Editorial: Boka broken; Southwestern withers

If you like to catch companies slipping bad news into the market, it’s always wise to stick around your computer after the markets close on Fridays.

* That was certainly the case during the week ended Nov. 3, the 44th trading week of 2007, as Southwestern Resources released at 5:43 pm on Friday its long-awaited, revised resource estimate for its now infamous Boka gold project, in China’s Yunnan province. The company had shocked investors in mid-July by withdrawing all its previous results from Boka, and then alerted them in August that it believed the Boka resource was “significantly less than previously reported” and that “manual and deliberate changes were made to its prior database to increase the grade of samples within mineralized sections.” That belief looks to be well founded, as the company has now outlined an inferred resource roughly one-tenth the size of past estimates. If there was indeed data tampering, it almost makes one suspect the tamperer may have just moved the decimal place over one place in all the data. It sure would be a lot quicker than making up numbers.

* The week’s biggest merger-and-acquisition activity happened Down Under, with Xstrata offering A$3.1 billion in cash (A$23 per share) for Aussie-listed nickel miner Jubilee Mines — a 35% premium. The friendly deal would see Xstrata fold Jubilee’s Australian nickel assets into the Xstrata Nickel division, and make Perth its new regional base of operations. Jubilee owns and operates the Cosmos nickel project in Western Australia’s Mt Keith-Leinster region and has recently announced formal approval to develop its Sinclair nickel project, located 100 km south.

* Meanwhile, Canada’s Northgate Minerals tabled a friendly deal for Australian gold miner Perseverance Corp., valuing the latter at roughly US$257 million. Perseverance’s Fosterville and Stawell gold mines in Victoria state, combined with Northgate’s existing output from Kemess in British Columbia, will propel Northgate to mid-tier producer status. Northgate’s move came soon after it was forced to abandon its planned Kemess North expansion owing to a negative environmental review.

* Barrick Gold launched a friendly $773-million ($18-per-share) cash bid for Arizona Star Resource, representing a 27% premium. The deal would give Barrick Arizona Star’s 51% interest in the large, low-grade Cerro Casale gold-copper deposit in northern Chile’s Maricunga district. Kinross Gold owns the remaining 49%. At last count, Cerro Casale held 1 billion tonnes of reserves grading 0.69 gram gold per tonne and 0.25% copper, or 23 million contained ounces gold and 6 billion contained pounds copper.

The project has been kicking around for years, but higher metal prices have suddenly made it attractive. In fact, it was only in June 2006 that Barrick short-sightedly handed over its 51% interest in Cerro Casale (acquired through its takeover of Placer Dome) to partners Bema Gold (since acquired by Kinross) and Arizona Star. At that time, the pair agreed to jointly pay Barrick around US$80 million for its 51% stake.

* Freeport-McMoRan Copper & Gold did a little more corporate tidying up after its monster acquisition of Phelps Dodge, and completed the sale of Phelps Dodge’s international wire and cable business to General Cable for US$735 million. Freeport will use the estimated US$620 million in proceeds to pay down debt.

* Aber Diamond got approval from the New York Stock Exchange to list its shares under the infinitely posher name “Harry Winston Diamond Corp.,” beginning on Nov. 19 and using the ticker HWD. Aber will end its NASDAQ listing but keep its Toronto one, using the new ticker HW.

* In another example of China’s growing presence in global mining, China’s Industrial and Commercial Bank of China — now the world’s largest bank by market capitalization at US$319 billion — plunked down about US$5.5 billion in late October for a 20% stake in South Africa’s Standard Bank, one of the key players in the financing of Africa’s mines, which will leave it about 40% foreign-owned. ICBC had the largest initial public offering in history in October 2006, raising US$22 billion, and the Standard Bank deal is its largest outside China, so far.