Editor’s Picks: the Week’s Top Mining Stories

Even as new record, nominal highs for uranium and nickel prices were being set in the week ended Feb. 24, it was organized labour action in Canada’s railyards that grabbed the most focused attention of those active in the country’s resources sector.

* While it never quite reached crisis levels, the 2-week, legal strike by 2,800 CN railway conductors and yard-service workers across Canada was definitely starting to put the squeeze on the nation’s miners, both in terms of provisioning their mines (especially with fuel, and particularly in the Far North) and exporting products (particularly coal).

Thankfully, late on Feb. 24, a day after the federal government had tabled back-to-work legislation (which is now suspended), CN management and the United Transportation Union reached a tentative agreement. UTU members still need to ratify the deal, with voting results expected on March 26.

The peace may prove temporary: the settlement, which is only for a year and entails a 3% pay rise plus a $1,000 bonus, is not being embraced by all members and locals, many of whom are not returning to work.

Look for the negative effects of the strike to show up in slightly higher cash costs for Canadian mines in the next round of quarterly results.

* As we near the end of earnings season, the world’s top two gold miners, Barrick Gold and Newmont Mining, both turned in record profits for 2006 of US$1.51 billion (US$1.77 per share) and US$791 million (US$1.76 per share), respectively. The strong performance was powered by soaring bullion prices that outstripped the rising operating costs that are being borne industry-wide.

Interestingly, both majors forecast that their 2007 gold output will sag even as new mines are brought on-stream. In terms of the increasingly difficult task of reserve replacement, Barrick has the leg up over its rival thanks to its takeover of Placer Dome’s quality ounces early in 2006.

While both companies covet and trumpet the “gold premium” built into their share prices, Barrick and Newmont are quietly hanging onto and even expanding their non-gold holdings, which include silver, platinum, copper, nickel and diamond assets.

* The week’s biggest surprise was Australian zinc major Zinifex’s tentative cash offer of $3.90 per share for Arctic base metals developer Wolfden Resources, valuing the junior at about $345 million.

There is a period of exclusive negotiations that will last until March 7, during which time Zinifex will investigate Wolfden’s assets and Wolfden won’t solicit other offers.

The somewhat half-hearted and unpolished unveiling of the friendly takeover bid makes us suspect that the two feared a leak and had to rush out a public announcement earlier than planned.

* The junior that had the best week was plucky, Vancouver-based Polaris Minerals, which is becoming a substantial player in the prosaic world of sand and gravel quarrying.

On Feb. 20, Polaris started production at its large, new Orca quarry on Vancouver Island, co-owned with the ‘Namgis First Nation, and followed up two days later with a $54-million bought deal financing at $9, near an all-time high.

To cap off a great few months, Polaris will be accepting the e3 Environmental Excellence in Exploration Award at the upcoming Prospectors and Developers Association of Canada convention.

* Sometimes you wonder why it’s worth bothering with sub-1% copper deposits in the Americas when you see the high tonnages and grades of deposits being developed in the African Copperbelt, which is now undergoing a renaissance.

This past week Art Ditto’s Katanga Mining announced that reserves at its Kamoto mine in the Democratic Republic of the Congo had jumped to 93 million tonnes of 3.53% copper and 0.37% cobalt, plus another 69 million measured and indicated tonnes at similar grades.

The new reserves represent a 24% and 33% increase in the copper and cobalt reserves, respectively, and the stock closed the week at an all-time high of $8.70 on the news.