Engineering & Mining Journal

APR 2016

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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NEWS-LEADING DEVELOPMENTS APRIL 2016 • E&MJ; 5 www.e-mj.com the top 10 were Finland, Alaska, Austra- lia's Northern Territory, Quebec, Utah and South Australia. At the other end of the scale, the bot- tom 10 jurisdictions ranked for invest- ment attractiveness included four Argen- tinian provinces, with La Rioja province ranked last, displacing Venezuela as the least attractive jurisdiction in the world. The complete list of the bottom 10 juris- dictions, beginning with the worst, were La Rioja; Venezuela; Honduras; Greece; Solomon Islands; Chubut, Argentina; Guinea; Kenya; Mendoza, Argentina; and Rio Negro, Argentina. The survey noted that analysis of regional trends in the results of the In- vestment Attractiveness Index indicates a stark difference between geographical regions, notably the divide between Aus- tralia, Canada, and the United States, and the rest of the world. The Fraser Institute survey includes numerous quotes from company exec- utives regarding experiences with regu- latory issues in individual jurisdictions. Among these comments: "Government management of the Ring of Fire in Ontario was a disaster. It has been 12 years since the original discov- ery and no sign as to when a development might occur." – An exploration company president. "The EPA's effort to circumvent the law and stop Pebble at all costs has had signifcant negative ramifcations on min- ing development in Alaska." – A manager for a producing company. "It has taken more than three years (and counting) to complete an environ- mental assessment to undertake explora- tion on U.S. Forest Service land in Ida- ho, in an area that has been mined for a century." – An exploration company vice president. "Next to impossible to even get drill- ing permits in New Mexico, let alone a mining permit." – A consulting company president. "Competition for ground is transparent in Western Australia, and corruption is rare." – An exploration company director. "Queensland has granted permission to explore for uranium but refuses to grant mining leases to mine it." – A pres- ident of a producing company. "Demand for corruption money by of- fcials, retroactive taxation, and a lack of infrastructure all act as deterrents to in- vestment in Democratic Republic of Con- go." – A consulting company president. "The increased taxes imposed on Mex- ico's mining industry in the 2014 tax re- form are a deterrent to investment. The poor administration of mining conces- sions and lack of timeliness in processing concession applications has brought early stage exploration to a halt." – A president of a producing company. The report totals 85 pages and in- cludes extensive tables and bar charts. It is available as a free download at www. fraserinstitute.org/sites/default/files/ survey-of-mining-companies-2015.pdf. Vale, Fortescue Agree to Pursue Chinese Iron Ore Market Expansion Brazilian mining giant Vale and Austra- lian iron ore producer Fortescue Metals announced in March they will pursue "op- portunities to enhance competitiveness in their operations" by signing a Memoran- dum of Understanding (MoU). The MoU sets out the principles on which Vale and Fortescue have agreed to follow up on long-term opportuni- ties in the iron ore market, as well as cre- ate additional value to the Chinese steel industry. These opportunities, according to the two companies, include formation of one or more joint ventures for blending and distribution of Vale's and Fortescue's respective products in China in order to develop an iron ore blend specifcally designed to meet the long-term needs of existing and new Chinese custo- mers. It also provides the option to undertake joint mining developments in Australia as well as for Vale to take a minority stake in Fortescue's holding company. Peter Poppinga, Vale's executive direc- tor for ferrous minerals, said, "The Mem- orandum of Understanding is one more important step toward optimizing Vale's supply chain, creating new platforms for future mine development and offering a new world-class alternative product to the Chinese steel industry. We are looking more than 10 years ahead." Both companies stated that the MoU does not constitute a contract and is not legally binding on the parties. It remains subject to agreement on the fnal terms of any resulting transaction documents and receipt of all required approvals, in- cluding board approval and any relevant regulatory approvals. Shortly after the joint announcement of the MoU agreement, Vale issued a statement clarifying that that the MoU "defnes only certain general principles on which Vale and Fortescue Metals Group Ltd. wish to progress discussions. These discussions include, among oth- ers, the optionality to undertake joint mining developments together with Forte- scue in Australia and the optionality to take a minority stake in Fortescue in the long term. "Vale states that its short- to medi- um-term strategic priorities are to com- plete the S11D project and to deleverage its balance sheet in order to improve its fnancial fexibility," the clarifcation statement said. Lundin Acquiring Interest in Serbian Copper-Gold Project Lundin Mining has entered into an agree- ment with an affliate of Freeport-McMo- Ran to purchase an interest in Freeport's stake in the Timok project in Serbia. Freeport currently holds a 55% interest in the project and is the operator; Reser- voir Minerals holds the remaining 45%. Upon the delivery of a feasibility study, Freeport can earn an additional 20% interest. Consideration for Lundin's pur- chase totals $262.5 million payable in stages upon the achievement of key de- velopment milestones. The Timok project hosts the high-grade Cukaru Peki copper-gold deposit, located approximately 6 km south of the famous, century-old RTB Bor copper-gold mining/ smelting complex. The region has a rich The Timok property's Cukaru Peki deposit is character- ized by high-grade massive and semimassive sulphide mineralization. (Photo: Reservoir Minerals Inc.) (Continued on p. 22)

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