Lions Gate Metals Blog

April, 28, 2009 - 05:30 pm Owram, Kristine - (THE CANADIAN PRESS)

TORONTO - Inmet Mining (TSX:IMN) hasn’t ruled out the possibility of depressed base-metal prices “for several years to come,” but will focus on the development of its copper resources amid hopes that production cutbacks will lead to a shortage of the metal.

“There’s almost been an assumption that the economic downturn requires the termination of productivity, regardless of the status of the project and the economic condition of the sponsor company,” Inmet president and chief operating officer Jochen Tilk said at the company’s annual general meeting Tuesday.

“We therefore strongly believe that an inevitable recovery in the economy will coincide with the realization that there’s a significant shortage of copper under development,” Tilk said.

“This situation can only lead to a strong copper price until supply finally catches up with demand.”

The plunge in base metal prices in the latter part of 2008 was “astonishing,” he said, with copper taking a nosedive from US$4.04 to $1.27 a pound in six months - a drop of almost 70 per cent.

Tilk said Inmet is positioning itself to take advantage of a spike in copper prices with two mines that have not yet reached production: Las Cruces in Spain, slated to begin production by June, and Petaquilla in Panama.

Inmet bought a 26 per cent interest in Petaquilla held by Teck Resources (TSX:TCK.B) in November and now owns 100 per cent of the mine.

Tilk said the company will produce 132,000 tonnes of copper per year by 2010 with the addition of Las Cruces, an increase of 64 per cent from its 2008 output.

With Petaquilla slated to come on stream by 2014, Inmet will be producing 238,000 tonnes of copper annually, “essentially tripling our current production” even with the winding down of the Ok Tedi mine in Papua New Guinea.

Inmet has $295 million in available cash and expects earnings from operations of about $240 million this year. It is working to maintain its strong balance sheet, preserve liquidity, protect its low operating costs - 52 cents per pound of copper in 2008 - and “responsibly pursue near-and long-term growth opportunities,” Tilk said.

It is looking for potential partners for Petaquilla, “and have set ourselves a target to retain at least 50 per cent interest in the project,” Tilk said.

He added that Inmet is keeping an eye out for acquisitions, although “the availability of high-quality producing copper assets is likely to be limited and we will be careful not to dilute our existing asset base.”

Earlier Tuesday, Inmet reported its first-quarter net income fell 52 per cent to $51.3 million or $1.06 per share, on weaker metal prices. This compared with $106.7 million or $2.21 a share in the first three months of last year.

The company, active in Canada, Turkey, Papua New Guinea and Finland, said sales declined to $239.1 million from $276.3 million.

Its stock fell $1.20 or 3.2 per cent to $36.70 on the Toronto Stock Exchange, down from $95 a year ago but up from $12.15 in December.

admin General Copper

[Source: Toronto (Reuters)  March 02, 2009]

Despite a sharp dip in economic growth this year and next, Chinese investment in foreign companies should continue to surge as the country tries to lock in access to resources, a mining conference in Toronto was told on Monday.

Chinese foreign direct investment outside the financial sector hit $40.5 billion last year — up from a measly $700 million in 2001 — and should continue to climb for at least the next two years, Kobus van der Wath, managing director of business strategy firm Beijing Axis told the Prospectors and Developers conference.

“This is one of the most important trends unfolding in the mining sector, and one that I think is likely to continue,” he said in a presentation entitled “China Inc is going global.”

The sentiment should be welcome among the hundreds of capital-starved junior miners that have come to the conference to strengthen industry ties, look for financing opportunities, and explore partnerships with other companies.

Flagging global growth and tight credit markets have sapped demand for metals and limited financing options for explorers and developers of industrial metals.

While the growth slump will not spare China, the country’s appetite for access to foreign resources has shown no signs of easing, van der Wath said.

He noted that foreign direct nonfinancial investment announced in February alone was $25 billion, due largely to state-owned Aluminum Corp of China’s $19.5 billion investment in Australian miner Rio Tinto (RIO.AX: Quote).

On China’s role as a top consumer of metals, van der Wath said China’s expansion story is far from over, although he said said that in the short term, the country’s trajectory is “changing significantly”.

He said growth should slide to 5.6 percent this year from a seven-year low of 9 percent in 2009. Growth should hit 7.5 percent in 2010, he said, but added that the forecasts could be too optimistic.

He said factors such as government stimulus measures and construction projects in the vast areas of Western China should continue to underpin expansion well above global growth levels. (Reporting by Cameron French; Editing by Peter Galloway)

admin Global Copper

[Source: Associated Press   Author: Sandy Shore   March 04, 2009]

Shares of coal and copper mining companies jumped Wednesday as investors found the potential for good news in an expected Chinese economic stimulus package.

A legislative meeting starts Thursday in China where government leaders will discuss how to expand growth rates that have been dragged down by the global economic downturn.

Investors are hoping China, the world’s third-largest economy, can help pull the world out of recession by reviving its own growth and demand for imports.

China ”really wants to boost employment,” Friedman Billings Ramsey analyst Luther Lu said in a telephone interview. “Hopefully, this will pull the entire commodity resource sector up.”

Oil and copper also rose Wednesday, and Jefferies & Co. analyst Michael Dudas noted China’s actions affect nearly every commodity. “With these stocks being so under pressure … you’re getting a nice bounce back,” he said.

Oil prices jumped above $44 a barrel at midday on the New York Mercantile Exchange.

Shares of Arch Coal Inc. rose 68 cents, or 5.4 percent, to $13.34; Alpha Natural Resources Inc., rose $1.63, or 10.3 percent, to $17.48; and Consol Energy Inc. rose $2.72, or 11.5 percent, to $26.29.

Shares of Patriot Coal Corp. rose 15 cents, or 4.9 percent, to $3.24, Massey Energy Co. rose 94 cents, or 9.2 percent, to $11.19 and Peabody Energy Corp. rose $1.56, or 7.3 percent, to $23.20.

In addition, Freeport-McMoRan Copper & Gold Inc. shares rose $3.91, or 13.8 percent, to $32.32. May copper prices rose 9 cents to $1.6965 a pound on the New York Mercantile Exchange.

admin General Copper