BHP approves $267m capex for Australian coal projects

JOHANNESBURG – Diversified giant BHP Billiton on Monday approved capital expenditure of $267-million to accelerate the development of a coal projects in Queensland.
BHP Billiton would use the funds for development of the Caval Ridge project and Hay Point Coal Terminal expansion.
The Caval Ridge project would produce 5,5-million tons a year of coking coal from the Caval Ridge mine and an incremental 2,5-million tons a year from the Peak Downs mine.
The terminal expansion project is expected to increase the annual capacity of the Hay Point Coal Terminal from 44-million tons a year to 55-million tons a year.
The $267-million would be used for feasibility studies, the procurement of long-lead time items and initial project activities, BHP, which is developing the projects in a partnership with Mitsubishi, said in a statement.
BHP noted that subject to regulatory approvals, final approval for the development of these projects was expected when the feasibility studies were completed in the third quarter of 2011.
The Caval Ridge mine, Peak Downs mine and Hay Point Coal Terminal are operations of the BHP Billiton Mitsubishi Alliance, a 50:50 joint venture between BHP Billiton and Mitsubishi Development.

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Xstrata halts output at Australia mine over strike

PERTH - Xstrata, the world's largest producer of thermal coal, said a strike at one of its Australian coal mines over a wage dispute has been extended by 24 hours and will significantly interrupt operations.

The labour action at the Bulga mining complex in eastern Australia, which comes on top of a 48 hour strike over the weekend, will halt production on Tuesday but will not affect shipments, the firm said on Monday.

"The union could plan more strike action if the wage dispute is not resolved. We are constantly assessing its impact on production," Xstrata's spokesman James Rickards said.

"Coal shipments are not affected by the strike yet," he said.

Workers from the Construction Forestry Mining and Energy Union are demanding higher wages and have rejected Xstrata's offer of a 15% in base salary over three years.

Bulga produces around eight-million tons of thermal coal used in power generation and semi-soft coal for steelmaking for export. Australia's total coal exports are around 270-million tons a year, one of the top earners for the commodities-driven economy.

The Bulga operation is 87,5% owned by Oakbridge, in which Xstrata holds a 78% shareholding. Nippon Steel owns the remaining 12,5%.

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SA might not reap full benefits of global mining rebound – analyst

JOHANNESBURG– Growing physical demand for commodities, a strong possibility of speculative buying and rising prices were expected to give the global mining industry a boost in 2010, but South Africa might not reap the full benefits of a rebound, a metals and mining analyst said on Monday.
Frost & Sullivan analyst Wonder Nyanjowa said on Monday that while the extent of the global economic recovery remained uncertain, commodity prices were likely to put up a strong performance and that mining companies were likely to expand production capacity.
However, some challenges particular to South Africa could dampen local prospects.
“Many of the local challenges that adversely impacted on production in 2009, such as electricity supply shortages, a lack of skills and safety concerns, are likely to continue affecting the performance of the mining industry in 2010,” he said in a statement.
Nyanjowa believes that growing inflation fears in the developed world, particularly the US, an unstable US dollar, threats of another recession from expansionary fiscal and monetary policies and negative real interest rates pointed towards a strengthening investment demand for gold.
“A price range of $1 300/oz to $1 500/oz in 2010 looks likely, supported by gold demand and supply fundamentals,” he said.
Last week, metals consultancy firm GFMS said the price of gold could climb to $1 300/oz in 2010, exceeding the 2009 record of $1 226/oz.
South Africa’s gold production was likely to slip further this year, to around 200 t.
While platinum was one of the biggest casualties of the global recession, Nyanjowa expected things to be much rosier in 2010.
“Frost & Sullivan anticipates that the platinum industry will recover this year on the back of stronger prospects of recovery in the global automotive sector, particularly in China and India. The launch of two new platinum-based exchange-traded funds in the US will also lead to strong investment demand.”
The platinum price rallied to its highest level in over 17 months on Monday, with the spot price reaching $1 626/oz.
Further, Nyanjowa said that coal miners should remain robust.
He expected the domestic demand for coal to continue to grow in 2010, following expansion programmes at State-owned Eskom and synfuels producer Sasol, which would require an additional 75-million tons of coal.

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Kinross Gold expects to produce 2.2Moz this year - Brazil, Chile

Toronto-based Kinross Gold (TSX: K, NYSE: KGC) has issued a preliminary output guidance for 2009 and 2010 of 2.23Moz gold equivalent and 2.2Moz respectively. Both estimates are in line with previously stated guidance, the company said in a statement Friday.
"As gold demand surged and prices hit record levels, Kinross delivered its highest-ever quarterly output in the fourth quarter of 2009, and expects to produce a record 2.23Moz equivalent for the full-year 2009, a 21% increase over 2008," CEO Tye Burt said.
Costs for last year are expected to have averaged US$435-450/oz of gold equivalent and are forecast at US$460-490/oz for 2010.
By country, in 2009 gold equivalent production from Brazil is expected to have been 430,000oz, Chile 465,000oz, Russia 690,000oz and the US 650,000oz.
As for capital expenditures this year, Kinross said it aims to spend about US$550mn, of which US$225mn will be for mine development, US$90mn for a new ball mill at the Paracatú mine in Brazil and US$48mn for new projects, the company said.

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Baja updates El Boleo's economics - Mexico

Vancouver-based Baja Mining (TSX: BAJ) has updated the economics for its 70%-owned El Boleo copper project in Mexico's Baja California Sur state to include capex of US$889mn for annual output of 56,697t copper cathode, 1,708t cobalt cathode and 25,364t zinc sulfate monohydrate for the first six years of mine life.
The project has a resource of 265Mt grading 1.50% copper equivalent in measured and indicated resources and 159Mt at 1.15% in the inferred category.
El Boleo has an after-tax internal rate of return of 25.6% using the guidelines of the US Securities and Exchange Commission (SEC) or 27.9% at present market prices, the company said.
El Boleo's net present value at an 8% discount rate is US$1.31bn using SEC guidelines or US$1.47bn at market values.
"This update now provides a strong foundation for completing construction financing and recommencing construction of the mine and processing facility in order to move to production as soon as possible," Baja CEO John Greenslate said.

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Mining claim requests sink 46.5% in 2009 - Peru

Peruvian geology, mining and metallurgy institute Ingemmet received 5,235 mining claim applications in 2009, down 46.5% from 9,793 applications in 2008 as the global economic crisis wilted mining stocks and financing options.
In terms of area, 2009 requests covered 2.34Mha compared to 4.93Mha the year before, the Ingemmet figures show. The 2009 figures were also lower than those recorded for 2006 and 2007, but surpassed the 5,052 requests over 2.25Mha made in 2005.
In December 2009, requests totaled just 290, the second lowest of the year after June's 281 and down 16.2% year-on-year. However, looking back at 2005-08, December was also the month of fewest applications submitted every year.
Peru captured 5% of global exploration spending of US$12.6bn last year, according to the Halifax-based Metals Economics Group, which has estimated that 2009 budgets sank to US$8.4bn.

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Mining News Today

Bolivia's hydrocarbons industry, viewed as one of the most unattractive in the region despite its massive natural gas reserves, got a much needed boost after state hydrocarbons company YPFB announced a five-year investment program of US$11bn.
YPFB president Carlos Villegas said in August last year that the company would need investment of US$11bn through 2026, which could suggest that Bolivian authorities are planning to accelerate works to finally increase stagnant natural gas production.
"I dream of having our state company becoming as important as Brazil's Petrobras or Venezuela's PDVSA," Bolivian President Evo Morales said at a ceremony to unveil the investment program.
YPFB's investment program will be financed by Bolivia's government, external financing sources and foreign firms that have announced new agreements with the company. YPFB officials said late last year that they had already obtained a US$1bn loan from Bolivia's central bank.
While Bolivia's government has frequently been depicted as hostile to foreign investment, especially after it nationalized most of its hydrocarbons industry, signals have recently started to emerge that the government may again be looking to attract foreign expertise.
Bolivia's government in late November said it was aware that nationalization of the industry in 2006 had not been sufficient to boost production and formed a company to promote and advance new hydrocarbons projects in the county.
Dubbed Empresa Boliviana de Industrialización de Hidrocarburos, the new firm was given a small budget and will seek to form partnerships with foreign companies.
"Bolivia shouldn't have to wait 60 years to get the industry going," the country's hydrocarbons minister Óscar Coca said.
Spanish oil major Repsol said in November it would invest US$1.5bn in Bolivia to increase natural gas production in the country. Russia's Gazprom and French oil major Total in 2008 signed an MOU with YPFB to invest US$4.5bn in a new natural gas project in Bolivia.
Brazil, meanwhile, also said this week that it was interested in investing in Bolivian natural gas infrastructure, according to Brazil's ambassador in La Paz, Frederico Cézar de Araujo.
According to the diplomat, Brazil could be willing to invest US$1.5bn-2bn in the neighboring country.
Average investors will still want to take a wait and see approach to the country, but signs that international majors are still interested in the country and YPFB's announcement could mean authorities are finally starting to increase production.
Also this week in Oil & Gas:

 

Brazil
- Brazil's attorney general's office is preparing to appeal an injunction that removed sugar and ethanol major Cosan from a government list of companies accused of using slave labor.
Cosan has said it had no knowledge of the situation. The company also said it has cancelled contracts with the sugarcane processor involved in the scandal.
- Mines and energy minister Edison Lobão confirmed the interest of Petrobras in acquiring a stake in Portuguese oil major Galp. According to Brazilian and Portuguese media reports, Petrobras is aiming to buy Italian major Eni's 33.34% stake in Galp.
- Brazil's gasoline will contain 20% ethanol from February 1 as opposed to the current 25% admixture rate. The measure, set to last for 90 days, was taken in order to minimize the impact of rising ethanol prices on the Brazilian fuel market.
Chile
- PetroMagallanes, the Chilean subsidiary of New Zealand's Greymouth Petroleum, announced that oil and gas has flowed from its Río del Oro-1A well on the Caupolicán block in the Tierra del Fuego region of southern Chile.
- Chilean fuel distributer Copec, one of the largest conglomerates in the country, will invest US$700mn in 2010 and aims to consolidate acquisitions made last year.
- Copec also finalized a long awaited contract with Chile's state oil company Enap.
Colombia
- Canadian oil junior Azabache Energy started a 2D seismic program to acquire 50km of data in Colombia. The company earlier in the month received approval to change its name to Azabache Energy from Argenta Oil & Gas.
Ecuador
- Ecuador is set to launch a biofuels pilot program in Guayaquil. The pilot project will create a 5% gasoline admixture with ethanol produced from sugarcane.
Peru
- State oil company Petroperú will list shares on Lima's BVL stock exchange in February in an effort to boost transparency.
- Petroperú and Spain's Técnicas Reunidas will sign the FEED-EPC contract for the modernization of the Talara refinery in Piura this month.
The project is slated to cost between US$1.2bn and US$1.3bn, although the final figure could be adjusted once engineering studies are complete.
- The Andean Development Corporation (CAF) approved a US$65mn loan for Maple Energy's US$246mn, 35Mg/y (133Ml/y) ethanol and biomass project in northern Peru.
Venezuela
- Tulsa-based service firm Helmerich & Payne expects its second fiscal quarter of 2010 to be impacted by US$20mn because of the currency devaluation recently announced by authorities in Venezuela.

RESULTS & FIGURES
Latin America-focused Global Energy Development produced 398,082b of net oil in 2009 compared to 438,007b during the previous year.
Oslo-based Norse Energy reported natural gas production from its Manati field in Brazil averaged 5.85Mm3/d in the fourth quarter of 2009. The volume represents a 7% increase from the third quarter last year.
Brazilian fuel distribution, gas and chemical group Ultrapar plans to invest 314mn reais (US$180mn) in its Ipiranga unit, Brazil's second largest fuel distributor, in 2010.
Ethanol sales by distillers in Brazil's center-south region, where 80% of the country's sugarcane is grown, reached 2.11Bl in December, according to the latest figures from Brazilian sugarcane and ethanol association Unica.
Of this total, 118Ml were exported and 1.9Bl went to the domestic market.
Norway's InterOil Exploration & Production, which operates in Colombia and Peru, produced 7,114b/d last month compared to 6,236b/d in November.
Peruvian consulting firm Maximixe claims there are 3.4Mha of deforested land in the country that could be used to cultivate biofuel crops.
Of the total, 75% are located in the Peruvian jungle in the departments of San Martín (1.4Mha), Loreto (950,000ha) and Ucayali (654,000ha).
Peru's fuel price stabilization fund has seen its debt surpass 400mn soles (US$139mn) as the oil price continues to climb.
Peru's liquid hydrocarbons production totaled 53.3Mb in 2009, up 20.7% from the previous year.
Canada's Talisman announced an international exploration program of US$700mn for 2010. Nearly US$500mn of that will be invested in potential new core areas and include the drilling of new wells in Peru and Colombia.

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Uranium One says Q4 output rose 42%

TORONTO – TSX- and JSE-listed Uranium One on Thursday reported fourth-quarter production of 1,2-million pounds, an increase of 42% compared with the group's attributable output in the third quarter of 2009.
Production for the full year rose 24% from 2008, to a best-ever 3,6-million pounds of uranium, the company said in a statement.
The production gains were mainly thanks to the successful ramp up in production at the new South Inkai mine, in Kazakhstan, Uranium One said.
The company also announced on Thursday that it had completed a C$270-million convertible debenture financing with a consortium of Japanese companies, and also received $20-million in dividends from its share of the Betpak Dala joint venture.
Uranium One owns 70% of the joint venture, which holds the Akdala and South Inkai mines in Kazakhstan.
The company also holds 30% of the Kharasan mine, and recently acquired a 50% holding in the Karatau mine, both of which are also in Kazakhstan.
The firm reported annual attributable sales of 3,2-million pounds of uranium in 2009, 44% higher than a year earlier.
Fourth quarter sales rose to a record 1,5-million pounds, more than triple the 0,4-million pounds reported in the third quarter.
Uranium One said it has received all the approvals it needs for its acquisition of the Irigaray in situ recovery central processing plant, the Christensen Ranch satellite ISR facility and associated uranium resources in the Powder River Basin, in Wyoming.
The deal is expected to close by January 31, and Uranium One aims to start first production from the Irigaray plant and Christensen Ranch well fields in 2011.
Finally, the company said it completed the sale of its 99% interest in the South Texas Mining Venture to Uranium Energy Corp, for 2,5-million restricted common shares in Uranium Energy, on December 18.

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Peru govt seizes $14m Doe Run financial guarantee

As pressure mounts on Doe Run Peru to reopen its La Oroya smelter, the government of Peru has seized the zinc and lead refiner's $14-million financial guarantee to make sure the company fulfils its environmental clean-up responsibilities.
Doe Run Peru announced a week ago that the smelter would not reopen in January as planned, drawing criticism from local authorities and workers.
The guarantee will be held until the company finishes the environmental remediation it is obliged to do, the country's Energy and Mines Ministry said in a statement on Thursday.
Once the work has been completed, the government will give the money back to the company.
The Ministry said it had also seized a $4-million guarantee in 2009 for the same reasons.
Up to now, Doe Run Peru has executed 52% of the environmental clean up project (known in Spanish as PAMA).
The remaining 48% requires a $160-million investment.
On September 24, Peru's Congress approved a law that extended to 30 months the term for the mining company to complete the PAMA programme, which includes the construction of a sulphuric acid plant, to reduce emissions, and the improvement of the copper circuit in the La Oroya plant.
The Archbishop of Huancayo, Pedro Barreto, criticized the company's decision to postpone the smelter´s inauguration, which means workers continue to endure “forced vacations”, he told local news radio station CNR.
On Thursday, Doe Run Peru, controlled by billionaire Ira Rennert, said it is seeking a “strategic partner” to finance the reopening of its shuttered smelter, Bloomberg News reported. “There’s a lot of speculation right now,” Doe Run Peru vice-president Jose Mogrovejo said.
Lima-based newspaper Caretas reported that Rennert is holding negotiations to sell the La Oroya smelter to Glencore International AG. Mogrovejo told Bloomberg that Doe Run does not plan to sell 100% of the smelter.

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Antofagasta Minerals options up to 65% of copper project in US - Chile

Chilean copper producer Antofagasta Minerals has signed an agreement to earn up to 65% in Duluth Metals' (TSX: DM) Nakomis copper-nickel project in the US state of Minnesota, the former reported in a statement.
Antofagasta agreed to invest US$130mn in the project over three years to earn 40%. If the company completes an economically viable feasibility study it can earn 25% more.
"This transaction is in line with our strategy to seek and acquire high quality mineral resources in order to improve our growth outlook in the long term," Antofagasta CEO Marcelo Awad said.
Nakomis has 274Mt grading 0.6% in inferred copper resources and also has nickel, platinum, palladium and gold.
Antofagasta Minerals is owned by London-based Antofagasta plc (LSE: ANTO), which in turn is controlled by Chile's Luksic group.

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National mine output to hit 5.73Mt this year - Cochilco - Chile

Chile's copper mine production is expected to rise to 5.73Mt this year from 5.34Mt in 2009 and in 2011 will reach 5.89Mt, according to the quarterly market research report by the country's state copper commission Cochilco.
Global mine output is expected to increase to 16.8Mt this year from 15.8Mt in 2009 and will reach 17.6Mt in 2011.
Peru, the world's second largest copper producer behind Chile, will fall from 1.23Mt last year to 1.21Mt in 2010 but rise to 1.22Mt next year, according to Cochilco.
The US, the third largest producer, will drop from 1.21Mt in 2009 to 1.17Mt this year but rise to 1.21Mt again in 2011.
China, the fourth largest, put out 1.06Mt in 2009 and will produce 1.13Mt this year and 1.22Mt in 2011, the report says.

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Xtierra reports favorable metallurgical tests linked to Bilbao feasibility - Mexico

Toronto-based Xtierra (TSX-V: XAG) has completed oxide metallurgical test work related to a feasibility study on its Bilbao silver-lead-zinc-copper project in Mexico's Zacatecas state, the company said in a statement.
"The oxide test results are extremely positive and indicate that we have a practical and economic solution to the processing and recovery for the oxide resources which represent approximately 40% of the total resource potential at Bilbao," said CEO Terence McKillen.
He added: "More importantly, it allows us to focus on open pit mining methods for the initial development of Bilbao, including all of the oxide and transition resources with the potential of extracting a significant portion of the sulfide resources before underground development."
The tests recovered 61.2% zinc, 41.0% lead, 66.7% silver, 71.0% copper and 55.0% gold, the company said.
Xtierra started the feasibility study in April 2009.
Bilbao has an NI 43-101 compliant 3.6Mt indicated resource with average grades of 3.53% zinc, 2.75% lead, 0.29% copper and 88.23g/t silver and 2.38Mt of inferred resources averaging 2.52% zinc, 2.79% lead, 0.28% copper and 83.08g/t silver, according to the company.

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Mining exports rise to US$1.7bn in November on better prices - Peru

Peru's mining industry exported US$1.72bn worth of metals and minerals in November 2009, rising 48.7% from US$1.16bn year-on-year, according to the latest figures from the country's central bank.
Two of Peru's main products, copper and gold, saw the total value of exports rise despite lower volumes shipped, thanks to higher prices.
The red metal brought in US$707mn in November compared to US$459mn year-on-year, while physical sales abroad dipped to 112,700t from 126,500t as average prices soared to US$2.846/lb from US$1.647/lb. The entire metals complex saw values sink drastically in late 2008 as a result of the global economic crisis.
Gold exports brought in US$587mn in the eleventh month of 2009, rising from US$411mn as volumes slipped to 520,400oz from 539,400oz.
Meanwhile, Peruvian zinc exports totaled 148,700t worth US$178mn in November, up from 134,700t worth US$71.8mn. Lead pulled in US$144m from the sale of 68,000t, up from US$48.8mn and 33,700t, the central bank figures show.
Exports of fine silver from Peru plummeted to just 0.4Moz in November 2009 from 3.2Moz year-on-year, taking revenue down to US$6.4mn from US$32.0mn.
Iron ore export income fell to US$27.7mn from US$39.8mn, though shipments inched up to 0.7Mt from 0.6Mt. Peru also sent abroad US$12.9mn worth of non-metallic minerals, down from US$15.6mn.
Mining products account for more than 60% of Peru's export revenue.

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