Editorial: Teck, Goldcorp, find there’s no place like home

With Canadian miners running into all sorts of problems overseas dealing with greedy and at times openly hostile governments, assets back home in the Great White North are looking better each year, even with our high taxes and growing red tape. The week ended Aug. 6, the 31st trading week of 2008, was punctuated by two Vancouver-based giants tabling large, friendly takeovers in established Canadian mining camps.

• Teck Cominco is doubling down on metallurgical coal with a US$14.1-billion bid for Fording Canadian Coal Trust, offering a hefty US$12.4 billion in cash and 36.9 million Teck shares.

If successful, Teck will boost its interest in the Elk Valley Coal Partnership, which includes six operating mines in British Columbia and Alberta, to 100% from its current 52%. The mines produced 23.4 million tonnes of high-value metallurgical coal in 2007.

While metallurgical coal prices are going through some volatility, the move solidifies Teck as a major player in what should be a lucrative market in the coming decades.

• In Ontario’s incredibly rich Red Lake gold camp, Goldcorp has launched a friendly cash-and-shares deal valued at $1.5 billion for junior explorer Gold Eagle Mines.

Goldcorp already operates the Red Lake and Campbell gold mines in the camp, and is now setting its sights on Gold Eagle and its neighbouring Bruce Channel high-grade gold discovery.

The move shows that, despite its rapid growth into gold’s heavyweight category, Goldcorp is still nimble enough to take out a junior based on excellent, early stage drill results, much as it did with Virginia Gold Mines a few years ago.

The bid, if successful, would also succeed in stymieing Agnico- Eagle Mines’ plans to grow its presence in the Red Lake camp. It was only on June 26 that Agnico made a splash by ploughing $50 million into Gold Eagle by way of a private placement.

At presstime, Agnico had made a sweet $19-million paper profit on its investment in Gold Eagle in just six weeks, so we don’t see Agnico coming back with a rival bid.

• As we’ve reported in recent issues, the Ontario government intends to revamp the provincial mining act, with a stated aim of “modernizing the way mining companies stake and explore their claims to be more respectful of aboriginal communities and private land holders.” (That no one’s being asked to be more respectful of miners shows where this one’s headed. . . )

The government has now set the dates for a series of related public and stakeholder meetings. These facilitated sessions will be held in Timmins (Aug. 11), Sudbury (Aug. 13), Thunder Bay (Aug. 18), Kingston (Aug. 28) and Toronto (Sept. 8).

The government describes these sessions as a “first step in a consultation approach that will also include focused discussions with the minerals industry, municipalities and other stakeholders, First Nations and Metis leaders, as well as input from First Nations communities across Ontario.”

On Aug. 11, a discussion paper will be posted for comment on the Environmental Registry and the ministry’s website at www.mndm.gov.on.ca.

Now’s the time for Ontario-focused mining companies to get involved in this process, preferably in co-ordination with such groups as the Ontario Mining Association and the Prospectors and Developers Association of Canada.

• While shares in most North American juniors keep on declining, Chinese majors are continuing to be a significant source of financial aid for juniors that are in a tight spot but able to boast a large resource.

The latest example is J-C Potvin’s Tiomin Resources, which has signed a preliminary agreement with the Jinchuan Group to invest US$25 million directly into Tiomin’s huge but long-delayed Kwale titanium sands project in Kenya. The deal will give Jinchuan 70% of Kwale, assuming that Jinchuan procures all necessary financing to get the project into production, and Barrick Gold waives its first right of refusal.

Tiomin declared force majeure at Kwale in December 2006, and investors had generally written off the project.


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