Guest Editorial

Stream financing: A primer

Stream financing, also known as resource streaming or metal purchase agreements, is becoming increasingly popular in the resources sector. Stream financing can be used to help bring a development stage project into production or to expand existing production capacity of an operating mine. It provides an alternative way of raising capital for a project at a time when market conditions make equity financings very dilutive and debt financing difficult and expensive to obtain. Stream financing can be in respect of either primary or secondary products and can be used for either precious or base metals. In this post, we will provide an overview of how stream financing is used in the resource sector, as well as its benefits and a short case study of a recent streaming agreement.

What is Stream Financing?

In a typical metals stream financing, a streaming company makes an upfront payment to a resource company in return for the right to purchase a fixed percentage of future production of one or more metals produced by a project, and makes on-going payments for each unit of metal delivered under the streaming agreement. Streaming transactions are generally long term in nature and are often for the life-of-mine.

The upfront payment may be payable in one payment at closing but, for projects in the development stage, is often advanced in stages as the resource company reaches certain construction milestones. While some streaming arrangements require the upfront payment to be used for specific purposes, others permit the resource company to use the funds as it sees fit. Still others provide for payment on closing but require partial repayment if certain milestones are not met.

The upfront payment is typically now structured as a deposit which is reduced as metal is delivered and, if structured correctly, the deposit may be characterized as deferred revenue rather than debt for accounting purposes, which certain issuers may find favourable.

In addition to the upfront payment, the streaming company also makes an additional payment, on delivery, for each unit of metal purchased under a streaming agreement. These on-going payments to the resource company, together with the obligation to return any uncredited deposit at the end of the term, help align the interests of the streaming company and the resource company and can provide incentive for the resource company to continue producing even though it has disposed of an interest in the streamed metal.

In a standard streaming arrangement, the on-going payments are equal to the lesser of a fixed price and the prevailing market price at the time of delivery. The streaming company will pay up to the fixed price in cash and, if the market price is higher than the fixed price, the balance is credited against the deposit. Thus, when the market price of the metal is higher than the fixed price, the upfront payment (or deposit) is amortized through the difference between the fixed price and the market price. When the market price for the metal is low, the upfront payment will be reduced more slowly and may never be reduced to nil. If the upfront payment has not been reduced to nil by the end of the term of the agreement, the resource company may be required to pay an amount equal to the remaining balance to the streaming company.

Streaming arrangements may provide for a buy-back option which provides the resource company with some protection in the event that there is a shortfall in production. A typical buy-back option would permit the resource company to buy-back a percentage of the production promised to the streaming company for a fixed price, usually in the form of a refund of a portion of the upfront payment, if the project does not achieve a target level of production. This option is usually only exercisable once and in very specific circumstances.

Some streaming arrangements also contemplate “top-up” deliveries in the event that anticipated future expansion is delayed. Where the resource company is required to deliver a fixed percentage of production to the streaming company, top-up deliveries are intended to compensate the streaming company in circumstances where expanded future production is promised but delayed. Top-up provisions provide for an adjustment mechanism to “top-up” or increase the amount of metals deliverable in the event that the resource company does not achieve a targeted level of production on or before a specified date.

The obligations of the resource company under a streaming agreement may be unsecured or secured, usually against the project assets or the securities of the project vehicle.

Benefits

Stream financing allows resource companies to capitalize on proven reserves before going into production, and to use those reserves to fund production or expansion. Streaming is typically done on a project by project basis and can allow the resource issuer to bring new projects into production more quickly than having to seek other sources of funding in difficult market conditions. It can be an attractive source of funding as it is non-dilutive to shareholders, allows the company to retain its borrowing capacity and the terms are typically less restrictive than debt financing.

A streaming transaction may also be seen by the market as an endorsement of the project’s potential by a third party finance provider, leading to increased investor confidence and higher share prices.

Where streaming arrangements involve a secondary products (or by-product) stream, that is, for the purchase of a precious metals stream from a base metals project, the stream can create shareholder value for the mining company as the net present value of its future precious metal production would typically be given a lower valuation by the market than if it had been produced by a precious metals company, resulting in a value arbitrage opportunity. That is, a streaming transaction allows a base metal company that trades at a lower net asset value (NAV) multiple to obtain the higher NAV multiple of a precious metals producer for the precious metals portion of its resource. Such secondary streaming arrangements can allow the mining company to maximize upfront proceeds while only impacting byproduct production.

Streaming arrangements allow the streaming company to benefit from exposure to resources without having to contribute to the operating or capital costs of the project after the initial payment is made and avoid many of the risk often faced by operators (for example, rising labour and fuel costs, environmental liabilities). Financing companies typically hold streams in respect of projects in production and development stages, in a variety of geographical locations and, often, in respect of multiple commodities, allowing them to diversify, so that the failure of one project may not have a significant impact on a streaming company’s overall portfolio.

The benefit of any additional resources beyond the proven reserves established by the feasibility study at the time the streaming transaction is entered into is shared by the resource company and the streaming company, as the resource company typically retains a portion of the streamed metal.

Streaming Companies

Although streaming transactions have recently been increasing in popularity, streaming has been an accepted form of financing for some years. As a result, there are a number of established stream financing companies including Franco-Nevada Corporation, Silver Wheaton Corp., Sandstorm Gold Ltd., and Royal Gold, Inc.

Case Study – Inmet/Franco-Nevada

In August 2012, Inmet Mining Corporation (Inmet) and Franco-Nevada Corporation (Franco-Nevada) announced what was then the largest streaming transaction to date, a $1 billion previous metals stream financing for the Cobre Panama copper project in Panama. The Cobre Panama project is owned by Minera Panama, S.A. (MPSA). Inmet owns 80% of MPSA, and the remaining 20% is owned by Korea Panama Mining Corporation (KPMC). KPMC is not participating in the stream.

Under the terms of the transaction, Franco-Nevada agreed to provide a $1 billion deposit to fund Inmet’s share of the development costs of the project. In return, Franco-Nevada is entitled to receive 86% of the payable gold and silver attributable to Inmet’s 80% interest in the project based on the project’s 31 year mine plan.

Under the streaming agreement, until the deposit has been reduced to nil, Franco-Nevada will pay a price per ounce equal to the then prevailing market price. Of this, an amount equal to the fixed price is payable in cash and, if the then prevailing market price per ounce of gold or silver is greater than fixed price, an amount equal to the difference will be credited against the deposit. Once the deposit has been reduced to nil, Franco-Nevada will pay the lesser of the fixed price and the then prevailing market price. The fixed price is equal to $400 per ounce for gold and $6 per ounce for silver (subject to an annual adjustment for inflation) for the first 1,341,000 ounces of gold and 21,510,000 ounces of silver (approximately the first 20 years of expected deliveries) and thereafter the greater of $400 per ounce for gold and $6 per ounce for silver (subject to an adjustment for inflation) and one half of the then prevailing market price.

The Inmet/Franco-Nevada streaming agreement also provides for a buy-back option under which, if there is a shortfall in precious metals production, MPSA will have the option to reduce the stream by repaying up to 10% of the $1 billion deposit, net of the value of any metals delivered to Franco-Nevada under the streaming arrangements prior to the date of exercise of the option. This option is exercisable only once at either the 3rd or 5th anniversary of production commencing. There is also a top-up option in the event that a certain level of production is not achieved within the expected timeframe.

Conclusion

2012 featured a number of large streaming transactions, including Franco-Nevada’s US$1 billion precious metals streaming arrangement on Inmet ‘s Cobre Panama copper project (discussed above) and Hudbay Mineral Inc.’s US$750 million precious metals stream transaction with Silver Wheaton in relation to Hudbay’s 777 copper, zinc, gold and silver mine and Constancia copper project. We expect that demand for these non-traditional funding arrangements will continue in 2013.

For further information, please contact John Anderson or Jennifer Honeyman.

Join Deloitte and Stikeman Elliott professionals for a seminar on the strategic, legal and tax implications of

Stream Financing

Monday, May 27, 2013

2:00 pm – 3:00 pm

Stream financing, also known as resource streaming or metal purchase arrangements, has become a very popular method of financing in the resources sector.

Topics:

Current Market Trends Introduction to Streaming Legal Considerations Tax and Accounting Perspectives Closing Remarks and Q&A Session

Vancouver Convention Centre
West Meeting Room 208-209 (Second level)
1055 Canada Place, Vancouver

DIRECTIONS

The seminar will be held in conjunction with theCambridge House World Resource Investment Conference. Please note that you do not need to register for the conference to attend our seminar.

To RSVP or for further information, please contact Erin Penway at604-631-1451 or epenway@stikeman.com

WELL SAID: Deloitte, Tracking the Trends 2013

Chinalco Mining moves a town in Peru, with mixed results

Mineral projects sometimes need to relocate people in order to proceed through mine development. In poverty stricken parts of the world this can be an opportunity for mining companies to help people, providing them with improved living conditions, including new homes with power and water, but without the proper dialogue companies risk alienating the very people they are trying to win over.

 

Graphite Is About Grade: Mason Graphite Continues To Deliver

Source: James West, Midas Letter

Investors looking for the next Zenyatta Ventures (TSX.V:ZEN) should be looking for companies that will perform as exceptions to the rule – rising strongly on continuous fundamental development, as opposed to drifting downward on progress. Another consideration would be a deposit that is better than Zenyatta’s Albany deposit.

What characteristics does such a company possess? Here are the three keys:

1. Ability to raise non-dilutive capital: The companies who are able to continuously raise funds at higher prices with each financing demonstrate that stakeholders are confident in management’s ability to take the project all the way;
2. Strong shareholders who aren’t running for the exits: Most companies in the resource space are seeing any and every bid hit on the slightest hint of positive news. Stock prices that actually rise and stay up on good news are green flags for “exception to the rule” companies;
3. A project that stands out from others within its sector due to key qualities such as grade, tonnage, proximity to markets, transportation and infrastructure.

In the graphite space, most, if not all of the companies, are touting unrealistic business models that are betting on new demand from as-yet un-commercial technologies, and are staffed by management with no particular expertise in graphite.

The exception to the rule?

Mason Graphite (TSX.V:LLG) is a Forbes and Manhattan company that has assembled a team of highly experienced graphite industry professionals who are hard at work on one of the highest grade graphite deposits in North America.

The Lac Guéret graphite deposit in Quebec has been a well-known high-profile deposit since at least 2006 due to its inordinately high native grade, which can easily be found in surface grab samples over 90%. Despite other high-flying graphite juniors such as Zenyatta Ventures and Energizer Resources (TSX:EGZ) hogging the limelight, Mason’s Lac Guéret deposit increasingly stands out as the most likely Next Graphite Mine in North America.

All one needs to do is compare the drill results of other would-be graphite producers with Mason Graphite’s grades, and you begin to understand the magnitude of Lac Guéret’s grade superiority.

Drill results released April 3 emphasize the point:

GC Zone
• Hole LG-221 intersected 55 meters at 26.1 % Cgr;
• Hole LG-234 intersected 128 meters at 21.1 % Cgr, including 27 meters at 37.3 %;
• Hole LG-235 intersected 197 meters at 17.1 % Cgr, including 39 meters at 33.9 %.

GR Zone
• Hole LG-248 intersected 31 meters at 20.2 % Cgr;
• Hole LG-257 intersected 32 meters at 15.9 % Cgr.

Mason Graphite’s consistent and long intercepts of very high grade large flake graphite make Mason Graphite superior.

High grade drill intercepts from holes LG-221 (55 meters at 26.1 % Cgr) and LG-222 (36 meters at 27.5 % Cgr) located in the GC zone suggest a possible extension to the northeast of the July 2012 mineral resource envelope. Mason will follow up on these holes of interest in the next phase of drilling.

While investors are now apparently bamboozled by Zenyatta Ventures’ ‘Vein-type graphite’, it is neither as rare nor as valuable as suggested, when you consider the maximum grade of any significant intercept length is no more than 7.3%. Compare that to Mason Graphite’s existing measured and indicated resource averaging over 20%, and with long intercepts regularly averaging over 30%. Plus, with Zenyatta’s steeply dipping vein, and upwards of 40 metres of overburden, the Albany deposit is a large degree of separation inferior to Mason’s at surface deposit. In terms of purification, there is nothing special about the capability of purifying graphite to 99.96%. Purification is just a matter of process.

Grade is King – Especially in Battery Applications

Consider this: In the process of producing spherical graphite, which is the graphite type required to service the lithium-ion battery market, as much as 70 percent of the graphite is discarded in the process of shaping the graphite flakes into spheres. So any graphite producer going after the battery market is going to need a higher average grade and flake size to start with if they are to compete effectively against the high-grade large flake deposits such as Mason Graphite, whose Lac Guéret project’s indicated resource is above 20%.

Industrial Minerals indicates that batteries are the fastest growing market for graphite with growth at 15-25% per year; consumption is driven by requirements for portable electronics (mobile phones, smartphones and tablets). A significant and growing portion of demand comes from high-tech applications because of its use in batteries as anode material; natural graphite anodes are favored by all battery technologies. The battery sector is predicted to increase its share of graphite consumption from 8% to 10% in the next five years. The introduction of electric vehicle batteries may create a significant impact in the future, especially vehicles requiring batteries of 10 kWh and above.

But the explosion in battery grade graphite will take time to build, and likely over a period of 25 years, according to Stephen Riddle, president of US based natural graphite producer Asbury Carbons. “Demand for Li-ion graphite to reach 1million tonnes per year is at least 25 years away or longer and I believe some or most of this increasing demand will be synthetic graphite,” Riddle said.

So building a company on the premise that you are going to sell all or some of your graphite to battery manufacturers is a tad misleading, to say the least. High purity concentrations thinly dispersed through no-grade host material is nowhere near as desirable as consistent purity across the orebody. In this sense, Mason is head and shoulders above all the other would-be graphite miners.

Traditional Applications Drive Graphite Consumption

Industrial Minerals reports that 80% of natural graphite demand is driven by industrial applications. The dominant market, with 39% of demand, is refractories which is in turn dependant on steel and refined metal production. Demand for refractories is expected to maintain its share of the market going forward.

The main consumption of graphite products is found in traditional applications such as refractories for steel making, lubricants, and brakes.

Brake linings, foundries and lubricants represent about 26% of demand; increased use of graphite in friction materials, packings and gaskets was driven by reduced use of asbestos globally.

Thus, while 9 out of 10 TSX Venture listed graphite companies purport to be getting ready for a brisk battery supply business, a real graphite company needs to develop multiple product lines to satisfy a wide range of customers in diverse applications.

Graphite Companies Need to Build Customer Networks

Benoit Gascon, CEO of Mason Graphite, was the individual who built the bulk of the sales channels for the world’s largest supplier of graphite products, Timcal (http://www.timcal.com), which is a wholly-owned subsidiary of Paris-based Imerys SA (EPA:NK), a US$5 billion market cap world leader in industrial minerals. He was CEO of Stratmin, which in 1989 began operation as North America’s only producing graphite mine. He turned around the operation, developed over 50 finished products and sold it to Imerys in 1996. Timcal was created through the acquisition of Stratmin, where Gascon developed a sales channels consisting of over 700 customers globally.

“Chinese graphite producers do not have very close connections with North American end-users or European end-users, so that is an opening where North American companies can build a competitive advantage,” he said. “That’s what we did with Stratmin Graphite in the 1990s. We evolved into a customer-oriented operation from top to bottom. That means selecting management with the right mindset, introducing flexibility in the production process and, as always, understanding the markets/industries of your customers and adapting to meet their requirements. The customer is king.”

Mason is a Prime Takeout Target

Timcal’s Lac-des-Iles deposit in Quebec has about 4 years left of ore. Is it conceivable that Timcal may be eyeing Mason Graphite’s Lac Guéret project as a possible contender?

“We’ve had that discussion with them,” says Simon Marcotte, Mason’s Vice President of Corporate Development. “They are not expressing interest right now, but that could change as we move closer to production.”

Considering that Timcal’s sales force and customers were developed by Gascon, Timcal could astutely view the acquisition of Mason as a pre-emptive move to thwart a new serious competitor right in its back yard.

Other entities however, who may be interested in such a high-grade graphite deposit include:

• Rockwood Holdings Inc. (NYSE:ROC), the world’s largest vendor of lithium and specialty industrial chemicals for the battery manufacturing sector, recently bid $6.50 a share for Talison Lithium, demonstrating a strategy of growth through acquisition. Since lithium-ion batteries incorporate from 10 to 30 times more graphite than lithium, it makes sense that such suppliers should consider incorporating a product that includes the graphite required for such batteries.

• SQM (NYSE:SQM), the world’s largest miner and producer of lithium, is a logical buyer of Mason Graphite’s graphite project, since it has already built the supply channels to battery manufacturers and lithium refiners that would make it a complimentary product addition.

• Talison Lithium Corp. (TSX:TLH): Talison, as its name implies, is primarily in the lithium business. But as it envisions becoming a supplier of lithium to battery manufacturers, its offering might be enhanced if it can deliver both high purity lithium and graphite to customers.

• FMC Corporation (NYSE:FMC), a global specialty industrial chemical company, is the world’s second largest producer of lithium, and so its expectation for electric vehicles to and hybrid electric vehicles to reach 4 – 5% globlally suggests that graphite may become part of that strategy.

The Lac Guéret Deposit

The Lac Guéret graphite property currently hosts a National Instrument 43-101 compliant Mineral Resource of about 300,000 tonnes at 24.4% Cgr in the Measured category and 7.3 million tonnes at 20.2% Cgr in the Indicated category.

Lac Guéret is an exceptional deposit both for its high grade and high ratio of large flake graphite, and the fact that it starts right on surface for a potentially very low initial strip. With the current indicated resource averaging 20.4% Carbon Graphite, Lac Guéret could be in production as soon as 2015. Drilling is ongoing to deliver an updated resource calculation by the end of Q2 2013, and results continue to demonstrate excellent grade continuity throughout the deposit.

A Mason Graphite geo-technician inspects high grade graphite core at the Lac Guéret Camp in Quebec

I first wrote about the Lac Guéret deposit in 2006.

Back then, it was in the project portfolio of Quinto Mining, who was bought by Consolidated Thompson Iron Mines back in 2008 for its large Peppler Lake iron project. Consolidated Thompson was then acquired in early 2011 by Cliffs Natural Resources NYSE:CLF in a whopping $4.9 billion transaction (engineered by Forbes and Manhattan), again with the primary objective being Cliffs’ Bloom Lake Iron Ore mine.

Cliffs wasn’t interested in graphite, and so Forbes and Manhattan was able to negotiate the acquisition from Cliffs after several other juniors failed. Interestingly, Cliffs found themselves in the graphite game after all when they invested in Zenyatta to search for copper and nickel deposits in Ontario. The discovery of the graphite breccia by Zenyatta was a fluke.

CEO Benoit Gascon has spent substantially all of his life working in the graphite space as CEO and in other roles of Stratmin Graphite until it was merged into Timcal. He is probably one of the most qualified individuals in the entire graphite industry to repeat Timcal’s success – an asset that is glaringly absent in most other would-be graphite companies.

The Exception to the Rule

TSX Venture-listed mining explorers and developers have seen their valuations deteriorating over the last year by as much as much as 80%. The exceptions to the rule are few and far between. Mason has thus far stood out as a clear exception to the rule. The Forbes and Manhattan machine has demonstrated repeatedly that they can sell assets up the food chain to major companies, and also that they can raise capital regardless of market conditions. It will be interesting to see how other graphite stories end as this protracted bear market begins to take its toll on the number of publicly traded companies. Mason Graphite is one of the clear exceptions to that rule, and shareholders in the company will benefit from that. Its just a matter of time.

Disclosure

The author is a shareholder in Mason Graphite and so should be regarded as biased. No compensation has been received for the production or distribution of this article. This article is intended for information purposes only and is in no way to be construed as recommendation to buy or offer to sell any securities mentioned herein. The information contained in this article is derived from sources believed to be reliable, but no warranty of same is expressed or implied. The opinions expressed in this article are those of the author solely and in no way represent the opinions of management of Mason Graphite or any other company mentioned herein. Resource investing is inherently risky and you could lose all or part of your investment. Always consult a registered investment advisor in your jurisdiction before deciding if any investment is right for you.

JACK CALDWELL: Mining Proposals for Filter Pressed Tailings, Greens Creek to El Morro

By Jack Caldwell, Ithinkmining.com

Paarl is the only South African brandy I can get in Vancouver.  It is rough—not like cognac—but rather the flavor of the veldt & bush, of scrub & dust, of a long-forgotten home & inequities long-rectified.  Thus inebriated, I blog.

Many years ago I wrote a proposal to do work at Greens Creek, then but a dream of a mine in Alaska.  We won the proposal.  I spent two summers on Admiralty Island looking for a site for the tailings facility and drilling the selected site.  We went on to conclude that the only way to do it was to filter press the tailings and build a dry stack.

The client concluded that we were crazy.  Only miners desperate to squeeze the last drop of product out of the tailings filter-pressed.  But we were right.  The approach was implemented and today twenty and more years later, the mine is still making a profit and the tailings are being filter-pressed and dry-stacked.

Other mines have taken to filter-pressed, dry-stack tailings.  Marlin in Guatemala is doing it.  Rob Dorey with whom we once worked must take credit.  Escobal in Guatemala will be doing it before the year is out.  There are other projects by others that now filter press the tailings.  It is the obvious way to go if water is scares, if seismic forces are large, if the regulator hates fluid tailings in perpetuity, and you subscribe to responsible mining, which was not a phrase we knew when we told Green Creek to go filter pressing.

Today I got out another proposal to design a filter-pressed dry-stack for a proposed new mine.  Their proposed rate of tailings production is an order of magnitude greater than Greens Creek.  Nobody has yet done it so big, on so grand a scale.  But it can be done and must be done on such scales if mining is to progress responsibly.

We may not win today’s proposal.  The EPCM contractor is bound to modern rules of contract to get bids from many and select the lowest cost.  I demanded that our cost be high:  if they cannot afford us, that is their problem.  Let them take the low bidder if they will; we will come in and sort out the mess at our cost eventually.

Like last week when I gave the client a budget for an equal amount.  This was a sole-source “proposal.”  They are in trouble and know we can help them.  None of this stupid EPCM bidding crap.  And I will help them, and my fees will be small by comparison with the issues they face and the costs they have to bear to get out of their mess.

Yet I gave in and let us propose.  My first instinct was: “Screw them.  If they cannot see we can do it and are the best, let them go their own way.  I have enough to do as it is. Why waste precious Sundays polishing a proposal to keep their system happy?”

Yet I gave in and let our proposal proceed and be submitted.  For there are many others who want & need the work.  It will promote their careers and bank balances.  Maybe I owe it to them.  We will see how my decision turns out.

Frank Holmes: Royal Gold vs Newmont in 2 Minutes

In a TAKE 120 ReutersTV clip, Frank Holmes tells Rhonda Schaffler that Royal Gold appears to be a more attractive investment due to higher profit margins and record royalty revenues. With gold oversold on our oscillator model today, there’s a high probability that gold could rally soon, and gold stocks could participate in that rise.

Note from BMO…

China’s State Reserves Bureau has issued tenders to buy 300kt of primary aluminum and 50kt of refined zinc from domestic smelters. This is part of a purchasing program announced in November 2012, ultimately to support metal prices for domestic smelters near term, but which perpetuates the fundamental issue of oversupply, in BMO Research’s view. RUSAL’s recent announcement to cut 300ktpa of capacity through 2015 is positive for the aluminum market, but BMO Research continues to forecast a surplus market globally this year. Aluminum inventories remain at all-time high relative levels, with the eventual unwinding of massive carry trades limiting price upside for years to come. At current aluminum prices of US$0.87/lb, BMO Research estimates over 30% of global smelters are loss-making. Zinc inventories remain at high relative levels, with BMO Research maintaining its view that sufficient new mine supply is expected to offset some larger mines coming offline over the next three to five years. BMO Research reiterates a cautious approach to mining equities with significant exposure to aluminum or zinc due to unfavourable market fundamentals relative to commodities such as iron ore and copper.

If you want to read more on this… here’s where you want to go.

Rick Rule: Mining will be survival of the finest

Rick Rule is a very smart guy. He’s the founder and chairman of Sprott Global Resource Investments and besides that, he’s one of the few people we’ve met in this industry who actually speak in complete sentences. Listen to what he says.

Key Charts: The Two Strongest Forms Of Money On The Planet Over The Last 13 Years

Brent Cook, Exploration Insights

Brent Cook is Long on Resources, Precious Metals Read more

Jeffrey Christian explains why gold standard won’t work

In this recent interview with Kitco, CPM Group founder Jeffrey Christian explains why the notion of a gold standard—recently touted by Republicans such as Ron Paul and congresswoman Marsha Blackburn, as well as the Tea Party—doesn’t hold water.  Read more

Could this be the next big metal?

In this exclusive interview, signumBOX’s Daniela Desormeaux weighs in on the lithium sector: There’s no real shortage of lithium in the world, so why is it’s price so high? And will it stay there? Read more

Silver: Supply and demand 101

How is silver traded? How much and how often do investors trade silver? Where does silver trading take place? Here are some simple answers about silver supply and demand.

Ore to more… the history of copper

Ever wonder how where copper comes from? How it’s made? Well, now you can stop wondering and start watching. Here it is: The story of copper!

INVESTING IN EARLY STAGE PROJECTS & PROSPECT GENERATORS

Tips for investing in early stage projects and companies, with John-Mark Staude Read more

Part 4: La Rinconada, The World’s Most Remote Mines

For sheer remoteness, few locations in the world compare to the La Rinconada gold mine in the Peruvian Andes.
Read more

Part 3: The World’s Most Remote Mines

Diamonds deposits are often discovered in incredibly remote areas. Although the Argyle Diamond Mine is located a very long drive from anywhere you’d likely want to live, it’s at least a relatively hospitable location. Read more

rI at the close, May 8, 2012

Greece struggle persists, markets tumble, Greece at lowest level since 1992

The consequences of lending to PIIGS took a graver turn this week as markets tumbled with increased fear of a Greek default on its debts.

  Greece has made its own bed with its epic inability to choose a clear governing party and may yet have to go back to the polls. The country appears, at least in an economic sense, to be rudderless and threatening to capsize without clearer leadership at the helm.

While the Financial Post reports that Germany will not abide any retreat from austerity, the Globe & Mail takes the news in stride, noting that the bond market shows little sign of contagion.

“While the yield on 10-year Greek government bonds has jumped 39 basis points today, to an eye-popping 22.25 per cent, most other countries’ borrowing rates are stable. The yield on French 10-year notes edged up seven basis points to 2.795. But German, Dutch, Swiss, Norwegian, Danish, Belgian, Austrian and Finnish rates all declined,” Canada’s national paper noted.

Nevertheless, the Toronto stock market tumbled more than 200 points Tuesday, before recovering somewhat in the afternoon, having dropped a net 1.59% or 188.41 points (to 11,672.24) within an hour of the market’s close.

The TSX Venture Exchange took a bigger hit, dropping 4.17% or 58.3 points to 1,339,12 within an hour of the close as well.

The S&P 500 index shed 15 points, or 1.1%, to 1,355 in Tuesday afternoon trading, falling for the fourth day in five and hitting a two month low.

The Dow Jones Industrial Average fell 142 points, or 1.1%, to 12,869 sliding for a fifth straight day.

The Nasdaq Composite lost 33 points, or 1.1%, to 2,925 and hit its lowest intraday trading level since February, reports WSJ.

In Europe, The Stoxx Europe 600 index sank 1.7%. Greece’s ASE Composite Index closed at its lowest level since November 1992, dropping 3.6%. The U.K.’s FTSE 100 fell 1.8% turning into the red for the year.

In the meantime, gold dropped to a session low, sliding 2% to below $1,600 per ounce. Reuters suggests further downside is possible based on the price breaking through a series of “technical support levels.”

“Spot gold dropped 1.9 percent on the day to $1,607.70 an ounce by 3:16 p.m. EDT (1916 GMT), its largest daily decline in a month. It hit a session low of $1,594.94 an ounce, its cheapest price since January 4.

“Gold’s has declined $180 from its 2012 high of $1,790 on February 29 after Fed Chairman Ben Bernanke did not hint at a third round of government bond purchases, or quantitative easing, which has underpinned the metal. A strong run of U.S. economic data has further reduced hopes for U.S. monetary easing.”

As Greece’s indecisiveness plays havoc with global markets, it may behove Europe’s leadership to finally take a stand and remove Greece’s untenable debit (if not the country as a whole) from the eurozone entirely.

Europe must turn its attention to the real problems at the root of its present situation, particularly the flaunting of the basic debt load stipulations of the Maastricht Treaty. 

 

Part 2: The World’s Most Remote Mines

 

Elsewhere in western Australia, one third of the world’s annual production of diamonds is mined at the Argyle and the Ellendale diamond mines. Read more

The world’s most remote mines, Part 1

The Coyote Gold mine, northwestern Australian outback

Read more

Next Page »