Weekly Nugget

From Offshore Oil to Offshore Metals, Norway Plans to Dive Deep for Mining

Norway is preparing for an environmental impact study needed to open areas of its seabed mineral exploration and production.


The move follows three years of exploration on which Norway has found deep-sea deposits containing copper, zinc, cobalt, gold and silver, according to the Norwegian Petroleum Directorate which conducted the work.

Norwegian University of Science and Technology (NTNU) researchers have estimated there could be up to 21.7 million tonnes of copper - more than the world’s copper output in 2019 - and 22.7 million tonnes of zinc on the Norwegian continental shelf.

The metals have been found in polymetallic sulphides, or “black smokers”, which are formed when seawater reaches magma, heats up and is flushed back to the seabed carrying dissolved metals and sulphur.

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North America’s Only Cobalt Refinery Secures Feed from Glencore Congo Operations

First Cobalt (TSX-V: FCC) announced an agreement with Glencore to process 4,500 tonnes per year of contained cobalt to be provided from Glencore's KCC mine and CMOC's Tenke Fungurume mine in the Democratic Republic of Congo

This agreement represents 90% of projected capacity for the Canadian refinery which could bring 22,250 tonnes per year of battery grade cobalt sulfate. The Company plans to purchase an additional 500 tonnes per annum of feed at a later date through contract or spot market purchases.

Offtake discussions, financing and permitting are on schedule, supporting commencement of construction in mid-2021. Today, approximately 80% of global supply comes from China and there is no production in North America.

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Mongolia Threatens to Halt Rio Tinto’s Oyu Tolgoi Copper Project

Rio Tinto’s (ASX: RIO, LSE: RIO) beleaguered Oyu Tolgoi copper mine in Mongolia is facing further hurdles as the Mongolian government has threatened to suspend development over concerns an ever-growing bill to develop the project that the country's potential revenue from the operation. 

Recently, Rio announced a $US6.75B underground expansion of the Oyu Tolgoi mine to address problems with the original mine plan. However, the government of Mongolia believes that this new plan will leave little benefit to the nation that has pinned hopes on the mine. 

Mongolia believes it will never receive a dividend from Oyu Tolgoi because of the amount of debt taken on to develop the existing open pit mine and pay for the underground expansion. 

The country is not expected to receive any cash flows beyond taxes and mining royalties from its ownership stake in the project for the foreseeable future due to $7 billion in partner loans accumulated during construction.

The government stated, “it is becoming necessary for us to review and evaluate whether or not this project should go ahead”.

Rio has invested more than $11bn in Mongolia since 2010 and was “open to improving” the terms of the agreement to “increase the benefits of Oyu Tolgoi to all shareholders.”

The Mongolian government holds a 34% stake in the mine and Turquoise Hill (TSX: TRQ) owns 66% of which Rio has a majority holding in the Toronto-listed mining company.

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Alaskan Governor Challenges Army Engineers Decision on Pebble Copper Mine

The Office of Alaska State Governor Mike Dunleavy issued a statement late last week to announce a formal appeal to the US Army Corps of Engineers' November 25, 2020 denial of a federal permit for Northern Dynasty’s (TSX: NDM, NYSE: NAK) Pebble Project.

In a statement released January 8, 2021, Governor Dunleavy said the Army Corps of Engineer’s Record of Decision and accompanying denial of a Clean Water Act 404 permit for the proposed copper-gold-molybdenum-silver-rhenium project in southwest Alaska is flawed and threatens the economic prosperity of the state. 

With a resource estimate of 6.5 billion tonnes in the measured and indicated categories containing 57 billion pounds of copper and 71 million ounces of gold, 3.4 billion pounds of molybdenum and 345 million silver ounces, if permitted, Pebble would become North America’s largest mine.

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Mining Firm Appian Raises $775M for Second Mining Fund

Appian Capital Advisory, a private equity firm that solely invests in mining, has secured $775M for its second mining fund, bringing total assets under management to $1.2B. 

In an article from the Financial Times, Michael Scherb, Appian’s founder and chief executive officer, said its new fund had attracted interest from university endowments, large US and European pension plans, family offices and sovereign wealth funds.

The firm is hoping to take advantage of the rising demands for commodities used in batteries, electric vehicles and renewable power systems including copper and nickel. The company will also employ investments in precious metals as a potential portfolio hedge.

Fund II will invest on a global basis, targeting assets in jurisdictions with proven geology, supportive governments and a robust legal framework including Brazil, Australia, Mexico, Peru, Chile and Canada, where Appian has existing operations

The fund has already deployed or reserved 40% of capital raised in five investments. These include equity investments in Mineração Vale Verde's copper-gold asset in Brazil and Kalbar's Fingerboards mineral sands project in Australia, a royalty investment in Atlantic Nickel's operating Santa Rita nickel-copper-cobalt asset in Brazil and both royalty and credit investments in Harte Gold's producing Sugar Zone mine in Ontario, Canada.

Since Appian Capital Advisory raised its flagship mining and metals fund in 2014, the London-based firm has made nine investments with six mines now in production and another two likely within the next two years.

The company stated it has plenty of capital left to deploy.

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