200 (26.07.18)


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NEWS IN BRIEF

Good Week for lithium which is booming in Kwinana in Western Australia. Chemical group Albermarle is injecting A$516m ($382m) into an expansion of its Greenbushes mine in the region, which the government is rebranding as “Lithium Valley”. The LME, the world's largest metal exchange, is also finalising plans to launch the world's first lithium futures

Bad Week for cobalt: 112 tonnes has been stolen from a warehouse in Belgium and mining companies have declined to say who owned the looted tonnage. Shipments have also been delayed from the Democratic Republic of Congo after an IT glitch reportedly scrambled customs records. The country accounts for two-thirds of all cobalt production

Gold M&A: “Pillow Fights”

It owns one of the world's largest gold mines and has a C$2.3bn ($1.8bn) market cap, but directors at Detour Gold are fighting for their posts having been drawn into a spat with Paulson & Co., the hedge fund led by investor John Paulson.
    Paulson & Co. has called for Detour to be sold or overhauled, accusing gold groups of “chronic, poor M&A”, digging the sector into a hole of “irrelevance and oblivion.” But Detour said it wants to avoid an “ill-timed fire sale,” accusing Paulson of running a “self-serving agitation campaign” in a “desperate attempt to resuscitate its flailing reputation”.
    M&A advisers saw dollar signs, linking Detour to at least six would-be acquirers. “Blood in the water?” asked Scotiabank. “Who Could Devour Detour?” wrote CIBC in a note to clients.
    Barrick Gold looks most in need of an acquisition, reporting negative quarterly cash flow this week of $172m. Bumpy production in Nevada, an earthquake in Papua New Guinea and a rock fall in Australia brought in production well short of full-year guidance of up to 5m ounces and Barrick's shares have nearly halved in the last two years. “Yes, our reserves are going down. Yes, it’s something we have to deal with,” CFO Catherine Raw told The Globe & Mail.
    Detour would add 600,000 gold ounces to Barrick's annual production, but it may also try to revive talks with its neighbour in Nevada, Newmont, which announced a $275m deal to buy into the Galore Creek gold deposit in British Columbia earlier today. Co-owned by copper group Teck, the 8m-ounce deposit would be the tenth project Newmont has built in the last five years, putting it on course to overtake Barrick as the world's biggest producer.
    Detour Gold has engaged Wes Hall, one of Toronto's sharpest corporate advisers, who has previously worked closely with Yamana Gold's steely CEO Peter Marrone. Corporate battles are not like “a pillow fight,” Hall has said.

BMO: Hawkish

When diamond giant De Beers pulled out of an exploration agreement on Baffin Island in Canada in 2013, its partner dropped quickly: shares in Peregrine Diamonds fell from 65 to 30 cents.
    Five years on and De Beers looks more like the falcon. Advised by investment bank BMO it has swooped to pick up the pieces, making a C$107m ($81m) takeover offer for Peregrine and its key Chidliak project, equal to 24 cents per share.
    “The world is short of diamonds, so we're positioning ourselves with options,” said Mark Cutifani, chief executive of De Beers' parent company Anglo American, talking to analysts in London this morning. Anglo and De Beers are “spending our money in a smart way.”

Gentlemanly?

Mining is enjoying “a gentlemanly boom”, say analysts at Investec: boards are being cautious, ambitions muted, as the market “wavers” between the prospect of robust growth and a US-led trade war. All that is very different to the last up-cycle when companies raced to buy and build new mines, prompting $273bn of write-offs when prices tanked, according to new figures by JPMorgan.
    But one board that is not being excessively polite is Lundin Mining: chairman Lukas Lundin, the Swedish billionaire, is trying to barge through a takeover of Nevsun Resources, hoping to pocket its Timok copper deposit in Serbia.
     Lundin was due to formalise a C$1.4bn ($1.1bn) cash offer before the end of this week, but has instead announced the surprise departure of its own longstanding CEO Paul Conibear. “I would like to thank Paul,” Lukas Lundin said; the company can now look to “an even greater future.”
    Lundin's offer for Nevsun (described as “low” by brokers) has so far been rebuffed by Nevsun's CEO Peter Kukielski. “The work we have been doing has also been noticed by several strategic parties.”

 

CONTENTS

Trouncing China at Trade

The US may have let relations with Beijing turn sour, but politicians in Santiago have been teaching the world's largest manufacturer how to shift products

Bernie Madoff & Titanic: Glencore Joins Illustrious Defendants in New York

On top of an investigation in Washington, lawyers working for Glencore are fending-off a lawsuit in New York

Letters: Munk's Marina

Visiting Peter Munk's marina in Montenegro, casino profits, fracking for copper in Arizona in the 1990s and why Ecuador beats Mongolia

20 Critical Trade Routes

Two office blocks in Singapore act as a control tower for trade across Asia, turning iron ore in Australia into cars piled-up on docks around the world