While plenty of Canadians took Aug. 2 as a holiday, that wasn’t the case for many of the folks at the head offices of Kinross Gold and Red Back Mining in Toronto and Vancouver, who were busy putting the finishing touches on their friendly merger proposal.
• As reported last week, the all-share offer values Red Back at US$7.1 billion, or a 21% premium for Red Back shareholders, and ownership in the resulting gold giant will be split 63-37 between existing Kinross and Red Back shareholders, respectively.
Reaction to the deal has been pretty much universally positive among shareholders, analysts and commentators, with the resulting larger company anticipated to be deeper and stronger technically and financially than either individual company.
In the often rancorous world of mergers and acquisitions, Kinross executives have shown a remarkable ability the last few years to initiate and close a wide variety of large deals around the world with a minimum of ruffled feathers and conflict.
• For gold bugs, one company to keep an eye on these days is Canadian base metals miner HudBay Mining, which now has former long-time Agnico-Eagle Mines chief financial officer David Garofalo serving as president and CEO.
HudBay has had great success drilling out its wholly owned Lalor gold-copper deposit in Manitoba, and the board has just given its official go-ahead for full mine development at a cost of $560 million, which includes an upgrade to the company’s Snow Lake concentrator.
In a sign of HudBay’s strong financial health coming out of the recession, funding for the mine is expected to come from existing cash and future cash flows.
HudBay expects initial production from an access ramp at Lalor in the second quarter of 2012 and full 3,500-tonne-per-day production from a 985-metre production shaft in late 2014.
The project is robust enough for Garofalo to have said during a recent conference call that HudBay is on the fast track to becoming a “mid-tier gold producer” by 2016.
By that time, the Lalor mine will have nearly doubled HudBay’s gold production and boosted zinc production by 50%.
HudBay also plans to be trading on the New York Stock Exchange by October.
• It’s taken so long, some were wondering if it would ever happen: Vale produced its first nickel product at its new Goro nickel laterite mine in New Caledonia after years of technical tinkering by previous owner Inco, a change in ownership and a downturn in nickel prices during the recent global recession.
Vale reports that commissioning of the Goro plant is almost complete, and it expects the refinery to be in production by the end of this year. At full capacity, Goro is scheduled to produce annually 58,000 tonnes nickel and 4,000 tonnes cobalt.
It’s been fascinating to watch how Inco’s assets and workers have been treated as the company has been progressively absorbed into the Brazilian iron giant over the past few years. It doesn’t take much to see that Vale has a different corporate culture than Inco, with one of Vale’s recent major press releases being headlined “Jesus returns to Rio.”
• At presstime on Aug. 11, it was the sixth day of a mine rescue attempt in Chile that has gripped the nation. Thirty three miners were trapped 400 metres underground in Minera San Esteban Primera’s San Jose copper mine in the northern Atacama region after the entrance to the mine collapsed.
Agence France Presse reported that rescuers initially tried to reach the trapped miners via a ventilation shaft, but ceased those attempts when the shaft collapsed on Aug. 7, dealing a major setback. Since then, rescuers have been drilling towards the mine workings in order to pass food and water to the trapped miners, and eventually bring them to surface. However, this will take a week to accomplish, even if the plan is successful.
One trapped worker is Franklin Lobos, a one-time professional soccer player from the Chilean team that competed in the 1984 Olympics.
New Chilean President Sebastian Pinera visited the rescue site on his way home from the inauguration of new Colombian president Juan Manuel Santos.
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