State of the Market Mining and Finance Report by IntierraRMG - Edition 1 2013


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The State of the Market: Mining and Finance Report details the state and outlook of the mining industry focusing on data-driven trends in exploration, metals production, mining and finance. The report series provides data and opinion on the closed quarter, plus forward views on the upcoming period.

Contributors include Professor Magnus Ericsson and Dr. Chris Hinde.

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State of the Market Mining and Finance Report by IntierraRMG - Edition 1 2013

  1. 1. Edition 1, 2013 State of the Market: Mining and Finance Report Expert review of all aspects of the industry, recent performance and quarterly outlook
  2. 2. ContentsHinde Sight 03Market for Mining 04Exploration Hot Spots 06Assay Share Price Alert 10Metals Production Outlook 11Mergers and Acquisitions 15Mining Finance 16Special Report: Overview of 2012 18Special Report: Mining Royalties and Taxation 24STATE OF THE MARKET: MINING AND FINANCE REPORT Report is published by CONTRIBUTORS IntierraRMG IntierraRMG Pty Ltd Åsa Borssén Abbey House, 5th Floor Rovino Chaudhary 74-76 St John Street Contact Alexander Elving London, EC1M 4DZ Chris Hinde Magnus Ericsson Tel: +44 (0)20 7780 7470 Editorial Director Stuart Ferguson Website: Email: Noxy Hatungimana Chris Hinde Kelly Chan Viktoriya Larsson Marketing Manager Olof Löf Email: Jeremy ThompsonThis report is supplied on a confidential basis for the subscribers use only. The contents must not be disclosed to third parties and it must notbe copied in whole or in part without the prior written permission of IntierraRMG Pty Limited. Photocopying and electronic forwarding prohibited.Copyright 2013 IntierraRMG.Edition 1, 2013 State of the Market: Mining and Finance Report 02
  3. 3. Hinde SightResource-stock investors and city financiers have been risk averse for a few years but suddenly it is the turn of the mining CEOsIf the abnormal (and still not complete) Glencore-Xstrata The bulk of the write down was the US$10-11 billiontransaction is excluded, there were only US$46.0 billion impairment of the company’s aluminium assets, mostof mining deals announced last year. The value of these of which were acquired with the US$38 billion298 deals contrasts with the US$98.9 billion announced purchase of Alcan (a deal that was finally completedin 2011. in November 2007, coinciding almost precisely with Despite this worrying shortfall, there are signs that, a peak in aluminium prices). The latest write-downat last, the supporting finance is becoming easier. brings the total reduction in the carried value ofFunds raised by mining companies in the quarter to Alcan’s assets to almost US$28 billion.end-December rose to US$6.8 billion, compared with However, Mr Albanese can’t reasonably be blamedonly US$5.5 billion in the September quarter, and this for the Alcan debacle as the acquisition came veryrepresented a welcome increase on the monies raised early in his tenure, which started in May 2007. Whatin the final quarter of 2011 (see p16). sealed his departure was the scarcely credible US$3 In its forecast for 2013, IntierraRMG expects billion charge against the company’s coal assets inmergers and acquisitions to gather steam, with Mozambique. This prize was acquired for US$3.7cash-rich companies targeting juniors. Meanwhile, billion less than two years ago.the on-going weakness in traditional debt-equity Mr Albanese’s demise signals the start of what will bemarkets will fuel ever more imaginative methods a period of remarkable change at the top of the miningof financing. industry. The boss of Anglo American, Cynthia Carroll, The targets will need to be low risk, however, with is leaving in April (to be replaced by AngloGold Ashanti’schief executives feeling the heat from over-valued Mark Cutifani), Mick Davis is due to leave Xstrata sixassets in previous periods of takeover activity. For months after it merges with Glencore, and BHP Billitonthe past few years it has been the CEOs at junior is looking to replace Marius Kloppers.companies that have been the subject of most The new executives will be taking the reins at asympathy. Suddenly, it is executives who sit at the challenging time for the industry, with volatile metalssharp end of planes that are under pressure, and four prices, increased political attention and widespreadof the leading mining companies are in the process of unrest amongst stakeholders. There is particularchanging their leaders. disquiet amongst employees, with strikes being Rio Tinto recently announced an US$14 billion asset triggered by industry-wide cost-cutting measureswrite down in its aluminium and coal divisions (two that include swingeing redundancies.days after announcing record iron-ore production). The leading mining companies will stick with whatThe write down in balance sheet value is equivalent to they know best, and that means a continued focus ona shocking 13% of the Anglo-Australian company’s iron ore, copper and coal. However, the real test of themarket capitalisation, and the Board announced that incoming CEOs will be how they reposition theirchief executive Tom Albanese was resigning with companies to the new operating conditions. They will,immediate effect, and by “mutual consent”. surely, be more careful on valuing deals. Gold prices (US$/oz) Copper prices (US$/t) 1,900 10,300 1,800 9,800 1,700 9,300 1,600 8,800 1,500 8,300 1,400 7,800 1,300 7,300 1,200 6,800 Jan 2011 Dec 2012 Jan 2011 Dec 2012 Iron ore prices* (US$/t) Coal prices* (US$/t) 180 * 62% Fe CIF China 150 * Australian thermal coal, 170 (12,000btu/lb, under 1% sulphur, 14% ash, 140 FOB Newcastle/Port Kembla) 160 130 150 120 140 130 110 120 100 110 90 100 80 Jan 2011 Dec 2012 Jan 2011 Dec 2012Edition 1, 2013 State of the Market: Mining and Finance Report 03
  4. 4. 15% offState of the Market Reports Annual Subscription (4 editions) For limited time only. Exploration Mining FinanceThe State of the Market Reports detail the state and outlook of the mining industry focusing on data-driven trends inexploration, metals production, mining and finance. The report series provides data and opinion on the closed quarter,plus forward views on the upcoming period. Contributors include Professor Magnus Ericsson and Dr. Chris Hinde.State of the Market: Mining and Finance Report Subscription promo price: USD3,060 + Tax Each quarterly issue includes: ► Market for Mining ► Exploration Hot Spots ► Mergers and Acquisitions ► Exploration Results ► Mining Finance ► Assay Highlights ► Product Updates ► Special Features Upcoming Special Features • Overview of the mining industry in 2012 • Mining royalties and taxation • Special Coverage: Cash cost data • Mid-year examination of the world’s metals stockpiles Usual price: USD3,600 + local tax • Mining methods, and technology developments and trends • Metal prices, grade and tonnage predictions for 2014 For limited time only!State of the Market: Exploration Report Subscription promo price: USD1,360 +Tax This quarterly report focuses specifically on exploration activities and trends for the previous and upcoming quarters. It includes data and opinion on exploration hot spots, drilling activity trends and exploration financing. Each quarterly issue includes: ► Driller’s Log ► Feasibility Studies ► Capital Raising for Exploration ► Exploration Hot Spots and Results ► Assay Share Price Alert Usual price: USD1,600 + local tax To download a free report sample, visit: For limited time only. To subscribe, e:
  5. 5. Market for Mining The world’s economies have continued to drift but we expect the mining sector to start its recovery this yearThe world economy continued to drift last year, until March, and the country could still suffer a serieswith global growth falling to 2.3% from 3.8% in 2011 of mini crises this year. The growth rate for the US is(and 5.1% in 2010). The malaise was worst in the predicted to fall to 1.9% in 2013 from 2.2% in 2012.‘advanced’ economies, which grew by only 1.3% lastyear, from 1.6% in 2011. Unfortunately, the emerging, European hopedeveloping, countries also recorded one of their Even though unemployment in the euro area rose toweakest economic growth rates in ten years, with an a new high in November 2012, the December quarteroverall increase of only 5.1% in 2012. was generally positive. The European Central Bank The lacklustre economic performance was attributed (ECB) renewed its bond-purchase programme, whichto uncertainty in Europe and the economic slowdown restored confidence in the financial markets andin China, where the growth rate dropped from 9.3% in bought time for political leaders. Also, the decision2011 to 7.9% in 2012. This decline in GDP growth is of the German Constitutional Court that theattributed to a shift away from intensive government’s ‘euro-rescue’ strategy was within themanufacturing and capital investments, toward German constitution (given certain restrictions),expenditure in the service sector (and intangible assets removed uncertainty about the future of thesuch as human capital). rescue mechanism. In spite of these disappointments, a better overall ECB’s chief, Mario Draghi recently gave positiveoutcome is projected for 2013. We anticipate an views on the state of the European economy, andimprovement in China’s economic growth, the believes that the euro area is showing “early signs ofrestoration of fiscal authority in the US, and improvement”, and should grow modestly by the enda stronger euro zone. of 2013. Elsewhere, the Dutch elections resulted in a stable pro-euro coalition.Fiscal cliff avoided The likelihood of a serious crisis of confidence in theIn the quarter to end-December, the US continued to euro zone has fallen considerably in the past quarter.suffer weak economic and employment growth, However, country-level finances are still vulnerable,declining labour-force participation and shrinking real with some countries facing being frozen out of theincomes. Moreover, the US trade deficit unexpectedly capital markets.grew in November, driven by an increase in imports of The euro zone is expected to grow by only 0.3% inconsumer goods. 2013, and just 1.4% in 2014. There was some good news from the US, of course,with the White House and Congress finally reaching an Emerging countriesagreement on the Federal Budget. This avoided In the quarter to end-December, leadership issuestriggering the so-called ‘fiscal cliff’, which would have were settled in China but very little is known about thebeen the culmination of a series of increasingly new leaders’ attitudes. Which form of economiccontentious fiscal showdowns between the country’s growth the new leadership chooses will be seen fromDemocratic and Republican parties over the past their GDP targets (to be announced in February). If thefew years. growth target remains at 7.5%, or above, then more Despite the deal, there is still no sign of a pro-growth policies can be expected. If the growthcomprehensive, long-term, deal on deficit reduction, target is lowered to 7%, say, then the Chineseand the US debt remains unsustainable. The Obama government may initiate a more gradual transition ofAdministration has simply delayed the tough decisions the economy. GDP Growth (%) Five-year metals prices (US$/t)8 35,000 Ni Cu (right scale) 10,500 Aluminium (right scale)7 30,000 9,0006 25,000 7,500 World5 20,000 6,0004 Advanced economies 15,000 4,5003 Emerging and 10,000 3,0002 developing countries1 5,000 1,5000 0 0 2010 2011 2012 2013f 2008 2009 2010 2011 2012Edition 1, 2013 State of the Market: Mining and Finance Report 04
  6. 6. Meanwhile, the December quarter saw China’s Metals Price ForecastGDP rise 7.8% (on an annualised basis), comparedwith 9.3% in the final quarter of 2011.The value of Raw Materials Group (RMG) expects expansionaryChina’s exports grew 14.1%, compared with a year measures by the European Union and the US in 2013.earlier (nearly three times as fast as expected), and The world’s Central Banks are also likely to stimulatewere led by shipments to the US. growth, and will seek to avoid deflation. Moreover, Chinese imports rose to 6% in the December the new political leaders in China are likely toquarter, partly because of an 11% jump in iron-ore announce new measures to stimulate their economy.imports as steel production rebounded. However, With a growing risk of inflation, and a debasementwith China’s imports having grown at a rate less of currencies, RMG expects a modest increase in thethan half as fast as its exports, China did not quite gold price this year to an average of US$1,850/oz,serve as the ‘locomotive’ to pull the rest of the before slipping to US$1,800/oz in out of recession. RMG expects the price of iron ore (62% Fe CIF The main driver of global growth recently has China) to average US$125/t this year and US$120/tbeen the world’s developing countries but their in 2014.growth has also slowed down considerably. For the other major metals, RMG expects higherEconomic growth in both the emerging and average prices this year (compared with last year’sdeveloping countries seems likely to be averages) for aluminium, nickel and zinc, but a loweranaemic this year. year-on-year average for copper (see table). Nevertheless, generally improving financial Major Metals Marketconditions, as well as a loosening of monetary 2012 2013f 2014fpolicy, should generate a slow improvement over Aluminiumthe course of 2013. Emerging and developing Output (Mt) 46.86 50.79 54.49countries are expected to grow by 5.5% in 2013. Use (Mt) 46.69 50.08 53.48 Balance (kt) 190 746 1,121 Price (US$/t) 2,018 2,205 2,150Metal Price Implications CopperMost base metals started 2012 on a positive note Output (Mt) 20.11 20.91 21.75but this optimism proved to be short lived as prices Use (Mt) 20.06 20.74 21.40fell progressively through the year. This was due to Balance (kt) 49 166 338the slow growth rate in the global economy, Price (US$/t) 7,950 7,874 6,539 Nickelsluggish demand from China, high stocks for most Output (Mt) 1.72 1.81 1.94metals and an increase in the supply of some Use (Mt) 1.67 1.76 1.88commodities. Balance (kt) 43 48 56 Nickel prices rose modestly in early 2012 but Price (US$/t) 17,527 17,670 18,385 Zincsubsequently fell back because of a weak market Output (Mt) 13.16 13.71 14.22for stainless steel (the end use of more than Use (Mt) 12.86 13.48 13.92two-thirds of nickel production), while copper Balance (kt) 291 233 298prices fell initially on declining imports from China. Price (US$/t) 1,946 2,020 2,265The hitherto relatively high copper prices have also The prices of nickel and zinc are expected toled to the substitution of copper in a variety of continue rising in 2014, while copper will continue itsuses, and to increased rates of recycling and downward trend. Aluminium’s performance is likelyscrap recovery. to be lacklustre. Copper demand is expected to pick up this year, RMG tracks a weighted-average price of a basket ofwith an economic recovery in the euro zone nine metals (iron ore, copper, zinc, nickel, lead, gold,supporting demand driven by China and other silver, platinum and palladium), and this is shown inemerging Asian markets. The early signs are the chart below (with the average price in 2000encouraging, and copper prices hit their highest recalibrated to 100).level in more than two months in January after theUS lawmakers avoided the ‘fiscal cliff’. Metals price index Aluminium prices dropped below US$2,000/t 450in the second quarter of 2012, and touchedUS$1,918/t in the third quarter (near to the pre- 3002005 levels) due to the global metal-supply surplusand high stocks, but prices picked up again in the 150December quarter. We believe that the metal willcontinue to make ground in 2013 followinga rebound of the Chinese economy 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013f 2014f(the country accounts for almost half of globalmetal consumption).Edition 1, 2013 State of the Market: Mining and Finance Report 05
  7. 7. Exploration Hot SpotsThere is hope, at last, for the mining sector despite a new low in exploration activityLast month’s exploration activity represented the with 64 (94) in Australasia, 33 (23) in Africa andlowest monthly total since February 2010, and meant 28 (36) in South America.that the number of drilling reports has fallen for three These targets are illustrated geographically in theconsecutive months. ‘Activity Map’ opposite. According to IntierraRMG’s on-line database, Measuring the drilling reports in terms of theIntierraLive, there was drilling reports from a total of primary-listing location of the company making the356 prospects in December 2012 (this total includes announcement, it is clear that Canadian companiesreports from more than one drilling prospect per are in the ascendancy.project), compared with 675 in December 2011. Companies listed on the Toronto Stock Exchange There has been a particular slump in drilling at gold (TSX) and TSX-Venture Exchange (together the TMX)prospects, with only 155 being reported in December, accounted for 53% of the 238 copper reports in thecompared with the recent peak of 493 in November quarter just ended, and 60% of the 702 gold-drilling2011; see chart on p7. (Note that the sum of the reports. Companies listed on the Australian Stockthree one-month amounts in any quarter will be Exchange (ASX) accounted for 43% of the copper, andconsiderably greater than the consolidated three- 29% of the gold, reports. Companies listed on themonthly project total shown in the drilling activity London Stock Exchange and AIM (together abbreviatedchart on p7, because of multiple reports of drilling here as LSE) hardly featured for either metal.from the same prospect, during the period.) For copper, the year-ago proportions were 48% and The slump in drilling reports over the past few 47% for TMX and ASX, respectively, and 55% and 31%months left the total for calendar 2012 well behind for gold drilling.the number recorded in 2011, but still well ahead of TMX-listed companies also dominated the drillingthe industry’s nadir in 2010. reports for lead, silver and zinc; see tables opposite.Gold dominates Slump in Reported ResourcesAs normal, the search for gold dominated the reports of Not surprisingly, the decline in drilling announcementsdrilling activity during the quarter to end-December, with during the past three months had a knock-on effecta total of 702 prospects (1,111 in the final quarter of on the announcement of mineral resources and ore2011). The next most significant exploration targets (in reserves (see tables on p9).terms of individual drilling prospects) were copper (238), Contained gold in mineral resources announcedsilver (174) and zinc (72); see tables opposite. during the December quarter were little changed from Canada led the way in the gold sector, with 192 the September quarter at 79.4Moz. This represents aprospects reporting drilling activity, followed by 114 slump, however, compared with the year-ago period,in Australia and 52 in the US. However, these numbers when announced resources contained 232.4Moz.are dramatically lower than the year-ago period, when The shortfall in gold resources came mainly in thethe figures were 279, 218 and 88, respectively, for the US (down from 35.0Moz to 6.9Moz) and in Canadathree countries. Indeed, drilling activity for gold in the (42.5Moz to 20.8Moz). Together with a shortfall inwhole of North and Central America has fallen from Mexico, this meant announced gold resources in North443 in the final three months of 2011 to just 299 in and Central America had fallen two-thirds between thethe quarter just ended. December quarters of 2011 and 2012. The next most important region for gold-drilling There was a similar slump in announced goldactivity in the December quarter was Australasia reserves, which fell to 15.7Moz (contained metal) in(with reports from 116 projects), followed by Africa the quarter just ended, compared with 78.2Moz a year(108) and South America (88). Nevertheless, ago. The damage was caused by massive reductions inAustralasia has seen a particularly sharp decline in the Americas and exploration, with drilling reports falling 47% The picture was scarcely any better for copper.since the year‑ago quarter. Resources reported in the December quarter contained Australia remains the leading exploration destination just 22.3Mt, comparing favourably with 16.7Mt in thefor copper, with 64 prospects reporting drilling September quarter but well down on the 107.4Mtactivity during the quarter just ended. This total is reported a year ago.sharply lower, however, than the year ago figure (94), The reporting of new copper resources collapsedand leaves the country only just ahead of Canada (60 across the globe, with the contained metal in Southin the December quarter, and 66 a year ago). American falling from 63.1Mt a year ago to 12.5Mt in Copper exploration has also fallen sharply in the US, the period just ended.with just 18 prospects reporting drilling during the Copper reserves were little changed from thefinal quarter of 2012, compared with 29 reports in the previous quarter (5.2Mt, compared with 6.2Mt in theyear-ago period. September quarter) but were dramatically lower than a Nevertheless, North and Central America again led year ago (35.2Mt). Most of the damage was fromthe way in the search for the metal, with a total of 90 exploration projects in South America.reports during the quarter (113 a year ago), compared There was a similar story for other metals.Edition 1, 2013 State of the Market: Mining and Finance Report 06
  8. 8. Quarterly Drilling Reports (Individual Prospects) Dec Q Sep Q Dec Q Dec Q Sep Q Dec Q Dec Q Sep Q Dec QCopper 2012 2012 2011 Gold 2012 2012 2011 Lead 2012 2012 2011Canada 60 50 66 Canada 192 198 279 Canada 17 10 16Australia 64 83 94 Australia 114 209 218 Australia 11 17 14USA 18 17 29 USA 52 72 88 USA 4 3 6Mexico 7 8 16 Mexico 42 44 60 Mexico 5 7 19Brazil 2 4 7 Brazil 23 21 32 BrazilN&C America 90 83 113 N&C America 299 328 443 N&C America 26 20 41S. America 28 31 36 S. America 88 109 129 S. America 1 9 9Europe 10 21 10 Europe 37 49 35 Europe 2 4 5Africa 33 31 23 Africa 108 158 178 Africa 3 2 1Asia 13 28 40 Asia 54 57 106 Asia 5 9 5Australasia 64 83 94 Australasia 116 210 220 Australasia 11 17 14TSX/TSX-V* 127 140 151 TSX/TSX-V* 422 511 615 TSX/TSX-V* 27 31 44ASX* 103 128 147 ASX* 203 313 346 ASX* 17 23 24London* 4 2 4 London* 47 43 57 London* 3 3 3TOTAL 238 277 316 TOTAL 702 911 1111 TOTAL 48 61 75* Primary listing of issuing company * Primary listing of issuing company * Primary listing of issuing company Global DRILLING ACTIVITY Dec Q Sep Q Dec Q Silver 2012 2012 2011 Canada 39 31 56 Australia 18 23 22 USA 21 25 26 Mexico 47 48 67 Brazil N&C America 112 110 151 S. America 24 56 55 Europe 2 10 8 Africa 5 14 9 Asia 13 15 16 Australasia 18 23 22 TSX/TSX-V* 115 151 172 ASX* 28 40 49 London* 15 15 15 TOTAL 174 228 261 * Primary listing of issuing company Activity Map (December Quarter) Dec Q Sep Q Dec Q Zinc 2012 2012 2011 Canada 23 14 24 Australia 15 27 22 USA 6 5 9 Mexico 5 8 17 Brazil N&C America 37 29 50 S. America 6 15 9 Europe 4 7 7 Africa 5 2 3 Asia 5 9 7 Australasia 15 27 22 TSX/TSX-V* 44 39 52 ASX* 21 35 37 London* 2 4 3 Operational Development Exploration TOTAL 72 89 98 * Primary listing of issuing companyEdition 1, 2013 State of the Market: Mining and Finance Report 07
  9. 9. Exploration ResultsSummary of the best assay results during the past quarter, and new resources/reservesTOP-RANKED ASSAYS (December quarter; grade x intersection) Grade Intersection DepthCOPPER Company Project Hole (%) (m) (m) Project Location 1 OZ Minerals Ltd Carrapateena DD12CAR090W1 0.90 1,492.0 609.0 65km E Woomera (Australia) 2 Blackthorn Resources Ltd Kitumba KITDD_005 3.02 220.0 206.0 180km WNW Lusaka (Zambia) 3 Atico Mining Corp El Roble ATDHR-17 5.41 88.7 71.8 75km SW Medellin (Colombia) 4 Africo Resources Ltd Kalukundi BH ANTD006 5.29 80.7 25.8 30km ENE Kolwezi (Congo DR) 5 Intrepid Mines Ltd Tumpangpitu Sulphide GTD-12-350 0.68 568.9 498.0 209km SE Surabaya (Indonesia) 6 CuDeco Ltd Rocklands Group NVB018 7.45 47.0 165.0 17km WNW Cloncurry (Australia) 7 Pilot Gold Inc TV Tower (Kucukdag) KCD056 6.96 46.7 102.7 20km SE Çanakkale (Turkey) 8 Reservoir Minerals Inc Brestovac-Metovnica (Chukaru) FMTC 1217 3.17 100.0 584.0 5km S Bor (Serbia) 9 NovaCopper Inc Bornite (South Reef Zone) DDH RC12-0216 4.45 55.7 671.0 65km ENE Ambler (US) 10 Peel Mining Ltd Mallee Bull MBDD009 3.48 69.0 533.0 105km SSE Cobar (Australia) Grade Intersection Depth GOLD Company Project Hole (g/t) (m) (m) Project Location 1 Pilot Gold Inc TV Tower (Kucukdag target) KCD-50 193.0 12.0 117.5 20km SE Çanakkale (Turkey) 2 ABM Resources NL Old Pirate (Golden Hind prospect) GHRC100014 44.0 42.0 0.0 625km NW Alice Springs (Australia) 3 Golden Rim Resources Ltd Balogo (Netiana) BDH012 111.0 13.0 56.0 105km S Ouagadougou (Burkina Faso) 4 Northquest Ltd Pistol Bay (Vickers) PB-12-22 8.2 156.5 87.0 60km SSW Rankin Inlet (Canada) 5 Gran Colombia Gold Corp Marmato MT-1500 1.6 618.1 394.0 85km S Medellin (Colombia) 6 Pretium Resources Inc Brucejack (Valley of the Kings) SU-584 187.0 4.7 135.8 240km N Prince Rupert (Canada) 7 Atna Resources Ltd Pinson PRC-12-006 47.4 18.3 1.5 42km ENE Winnemucca (US) 8 Unity Mining Ltd Henty (Read zone) Z18553 269.0 3.1 105.7 30km N Queenstown (Australia) 9 Centerra Gold Inc Kumtor (SB zone) D1653 7.7 109.3 494.1 180km SSE Almaty (Kyrgyzstan) 10 Bralorne Gold Mines Ltd Bralorne-Pioneer UB12-015 386.0 2.1 163.7 74km N Whistler (Canada) Grade Intersection Depth LEAD Company Project Hole (%) (m) (m) Project Location 1 Eurasian Minerals Inc Balya (Hastanetepe) DB-81 13.80 18.0 33.0 28km WNW Balikesir (Turkey) 2 El Nino Ventures Inc Murray Brook MB-2012-138 4.58 45.4 179.6 56km WSW Bathurst (Canada) 3 Buchans Minerals Corp Lundberg-Engine House H-12-3475 1.34 134.8 59.5 15k E Buchans (Canada) 4 US Silver & Gold Inc Galena (Lead Zone) DH49-196 17.40 6.4 78.6 2km W Wallace (US) 5 Rathdowney Resources Ltd Olza OLZ-147 3.88 27.3 134.4 Near Zawiercie (Poland) 6 Balamara Resources Ltd Brskovo DH3-12 3.63 28.0 111.0 70km NNE Podgorica (Montenegro) 7 Silvercorp Metals Inc Ying/SGX (S7-1) ZK07AS7-103 41.50 2.2 203.6 120km SW Luoyang (China) 8 Golden Tag Resources Ltd San Diego SD-12-50W 0.55 152.7 818.8 50km SSW Torreon (Mexico) 9 MacPhersons Resources Ltd Nimbus East NBRC216 4.70 17.0 205.0 20km ESE Kalgoorlie (Australia) 10 Red Metal Ltd Maronan MRN12003B 4.79 15.9 1,228.0 155km ESE Mt Isa (Australia) Grade Intersection Depth SILVER Company Project Hole (g/t) (m) (m) Project Location 1 Sierra Metals Inc Promontorio (Cuerpo Oriente) B509 753.0 48.9 376.5 20km SSE Cuauhtemoc (Mexico) 2 Tahoe Resources Inc Escobal (East) 375 490.0 70.5 699.0 44km ESE Guatemala City (Guatemala) 3 Investigator Resources Ltd Peterlumbo PPDH023 2,591.0 10.0 165.0 165km W Port Augusta (Australia) 4 MacPhersons Resources Ltd Nimbus East NBRC216 896.0 28.0 200.0 20km ESE Kalgoorlie (Australia) 5 Brixton Metals Corp Thorn THN12-83 165.0 150.5 24.0 98km ENE Juneau (Canada) 6 Silver Standard Resources Inc Pirquitas (Cortaderas Breccia) DDH-250 206.0 120.8 76.0 207km NW San Salvador de Jujuy (Argentina) 7 GoGold Resources Inc San Diego (Chispa De Oro) GGS-056 87.0 194.3 31.2 110km SW Durango (Mexico) 8 Hecla Mining Co Greens Creek (South West Bench) GC3364 603.0 22.3 0.0 28km SW Juneau (US) 9 Focus Ventures Ltd El Reventon (Reventon Breccia) RC-08-8 71.3 155.4 13.7 55km NE Cosala (Mexico) 10 Hochschild Mining plc Arcata (Alexia) DDH400-S-12 984.0 9.3 0.0 75km NNW Cabanaconde (Peru) Grade Intersection Depth ZINC Company Project Hole (%) (m) (m) Project Location 1 Silver Standard Resources Inc Pirquitas (Cortaderas Breccia) DDH-250 5.0 120.8 76.0 207km NW San Salvador de Jujuy (Argentina) 2 Silver Bull Resources Inc Sierra Mojada (Shallow Silver Zone) T12116 13.9 40.4 0.0 190km N Gómez Palacio (Mexico) 3 MacPhersons Resources Ltd Nimbus East NBRC216 26.3 17.0 205.0 20km ESE Kalgoorlie (Australia) 4 Buchans Minerals Corp Lundberg-Engine House H-12-3475 3.1 134.8 59.5 15km E Buchans (Canada) 5 El Nino Ventures Inc Murray Brook MB-2012-138 8.5 45.4 179.6 56km WSW Bathurst (Canada) 6 Venturex Resources Ltd Sulphur Springs (copper/zinc mine) SSR002 19.4 11.0 174.0 112km SSE Port Hedland (Australia) 7 Golden Tag Resources Ltd San Diego SD-12-50W 1.4 152.7 818.8 50km SSW Torreon (Mexico) 8 Hecla Mining Co Greens Creek (South West Bench) GC3451 10.7 16.8 0.0 28km SW Juneau (US) 9 Cazaly Resources Ltd Mt Angelo North HCRC0005 2.8 62.0 24.0 35km WSW Halls Creek (Australia) 10 Imperial Metals Corp Ruddock Creek (V zone) RD-12-V38 24.0 6.4 175.3 100km NNW Revelstoke (Canada)Edition 1, 2013 State of the Market: Mining and Finance Report 08
  10. 10. So, does the level of exploration activity, shown on activity might start rising again in the months ahead.p7, signal continued doom and gloom? Well, yes, and According to calculations by IntierraRMG, fundsno. Even allowing for the skewing effect of a few raised for exploration rose sharply in the quarter tolarge exploration results, the numbers are clearly end-December, reaching over US$3.4 billion. Thisawful. But they do not tell the whole picture. There contrasts with the paltry US$1.8 billion raised in thehas been a significant increase recently in funds September quarter and is 19% better than the finalraised for exploration, which suggests that drilling three months of 2011 (see p17).Quarterly Review of Reserves / Resources AnnouncementsGOLD RESOURCES (oz; contained metal) GOLD RESERVES (oz; contained metal) Dec Q 2012 Sep Q 2012 Dec Q 2011 Dec Q 2012 Sep Q 2012 Dec Q 2011Canada 20,811,907 16,972,667 42,486,655 Canada 5,751,064 7,161,921 5,508,473Australia 9,040,018 3,549,161 10,850,697 Australia 2,451,408 225,951 1,812,461USA 6,918,025 3,463,209 34,990,622 USA 664,142 24,557,733Mexico 106,346 316,357 5,950,056 Mexico 4,142,319 478,032Brazil 8,080,381 4,732,025 8,036,141 Brazil 2,370,125 855,155 2,051,849N&C America 28,875,291 21,378,822 84,217,187 N&C America 7,882,047 12,075,160 33,241,378S. America 21,612,522 9,340,498 35,515,569 S. America 2,370,125 1,706,712 19,929,943Europe 9,619,509 9,148,874 16,790,636 Europe 2,288,185 3,193,644Africa 4,272,516 18,037,167 49,498,731 Africa 1,192,458 2,988,933 15,084,165Asia 5,994,715 16,574,851 33,784,548 Asia 1,769,402 14,566,693 4,952,385Australasia 9,040,018 3,549,161 12,552,027 Australasia 2,451,408 225,951 1,812,461TOTAL 79,414,571 78,029,373 232,358,698 TOTAL 15,665,440 33,851,634 78,213,976COPPER RESOURCES (t; contained metal) COPPER RESERVES (t; contained metal) Dec Q 2012 Sep Q 2012 Dec Q 2011 Dec Q 2012 Sep Q 2012 Dec Q 2011Canada 344,842 358,759 5,633,152 Canada 2,541,972 943 1,548,578Australia 225,986 1,754,448 2,991,735 Australia 40,488 49,406 445,271USA 381,974 5,927,462 2,085,063 USA 109,864 698,208 358,809Mexico 1,090,298 4,832,905 Mexico 65,592Brazil 319,752 236,138 Brazil 444,449 75,787N&C America 726,816 7,510,007 12,694,538 N&C America 5,172,326 786,847 2,422,510S. America 12,545,239 1,263,608 63,097,753 S. America 670,049 23,168,430Europe 811,350 87,027 1,984,578 EuropeAfrica 4,933,456 737,029 14,210,886 Africa 26,000 83,200 1,631,417Asia 3,024,759 5,334,250 12,393,819 Asia 4,657,200 7,517,888Australasia 225,986 1,754,448 2,991,735 Australasia 40,488 49,406 445,271TOTAL 22,267,606 16,686,369 107,373,309 TOTAL 5,238,814 6,246,702 35,185,516SILVER RESOURCES (oz; contained metal) SILVER RESERVES (oz; contained metal) Dec Q 2012 Sep Q 2012 Dec Q 2011 Dec Q 2012 Sep Q 2012 Dec Q 2011Canada 59,960,804 45,326,851 86,131,090 Canada 52,063,691 1,919,488Australia 37,421,986 9,672,896 148,594,985 Australia 1,077,214 1,907,375 2,263,412USA 41,424,856 82,496,983 456,390,869 USA 17,574,792 105,952,706Mexico 37,160,251 379,747,649 446,601,438 Mexico 387,150,783 45,002,369 44,776,110Brazil 263,293 BrazilN&C America 139,809,216 514,125,635 1,016,688,374 N&C America 465,968,234 62,577,161 179,565,248S. America 113,629,100 62,203,594 525,615,929 S. America 8,240,753 145,811,332Europe 32,965,357 17,327,272 274,108,874 Europe 9,976,485 4,794,340Africa 33,808,951 16,798,475 16,236,029 Africa 752,649 5,462,092Asia 12,120,759 86,132,977 189,699,267 Asia 1,458,459 52,534,110Australasia 37,421,986 9,672,896 148,594,985 Australasia 1,077,214 1,907,375 2,263,412TOTAL 369,755,369 706,260,849 2,170,943,458 TOTAL 469,256,556 88,163,866 384,968,442ZINC RESOURCES (t; contained metal) ZINC RESERVES (t; contained metal) Dec Q 2012 Sep Q 2012 Dec Q 2011 Dec Q 2012 Sep Q 2012 Dec Q 2011Canada 336,111 969,705 7,543,713 CanadaAustralia 108,800 3,451 2,591,072 Australia 66,091 77,600USA 20,059 668,954 817,240 USA 60,735Mexico 76,360 2,121,228 1,203,944 Mexico 806,254 30,460Brazil BrazilN&C America 432,530 3,759,887 9,564,897 N&C America 806,254 107,703S. America 27,942 445,421 2,106,765 S. AmericaEurope 1,978,940 214,246 898,035 Europe 32,420Africa 2,106,290 591,939 316,124 Africa 579,600Asia 335,003 25,203 779,889 Asia 35,649Australasia 108,800 3,451 2,591,072 Australasia 66,091 77,600TOTAL 4,989,505 5,040,147 16,256,782 TOTAL 872,345 579,600 253,372Edition 1, 2013 State of the Market: Mining and Finance Report 09
  11. 11. Assay Share-Price Alert Many of the drill intersections announced during the past quarter had significant share-price impactDespite the sharp reduction in drilling activity intersection was from surface) was 44g/t over 42m at(as reported) during the quarter just ended, there ABM Resources’ Old Pirate project in Australia.have been remarkable intersections during the past Some of the intersections announced during thefew months; and some have had an astonishing impact past quarter had a significant effect on the shareon share prices. price of the owners (see list below). Ten-day share- The ten top-ranked assays are shown in the tables price gains of over 60% were recorded by Neweraon p8 for each of five metals (simply measured by Resources and Greenpower Energy for their projectstaking the average grade multiplied by the intersection at Shanagan Uul and Mirboo, respectively. A furtherlength, and taking no account of depth). eight companies saw their share prices appreciate Top of the ranking for the copper assays during the by more than 25% in the ten days followingDecember quarter was a drill hole on OZ Minerals a drilling announcement.Carrapateena project in Australia, which returned Indicative of the lacklustre exploration activity (and0.90% Cu over 1,492m (at a depth of 609m). In second markets) in the final weeks of the year, only one of theplace was an assay at Blackthorn Resources Kitumba 28 instances of share prices rising over 12% (measuredproject in Zambia which yielded 3.02% Cu over 220m ten days after an exploration announcement) was in(at 206m). Ranked third was an 89m intersection December. There were 17 such share-price rises ingrading 5.41% Cu at Atico Mining’s El Roble project October and 10 in November. Indeed, even this onein Colombia. exploration share-price spike in December was by The top gold intersection during the December Newera, which had set the quarter’s record price gainquarter was Pilot Gold’s 193g/t, over 12m (at a depth during the previous month. Despite a share-priceof almost 118m) on its TV Tower project in Turkey (for retreat between the two drilling reports, Newera’sa grade-intersection value of 2,316m.g/t). In second share price doubled; demonstrating the abiding appealplace during the quarter (but noteworthy because the of junior stocks. Impact of Drilling Results on Share Prices (December Quarter) SHARE PRICE (US$) COMPANY NAME PROPERTY PRESS RELEASE FROM TO* GAIN (%) Newera Resources Ltd Shanagan Uul East November 0.021 0.035 66.7 Greenpower Energy Ltd Mirboo October 0.040 0.064 60.0 Aguia Resources Ltd Tres Estradas November 0.130 0.180 38.5 Indico Resources Ltd Maria Reyna October 0.180 0.240 33.3 Newera Resources Ltd Shanagan Uul East December 0.030 0.039 30.0 Cockatoo Coal Ltd Baralaba October 0.140 0.180 28.6 Marmota Energy Ltd Angel Wing October 0.072 0.090 25.0 Stellar Resources Ltd Heemskirk October 0.080 0.100 25.0 Foyson Resources Ltd New Britain November 0.008 0.010 25.0 Merah Resources Ltd Lawlers October 0.200 0.250 25.0 St George Mining Ltd East Laverton October 0.250 0.310 24.0 Navarre Minerals Ltd Bendigo North October 0.130 0.160 23.1 Atrum Coal NL Groundhog October 0.180 0.220 22.2 Hannans Reward Ltd Pahtohavare November 0.015 0.018 20.0 International Goldfields Ltd Latin October 0.027 0.032 18.5 Talga Resources Ltd Nunasvaara October 0.300 0.355 18.3 Blackthorn Resources Ltd Kitumba October 1.100 1.285 16.8 Kalgoorlie Mining Co Bullant October 0.006 0.007 16.7 Haranga Resources Ltd Bayantsogt November 0.155 0.180 16.1 Eagle Hill Exploration Corp Windfall Lake November 0.125 0.145 16.0 Monax Mining Ltd Punt Hill October 0.048 0.055 14.6 Northern Minerals Ltd Browns Range October 0.210 0.240 14.3 Shaw River Manganese Ltd Otjozondu November 0.014 0.016 14.3 Sirius Resources NL Nova October 2.180 2.480 13.8 Emmerson Resources Ltd Orlando November 0.120 0.135 12.5 International Goldfields Ltd Latin November 0.024 0.027 12.5 Latin Resources Ltd Mariela October 0.160 0.180 12.5 Eagle Hill Exploration Corp Windfall Lake November 0.125 0.140 12.0 Sirius Resources NL Nova October 2.180 2.430 11.5 * Share price ten days following assay announcementEdition 1, 2013 State of the Market: Mining and Finance Report 10
  12. 12. Metals Production Outlook Emerging data indicates positive growth in global metals productionEarly production announcements for the three months (quarter-over-quarter) came at the massive Escondidato end-December (Q4) demonstrate positive growth in mine. Production there has benefited from the transitionmetals production, compared with results published to higher-grade ore feed, and the successful completionfor the September Quarter (Q3). of large-scale maintenance programmes to increase The weighted average of all announced Q4 concentrator throughput.production showed an 18% increase in gold output, In the gold sector, a number of North American anda 6% improvement in copper and 3% rise in iron-ore, African mines showed strong Q4 production increases.compared with production in the prior three-month For example, Goldcorps cornerstone mine, Red Lake,period. As indicated in the Region chart below, the ended the year with operational stability, a strongstrongest rises came in Africa and in Asia. The size of production result and newly-discovered mineralisedthe spike in Asian gold being partially due to Centerra zones. The latter hold the potential to contribute toGold’s announcements that they had overcome the production profile over the longer term.production delays at Kumtor. Most of last year was a challenge for Centerra Details of global production can only be confirmed Gold’s Kumtor operation in Kyrgyzstan, with extrememany months after the end of the relevant reporting weather, and low grades in the Central Pit, impactingperiod as production statistics are slow to be released on production. However the year ended strongly,by producers. Global mine production analysis is and their forecast is positive for 2013.therefore best done on an annualised basis. However, Two of the most significant Australian iron-oreviewing consolidated global tables of early production mines announced sharply higher production forannouncements each quarter does provide a more the December quarter, with strong results fromimmediate barometer of production results. Chichester Range and Yandi. The tables below list those mines that have already The result from Chichester Range contributed toannounced their production for the December quarter, Fortescue’s announcement that in December 2012and where this amount is more than 10% different from the companys operations had achieved an annualisedthe production in the September quarter. (Our net shipping rate of more than 100Mt/y. The resultfigures above include all early-reporting operations, from Yandi helped BHP Billiton to announce thatnot just those that have signalled the greatest changes.) its Western Australia Iron Ore (WAIO) division had Notable changes include operations in the copper delivered a 12th consecutive December half yearsector, where the biggest actual increase in production production and sales record. Commodity Regional Change Quarter on Quarter Copper Iron Ore Gold 100% 80% 60% 40% 20% 0% -20% -40% AFRICA ASIA AUSTRALIA EUROPE NORTH AMERICA SOUTH AMERICA (inc MEXICO)Edition 1, 2013 State of the Market: Mining and Finance Report 11
  13. 13. Metals Production Outlook continuedEarly warning this year, and production for calendar 2013 isA prompt opinion of supply trends can also be gained anticipated to be 500,000-650, assessing new mine openings during each quarter. Production at Rio Tinto’s Benga coal mine in The methodology used in this section of the report Mozambique’s Moatize Basin continues to ramp up.analyses data from those mines that have formally The company notes that work has been undertakenannounced initial metals production during the to expand capacity on the Sena railway line topreceding quarter. The actual metals output will eliminate a bottleneck in the system.naturally vary as the mines are in various stages of With no new iron-ore mines coming on streama ramp-up, so we monitor the ore reserves at these during the quarter to end-September, the recentnew mines. This provides a snapshot of the emerging start of production at Karara had a significantproduction potential. impact on the Q3-Q4 comparison table for newly One such mine is Barrick Gold’s 60%-owned Pueblo ‘introduced’ ore reserves. Similarly, there was aViejo gold mine in the Dominican Republic. Initial large jump in gold and silver deposits that haveproduction was announced during the December now reached development.quarter from an operation that is exploiting a The December quarter was also significant fordeposit containing 25.3Moz of gold. Subsequent magnetite, with the mid-November announcementannouncements indicate that ramp‑up to full by Gindalbie Metals Ltd that it had produced thecapacity is expected to occur in the second half of first magnetite concentrate from its Karara project. EARLY PRODUCTION ANNOUNCEMENTS: GOLD (oz) Company Q3,2012 Q4,2012 Rise / Fall Change (%) AFRICA Buzwagi African Barrick Gold plc 30,211 64,828 34,617 115 Sukari Centamin plc 60,922 85,543 24,621 40 Bogoso-Prestea Golden Star Resources Ltd 39,844 50,230 10,386 26 Kansanshi First Quantum Minerals Ltd 35,245 45,410 10,165 29 North Mara African Barrick Gold plc 53,120 63,235 10,115 19 Kalsaka Amara Mining plc 14,369 11,480 -2,889 20 ASIA Kumtor Centerra Gold Inc 23,786 189,438 165,652 696 Grasberg Freeport-McMoRan C&G 227,000 249,000 22,000 10 Lihir Newcrest Mining Ltd 129,311 147,126 17,815 14 Boroo Centerra Gold Inc 18,938 29,878 10,940 58 AUSTRALIA Boddington Newmont Mining Corp 167,000 216,000 49,000 29 Macraes OceanaGold Corp 36,874 58,872 21,998 60 Telfer Newcrest Mining Ltd 110,372 128,995 18,623 17 Pajingo Evolution Mining Ltd 15,651 24,340 8,689 56 Bronzewing Navigator Resources Ltd 20,368 17,431 -2,937 14 Edna May Evolution Mining Ltd 25,925 22,763 -3,162 12 EUROPE Berezitovy High River Gold Mines Ltd 33,241 37,100 3,859 12 NORTH AMERICA Red Lake Goldcorp Inc 121,200 168,100 46,900 39 Mulatos Alamos Gold Inc 43,500 67,800 24,300 56 Hycroft Allied Nevada Gold Corp 25,482 46,900 21,418 84 Porcupine Goldcorp Inc 53,100 74,100 21,000 40 Seabee Claude Resources Inc 15,073 12,760 -2,313 15 SOUTH AMERICA Sao Francisco Aura Minerals Inc 19,814 28,584 8,770 44 Andorinhas Troy Resources Ltd 9,975 8,056 -1,919 19 * announcements with change >10%Edition 1, 2013 State of the Market: Mining and Finance Report 12
  14. 14. EARLY PRODUCTION ANNOUNCEMENTS: COPPER (t) Company Q3, 2012 Q4, 2012 Rise / Fall Change (%) AFRICA Palabora Palabora Mining Co 5,600 12,100 6,500 116 Guelb Moghrein First Quantum Minerals 8,656 11,038 2,382 28 Mowana African Copper plc 2,882 2,577 -305 11 ASIA Gedabek Anglo Asian Mining plc 132 116 -16 12 Cayeli Inmet Mining Corp 7,800 7,000 -800 10 AUSTRALIA Nifty Aditya Birla Minerals Ltd 11,075 13,800 2,725 25 Boddington Newmont Mining Corp 6,800 8,600 1,800 26 Cadia Valley Newcrest Mining Ltd 11,682 13,264 1,582 14 DeGrussa Sandfire Resources NL 21,181 16,392 -4,789 23 EUROPE Kevitsa First Quantum Minerals Ltd. 4,004 6,896 2,892 72 Aguablanca Lundin Mining Corp 697 1,563 866 124 Neves-Corvo Lundin Mining Corp 14,012 11,988 -2,024 14 NORTH AMERICA Bingham Canyon Rio Tinto Ltd 42,900 59,300 16,400 38 Safford Freeport-McMoRan C&G 17,000 21,000 4,000 24 Chino Freeport-McMoRan C&G 17,500 20,500 3,000 17 Pinto Valley BHP Billiton Ltd 1,200 1,700 500 42 Bolivar Sierra Metals Inc etc 668 981 313 47 Aranzazu Aura Minerals Inc 1,114 927 -187 17 Lockerby First Nickel Inc 650 450 -200 31 Troy Revett Minerals Inc 1,071 457 -614 57 Minto Capstone Mining Corp 5,241 4,069 -1,172 22 SOUTH AMERICA Escondida BHP Billiton Ltd 248,000 280,900 32,900 13 Spence BHP Billiton Ltd 34,900 40,900 6,000 17 Santa Rita Mirabela Nickel Ltd 1,704 1,507 -197 12 * announcements with change >10% EARLY PRODUCTION ANNOUNCEMENTS: Iron Ore (t) Company Q3,2012 Q4,2012 Rise / Fall Change (%) AFRICA Kolomela Kumba Iron Ore Ltd 2,500,000 2,793,000 293,000 12 Marampa London Mining plc 373,000 546,000 173,000 46 Thabazimbi Kumba Iron Ore Ltd 241,000 182,000 -59,000 24 Sishen Kumba Iron Ore Ltd 9,756,000 6,038,000 -3,718,000 38 AUSTRALIA Chichester Range Fortescue Metals Group 15,400,000 19,100,000 3,700,000 24 Yandi BHP Billiton Ltd 16,201,000 18,769,000 2,568,000 16 Tallering Peak Mount Gibson Iron Ltd 504,000 672,000 168,000 33 Koolan Island Mount Gibson Iron Ltd 793,000 913,000 120,000 15 Karara (DSO) Gindalbie Metals Ltd 350,000 406,000 56,000 16 Goldsworthy JV BHP Billiton Ltd 508,000 445,000 -63,000 12 West Angelas Rio Tinto Ltd 8,037,000 7,183,000 -854,000 11 James Labrador Iron Mines Holdings 1,141,000 327,000 -814,000 71 * announcements with change >10%Edition 1, 2013 State of the Market: Mining and Finance Report 13
  15. 15. Identify Trends and Opportunities Develop your strategic business options with IntierraRMG IntierraRMG databases are the world’s premier tools for evaluating trends and opportunities in the mining sector. AngloGold Ashanti Limited Covers global leases, 90,000 companies, 4,100 listed companies, “We value the depth and breadth of 50,000 global projects and 190 commodities. IntierraRMG’s global data coverage. The integrity of information is highly Benchmark projects by searching, filtering, exporting and ranking regarded. The source documentation across key classes of data. links are extremely useful.” ► Equity Interests ► Resource and Reserves Data Greg Foulis ► Production Data ► Financial Ratios Senior VP Business Development ► Capital Raisings ► Property Transactions AngloGold Ashanti Limited ► Feasibility Reports ► Mergers & Acquisitions ► Financial Reports ► Drill Holes Results ► Mine Cash Costs ► Refineries, Smelters and Plants Contact: Advanced online mapping enables in-depth investigation of projects and properties; displaying data on ownership, infrastructure and geology. Global Cash Cost Data Assess, benchmark and budget by individual mine or company. • ANALYSE, EVALUATE & BENCHMARK Voisey Bay • FORECAST & MODEL • COST MODELS & COST CURVES For enquiries: www.intierraRMG.comEdition 1, 2013 State of the Market: Mining and Finance Report 14
  16. 16. Mergers and Acquisitions The December quarter saw a decline in the number of mining deals but the overall value increasedDeals in the mining industry during the December Metals M&A (2012)quarter were valued at just US$13.9 billion. Of the 50,000 90 Number of deals announced71 deals announced during the three-month period, 45,000 8033 were for gold assets (worth US$2.7 billion) and14 were for copper assets (worth US$7.1 billion). 40,000 70 Value of deals (US$ million)This brought deals announced during 2012 to 35,000 60US$80.0 billion, which includes the huge Glencore- 30,000Xstrata amalgamation, worth US$34.0 billion. Glencore/Xstrata 50 The 25% quarter-on-quarter increase in mergers and 25,000 40acquisitions (in value terms) during the three months to 20,000end-December was buoyed by First Quantum’s hostile 30 15,000 Firstoffer for Inmet Mining in December. However the number Quantum/Inmet 20of deals announced fell slightly (see chart on right). 10,000 AA Sur Copper and gold deals topped the list (in terms of 5,000 10value), with nickel in third place (ahead of iron ore). 0 0 Canadian companies led the way in the quarter just March Q June Q September Q December Qended, in terms of both value and the number of deals.Chinese overseas acquisitions (up a remarkable 60%quarter-on-quarter), primarily in lithium and copper,earned them second place, ahead of the UK, the US Metals: Deal Value (Dec Q 2012) 18%and Australia. 1% Copper Iron Ore 11% 51% Gold Other MINING DEALS Nickel 19% (December Quarter 2012) Value Deals Copper, Gold and Iron Ore (US$ million) (US$ million) (Number) 8,000 Copper 7,076.1 14 7,000 Gold 2,653.7 33 6,000 Nickel 1,487.0 1 Lithium 831.3 1 5,000 Copper PGMs 550.0 3 4,000 Gold Silver 532.9 4 3,000 Iron Ore Manganese 447.0 1 2,000 Iron Ore 226.8 8 Other 106.0 6 1,000 TOTAL 13,910.8 71 0 March Q June Q September Q December QLargest MINING Deals (December Quarter 2012) Main Share Value Object Buyer’s Seller’sAnnounced Status Object metal (%) (US$m) country Buyer country Seller countryDec Pending Inmet Mining Corp Copper 100.0 4,999.5 Canada First Quantum Minerals Canada n/aDec Pending Norilsk Nickel Nickel 5.9 1,487.0 Russia Millhouse LLC Russia UC Rusal RussiaOct Pending Discovery Metals Ltd Copper 88.3 844.5 Australia Cathay Fortune Corp China n/aDec Pending Talison Lithium Ltd Lithium 100.0 831.3 Australia Chengdu Tianqi Industry China n/aOct Closed Ocampo OP gold/silver mine Gold 100.0 735.2 Mexico Minera Frisco SAB de CV Mexico AuRico Gold CanadaDec Closed Camrose Resources Copper 49.5 550.0 UK ENRC UK n/aDec Pending Mimosa Holdings PGM 51.0 550.0 Zimbabwe Local investors Aquarius Plat AustraliaNov Closed Queenston Mining Inc Gold 100.0 539.2 Canada Osisko Mining Corp Canada n/aNov Pending Kalagadi manganese deposit Manganese 50.0 447.0 South Africa n/a ArcelorMittal UKEdition 1, 2013 State of the Market: Mining and Finance Report 15