Cameco closes the book on Centerra

TORONTO - TSX- and NYSE-listed Cameco Corporation has sold 88,6-million shares in Centerra Gold for C$871-million, and made arrangements to transfer the other 25,3-million shares it owns in the gold miner to the government of Kyrgyzstan.
After the transfer is completed, Cameco will have sold its entire interest in Centerra, ending its participation in the gold-mining business and freeing the company to focus on its core uranium-mining and nuclear-energy businesses.
Cameco announced earlier this month it would sell the 88,6-million shares in a public offering at C$10,25 apiece.
The transfer of the rest of the stake to the Kyrgyz government was agreed to in April, as part of an investment agreement signed for Centerra's Kumtor mine in the country.
In the April agreement, which followed years of negotiations and delays, Centerra and Cameco agreed to give the Kyrgyz government an increased share in Centerra, in exchange for security of tenure, a bigger concession area and a simplified, fixed tax regime of 14% of the gross revenue for the Kumtor mine.

Cameco spun out its gold assets into Centerra in 2004. Besides Kumtor, Centerra also owns and operates the Boroo mine, in Mongolia, and is planning a new operation, Gatsuurt, also in Mongolia.

NEW DIRECTORS
Centerra said separately on Wednesday that it has appointed three new directors to its board.
Firstly, John Lill will replace Cameco CFO Kim Goheen, who has stepped down as a director of Centerra now that the uranium miner no longer has a stake in the company.
Centerra has also expanded the number of directors to 11 from nine, and appointed Aleksei Eliseev and Iurii Kosvin to the board as representatives of the government of Kyrgyzstan.
Shares in Centerra slid 0,48% on Wednesday, to C$10,30 apiece by 14:13 in Toronto. Cameco gained half a percent, to C$34,01 a share.

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Antamina says $1,2bn expansion nearly approved

LIMA - Antamina, a leading copper-zinc mine in Peru, said on Tuesday its $1,2-billion expansion plan should be formally approved by shareholders in the coming days.

Antamina – a joint venture between BHP Billiton Ltd, Xstrata, Teck Cominco Ltd and Mitsubishi Corp – has said the expansion would lift the volume of ore moving through its mills by 38%.

It produced 358 179 tons of copper and 382 842 tons of zinc last year, according to the mining ministry of Peru, the world's second-largest producer of zinc and third-largest producer of copper.

The project should be approved "before the end of the year," an Antamina official said. "Up to $1,2-billion will be invested."

Construction is expected to start in the first half of 2010 and be operational in the second part of 2011. It is expected to extend the life of the mine to at least 2029.

Miners in Peru delayed investments in late 2008 during the depths of the global economic crisis, but lately have decided to move ahead with expansion efforts.

In September, Antamina's president, Ian Kilgour, said the mine had already ordered new mills for the project.

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Copper hits 16-month high on 2010 confidence

LONDON  - Copper climbed to a fresh 16-month high above $7 300 on Wednesday as rising demand expectations for 2010, combined with strike action in Chile, supported prices. Benchmark copper for three month delivery on the London Metal Exchange traded at $7 321 a ton from $7 275 at the close on Tuesday. The metal, used in power and construction, earlier touched $7 380, its highest since Sept. 4, 2008.

"There is ongoing support from indications of an improving outlook in 2010," said John Meyer, analyst at investment bank Fairfax. "Certain metals have been helped by investment demand ... It's been a roller coaster year."

He added that improving U.S. consumer confidence data from Tuesday was also boosting investor sentiment.

In addition, Chile's Codelco, the world's No. 1 copper producer, was braced for a strike at its giant Chuquicamata mine after workers rejected a wage offer on Tuesday, stoking supply fears on global markets.

A strike could start on Jan. 4 at Chuquicamata although analysts expect any stoppage to be short lived.

"Workers voted on Tuesday to strike at Chile's Chuquicamata mine, which produces around 4 percent of the world's copper concentrate," RBC Capital Markets said in a note.

"The Chuquicamata strike vote came just hours after union workers began an indefinite strike at Chile's Altonorte smelter, where owner Xstrata has cut output at the facility for nearly a month for maintenance work."

But copper prices were little affected by a firmer dollar, which hit a two-month high as it continued to benefit from the view the U.S. economy is on course to recover.

A strong U.S. currency makes metals priced in dollars more expensive for holders of other currencies.

A weak dollar has boosted industrial metals this year, combined with Chinese buying, new investor cash and an improving macro outlook.

Copper is now on course for an annual rise of about 140 percent, its biggest in at least three decades.

The red metal has rallied every quarter this year, its longest run of gains since breaking a run of nine quarterly increases at the end of 2006.

Average quarterly gains for London copper in 2009 were 24 percent, pipping 1987's average of 20 percent.

"It looks like copper's amazing bull run will continue into next year, for a while at least. But there is a lot of speculative froth in these prices and valuations have very little to do with current fundamentals," a dealer in Hong Kong said.

INVENTORIES RISE

Demand worries remain. Copper stocks rose 10 025 t to 495 950 t – the highest point since early April.

In other metals, aluminium traded at $2 266 a ton in LME rings from $2 273 but earlier hit a two-week high at $2 289. LME stocks for the metal, used in transport and packaging, fell 1 800 tons but remain near record levels above 4,6-million tons.

Steel making ingredient nickel traded at $18 930 in LME rings from $19 200 while battery material lead was at $2 426 from $2 449.

Weighing on nickel were LME stocks, which gained 1 038 tons to new record levels at 153 936 tons.

Zinc traded at $2 581 a ton from $2 548 and tin was untraded in official rings but last bid at $16 750 from $16 745.

"Chart indicators and demand expectations should continue to limit substantial price weakness over the next few days while the focus will be firmly on year-end window dressing," BaseMetals.com said in a note.

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Chile output unexpectedly up, copper output jumps

SANTIAGO - Chile's industrial output rose unexpectedly in November in the first increase in 14 months and copper output surged, data showed on Wednesday, as the economy pulls out of its first recession in a decade.

Industrial output rose by 1 percent, driven by external demand, the National Statistics Institute (INE) reported, topping expectations for a fall of 1,1 percent, according to the median forecast by analysts in a Reuters poll.

Chile, the world's No. 1 copper producer, said its output of the red metal jumped 8.2 percent in November from a year ago. And INE reported the jobless rate for the September-November period slowed to 9.1 percent from the three-month period ending in October.

Finance Minister Andres Velasco said the latest data, including the rise in November industrial output, confirmed the economy's recovery from recession.

"We are not talking about an isolated figure. There is a batch of data which shows a recovery of the economy which is now sustained," Velasco told reporters.

Industrial output in October had dropped 6,6 percent.

"The growth in industrial output ... is due to improved external demand, rebuilding of inventories, followed by the recovery of diverse industrial sectors," INE said in a statement, citing a rebound in paper products and food and drink.

Chile's peso was slightly firmer in early trade after the release of the data, but later eased with global bourse losses.

The jobless rate for the September to November period was slightly lower than the median forecast of 9,2 percent of analysts surveyed by Reuters. The jobless rate for the year-ago three-month period was 7,5 percent.

"In our opinion, the data just confirms the strong recovery that the Chilean economy is experiencing," Banchile Inversiones said in a research note.

Chile's gross domestic product fell by 1.6 percent in the third quarter from the same quarter in 2008, but grew a seasonally-adjusted 1.1 percent compared to the second quarter.

EXITING RECESSION

The economy is on course to formally exit recession in the fourth quarter, though the central bank has warned that Chile's recovery from an economic slump will be more gradual than originally expected.

The recovery will hinge largely on a wider global upswing, which would underpin demand for its exports, the central bank said.

Chile's central bank this month maintained its outlook for 2010 economic growth of between 4,5 percent and 5,5 percent as the economy bounces back from its first recession in a decade but cut its inflation outlook for next year to 2,5 percent.

The bank has forecast an economic contraction of 1,9 percent in 2009.

Output of copper, Chile's main export, rose 8,2 percent to 477 266 tonnes in November from the same month last year. Copper output had risen 9,8 percent in October from the same month in 2008.

Copper output during the January-November period rose 0,7 percent from a year earlier to 4,92-million tonnes, INE said.

Molybdenum production in November jumped 19,7 percent to 3 051 tonnes and rose 7,5 percent in the 11-month period to 32 287 tonnes.

While copper output is rebounding, a threatened strike over pay at the giant Chuquicamata mine owned by state-run Codelco will hit output in January if it goes ahead as expected.

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US gold settles at $1 096,20, up 23% for 2009

NEW YORK - Gold futures posted their biggest yearly gain in three decades on Thursday, rising for an unprecedented ninth consecutive year as dollar-hedging traders and central banks joined the rally even as safe-haven buying subsided.
Benchmark US February gold futures settled at $1 096,20 an ounce on the COMEX division of the NYMEX.
On a percentage basis, February gold rose 23% compared with $891,90 on Dec. 31, 2008 – short of 2007's rise of about 30 percent.
Gold hit a record high above $1,220 on Dec. 3 on a combination of renewed central bank interest, worries over paper currency depreciation and long-term inflation fears due to the massive economic stimulus programs.
Other precious metals staged equally impressive gains after last year's deep decline, with most active April platinum rising a record 56 percent and March palladium up 117 percent on improving economic conditions, as well as hope for a boost in physical demand from new U.S. exchange traded funds expected to launch soon.
Silver jumped 48,5 percent

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Crocodile announces maiden gold pour

TSX-listed Crocodile Gold Corp has poured the first gold at its Union Reefs mill, in Australia's Northern Territory, the firm reported on Tuesday.
Crocodile Gold is mining from the Chinese South pit and the Brocks Creek underground mine and plans to increase mining rates at the two operations to 130 000 t/m and 10 000 t/m respectively by early in the New Year.
“Our first gold pour marks a significant milestone for Crocodile Gold, and we thank our hardworking operations team for achieving this milestone successfully before year end,” COO Grant Davey said in a statement.

Shares in the company rose 1,06% on Tuesday, to C$1,91 apiece by 12:27 in Toronto

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Consol can continue operating W Virginia mine

A US district court judge has granted a motion for judicial relief of a previous ruling, and agreed that Consol Energy's Fola operations, near Bickmore West Virginia, can continue to operate beyond a previously imposed deadline of January 23.
In November, Judge Robert Chambers found deficiencies in the permit notification process by the US Army Corp of Engineers, and set aside a permit that had been issued in January 2008.

The permit suspension followed an appeal by the Ohio Valley Environmental Council.
At the time, Chambers stayed his ruling for 60 days, to give Fola an opportunity to appeal or seek other relief, but the company warned that about 482 people would be laid off if the operations were idled.
The order issued on Monday allows Consol to continue operating in six valley fills that were already being affected by surface mining operations, the company said.
"We are very pleased by Judge Chambers' ruling, which is welcome news to our nearly 500 Fola employees and their families, especially during this holiday season," said COO Nicholas DeIuliis.
"This ruling will allow us to re-focus our attention on operating the Fola Complex safely, efficiently and in an environmentally sound manner."

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Chinese firms offer C$679m for Corriente Resources

TORONTO (miningweekly.com) – Vancouver-based Corriente Resources has signed a support agreement with two Chinese companies that plan to make a cash takeover bid for the company.
CRCC-Tongguan Investment, which is jointly owned by mining conglomerate Tongling Nonferrous Metals Group and China Railway Construction Corporation, will offer C$8,60 a share for Corriente, valuing the Canadian firm at about C$679-million on a fully diluted basis.
The proposed transaction is the latest in a series of investments by Chinese companies in Canadian-owned mineral resource companies.
Shares in Corriente rose 12,7% on Tuesday, to C$8,51 apiece by 12:49 in Toronto. The offer was announced on Monday but the TSX was closed for a holiday.
Corriente is a copper and gold exploration and development company and its most advanced asset is the Mirador copper/gold project in Ecuador, where it has completed a feasibility study.
The company said that the agreement with CRCC-Tongguan was the culmination of an extensive review of strategic alternatives over the last two years.

Although Corriente has been looking for potential buyers for some time, the company has been clouded by uncertainty over mineral regulations in Ecuador, which froze all mining and exploration activity last year.

The government has since drawn up and put in place new mining legislation and Corriente said in November it had received a formal notification from the Ministry of Non-Renewable Natural Resources that advanced work could resume on the Mirador project.
The takeover offer, which has the support of Corriente's board, will require regulatory approvals, including from the Chinese government, and acceptance by at least two-thirds of Corriente shareholders.
All officers and directors of Corriente, who collectively hold about 12% of the company, have entered into lock-up agreements with CRCC-Tongguan, under which they have agreed to tender their shares to the offer and that they will not support any rival offer unless it represents a superior proposal.
"We are pleased to have reached an agreement with CRCC-Tongguan, who is committed to bringing their vision of responsible mining development to Ecuador,” said Corriente CEO Ken Shannon.
“The Mirador and Panantza - San Carlos copper projects will require large scale capital investment by CRCC-Tongguan to unlock the infrastructure development, social benefits and jobs that will flow to the people of Ecuador.”

By 14:13 on Tuesday more than 11,7-million Corriente shares had changed hands, making it the most traded stock on the TSX for the day.

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Guinea chaos helps knock bauxite output lower

CONAKRY - Guinea's output of the aluminium ore bauxite fell by more than one fifth in the first nine months of 2009, according to a government document obtained by Reuters citing the impact of "institutional instability".

The paper showed the economic cost of a year of chaos in the world's top bauxite exporter that began with a December 2008 coup and ended in a failed assassination bid on its leader.

The document revealed similar falls in output of other resources such as alumina and gold, which together with bauxite form the backbone of the West African state's economy and public finances, already under pressure from a slowdown in global demand.

"Data for the first nine months of 2009, compared to the same period of 2008, show a fall of 22,9 percent in the total production of bauxite to 10 413 290 tons," said the finance ministry paper.

Output in the third quarter was hit "among other things by institutional instability and a review of mining project contracts", it said of moves by the junta to re-examine deals signed under late president Lansana Conte.

Income from projects run by mining majors including Alcoa, Rio Tinto and RUSAL accounts for 80 percent of Guinea's foreign currency reserves. Such revenues amounted to $149 million in 2007.

The Alcoa-Rio venture CBG (Compagnie des Bauxites de Guinee), saw bauxite output of 8 299 780 tons in the first nine months, said the report, a figure that compares with the record 13,7 million tons it produced for the whole of 2008.

Output of alumina, which is refined from bauxite to make aluminium, fell 25,3 percent in the first nine months of the year to 361 410 tons, while gold production fell 26,4 percent to 359 610 ounces, it continued.

DIAMOND OUTPUT UP

However diamond production rose 30,5 percent to 476 700 carats on the back of strong Chinese demand.

The document did not detail why output of key resources had fallen. Mining firms have repatriated some non-essential staff but have said operations are proceeding as normal.

A September court decision to rescind the sale of an alumina refinery to Russia's RUSAL reinforced the concerns of some investors about the security of existing contracts, and consultants are warning potential new investors to be cautious.

The data bears out expectations of a sharp fall in Guinean mining income. Citing the global slowdown, a CBG official who asked not to be named said in September revenues would fall some 60 percent next year as a result of lower demand and prices.

Junta leader Captain Moussa Dadis Camara has made no public appearances since being evacuated to Morocco for treatment of head wounds sustained in a December 3 gun attack by an ex-aide. Junta officials say his health is steadily improving.

Camara has since been named by a U.N. report, on the September 28 killings by security forces of over 150 pro-democracy marchers, as being personally responsible for crimes against humanity and could face international prosecution.

Guinea, whose stability is seen as pivotal to that of the West African region, is currently in the hands of Defence Minister Sekouba Konate, a Dadis loyalist who has so far prevented the country sliding further into chaos.

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AngloGold, Iamgold buy IFC's Sadiola stake

Gold-miners AngloGold Ashanti and Iamgold have each bought half of the 6% stake that the International Finance Corporation (IFC) owns in their Sadiola mine, in Mali.
The companies will each pay an initial $6-million for their respective 3% stake, followed by contingent payments in 2010, 2011 and 2012 of $250 000 for each year in which the average gold price is higher than $900/oz, or $500 000 if the average gold price exceeds $1 000/oz.
They will also pay another $500 000 if and when a decision is made to go ahead with the Sadiola deep sulphide project.
Iamgold and AngloGold Ashanti owned 38% each in Sadiola, but have now increased their stakes to 41% each.

"The acquisition of an additional 3% share in Sadiola illustrates the confidence we have in the future of this mine," Iamgold CEO Joseph Conway said in a statement.

In November, Iamgold said that it had agreed to buy all 6% that the IFC owned in Sadiola, but that AngloGold and the government of Mali had pre-emptive rights to take up their proportionate share of the holding.
AngloGold and Iamgold have also offered to sell the Malian government a 1,2% stake in Sadiola, on terms proportionately the same as the IFC transaction.

The government currently owns 19,15%.

In November, the partners approved a $9-million feasibility study on developing the large deep sulphide resource below the current pit at the Sadiola mine.

The current Sadiola mine plan estimates production of 350 000 oz of gold for 2009, but output will decline until the end of the life-of-mine in 2015.
A prefeasibility study on the deep sulphides project estimated production could be increased to between 400 000 oz and 500 000 oz/y, with an end of life-of-mine in 2019.
This would boost the total gold production at Sadiola by around 2,2-million ounces beyond the current mine plan.

Although AngloGold is the operator of the mine, Iamgold has taken the lead this year in studying the deep sulphides potential.

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Antamina says $1,2bn expansion nearly approved

LIMA - Antamina, a leading copper-zinc mine in Peru, said on Tuesday its $1,2-billion expansion plan should be formally approved by shareholders in the coming days.

Antamina – a joint venture between BHP Billiton Ltd, Xstrata, Teck Cominco Ltd and Mitsubishi Corp – has said the expansion would lift the volume of ore moving through its mills by 38%.

It produced 358 179 tons of copper and 382 842 tons of zinc last year, according to the mining ministry of Peru, the world's second-largest producer of zinc and third-largest producer of copper.

The project should be approved "before the end of the year," an Antamina official said. "Up to $1,2-billion will be invested."

Construction is expected to start in the first half of 2010 and be operational in the second part of 2011. It is expected to extend the life of the mine to at least 2029.

Miners in Peru delayed investments in late 2008 during the depths of the global economic crisis, but lately have decided to move ahead with expansion efforts.

In September, Antamina's president, Ian Kilgour, said the mine had already ordered new mills for the project.

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Chile Chuqui workers vote to strike, smelter hit too

CHUQUICAMATA MINE - Workers at Chile's Chuquicamata copper mine, one of the world's largest, rejected a wage deal and voted to strike, fanning supply fears that have helped boost global prices.

The move comes just hours after union workers on Monday began an indefinite strike at Chile's Altonorte smelter, where owner Xstrata cut output at the facility for nearly a month for maintenance work.

Strikes and stoppage threats have buffeted Chile this year as workers sought a bigger slice of windfall profits after copper prices rebounded from global financial crisis.

Union leaders, who had expected the wage offer to be accepted, said early on Tuesday that workers had voted to reject Codelco's wage offer by a slim margin.

Codelco can now opt to call for 5 days of government mediation to try to broker a deal before the strike begins. If the company opts for mediation, and fails to clinch a deal with workers, a strike would likely begin in early January.

"The workers have voted to strike," said Victor Galleguillos, head of one of the three unions that negotiated jointly with Codelco. "If the company does not ask for mediation, the strike would begin on Dec. 31."

A strike at Chuquicamata, which marks the last major stoppage risk at world No.1 copper producer Codelco for nearly a year, would inflict production losses just as the company is set to break years of dwindling output in 2009 thanks to an aggressive investment plan to upgrade older mines like Chuquicamata.

A Codelco official told Reuters on Wednesday the company would be able to honor all its contracts early next year even if workers at Chuquicamata strike, as bigger-than-expected output in 2009 gave the company a cushion.

The workers' rejection of the wage offer underscores rank and file disenchantment with their union leaders. However, while a strike at Chuquicamata would be a major setback for Codelco, it doesn't face another round of major collective wage negotiations until late 2010.

Copper prices jumped to 16-month highs on Monday, supported by the supply interruption at Altonorte and the threat of stoppage at the Chuquicamata complex, which produces nearly 4 percent of the world's mined copper.

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