Junior miners partly to blame for poor price performance - #Gold JUNIOR #MINING - Mineweb.com

Junior miners partly to blame for poor price performance

While there are a number of external factors behind the recent fall in the valuations of junior miners, there is a sense that the companies themselves should bear some of the blame

Author: Geoff Candy
Posted:  Monday , 16 Apr 2012
GENEVA (MINEWEB) - 

Junior gold stocks have had a torrid time of things over the last 8 weeks, many of their share prices falling significantly as investors battened down the hatches.

But, while there are a number of significant exogenous factors at work on the sector - from Spanish debt levels to uncertainty about whether or not the US will kick off another round of quantitative easing - there is a sense that the juniors themselves should shoulder some of the blame.

Speaking to Mineweb at the Precious Metals Summit in Geneva, Haywood Securities analyst Joe Mazumdar said that one of the problems facing the sector is that, "you've got probably an oversupply of gold equity right now. There's a lot of exploration, a lot of issuers that are just gold stocks - that's all they do and they want to be gold stocks to get that premium and so now we've got oversupply and the demand has come down."

Astur Gold CEO, Cary Pinkowski agrees, telling Mineweb, "On the junior level, there are just too many companies, it is difficult for the investor to tell what is a good project and a bad project because everyone says they have a good project and great management. Five years ago a million ounce gold deposit was rare, now it is not because they have just reduced the cut off grade and say it is economic but, costs have gone up as well. So, to find the good economic projects is difficult."

Pinkowski believes there should be some consolidation in the sector. Adding, "We have realised that with junior companies, to have one asset is ok but to have two or three is the way to go; tighter management teams, more assets."

In some respects, however, the juniors are in a catch 22 situation right now because while fewer companies with more assets would be potentially more appealing to investors, their share prices are so low that most are reluctant to embark on any M&A activity either as predator or prey.

Indeed, one of the over-riding refrains to come out of the companies Mineweb spoke to at the Precious Metals Summit was the sense that there is money out there, it is just sitting on the sidelines and waiting for a reason to come back in.

Joseph Foster, of Van Eck Gold Funds told Mineweb, "I think the market is waiting for a reason to buy gold stocks. The valuations are very attractive with these stocks and we just need a catalyst - another rise in the gold price, a move towards new highs would definitely do the trick."

Another part of this problem is that investors in the current climate, faced with a veritable smorgasbord of opportunities from which to choose is that they are becoming much picker.

As Foster says, "We'd like to see these companies do a better job of meeting expectations, and if they can meet or even better, beat expectations, I think that would go a long way towards attracting investors to the equities."

According to Mazumdar, "Before, equity investors potentially wouldn't have asked all the same questions that debt holders would; now they're asking all the same questions because it's all related - if I finance you for equity, where are you going to get the rest of the money."

He adds, "When I was looking at a report on exploration from 2011 about 2010 - a lot of the exploration funding was done by juniors but less grassroots, more advanced exploration to build resource, because that's what the investors wanted. Now you're building up a lot of companies with this resource base, but with 1) no skillset to build it, 2) not finance to build it and so now what... There are a lot of companies out there that are in that ‘now what' sort of situation."

See the article online here: Junior miners partly to blame for poor price performance - JUNIOR MINING - Mineweb.com | The world's premier mining and mining investment website Mineweb

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British Columbia to spend C$25bn improving Asian trading opportunities - POLITICAL ECONOMY - Mineweb.com | The world's premier mining and mining investment website Mineweb

British Columbia to spend C$25bn improving Asian trading opportunities

BC's Premier announced Monday the launch of the Pacific Gateway Transportation Strategy which aims to expand the Canadian mining exports to Asia

Author: Dorothy Kosich
Posted:  Tuesday , 03 Apr 2012
RENO (MINEWEB) - 

British Columbia Premier Christy Clark Monday launched the new Pacific Gateway Transportation Strategy 2012-2020 to expand international trade in coal, potash, minerals, forest products, grain, container traffic and growth in air travel.

The strategy targets Cdn$25 billion in new public and private sector investment needed to meet demand, in addition to $22 billion already committed since 2005.

"We have a once-in-a-generation opportunity to take advantage of the fastest growing economy in history," Clark said. "Asia is right at our doorstep-our ports are closer than anywhere else in North America. Our government is making sure we can get our goods to market as efficiently and quickly as possible and this strategy is a huge part of that plan."

For instance, Teck has invested more than $1 billion and hired an additional 1.000 people in British Columbia to expand its steelmaking coal, copper and zinc operations. "We're investing to meet growing demand, particularly in Asia, for the products we produce," said Teck CEO Don Lindsay. "Working with the B.C. government and the other Pacific Gateway partners, we're creating opportunities for equipment operators, trades people and professionals across the province."

Neptune Terminals' strategic investments have resulted in record terminal exports of potash and steelmaking coal, a 20% job increase at terminals, "and additions to come as we complete our expansions," said Neptune Bulk Terminals (Canada) President, James Belsheim.

The strategy will increase major road and rail capacity, rural resource transportation capacity, bulk and container terminal capacity at B.C. ports and air passenger and cargo capacity to meet projected growth through 2020.

So far, about $12 billion worth of projects have been completed. $10 billion in projects are now underway including expansion of the Trans-Canada Highway to four lanes from Kamloops to the Alberta border and Kicking Horse Pass. The highway is a main route for movement of east-west goods to B.C. ports.

Going forward, $25 billion in additional investment is planned. CN and Canadian Pacific plan to invest $2.8 billion to increase capacity on rail mainlines.

Private sector investment of between $300 million and $1.1 billion will expand coal terminal capacity in Vancouver and Prince Rupert, while up to $60 million has been committed to expand metal and mineral terminal capacity in Northwest B.C. and Vancouver.

Private sector investments of up to $700 million will be used to develop additional potash terminal capacity.

"We are building on our world-class transportation network to support the growth of exports that create new jobs and opportunities in B.C.," said Transportation and Infrastructure Minister Blair Lekstrom. "Our vision is to make B.C. the preferred choice for Asian-Pacific Trade and secure a great economic future for British Columbians."


See the article online here: British Columbia to spend C$25bn improving Asian trading opportunities - POLITICAL ECONOMY - Mineweb.com | The world's premier mining and mining investment website Mineweb

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Chalco Agrees to Buy SouthGobi Stake to Gain Coal Mines (1)

(BN) Chalco Agrees to Buy SouthGobi Stake to Gain Coal Mines (1)

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Chalco Agrees to Buy SouthGobi Stake to Gain Coal Mines (1)
2012-04-02 11:05:28.628 GMT

(Updates with comment from SouthGobi CEO in eighth
paragraph.)

By Michelle Yun
April 2 (Bloomberg) -- Aluminum Corp. of China Ltd., the nation's biggest producer of the metal, agreed to buy Ivanhoe Mines Ltd.'s stake in SouthGobi Resources Ltd. to gain control of Mongolian coal production as it expands into other commodities and diversifies revenue.
Ivanhoe will tender its 57.6 percent stake in SouthGobi into Chalco's C$925 million ($928 million) offer to buy as much as 60 percent of the company at C$8.48 a share, 28 percent more than its close in Toronto on March 30, according to a statement today from Chalco, as the Chinese company is known. Should shareholders tender more than 60 percent of the stock, the amount sold by Ivanhoe may be reduced, according to a statement from Ivanhoe.
Control of SouthGobi will give Chalco coal sales from the Ovoot Tolgoi mine to bolster revenue as aluminum prices decline.
Ivanhoe, founded by billionaire Robert Friedland, said in February it was encouraged by progress of talks as it sought to sell some assets to finance the Oyu Tolgoi copper and gold project.
"It marks the most significant step by a long way for Chalco in terms of executing this diversification strategy it's been talking about for a number of years," said Andrew Driscoll, Hong Kong-based head of resources research at CLSA Asia-Pacific Markets.
The aluminum producer has also agreed to purchase as much as 100 percent of SouthGobi's production for as many as two years, Chalco said. Its shares fell 1.9 percent to HK$3.67 at the close in Hong Kong. SouthGobi surged 18.2 percent to close at HK$60.50.

Offer Premium

Chalco's offer is priced at 36 percent more than SouthGobi's weighted average price over the past 20 days, compared with a 21 percent premium for similar-sized completed basic materials deals over the past five years, according to data compiled by Bloomberg.
Chalco will use its own cash, bank loans or a combination of both for the purchase, it said. It will retain nine of SouthGobi's senior staff, including Chief Executive Officer Alexander Molyneux for 12 months from their employment termination under consultant agreements to facilitate transition, Chalco said.
"It's almost certainly going to happen as long as the regulatory approvals happen and go forward," Molyneux said on Bloomberg Television's "On the Move Asia" program today after the announcement. "You might say there's a lot more synergy having a Chinese state-owned enterprise as a major shareholder as opposed to having a very well-known exploration resource development company."
The acquisition is Chalco's biggest since it agreed to pay
$1.35 billion for a stake in Rio Tinto Group's Simandou iron ore project in Guine in July 2010. The offer is expected to open on or before July 5 and shareholders will have not less than 35 days to accept the offer, according to Chalco's statement.
SouthGobi was among the assets that Ivanhoe's advisers had contacted potential investors about last year after receiving unsolicited expressions of interest, Ivanhoe said in September.
"Depending upon the uptake of the offer by other SouthGobi shareholders, Ivanhoe could receive up to approximately C$889 million from the sale of all of its shares in SouthGobi,"
Ivanhoe said in its statement today. "A sale of 60 percent of its current holding would realize proceeds of approximately
C$533 million."

For Related News and Information:
Top metal stories: METT <GO>

--Editors: Andrew Hobbs, Peter Langan

To contact the reporters on this story:
Michelle Yun at +852-2977-4643 or
Myun11@bloomberg.net