Deloitte report outlines top 10 issues facing mining companies

Deloitte publishes main issues and advice to mining companies, which can be summarised as: Cutback, Innovate, Adjust to Markets, Engage with stakeholders, Take whatever money you can get in whatever way it is offered, Spend some money with an accountant sorting out your tax, Buy at the bottom not the top, don’t divest at the bottom (Slap on the wrist BHP, Rio etc.) and spend some more money on Health and Safety.

A sterling effort there from Deloitte and sensible advice, but hardly groundbreaking.  This should be in every CEO’s user manual on how to run a company. However in the good times it is forgotten about and in the bad times it is too late and the first point tends to override all else.

Financial markets and fund managers have to shoulder much of the blame with the CEO’s and boards of companies, for pushing unrealistic expectations of returns and endorsing bad corporate decisions, particularly overpriced and over-hyped mergers.

Source: Deloitte report outlines top 10 issues facing mining companies in 2016 | Deloitte | Press Release

African Minerals to go into administration | Mining News

Another iron ore junior bites the dust under high debt load of +600 M USD in bank debt and convertibles and a mine on care and maintenance due to low prices and disputes with Chinese partner. This project had some of the lowest cash costs in the junior iron sector and had made the hurdle into production, yet even so the scale of capital investment and the associated debt load proved too much in the “return to normal” of iron ore pricing. This raises serious questions about market optimism, business models, reasonable pricing and whether small companies really have the resources to develop and operate capital projects of this scale.

African Minerals to go into administration | Mining News.

GOLD: Barrick weighed down by $2.9B losses

Barrick recorded another $3.4 billion in after tax impairments for 2014, giving $2.9 billion in losses for the year. On the back of large write downs for Cerro Casale (Permitting and Capital Cost issues) and Lumwana (Zambian export tax and Low grades/copper prices). These writedowns are reflecting challenges in stakeholder engagement and jurisdiction rather than operational issues, though they lost another 11.1 million oz’s off the reserve list due to mining and divestitures. Whats going to happen with Pascua de Llama?

This compares to 2013 when they recorded a whopping net loss of $10.37 billion ($10.14 per share), including after-tax impairment charges of $11.54 billion. These impairments were largely driven by the price crash in gold and recalculations of reserves, with 36 million oz’s of gold disappearing from the books.


GOLD: Barrick weighed down by $2.9B losses.

Big business names hurting as iron ore slump claims Western Desert

Big business names hurting as iron ore slump claims Western Desert.

One of the more high profile Iron Ore junior collapses to date,  look for more as the Iron Ore party finally grinds to a halt. Massive multi-billion dollar infrastructure expansions by the big three + fortescue have bought  a veritable flood of direct shipping iron ore to the market. Lookout the magnetite producers, as they will find it very difficult to compete in this environment.