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44 SEG NEWSLETTER No 90 • JULY 2012 ... from 43 Exploration Reviews (Continued) EXPLORATION REVIEWS move from mining back to into exploration, suggests that the company has a confident view of the world uranium price over the next decade. The Australian Bureau of Statistics (ABS) reports that during the October to December quarter 2011, mineral exploration expenditure in Australia increased to A$945M, an increase of 35% over the same quarter in 2010. However, the actual meters drilled in Australia fell by 6% over the 12-month period. Of concern is the fact that the proportion of meters drilled on greenfields projects has fallen since 2003 from around 45% to just over 30%, while brownfields drilling has increased from 55 to 70% over the same period, suggesting that the appetite for risk in the corporate game plan is decreasing. Now, a gentle reminder for those you who have thought about a trip “Down Under” – here is your excuse. The 34 th International Geological Convention is being held in Brisbane from 5 th to 10 th August, and has a number of exciting symposia covering many topics, including mineral resources and mining, mineral exploration geoscience, and mineral deposits and ore forming processes—visit www.34igc.org for more information. See the online version of the SEG Newsletter for lots of exciting exploration news from the Australasian region, and here are some of the highlights. Yet again, Western Australia is leading the pack, and our correspondent there (Roger Thomson) has made a first-class effort to report all the exciting news from “the West.” Standout announcements include the Northern Star Resources bonanza intersection of 2.3 m @ 36 oz/t Au below its Paulsens gold mine, the Integra Mining Cu-Au discovery at Imperial in the Kalgoorlie region, and the Fox Resources intersection of 23.7 m @ 3.3% Cu at the Ayisha project in the Pilbara. However, the most exciting copper news is Straits Resources’ discovery of the Avoca Tank Besshi-style VMS deposit in NSW with a best intersection of 84 m @ 2.86% Cu (including 12 m @ 6.38% Cu), with credits of Zn, Au, and Ag. Not to be outdone, our friends in NZ have a number of exploration successes, including the announcement by the Newmont/Glass Earth Gold joint venture of a drill intersection of 15 m @ 19.4 g/t Au at their WKP epithermal project close to the Waihi gold mine. EUROPE Regional Correspondent: Paul W. Kuhn (SEG 1983 F) Avrupa Minerals Limited Porto, Portugal E-mail: paulk@avrupaminerals.com Website: www.avrupaminerals.com Spring has passed quickly and summer is on us. The field season in mainland Europe is well underway, and results from early season work have already found their way to corporate news releases. From my first pass review of more than 150 exploration and mining companies, I see a lot of exciting activity. As always, there is a lot of activity to report from Turkey, Sweden, Finland, Ireland, and Spain, but eastern and central Europe, as a whole, are extremely active right now, and surprisingly, even Portugal is a busy place. I am beginning to see more reports from the less mining oriented (or formerly mining-oriented) countries such as Germany, Italy, England and Northern Ireland, Greece, and even Austria. Gold exploration is still the main pursuit. Even with so-called price-of-gold (POG) doldrums, many of the reporting companies are truly looking for the pot under the rainbow. Even though fundraising is incredibly difficult for all of us junior explorers, it is still possible to raise some money for almost any really good gold idea. For the rest of the precious metal stories, though, it is indeed difficult to do much. This may put a damper on exploration later this summer, unless there is a turnaround in the junior markets. Given that market sentiment is almost 100% negative, I expect the turnaround at any time… European recession fears and the lack of strength of many of the EU members are bullying the financial markets right now, but with signs a European version of QE1 or 2, or whatever, beginning to show up with governmental changes in France, Spain, Portugal, and (again) what - ever in Greece, the POG will be ripe for a good jump. Even today, as I write this short note, US jobs data came out weaker than the mainstream media expected and the POG went back up over US$1,600/ ounce. Yessirree, step right-up and print more money to race to see who can get to the bottom first!! Good for POG!! Still many companies are exploring for other metals and products in Europe. The copper price has been remarkably resilient, considering the economic malaise. Tungsten prices remain fairly buoyant, if you can find an accurate quote in this rather non-transparent market, and I see the big zinc companies, including European-based Nyrstar and Glencore, among others, are buying up whatever advanced projects that they can find. Lundin Mining produces zinc concentrates from a brand new zinc plant at Neves Corvo in Portugal. I do see less hype from the REE sector in Europe, but in this case, prices of the various elements are dropping like the rocks that they come from. My overall observation about the European exploration theater is that new interest is being driven by the re-opening of a number of former mining countries. The EU has only recently come to the understanding that the resources it needs and wants to drive what economies are left (read Germany, France, and England) will not necessarily be available, as and when they are needed. The realization that some of the resources need to be produced locally, where they are available, is late in coming, but a real opportunity for responsible explorationists and miners. Some of the 150 or more companies working in Europe are really taking advantage of the fertile target areas in and around Europe. SOUTH AMERICA Regional Correspondent: Mark I. Pfau (SEG 2004) Tellurian Exploration, Inc. E-mail: markpfau@fastmail.fm Country Correspondent: Regina Baumgartner-Peru (SEG 2008) E-mail: regina.baumgartner@gmail.com Three recent and unresolved conflicts with governments in South America should be a warning light for explorationists on that continent. First, the highly publicized takeover of Spanishowned oil company YPF SA by Argentine President Cristina Kirchner demonstrates the length to which government will go to force its political agenda on to the resource sector. By raising a ruckus in the media about nationalizing YPF, the largest oil company operating in Argentina, the company’s stock lost 50% of its value in the past year. Then, the Kirchner government announced that compensation would be based on current market value of the company.
JULY 2012 • No 90 SEG NEWSLETTER 45 The Spanish government should be outraged by the Argentine actions but has too many domestic problems to deal with at this time. In Bolivia, the giant Mutún iron ore project is on hold after the Bolivian government seized the US$18M guarantee from India’s Jindal Steel and Power Corp., and reneged on the promised infrastructure development which the project needed. Jindal has spent almost US$100M so far on the US$2.1 billion project and is still in limbo over moving forward. In Chile, the Anglo American- Codelco rift gets deeper as the issue appears headed for the Chilean court system. Codelco, the world’s largest copper company with controlling interest held by the Chilean state, is attempting to take a larger portion of the giant Los Bronces mine from Anglo after Anglo invested in a US$2.8 billion expansion of mine production. Codelco appears to have slipped through the fine print on its underlying agreement with Anglo and missed an opportunity to legally purchase up to 49% of ASS, the South American subsidiary of Anglo which controls the Los Bronces mine. Similar accounts are noted in Ecuador and Brazil, where government increasingly pushes private industry to fund its social agenda. What’s behind the rise in government-resource industry conflicts? Examine closely and leftwing politics are the root causes not only of the legal conflicts but the increasing violence in Peru and Colombia. Where is the left taking its cue? Look no further than Washington D.C., where for the past four years America has abdicated its economic leadership, has given the EPA unlimited regulatory power to instigate its energy policy, and has turned the SEC into a financial minion of its social democracy agenda. The current administrations tacit approval of the violent Wall Street sit-ins last year was a green light for the left of the world. The situation is South America will not change until leadership returns to Washington and American economic exceptionalism returns as the model for growth. Populist rhetoric doesn’t cut it anymore. We do not have an update from Peru this month as Regina Baumgartner has been away. The SEG continues to seek qualified writers to cover exploration in Brazil and Chile-Argentina for this SEG Newsletter. MEXICO Regional Correspondent: Erme Enriquez MSc, CPG (SEG 1984 F) Minera Canasil, S.A. de C.V. Alheli No. 142, Fracc. Jardines de Dgo Durango, DGO 34200, Mexico E-mail: eenriquez@canasil.com.mx MEXICO In 2011, the production in the mining industry in Mexico reached 2.25% of the GDP, lower than a year before; this was due to low prices on an international level. Mexico is still the first silver producer at global scale and occupies the ninth place in production of gold. Domestic credits and investments of foreign companies, mainly from Canada and the USA, maintain the growth of the mining industry every year. The financial indicators of the country register significant improvements, considering the international context. The expectations for economic expansion of Mexico are favorable. The Mexican economy remains without significant changes since the financial crisis of 2008. As a consequence of a soft economic recovery, changes are not expected until the end of 2012, perhaps even as late as 2013. In general, tendencies for the mining industry and exploration in Mexico remain moving in the direction of growth, with more and more major and junior companies investing in exploration. The next success that may paralyze the economy is the presidential election on July 1 but, whoever the winner, the country continues with its own inertia. NORTHERN EURASIA Regional Correspondent: Alexander Yakubchuk (SEG 1999 F) Orsu Metals Corp, London, UK E-mail: ayakubchuk@orsumetals.com Detailed information can be found at http://gold.prime-tass.ru The Kazakh Government announced that it will fund the exploration works from the federal budget for a total of ca. $400M per annum. The Russian state holding Rosgeologiya announced a strategic agreement with BRGM to help with regional studies in Russia. The supervisory board of Alrosa recommended that the Russian government preserve a controlling stake (25% +1 share) in case of privatization. The government is planning to privatize the company between 2012 and 2014. The company is currently owned by the federal government (50.9%), the Yakutian government (32%), eight regions of Yakutia (8%), and other shareholders (9%). It is expected that federal and Yakutian governments will sell 7% each. Polyus Gold International reported a 12% increase in its JORC-audited P+P reserves from 80.7 to 90.5 Moz gold. The M+I+I resources increased 29%, from 125.3 to 161.1 Moz gold. In particular, the P+P reserves of the Olimpiada deposit are up 2.5-fold from 13 to 32.1 Moz gold. In addition, M+I+I resources of Panimba and Razdolinskoye projects, located 50–170 km south of Olimpiada, are 6.3 Moz gold. Polyus also announced its plans to invest $7.7 billion in development of the existing and new projects until 2020. This includes $3.8 billion investment to be made before 2015. This excludes the Nezhdaninskoye deposit in Yakutia and the Bamskoye deposit in Amur region. The recently listed Nordgold (formerly part of Severstal) is targeting to organically double its reserve base during next four years from the current 8.3 Moz gold. The announced investment is $800M until 2015. The targeted production is 1.2 Moz gold, or 60% increase. Russia is progressing with the development of several major copper projects, which can be attributed to deposit types that are different from the current copper mines producing approximately 1 Mt of copper per year. For the most part, 50% of copper comes from Cu-Ni at Norilsk and 50% from Cu VMS deposits in the Urals. For the Udokan sediment-hosted copper project in Transbaikal Region, Vnesh EconomBank has approved a tranche of $300M to the Baikal Mining Com - pany for completion of a feasibility study and some advance payments. The other potentially important development is a long-awaited IPO of Intergeo, which is a spin-off from Norilsk Nickel after some assets were restructured due to change in ownership. The company is expected to be listed on TSX to raise between $100 and $500M. Its principal projects are Kingash Ni-Cu deposit in Krasnoyarsk and Aksug Cu-Mo porphyry deposit in Tuva. 46 to page ... EXPLORATION REVIEWS
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