TORONTO – Is it Tanzania? Quebec? Nevada? Mongolia? Zambia?
From the mouths of geologists and mining executives straight to our ears: this-or-that nation or state has the world’s best minerals environment.
Country risk is on the lips of most companies attending PDAC 2009, the mining trade show that is expecting about 18,000 people this week. Oddly, to hear most companies tell it, the risks are exaggerated.
“Papua, New Guinea has an excellent mining environment,” says Graham Briggs, CEO of Harmony Gold (NYSE: HMY, Stock Forum), “very supportive, down to the regional governments. What you hear most about is land ownership issues.” Harmony’s primary properties are in South Africa, and it is exploring in Papua.
“The Zambian government is a stable, multi-party democracy,” declared Craig Williams, CEO of Equinox Minerals, which mines copper from its Lumwana property. Probably Africa’s largest open-pit copper mine, Lumwana began producing copper two months ago – after a fire there delayed start-up.
“Tanzania has been opening a new mine each year for the past six years,” Phil Bentley, chief geologist at Great Basin Gold (TSX: T.GBG, Stock Forum), says.
“Quebec is the best place in the world,” says Caroline Wilson, a geologist at Osisko Mining of Montreal (TSX: T.OSK, Stock Forum). “They pay 46% of mining exploration costs, with a check.” Osisko, which just raised $400 million Canadian, considers itself the owner of Canada’s largest gold reserve – pegged at 6.3 million ounces.
You get the picture. To be candid, I believe all of them. Or I believe that they believe. (For miners’ lies that do freeze heck over, please see ThomWatch Monday, filed earlier today from Toronto.)
To her credit, Caroline Wilson at Osisko, whose husband John Burzynski is the company’s VP of corporate development and also a geologist, flashed before me (and two of our Ticker Trax subscribers, Mike and Ike – I kid thee not!) The Fraser Institute’s Annual Survey of Mining Companies and Countries.
Voila! Rated on criteria for policies and minerals potential, The Fraser survey put Quebec at the very top of the chart, followed by Manitoba and Finland. Utah and Nevada were in the top 10, as were spots in Australia and Ontario, Canada.
Papua was in the high teens, followed by Tanzania and New South Wales – out of about 70 nations and regions. Mexico was No. 20. The Congo (DRC), South Africa and Zambia were in the low 30s.
“We hope we will be producing in Quebec by 2011,” Ms. Wilson said. “Our next goal is to get the mining license. We are moving a town (in the area of the company’s Canadian Malartic Project.)
In the category of brutal honesty, I have to place John Macken, CEO of Ivanhoe Mines (TSX: T.IVN, Stock Forum) in Mongolia. Ivanhoe is part of a cadre of mining companies exploring for or producing copper, gold and coal in Mongolia, Australia, Kazakhstan and Indonesia.
Macken The Knife
As Mr. Macken told us Monday, Ivanhoe’s negotiations with Mongolia’s government about the taxation and treatment of Robert M. Friedland’s Oyu Tolgoi copper and gold project in the Gobi are continuing. Mr. Friedland, Ivanhoe Capital’s chairman, was said to be in Toronto this week for meetings – contrary to my earlier report.
“We believe our share price is grossly undervalued and will see significant upside even though it has doubled recently,” Macken said. A 20-year veteran of Indonesia’s Grasberg Mine and other copper and gold projects (Freeport McMoRan) over the years, Macken said he expects negotations to conclude in a “win-win for everyone … very soon.”
Macken declined to provide a timeline for the Mongolia talks, which are attempting to reach a compromise on the government’s stance toward the vast Oyu Tolgoi deposits that Ivanhoe has been developing for most of this decade.
Macken, speaking frankly about why he believes Ivanhoe Mines’ shares (total worth about US$1.8 billion) are selling for pennies on the dollar when rated for its copper and gold reserves and its activities in other countries, said, “We hope to see a significant bump in share price once Mongolia is clarified. We hope we and the government have something to announce very soon.”
Mongolia’s hesitation and reversals about Oyu Tolgoi in the past 18 months has evaporated three-quarters of Ivanhoe Mines’ market worth, according to some estimates and opinions. The global Rio Tinto mining conglomerate owns 9% of Ivanhoe Mines – a stake Mr. Macken said theoretically could go as high as 46% with converted warrants and open-share purchases.
Country risk counts, even for the big guns. Mr. Macken at least could take solace in the Oyu Tolgoi camp site, which now sports a dining hall capable of seating 700 workers, he displayed quite plainly in a photograph before his Toronto audience.
Let’s see, 700 seats – three shifts – well, that’s 2,000 miners on a hungry day.
(For more on PDAC, please see:Future's on deck at PDAC show: ThomWatch.)
I’ll have more for free readers of ThomWatch™ on Stockhouse and for paying subscribers of Ticker Trax™ on Stockhouse later in the week.)
Ticker Trax™
Ticker Trax By Thom Calandraexplores planet Earth for a handful of stakes and strategies that offer the prospect of excellent, in some cases cosmic, returns. The new service is for those who can cope with stratospheric levels of risk attached to a handful of planetary prospects. (Please see www.tickertrax.com.)
Bonus: Please nip into our Ticker Trax™ discussion group – only on Stockhouse. For the free ThomWatch, please click here. For subscription service Ticker Trax, please visit www.TickerTrax.com. Thank you!
THOM’S STORY:Thom Calandra during 27 years of road work has helped his audience find value in a quagmire of investment choices. Thom co-founded CBS MarketWatch, MarketWatch.com and FT MarketWatch in Europe. As the voice of Thom Calandra's StockWatch and The Calandra Report, Thom fancied $300-ounce gold before that metal became an investment rage. Thom visited bioscience companies, metals mines and energy companies in a search for reliable sources and fine planetary prospects. (He was imperfect in at least one regard, having settled a U.S. Securities & Exchange Commission complaint in 2004.) Thom's novel PABLO BY NUMBERS was completed in 2008.
HOLDINGS: Thom’s cosmos of holdings is listed for free Stockhouse members on www.Stockhouse.com under the “portfolio setting” for user TCALANDRA. He and his family own recently minted gold coins. They own shares of Great Basin Gold. They have no interest in any publicly traded Ivanhoe.
For the free ThomWatch, please click here. For subscription service Ticker Trax, please visit www.TickerTrax.com. Thank you!
Ticker Trax™ is published by Stockgroup Media Inc. Ticker Trax is an information service for subscribers and neither Stockhouse nor Thom Calandra is a broker or an investment advisor. None of the information contained therein constitutes a recommendation by Mr. Calandra or Stockhouse/Stockgroup Media that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Ticker Trax does not purport to tell or suggest the investment securities subscribers or readers should buy or sell for themselves. Subscribers and readers of Ticker Trax should conduct their own research and due diligence and obtain professional advice before making any investment decisions. Ticker Trax will not be liable for any loss or damage caused by a reader’s reliance on information obtained in the reports. Subscribers and readers are solely responsible for their own investment decisions. Opinions expressed in Ticker Trax are based on sources believed to be reliable and are written in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. All information contained in Ticker Trax should be independently verified. The editor and publisher are not responsible for errors or omissions or responsible for keeping information up to date or for correcting any past information. Ticker Traxdoes not receive compensation of any kind from any companies that may be mentioned in the report. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities that are discussed in Ticker Trax. PLEASE DO NOT EMAIL THOM SEEKING PERSONALIZED INVESTMENT ADVICE, WHICH HE CANNOT PROVIDE. Copyright 2009 all rights reserved.