207 (31.01.19)


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CONTENTS

Ivan Glasenberg’s Spaghetti Business

For more than 12 months Glencore’s CEO was pocketing dividends from gnocchi and bow-tie pasta twirls

Every Day in China

A daily snapshot of how life has changed in the 20 years since China was invited to join the World Trade Organization

20 Critical Trade Routes

How $54bn of iPhone sales are kept going by one mine in the California desert: “Our products are in everything around us”


Images: Great Bear and Goldcorp’s drill results at Red Lake (Dave Shaver, Mike Mozart)

ROB MCEWEN

Red Lake Revival

One of Canada’s greatest gold camps turning-up bonanza grades

Forget debt-funded M&A; one mine built gold giant Goldcorp and that is Red Lake in Ontario. One of Canada's most prolific gold camps, Goldcorp’s founder Rob McEwen bought into the district in 1989, pushing the asset hard. As Goldcorp's share price broke through record highs, engineers popped into his executive suite to suggest he prolong the mine life by blending in lower-grade ore. “Can you find me more high-grade?” McEwen countered. “Then mine that.” 30 years on and Red Lake still yields almost $300m of gold at under $900 per ounce. Under a partnership with IBM, Goldcorp is using its super-computer Watson to pinpoint new pockets of ore, hitting a bonanza-grade discovery in recent weeks at 51 grams per tonne. Denver-based Newmont Mining has bid $10bn for Goldcorp and plans to exit Red Lake, but that could be the beginning of a district revival. Down trend, Toronto-listed gold explorer Great Bear Resources has been hitting even higher grades, having snapped-up another project that Newmont dropped. IBK Capital, an investment boutique, meanwhile re-introduced Rob McEwen to Red Lake last year; together they bought C$10m of Great Bear's stock at C$1.45. On recent drill results, the shares have since doubled. “Obviously we have gold in the rocks,” exploration director Bob Singh told investors last week. “We have geological continuity on a large scale.”


BILL BEAMENT

Newmont’s Gold Mine Giveaway

Newmont’s track-record in underground mines patchy at best

Newmont's $10bn bid for Goldcorp could begin a chain of deals. The new group, which will have 19 operations on 5 timezones, will be run by Thomas Palmer, Newmont's faultless chief operating officer, who previously ran Rio Tinto's iron ore mines in Australia. There's one problem: Newmont doesn't like underground mines, where value at Goldcorp is buried. Its Red Lake and Eleonore mines produce over $700m of gold from deep, high-grade, variable veins, very different to Newmont’s pits, which are locked into fixed mining schedules. Adding Porcupine, Musselwhite, Cerro Negro and Goldcorp's new Borden asset, the world’s first fully-electric underground mine, and the majority of its cash flow comes from deep operations. Of Newmont’s underground mines, CEO Gary Goldberg has sold Midas in Nevada and tendered out Tanami in Australia to a contractor. Jundee near Kalgoorlie was sold for $91m: with 411,000 ounces of reserves, the mine looked depleted, but buyer Northern Star, led by Bill Beament (an underground mining specialist), has upped output whilst hitting new discoveries, adding 5.9m ounces of gold worth $8bn. Its shares are up 7-fold. That leaves Beament palpably excited at the prospect of buying yet more mines off Goldberg and Palmer, who fielded calls on asset sales within minutes of bidding for Goldcorp. Talking to investors, Beament is biting his lip. “We never comment on M&A.”


DIDIER DROGBA

Gold & The President’s Office

Endeavour Mining has a valuable new partner in West Africa

Toronto-listed Endeavour Mining has a valuable new partner in Cote d'Ivoire. The company has given 1.1m shares to DYD International, a company controlled by former Chelsea footballer Didier Drogba. Having captained the national side, Drogba is more than a star in Cote d'Ivoire; he could be the next president. Born in the port city of Abidjan, Drogba was sent to France aged five to live with his uncle. Industrious and driven, he rose through Europe’s football ranks, scoring Chelsea’s winner in the 2012 Champion’s League Final. Few fans knew what he was doing off the pitch: a Catholic, Drogba started donating shirts to churches in Africa and used $3m from Pepsi to build a hospital. When Cote d'Ivoire qualified for the 2006 World Cup, Drogba pleaded on television for a ceasefire, ending five years of gunfire. To heal wounds, he also asked for matches to be played in rebel territory. “All the players hated what was happening to our country.” Drogba retired last year, aged 40, but is Cote d'Ivoire's all-time top scorer and is mobbed wherever he goes. A UN Goodwill ambassador, he has the president's helicopter at his disposal, popping-up across West Africa, from factory openings to inaugurations. Drogba has knocked-back suggestions he could run for office, but would be in good company: Liberia's president George Weah also played for Chelsea and has urged Drogba to “follow the same path.” Having once studied accountancy, Drogba bought into Endeavour's Ity gold mine six years ago, which he has now traded for $15m (C$20m) of stock. His political leanings are a mystery, though Drogba’s mother has always called him “Marshall Tito”, in tribute to a resistance fighter who became a benevolent dictator. His son, Isaac, meanwhile plays professional football. “Isaac's birth was a turning point in my life,” Drogba has said. “It straightened me out.”