Editor picks: top stories of week 15

The most significant mining event of the fifteenth trading week was very good news, even if the announcement was brief.

  • Ivanhoe Mines (IVN-T, IVN-N) and partner Rio Tinto (RTP-n) reached a preliminary investment agreement on Tuesday with the Mongolian government to develop the giant Oyu Tolgoi copper-gold project in the South Gobi region.

    More details have not been forthcoming, and Ivanhoe says the draft agreement remains subject to review and approval by the cabinet and national parliament, as well as the boards of the two companies.

    Our theory is that a deal between the companies and the Mongolian government become far more likely after the huge Prospectors and Developers Association of Canada convention in Toronto in early March.

    There, the Mongolian delegation would have better realized that its country was part of a very competitive world, and that the mining sectors of many other jurisdictions — including Canada — were thriving with sensible, free-market mining policies.

    Indeed, along with other Mongolia-focused stocks, Ivanhoe’s stock started to move upwards significantly during the PDAC convention, resulting in only a modest rise following Tuesday’s positive announcement.

  • Lundin Mining (LUN-T, LMC-X) is continuing to impress with its drive to grow into a major mining company under the guiding hand of the next Lundin generation. This week, fresh from its friendly offer for Rio Narcea Gold Mines (RNG-T), Lundin unveiled another friendly deal: a merger with its cousin Tenke Mining (TNK-T).

    Tenke brings with it, of course, its stake in the gigantic, high-grade Tenke Fungurume copper-cobalt asset in the Democratic Republic of the Congo, a joint venture with Phelps Dodge (PD-N) and the DRC government. Under the proposal, existing Lundin Mining and Tenke shareholders will own 73% and 27%, respectively, of the new Lundin Mining.

  • Another largish deal was Barrick Gold‘s (ABX-T, ABX-N) purchase of another 20% in its Porgera mine in Papua New Guinea from financially troubled Emperor Mines (EMP-A) for US$250 million in cash plus an adjustment amount.

    Barrick is simply adding to its existing 75% interest in Porgera picked up through its Placer Dome acquisition last year.

    Porgera produced approximately 542,000 oz. gold last year and hosts 9.4 million oz. gold in reserves.

    Emperor is 78%-owned by DRDGold (DROOY-Q), which was formed in 2005 from a hodge-podge of lesser quality gold assets located mostly in South Africa. The Porgera deal will leave Emperor with a US$130-million surplus

    Just last month, Emperor unloaded its shuttered Vatukoula gold mine in Fiji for US$1 (and the assumpition of liabilities) to junior Westech Gold, which intends to raise several million ponds in London and Hong Kong and restart operations at the mine.

    Emperor thus brings to an end its 71-year history of mining in Fiji, and now owns only the small Tolukuma gold mine in Papua New Guinea.

  • The uranium subsector proved to be lively again this past week, with a rival bid emerging from Central African Mining & Exploration Co. (CFM-L) for Australia’s OmegaCorp (OMC-A).

    CAMEC is offering 1 share for every OmegaCorp Share, valuing each OmegaCorp Share at A$1.44 and OmegaCorp at A$222 million. This represents a 25% premium to the current A$1.15 offer from Canada’s Denison Mines (DML-T), which expired on Friday.

    On Thursday, Paladin Resources bumped up its hostile offer for Summit Resources to one Paladin shares for every 1.67 Summit Resources shares, up from 2.04 Summit shares.

    On Sunday, Summit’s board unanimously recommended that shareholders tender to the new offer, in contrast to their rancorous rejection of the previous one (as detailed in our accompanying feature section, which went to press prior to the revised bid).

  • On the newly trendy moly front, some handy number crunching from Northern Securities mining analyst Jeremy Link shows a substantial amount of insider selling over the past 12 months among Canadian-listed molybdenum-focused juniors.

    Among the top 15 juniors, Link tallied $1.7 million in insider buying and $38.9 million in insider selling. The selling was led by the insiders of Blue Pearl Mining, Roca Mines, and Adanac Molybdenum.

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