While this past year was another very strong one for the mining industry, it wasn’t without its twists, turns and dramatic flare-outs. Here’s our reckoning of the top 10 mining stories of 2007:
10. The spike and correction in uranium. Long-ignored uranium spent the first half of the year as the surprising new darling of the metals sector, spurred on by increased demand from nuclear power stations and constrained supply, especially from Saskatchewan’s Athabasca basin.
After trading for many years around US$10 per lb. U3O8, spot uranium prices began a relentless climb in mid-2003, closing out 2006 at US$72.
But that was just a taste of things to come in 2007, as prices kept on climbing, peaking at an all-time record US$136 per lb. in June but then tanking over the next three months to below US$80 per lb.
At presstime, uranium oxide looks to be closing out 2007 at a price of US$90 per lb.
The growing number of uranium junior explorers spent the year scrambling to find experienced staff and revive often times marginal uranium deposits drilled out during the last boom in the 1970s.
9. M&A hits the mid-tiers. Mergers among the giants in the nickel and gold sectors in 2006 (i.e. CVRD buying Inco, Xstrata scooping up Falconbridge and Barrick Gold getting Placer Dome), meant that much of the M&A activity in 2007 zeroed in on the mid-tier producers.
In the nickel space, we watched as Russia’s Norilsk confidently topped Xstrata’s bid for LionOre Mining International, Sherritt International swooped in to take over Dynatec, and Lundin Mining grabbed Rio Narcea Gold Mines.
The golds were just as dramatic, with: Kinross Gold buying Bema Gold; Newmont Mining picking up Miramar Mining and spinning out the old Franco-Nevada Mining assets; Agnico-Eagle Mines acquiring Cumberland Resources; Coeur d’Alene Mines finessing a three-way merger with Bolnisi Gold and Palmarejo Silver and Gold; Yamana Gold merging with Northern Orion Resources and Meridian Gold; and Barrick buying Arizona Star Resources.
8. Aurelian’s mega-tally. By October, just 17 months after discovery, Vancouver’s Aurelian Resources had delineated 13.7 million oz. gold at its high-grade Fruta del Norte discovery in southeastern Ecuador. It stands as one of the few truly “world-class” discoveries made during the current gold bull market.
7. The sinking greenback. For the many reasons you’ve been reading about all year, including the latest subprime mortgage woes, the U.S. dollar’s decline translated into strong rises in all sorts of commodities, from oil and agricultural products, to gold, nickel, zinc and platinum.
The loonie also took flight, up from a trough of US62 in 2002 to a 1-day peak of US$1.10 in November 2007.
6. B.C.’s fading. A lot of the good feelings about the rejuvenated mining scene in Canada’s westernmost province went cold this year.
In May, fresh from warding off a hostile takeover attempt by Barrick Gold, NovaGold Resources brought in Teck Cominco with great fanfare to co-develop the large, but low-grade and remote Galore Creek copper-gold project in northwestern B.C., at an estimated cost of $2 billion.
The project was key in opening up the whole northwest to resource development, and NovaGold’s forging of a positive relationship with local aboriginal groups had been widely touted as a model for others.
However, by November, the project was shelved, as costs were all of as sudden estimated at $5 billion.
In September, Northgate Minerals was delivered a major setback when a federal-provincial environmental panel recommended that its large Kemess North copper-gold mine expansion in north-central B.C. not proceed owing to aboriginal opposition to tailings disposal in a lake.
5. Geopolitics matter again. Miners ran into all kinds of trouble with mercurial governments around the world, including notable moments such as: The Alaskan government revoking Coeur d’Alene Mines’ tailings facility permit at its advanced Kensington gold mine project near Juneau; Exeter Resource’s Don Sixto gold project in Argentina put on hold in June, when the Mendoza government banned some mining-related chemicals; Bolivian President Evo Morales sending 200 troops to occupy and nationalize Glencore International’s Vinto tin smelter in Bolivia in February; and Gabriel Resources shutting down its Rosia Montana gold project in Romania owing to persistent opposition by NGOs and the national government.
4. Boka blues. In July, Southwestern Resources stunned investors when it retracted all assay results from its flagship Boka gold project in China’s Yunnan province.
Southwestern’s CEO, John Paterson, who had resigned in June and is now being sued by the company, was soon admitted to hospital for treatment of clinical depression. The company said that data was deliberately tampered with, and a new resource estimate released in the fall showed that gold resources were about 10% of previous estimates.
3. A good ol’ fashioned Canadian area play. Noront Resources had great success with its Double Eagle project in Ontario’s James Bay Lowlands, with its first hole returning 36 metres of 1.84% nickel and 1.53% copper at shallow depths.
A rash of juniors have descended on the camp, and the developing area play will be one of the hot stories of 2008.
2. Metals-hungry China. Now ranking as the world’s largest consumer of minerals, it’s no surprise that China is more aggressively scouring the globe to secure minerals and other natural resources, even if it means propping up more than a few despotic regimes.
By the end of last year, Chinese mining companies had invested US$18 billion abroad, and that figure looks set to be exceeded in 2007.
1. Clash of the titans. These were the biggest stories in dollar terms: Freeport McMoRan Copper & Gold completing its merger with copper major Phelps Dodge; Rio Tinto fighting off Alcoa to take Alcan; BHP Billiton bidding about US$138 billion for Rio Tinto; and new kid on the block Xstrata coming into play.
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