MasterMetals on Twitter

July 31, 2014

Seems like it's official: #Venezuela Seeks Buyer for #Citgo #MasterEnergy

#PDVSA “is currently seeking to monetize its ownership interest in us,” Citgo said in a July 29 bond prospectus document. “There can be no assurance as to whether a transaction will occur or as to the nature or timing of any potential transaction.”


See the whole article on Bloomberg: Venezuela Seeks Buyer for Citgo Petroleum Refinery Unit - Bloomberg

July 23, 2014

#Iran - Country Analysis #MasterEnergy @EIAgov

Energy Information Administration (EIA) Logo - Need Help? 202-586-8800
Iran holds the world's fourth-largest proved crude oil reserves and the world's second-largest natural gas reserves. Despite the country's abundant reserves, Iran's oil production has substantially declined over the past few years, and natural gas production growth has slowed. International sanctions have profoundly affected Iran's energy sector. Sanctions have prompted a number of cancellations or delays of upstream projects, resulting in declining oil production capacity.

For more information on the Iran’s energy sector, visit http://www.eia.gov/countries/cab.cfm?fips=IR



Iran - Analysis - U.S. Energy Information Administration (EIA)



The MasterMetals Blog

July 22, 2014

#Gold Dumped (Pre-#CPI) And Pumped (Post-CPI)

GOLD - Action before and after CPI figures - the "mystery" seller continues 

Gold Dumped (Pre-CPI) And Pumped (Post-CPI)

 

9 minutes before CPI data hit, gold futures were slammed lower on notable volume ($390 million). Then as CPI hit and "noise" was evidently not going away, gold prices surged over $12 to $1316 on very heavy volume...

 

 

and in detail...

 

 

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MasterMetals

#Bolivia's new #mining law banning JVs with with private companies is a disaster for the country #ResourceNationalism

From  @EY_MiningMetals's Resource nationalism July 2014 update: Bolivia has approved a new mining law, which denies cooperatives the right to partner with private companies, whether domestic or foreign. The law also bans private firms from registering minerals as property, which means they can’t use them as collateral for loans or include them as assets in stock market filings. Bolivians, however, can now form mixed business enterprises with or through the state mining agency, Comibol. 
 
Until now, some of Bolivia's largest mines had operated as partnerships between exchange-listed multinationals and small local cooperatives. The new mining law, while bringing the sector in line with the 2009 constitution, will have an important impact on those operations, including Sumitomo’s San Cristobal open-pit silver, lead and zinc mine.
 
Under the revised regulations, which create a new government division to oversee the mining sector, all pre-existing contracts will be respected, though concessions will be limited to 62,000
hectares. Those whose terms and conditions do not conform to the new law can be renegotiated over 12 to 18 months.*


* - "Bolivia passes mining law that bans partnerships with multinationals", Mining.com, 5 June 2014



Read all the updates on Resource Nationalism from EY here:   Resource nationalism update - July 2014 - EY-Resource-nationalism-July-2014.pdf





July 18, 2014

#Palladium, the metal with the best fundamentals, just made a 13-year high!

Yesterday Palladium reached a 13-year high.

Palladium has the best fundamentals of all the precious metals.
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MasterMetals

#Diamonds - shining brighter every day

#China, second largest #Silver producer, mainly as a by-product

World's Largest Silver Producing Countries: China
By Alex Létourneau of Kitco News
Tuesday July 15, 2014 9:00 AM

 (Kitco News) - Tough to find readily available information and statistics regarding Chinese silver mine supply? You don't say.

As China slots into the second position of the world's largest producing silver countries, one would be forgiven for scratching their head and wondering where all this silver comes from when their largest producing mine accounts for 4.5 million ounces.

The answer; there's a lot of silver by-product.

In fact, China's second largest mine that produces silver is primarily a lead and zinc producing mine. Much of the country's silver comes from base metal mines and refineries.

To add to the confusion, it's not clear how much silver is refined from domestic and overseas ore due to a lack of information released by the government.

China only began releasing their mine supply information in 2000, and the sector has grown faster than any other nation since.


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MasterMetals

#Venezuela’s #oil diaspora: Brain haemorrhage #MasterEnergy @TheEconomist

Venezuela's loss is every other oil country's gain. Another story on the destruction of a country.

Brain haemorrhage

IN 2003 Venezuela’s then president, Hugo Chávez, fired more than 18,000 employees, almost half the workforce, of the state-run oil corporation, Petróleos de Venezuela (PDVSA). Their offence was to have taken part in a strike (pictured) called in protest at the politicisation of the company. Their punishment was to be barred from jobs not only in PDVSA itself but also in any company doing business with the oil firm. The axe fell heavily on managers and technicians: around 80% of the staff at Intevep, PDVSA’s research arm, are thought to have joined the strike. At the stroke of a pen, Venezuela lost its oil intelligentsia.
It was a blow from which PDVSA has never recovered. The firm’s oil production has since stagnated (see chart), despite a big run-up in prices. The financial crisis bears some of the blame for that, as does the economic mismanagement of Chávez and, since last year, Nicolás Maduro. But the loss of skilled personnel was a huge handicap, hurting exploration and management. The Centre for Energy Orientation, a Venezuelan NGO, says the number of incapacitating injuries due to accidents at PDVSA rose from 1.8 per million man-hours in 2002 to 6.2 in 2012. At Pemex, Mexico’s state oil firm, the rate was 0.6 in 2012.
Venezuela’s loss was others’ gain. Not all of the former PDVSA employees stayed in the oil business; a minority chose to remain in Venezuela. But thousands went abroad—to the United States, Mexico and the Persian Gulf, and to farther-flung places like Malaysia and Kazakhstan.
Many headed to Alberta, in Canada, where the tar sands yield a residue that is similar to the heavy oil from the Orinoco belt, which Venezuela is struggling to develop. There were 465 Venezuelans in Alberta in 2001; by 2011 there were 3,860.
Pedro Pereira, who once headed PDVSA’s research into the processing of extra-heavy crude oil, came to Canada in order to set up a similar research team at the University of Calgary in Alberta. His work focuses on inventing and patenting new technologies to process Alberta’s crude. Three dozen Venezuelans have passed through the Calgary centre since its inception, around two-thirds of them as a direct result of the purge of 2003. All have gone on to work in the Canadian oil industry.
No country has benefited more from the Venezuelan exodus, however, than one next door. Colombia’s oil output was declining at the time of the purge, falling from 687,000 barrels a day (b/d) in 2000 to 526,000 five years later. Today, average daily production stands at around 1m b/d. Much of this renaissance is thanks to the Venezuelans.
Former PDVSA executives had been heading to Colombia even before the purge. (Luis Giusti, a former chairman who quit as soon as Chávez came to power in 1999, helped the Colombian government redesign its energy policies.) But it was the post-2003 influx that revolutionised the industry. All of a sudden, says Alejandro Martínez of the Colombian Petroleum Association, “Colombia was filled with real oilmen.” The Venezuelans had years of experience, lots of it spent abroad. They had an excellent technical heritage: PDVSA was created in the mid-1970s when the local subsidiaries of sophisticated firms like Exxon and Royal Dutch Shell were nationalised. They were also used to thinking big. “They did not shy away from projects that needed $2 billion in investments when for Ecopetrol [Colombia’s state oil firm] $50m was a big deal,” says Mr Martínez.
In 2007 Ronald Pantín, a former chairman of PDVSA Services, bought Colombia’s Meta Petroleum along with several partners. Meta operated the Campo Rubiales field in central Colombia, from which operators were then barely squeezing 14,000 b/d. Now it is the country’s largest producing oilfield, and Pacific Rubiales Energy, Meta’s owner, is the largest independent oil producer in Colombia. Humberto Calderón, a former Venezuelan oil minister, founded Vetra in 2003. Today the two firms account for more than a quarter of the country’s production.
Without the input of the Venezuelans “there is no way Colombia could have doubled its production in such a short time,” says Carlos Alberto López, an energy analyst. It was an “extraordinary coincidence” that Colombia carried out its reforms just as PDVSA’s managers were thrown out, oil prices soared and areas once under guerrilla control were made safer. “The timing couldn’t have been better,” says Mr López.
The prospects for enticing the diaspora back to Venezuela are poor. The expatriates have put down deep roots abroad, and the situation at home remains chaotic. PDVSA’s goal is for the Orinoco belt to be producing 4.6m b/d by 2019. But the oil is difficult to refine, and the huge investment required is hampered by the government’s insistence on overvaluing the bolívar. So far PDVSA has missed all its intermediate targets for Orinoco: by the end of 2013 it had reached 1.2m b/d, compared with a planned figure of 1.5m.
Welders, electricians and machine workers reportedly make three times as much helping with the expansion of Ecopetrol’s refinery in Cartagena as they can in Venezuela, according to El Nacional, a Venezuelan daily. A ranking published by Hays Oil and Gas, a recruitment agency, put the average annual salary for oil-industry professionals in Colombia at $100,300. In Venezuela it is $50,000. From Calgary Mr Pereira says he is seeing a “second wave” of emigration that began a couple of years ago, of young professionals with five or six years’ experience. “As soon as they get some significant knowledge, they’re leaving,” he says. “The company, and the country, is heading for a disaster.”



Venezuela’s oil diaspora: Brain haemorrhage | The Economist



The MasterMetals Blog

July 16, 2014

More troubles at #Barrick: CEO to step down on sept 15th- No replacement yet

CONCLUSION: Jamie Sokalski CEO of Barrick will be stepping down effective sept 15th. No replacement has been announced yet. This is a surprising announcement. Could it be a prelude to splitting the company as some speculate? Or a disagreement on strategy with the Chairman John Thornton? Interesting that the company has two co-Presidents now.
 
More later, in the meantime stock likely to trade sideways till we hear more specific news. Company is due to report its 2Q earnings on July 30th.
 
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BN 07/16 13:22 *CORRECT: BARRICK PROMOTES AL-JOUNDI TO SR EVP, CFO
 
 
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Barrick Announces New Executive Management Structure
2014-07-16 13:20:27.971 GMT
 
Barrick Announces New Executive Management Structure
TORONTO, ONTARIO -- (Marketwired) -- 07/16/14 --   The Board of
Directors of Barrick Gold Corporation (NYSE: ABX)(TSX: ABX) (Barrick or the "company") today unveiled a new executive management structure that will enable the company to meet the distinct demands and challenges of the mining industry in the 21st century.
Kelvin Dushnisky, currently Senior Executive Vice President responsible for Corporate and Government Affairs and Chairman of African Barrick Gold plc, and Jim Gowans, currently Executive Vice President and Chief Operating Officer, will be appointed Co-Presidents with overall responsibility for execution of the company's strategic priorities and operating plans. This model reflects the interconnected nature, and strategic importance of jointly managing day-to-day mining operations and the company's relationships with host governments, local communities and other external stakeholders. As Co-Presidents, Messrs. Dushnisky and Gowans will be responsible for the seamless execution of both functions at all times.
Ammar Al-Joundi will be promoted to Senior Executive Vice President and Chief Financial Officer and will also work closely with the Chairman on the development and execution of strategic initiatives.
 
Darian Rich will become Executive Vice President, Talent Management, a new position that reflects the critical requirement that any company seeking to be the leader in its field must attract, retain and develop exceptional people.
 
In conjunction with this restructuring, President and Chief Executive Officer Jamie Sokalsky will be stepping down effective September 15, 2014. In the interim, Mr. Sokalsky will assist in facilitating a smooth transition to the new leadership structure.
"These structural changes put an even greater emphasis on operational excellence, and will accelerate our portfolio optimization and cost reduction initiatives, while fostering a partnership culture both inside the company and externally," said Chairman John Thornton.
"Internally, that means our people will be financially invested for the long-term in Barrick's success, and personally committed to a culture of teamwork that balances individual and collective responsibility and accountability. Externally it means building enduring partnerships with the key stakeholders who are central to our success, including long-term investors, host governments, local communities and NGOs."
"On behalf of the entire Barrick team, I would like to thank Jamie for his many contributions to the development and success of the company over 20 years," added Mr. Thornton. "The changes we are announcing today build on the operating model that Jamie and his team implemented over the past year, setting the stage for us to move forward as a nimble, more versatile company focused on shareholder returns."
During his tenure as CEO, Mr. Sokalsky introduced a strategy to prioritize returns and free cash flow over production growth and led a company-wide portfolio optimization program. He also spearheaded successful initiatives to reduce costs and strengthen the company's balance sheet.
"I'm fortunate to have worked with so many great people over my career at Barrick and I'm particularly proud of what we have been able to accomplish over the past two years with the support and dedication of the entire Barrick team," said Mr. Sokalsky. "It is now time for the next phase of the company's development. I believe our new management structure will allow Barrick to address successfully the key challenges facing the mining industry today, and in turn, will position the company to deliver superior returns to its shareholders in the future."
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION


July 14, 2014

#Lundin to buy Freeport's #Candelaria #copper mine with Franco-Nevada's help $FCX $FNV

Globe reporting that LUN will partner with FNV on the Canderlaria mine purchase for >$2 bln.

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Canada's Lundin Mining Corp. is emerging as the front-runner to buy a major Freeport-McMoRan Copper & Gold Inc. copper mine in Chile, sources familiar with the matter said.
Toronto-headquartered Lundin would pay more than $2-billion for the Candelaria mine, according to people familiar with the current proposal. It would partner with Franco-Nevada Corp., which would pay up to $1-billion for a stream of the mine's future gold production, the sources said.

The base-metals miner has been hunting for a copper acquisition for more than two years. Its chief executive officer Paul Conibear told The Globe and Mail in April, 2013, that assets with at least a 10-year mine life and capable of producing some 50,000 tonnes of copper per year would be ideal.
At the time, Mr. Conibear said the company had a strong balance sheet, no debt and has been on the lookout for the right deals for the last year and a half.
If Lundin's proposal succeeds, the Chilean mine would boost Lundin's copper production significantly.
The interest in copper assets comes after a tumultuous few months for the red metal, used in construction and power generation. It dropped below $3 (U.S.) a pound on fears that China's slowing economy would weaken demand, though has since rebounded and is trading around $3.25.
Lundin produces copper, zinc, nickel and lead from mines in Europe, Africa and the United States. The company has partnerships with Arizona-based Freeport on the Tenke Fungurume copper mine in the Democratic Republic of Congo, as well as a refinery in Finland.
During the commodity boom a few years ago, Lundin tried to merge with fellow Canadian miner Inmet Mining Corp. before Inmet was taken over last year by First Quantum Minerals Ltd. It also fended off a hostile takeover attempt by Equinox Minerals Ltd. in 2011, which was later taken over by Barrick Gold Corp.
Lundin has since bought a small copper and nickel mine in Michigan.
Freeport, one of the largest copper companies in the world, has been moving into the U.S. oil and gas market and has been selling assets to pay down its hefty debt load. The miner recently sold its Eagle Ford shale assets to Canada's Encana Corp. for $3.1-billion.
Freeport had been aiming to announce the sale of Candelaria by mid year, one source said. But the company's process has been delayed because it is waiting to hear from the mine's minority owner Japan's Sumitomo Corp., which holds a 20-per-cent stake in the Chilean mine.
Barrick Gold's former CEO Aaron Regent had also expressed an interest in Candelaria, the sources said. Mr. Regent is looking to build a new mining company and has been on the hunt for assets through his investment firm Magris Resources Inc. It is not known whether Mr. Regent or another company will top Lundin's proposal.
Last year, Mr. Regent teamed up with two senior mining companies and private equity firm Blackstone to buy Glencore PLC's Las Bambas copper project. But his bid fell through when one of the miners backed out, one source said. The project was eventually sold to a Chinese consortium for nearly $6-billion.
A spokesman for Freeport said the company doesn't comment on speculation. Lundin, Franco-Nevada and Magris declined comment

July 1, 2014

Why Canada’s junior #mining sector is going to pot — literally


More than a dozen Canadian mining companies have announced shifts into medical marijuana in a desperate bid to wait out the funding crisis that many insiders believe threatens their very existence.

Nick Brusatore wanted to create a leading Canadian medical marijuana company. So he turned to a logical source: a hopeless junior mining company.

He bought a controlling interest in Affinor Resources Inc. in March, and then met with the management team. His pitch was simple: the great marijuana gold rush of our generation is just starting, while the junior mining gold rush is pretty much dead. The Affinor team listened and loved what they heard.

"They were clearly looking for something to do with this shell that they'd been keeping on the market, because the mining thing just kind of went bust," Mr. Brusatore said in a matter-of-fact tone.

I think the Canadian resource junior is an endangered species

Affinor followed his lead, and was wise to do so. Its stock price has shot up an astounding 2,600% in the nine weeks since the company moved into pot, meaning its market cap has jumped to roughly $50-million from less than $2-million. Quitting the mining universe was clearly the smartest thing this company ever did, but it's not the only one doing it.

More than a dozen Canadian mining companies have announced shifts into medical marijuana. Given that raising capital for exploration is impossible for most juniors, the moves make sense if they want to do something productive.

This "Breaking Bad" strategy has generated some chuckles in the investment community. But it underlines the fact that investor interest in mining stocks has fallen to a shocking low. And there is no consensus on when that will change, or what catalyst will turn things around.

The malaise is being felt right across the industry, from the tiniest junior to the largest producer. The hot money has moved on to stocks in technology, oil and gas, health care and other sectors where returns have been superior to mining, which is just about all of them.

The sector continues to chug along and generate decent earnings, but the lack of noise about them on the street is almost deafening. To take one example, the HUI gold equity index is at roughly the same level it was 10 years ago, when gold prices were below US$400 an ounce.

People who talk about the lack of investor interest in mining almost always boil it down to two issues: weaker metal prices due to slowing Chinese growth, and self-inflicted damage by the mining companies through poor cost control and/or terrible acquisitions at the top of the cycle.

Those are certainly central issues. But experts wonder if there are other deeper root causes.

One of them may just be fatigue. Metal prices have been in an overall bull market (albeit a rocky one with big ups and downs) since 2002. History suggests that 12 years is fairly short by the standards of commodity cycles, which can last for two decades or more.

Metal prices are below their 2011 highs, but they are still fairly healthy (coal and iron ore aside). National Bank economist Stefane Marion said this week that commodity prices overall are at their highest point since 2008, even after stripping out energy.

But investment horizons have become so short that many people never think about the sector that way. To them, the cycle has been going on for an eternity and the upside is long gone.

The short-term horizon has also affected the companies, which are being asked to deliver more profits and production growth in increasingly short periods of time. Not surprisingly, they have failed, and that line of thinking has pushed companies into many foolish acquisitions that backfired.

"People don't understand," said Terry Ortslan, an independent mining analyst. "They think you press a button, drill a hole and discover your ore body."

He offered up another key reason for investor frustration: mining companies during this entire commodity upswing have failed to make a single world-class discovery that has created real value, despite many claims to the contrary by the industry. "Let's get real," he said.

Miners have become very proficient at processing low-grade ores and making them profitable, as Osisko Mining Corp. did at its hugely successful Canadian Malartic mine. But one could argue that all the high-grade, "world-class" deposits that were developed during the past decade (such as Cigar Lake, Oyu Tolgoi and the half-built Pascua-Lama project) were found before it started.

Another key factor working against miners is what could be described as the fool-me-once syndrome. Investors made the mistake of bingeing on mining stocks in the peak years last decade, and a lot of low-quality companies that never should have raised a penny received tens of millions of dollars as a result. Virtually any miner that had words like uranium or potash in its title was getting financing with ease.

In 2007 alone, Toronto-listed miners completed 577 deals that raised close to $15-billion, according toFinancial Post data. A whopping 416 of those financings were for exploration companies on the TSX Venture exchange. By comparison, there were 61 financings by miners on the junior exchange in 2013.

"The funds took on so much stuff that they just didn't know what to do with it," said Stan Bharti, a well-known mining financier and founder of merchant bank Forbes & Manhattan. "It's so destroyed in value that they're just shell-shocked."

Investors have no desire to make that same mistake again. Last year, Toronto-listed miners raised just $2.8-billion, not counting Barrick Gold Corp.'s $3-billion equity offering (which was a big outlier). The pace of deals has picked up a bit in 2014, but is still a fraction of the peak years.

At its core, mining is a simple business with three elements: find it, extract it and sell it. But it has become increasingly hard to spot value in the past decade for all sorts of reasons: governments demanded a bigger share of the pie, financial players distorted the market with exchange-traded funds and other variables, discoveries became more remote and difficult to develop, and anti-mining activists stepped up their fight against the sector with considerable success.In addition, there is a broad sense among industry experts that the mining story has become too complicated for investors to bother with.

Mining companies also kept changing their mind on what they wanted to provide investors. Gold miners, for example, offered optionality, followed by net present value, followed by production growth, and now the current mantra is free cash flow. It could be something entirely different in a year or two.

JUNIOR MALAISE

The investor frustration with large companies such as Barrick is well documented. But it pales in comparison to their total abandonment of exploration juniors, which are in such a crisis that many insiders believe their existence is under threat.

Very few of these companies can raise capital. Since the start of 2013, miners on the TSX Venture have raised $660-million, Financial Post data shows. In the peak year of 2007, they raised $4.3-billion. Not surprisingly, the boutique investment banks that made so much money servicing these firms in the boom years are now chopping staff or closing down entirely.

Junior mining analyst John Kaiser offers much scarier data. Of the 1,731 Canadian juniors that he covers, 881 have less than $200,000 of working capital, and more than 700 have negative working capital. These companies may claim to be in the "mining" business, but they can't possibly be doing anything that would build value for investors.

It might benefit Canadian capital markets if hundreds of these companies disappear or go into medical marijuana, but it wouldn't make it any easier for the survivors to raise money.

As Mr. Kaiser sees it, the entire business model of greenfield exploration firms is dead and gone. The Canadian retail investor, who could always be counted on to finance these things, has moved on to other sectors. The rumour mill that used to build excitement over these names has been destroyed by the Internet, which ensures that information is everywhere. And automated trading has been particularly tough on juniors, as they trade on speculative value and can be crushed by unfriendly trades.

"We're heading towards an institutional, structural collapse at multiple levels," Mr. Kaiser said. "I think the Canadian resource junior is an endangered species."

Part of the problem is that there hasn't been anything to generate excitement in several years. Over the past few decades, there was almost always something that got people talking: a plethora of copper and gold discoveries in the 1980s; Voisey's Bay and the Arctic diamond finds in the 1990s; and the opening up of new exploration ground in Africa, Latin America and the former Soviet states in the 1990s and 2000s.

Most companies that had land in these places were able to raise money, regardless of market conditions.

The last time there was real excitement in the junior exploration space was in 2007 and 2008, with the discovery of the Ring of Fire mineral belt in Northern Ontario. Since then, nothing has captured the imagination of investors to a substantial degree. Fission Uranium Corp.'s recent find in Saskatchewan triggered a big staking rush, but without the corresponding investor frenzy.

The slow death of the junior exploration sector has real implications for Canadian mining as a whole. If these companies can't raise money, new mineral discoveries will become scarcer than they already are, and a generation of geologists and engineers might decide they are better off in another industry (as thousands did in the lean years of the 1990s).

The senior companies will also find it harder to secure new projects and find quality people, meaning it will become increasingly tough for them to capitalize on future commodity upswings.

STILL HOPING

The big picture may look grim, but mining industry folks have always been an optimistic bunch. For the most part, they are confident that investors who bailed out of the sector will come back in large numbers, if only because they always have in the past. But it is hard to predict when that will happen.

History suggests that a quick drop in global metal inventories, either because of a supply disruption or rising demand, is all it takes to get everybody talking about mining again. The recent run in nickel prices, brought about by export restrictions in Indonesia, is viewed by many insiders as a small example of what a recovery in this sector will look like.

In the meantime, miners have to console themselves with the fact that underlying commodity demand remains solid, regardless of whether the broader investment community wants to talk about them or not.

Mr. Bharti recalls the big fund managers in the late 1990s telling him they would never have anything to do with mining again. By the mid-2000s, they were setting up standalone resource divisions and plowing billions of dollars into the sector.

"When people see these stocks going up three, four, five times, they'll all be back. It's human nature," he said. He thinks interest in the mining space will start growing again by mid-2015, and 2016 should be another monster year for the sector.

Maybe so. But for the hundreds of companies struggling to keep the lights on today, that turnaround can't come soon enough. If they can't find someone willing to give them some cash, their future is going up in smoke like so much medical marijuana.

 

Clarification: The financing statistics used in this story come from internally-derived Financial Postdata. This data is different from the TMX Group's financing numbers as it counts only brokered deals and excludes deals smaller than $1.5-million, warrants or rights issues, and foreign-incorporated transactions. The TMX statistics can be viewed here

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