounce, Last week, he cautioned that by 2040, B.C. 's 14 operational mines might diminish to only five. "Three bucks, give or take, on copper, you might see mines reopen for treatment and repair," said Michael Goehring, CEO of the British Columbia Mining Association (MABC) in a September 22 BIV interview, "A [US] $3.50 copper price would incentivize new mines to start." He added that the present bull market for precious metals, and the one for base metals to come, is not only fantastic for B.C. Miners-it is also fantastic for Vancouver, the global center for mine funding. "B.C. 's main mining sector is not mining," he added. "It's mine facilities and financing for mine. In Vancouver, there are more workers involved with mining than in the hinterlands, and Vancouver is an actual

epicentre."

A recent study from the MABC reports, however, that the province has a severe carbon leakage issue that may see the mining sector here shrink significantly as mining pollution grow in other nations. Leakage is when pollution constraints on a sector in one jurisdiction result in the industry simply investing else34 | SKILLINGS MINING REVIEW December 2020 where, where such constraints are lower or absent, such as carbon taxes. Since carbon taxes were first imposed by the Liberal government in B.C., the coal sector in B.C. largely accepted them. But the sector anticipated that carbon tariffs would still be introduced by some rival jurisdictions.

Most did not. In comparison, the NDP terminated carbon tax parity, where rises in carbon taxes are covered by reductions in other taxes. The study notes that "After BC introduced the carbon tax in 2008, several other nations and subnational jurisdictions were supposed to comply with their own," "Most have not. Some that have covered exposed companies for their exchange.

"In spite of this, the mines and smelters of BC face a major cost disadvantage since there is no carbon taxation or slightly reduced carbon pricing for industries they contend with in other jurisdictions. Anecdotal data shows that the carbon tax is

also leading to a change in capital spending and carbon leakage." It states that no carbon price is charged by the U.S., Australia, Russia and the Middle East, and miners in Chile only pay carbon tax on their power production, at $5 per tonne of CO2. Currently, B.C.'s carbon tax is $40 per tonne, and is projected to increase to $45 per tonne in 2021.

There are presently 14 mines in operation in B.C. and two smelters that provide 35,000 workers, have government tax income of $1 billion and account for 25% of B.C. 's exports, the study states.But the association reports that due to the high expense, once the mines become exhausted, new ones will not be constructed. New replacement mines may be established, and pollutants may be produced-it may only not be in B.C.

In B.C., 25 areas of concern for mining were listed by the NDP government's own mining task force, with carbon pricing and the lack of security for emissions-intensive and trade-exposed (EITE) sectors being a top concern.

"As described by the Task Force, the lack of security under B.C.'s carbon tax for mines and other EITE sectors such as pulp and paper or forestry is the single largest obstacle to BC's mining industry 's competitiveness," the study states. "In order to offer greater security for B.C. mines dealing with mines and exporters in jurisdictions that do not provide the same carbon pricing standards, the study encouraged the provincial government to" modify the current Renewable BC Industrial Incentive Policy.

A ALERT CONCLUDES THE REPORT:

Nine BC mines are projected to hit the end of their supply and shut over the next 20 years , leaving just five operational mines in 2040. Which ensures that along with them, the employment, community benefits and taxes for public programs will vanish. "No assurance exists that BC mining can proceed."

Dalian iron ore futures set for 6th monthly gain amid strong steel demand

Some of the main gold miners in Western Australia are torn over the rough boundary policies of the state.

Duncan Gibbs, managing director and chief executive of Gold Road Resources, said at the Diggers and Dealers mining conference in Kalgoorlie on Monday that the firm was juggling with a smaller pool of manpower as iron ore firms sucked up employees from other industries to fill shortages left by employees from the east coast who stuck in their state.

Mr. Gibbs said the Gruyere gold mine was largely untouched by the venture, although there were increasing rumors in the sector that finding workers was becoming more challenging. "I believe you're going to see iron ore being hired from the gold and nickel industries," he added. You still have a challenge on the technical side of things for things like mining engineers. Stuff like shutdown labor, some of it comes from the east coast, are what you're actually seeing rather than anything.

As an example, we had to adjust the crew that was scheduled to do Gruyere's tailings dam mining job. "It's not at the point that you should get the job finished, so we're just sort of juggling for a smaller pool at the moment." Thanks to the hard frontier, Evolution mining executive director Jake Klein was unable to attend the Diggers and Dealers event in person, instead presenting his presentation and press conference via video connection.

He said Australia had performed well after the pandemic, but the boundary strains remained a market impediment and "the faster the stronger they can be removed." In WA, the hard boundary was wildly successful and brought Premier Mark McGowan to a degree of success that is only seen in politics. Criticisms, however, are increasing over his relentless role on travel bubbles with states that have reported no transmission of COVID-19 to the population, in some cases for a longer duration than Western Australia.

Including high-profile businessman Richard Goyder, Federal Finance Minister Mathias Cormann has attacked Mr McGowan across the boundaries. Although the boundary policy is firmly supported by portions of the gold industry. Raleigh Finlayson, managing director of Saracen Mineral Holdings, who hosted Mr McGowan on Sunday at the Mega Pit gold mine in Kalgoorlie, said he was "content with the closure."

As much as if you claim it will be nice to come out to speak to shareholders again, the flipside is that if we open up too fast to start having cases or, Heaven forbid, we begin to get cases in a regional area like Kalgoorlie or one of our mine sites, we would regret it very easily, "said Mr. Finlayson." Though three of his colleagues had only undergone 14 days of isolation, Northern Star Resources executive director Bill Beament said he supported the borders and suggested another outbreak of the virus would do much more damage.