For miners, the only dispute about 2013 was whether it was the worst year since 2008, 2000 or even going back decades. If the mood was glum, there was at least no shortage of news to spice up the year. Here are our picks for the biggest stories of the year for North American-listed miners.
Gold price plummet — After trending sideways from September 2011 to December 2012, the spot price of gold tumbled mightily in 2013, dropping from its year-end close of US$1,664.00 per oz. to its nadir of US$1,192 per oz. as a PM fix in London on June 28, 2013. Things perked up for a while after that, with gold rising above US$1,400 per oz. in late August. It’s been mostly a long slide down after that, however, with gold now treading water at US$1,235 per oz. at presstime in mid-December.
Freeze in financings, M&A — As 2013 winds down, it looks like only about $2 billion will be raised by the mining sector in Canada this year, according to a tally by CIBC that only looks at financings larger than $10 million. That $2 billion figure is down nearly 80% from the five-year average. Mergers and acquisitions felt a similar chill, with most of the biggest deals coming in at several hundred millions of dollars. The last mega-deal of the cycle was First Quantum Minerals’ $5.1-billion acquisition of Inmet Mining, way back in early 2013.
Cost overruns, writedowns, project delays — There were so many in 2013, it would fill an issue on its own. But nothing grabbed the headlines and was emblematic of the industry’s overreach like Barrick Gold’s writedown and work suspension of the Pascua-Lama gold-copper mega-project on the Chilean-Argentine border. Barrick was further humbled as the year went on by massive corporate layoffs, asset sales, a shareholder revolt over executive pay, and accelerated turnover among top management and directors.
Pretium sitting pretty? — The Robert Quartermain-led junior provided the biggest emotional rollercoaster ride for investors this year, with exhilaration over its rapidly expanding high-grade reserves at its Brucejack gold project in B.C. giving way in October to nagging doubts and a plummeting share price over the quality of the reserve estimate after the resignation from the project of widely respected consultants Strathcona Mineral Services. Shares nearly doubled in November as a bulk sample turned out to be chock full of gold.
New Prosperity showdown — Nothing better epitomized the polarity of B.C. resource-development politics better than the passionate clashing over the fate of Taseko Mines’ proposed open-pit New Prosperity copper-gold mine near Williams Lake, B.C. Lively public meetings over the summer featured local First Nations and environmental groups bumping heads with Taseko and local business groups, with regulators sitting in the middle. A decision on key federal environmental permits is due soon.
Cliffs’ pullout from the Ring of Fire — Overblown expectations in some quarters in Ontario as to the value of the Ring of Fire chromite and base metals camp in northern Ontario were brought down to earth in November as Cliffs Natural Resources shelved its $3.3-billion plan to build a chromite mine in the Ring of Fire and a ferrochrome conversion facility in Sudbury.
Patterson Lake South — One of the bright spots on the exploration front was the Patterson Lake South high-grade uranium discovery by the now-merged partners Fission Uranium and Alpha Minerals at a shallow depth in a new area just outside Saskatchewan’s Athabasca basin.
Kinross abandons Fruta del Norte — Political risk trumps geology every time, and Kinross learned that lesson the hard way in Ecuador, walking away from the Fruta del Norte gold project there in June and taking a US$720-million writedown on a 6.7-million oz. gold reserve. The move came five years after spending just under $1 billion on Aurelian Resources to acquire the project, and two years after starting negotiations with the Ecuadorian government over how to share mine cash flow — negotiations that proved impossible.
Diamond revival — People have been talking for years about the compelling supply-demand fundamentals in the diamond space due to the exceedingly difficult task of bringing new mine supply online as existing mines age and are depleted. But the latter half of 2013 showed a long-hoped-for revival in junior diamonds stocks, with many juniors’ shares showing double-digits gains after years of slumber.