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TABLE OF CONTENTS Dec 31, 2012 - Jan 6, 2013 Volume 98 Number 46 - 0 comments

Editorial: 2012 a sweet and sour year

Top stories of 2012

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It was a mixed year of success and setbacks in mining, with some of our favourite stories being:

9. DR renaissance — The sleepy northwest corner of the Dominican Republic came alive in 2012, with exciting drill results coming out of exploration campaigns by Goldquest and Unigold, and much gold potential lying across the border in northeastern Haiti. After the suspension of the Falcondo nickel-laterite operations, the DR is returning to major miner status with Barrick and Goldcorp’s Pueblo Viejo gold mine coming online.

8. Barkerville follies — B.C. provided much of the comic relief for miners in 2012, culminating in Barkerville Gold Mines’ statement in July that it had come up with up a “resource potential” of up to 90 million oz. gold at its property in B.C. The stock has remained halted ever since, and management still has plenty of explaining to do.

7. HD Mining uproar — The erstwhile coal miner ran into Canadian union flak with its plan to bring temporary Chinese miners to northern B.C. to develop an underground coal mine at Tumbler Ridge, prompting a review by the federal government of its entire Temporary Foreign Worker program. On a less contentious note, the Canadian and Chinese governments signed an agreement in February allowing Canadian uranium exports to China.

6. Mali coup — New instability erupted in March with the ouster of President Amadou Toumani Touré by rebels who’d claimed his government hadn’t done enough to quell an insurgency by Tuareg Islamic radicals in the country’s north. Ironically, the coup allowed Tuareg forces — replenished with arms from the Libyan civil war — to accelerate their campaign and occupy the country’s northern half, which is where things stand today. With the gold mines located in the south, some operational normality has returned, but the status quo can’t hold.

5. New rules — The shifting regulatory and tax landscape kept things unpredictable for miners globally, with new ownership rules in Indonesia; a tax hike in Australia; asset seizures in Bolivia; tax hikes and currency restrictions in Argentina; project reviews by the Kyrgyzstan and Papua New Guinea governments; threatened regulatory and tax changes in Quebec; and Guatemala floating expanded government ownership in mines.

4. Glencore-Xstrata merger — In February, Glencore and Xstrata announced their long-anticipated, all-share mega-merger of equals, which had been delayed until Glencore could go public in order to establish its market valuation. The combined entity will dominate the global markets for thermal coal, zinc, lead and ferrochrome, and become a significant copper producer, as well as remain a major nickel player.

3. M&A mania — It was a busy year on the mergers and acquisition front, with headline participants including: Elgin and Gold-Ore; Rio Tinto and Hathor; Macusani and Southern Energy; Teck and SilverBirch; Smash and Prosperity; Pan American and Minefinders; US Gold & Minera Andes to form McEwen Mining; Winsway and Grande Cache Coal; Regulus and Pachamama; Panoramic and Magma Metals; Molycorp and Neo Material; Prophecy Platinum and Ursa Major; Xstrata buying Canadian coal assets from Talisman; Iamgold and Trelawney; Endeavour and Avion; Talison and Chengdu Tianqi; EBX Group and targets Galway and Calvista; Argonaut and Prodigy; Primero and Cerro Resources; Osisko and Queenston; Harry Winston buying Ekati; Hochschild and Andina; Keegan and PMI; and First Quantum going after Inmet, which is after Petaquilla.

2. Cost overruns — Kinross started the year by announcing it would review three major advanced gold projects and write down the value of its Tasiast gold project in Mauritania, acquired by buying Red Back Mining in 2010. The Tasiast debacle put an end to Tye Burt’s leadership as Kinross CEO. Chronic cost overruns at Barrick Gold’s megaprojects under development around the world led to the ouster of Aaron Regent as CEO in June, to be replaced by CFO Jamie Sokalsky. At the junior end, Baja Mining had the most spectacular bellyflop at its half-built Boleo project in Mexico, where estimated cost overruns of US$400 million caused a major cash crunch and management shakeup.

1. Banks lie, bore — The cynic’s view that the West’s global megabanks are just well-dressed criminal gangs proved to be true in 2012, with the revelation in July that many of the biggest U.K. and U.S. banks had for years rigged the London Interbank Offered Rate (Libor). Barclays was the first to pay US$453 million to regulators in fines, while in December UBS agreed to US$1.5 billion in penalties. HSBC closed out the year agreeing to pay US$1.9 billion in fines for laundering money for Mexican drug lords and the sanctioned Iranian regime — the biggest penalty ever imposed on a bank. The same day, the U.K.’s Standard Chartered Bank settled a money-laundering investigation involving Iran, with a US$340-million payment to U.S. regulators.

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