Galore project takes giant step forward
Grand Chief Beardy says Aboriginals don’t have enough say in mining development up north
Doreen Sangris – happy at home
Highland Valley Copper mine extended to 2019
Diavik completes second Aboriginal Leadership Program
Winter road blues a thing of the past?
Mining Association “digs” BC budget
Cumberland Agnico-Eagle transaction win-win situation
Strongbow gets deal with Native group to expand exploration of Silvertip project in Nunavut
Galore project takes giant step forward
By Shirley Collingridge
The Province of British Columbia has granted to NovaGold Resources Inc. (AMEX, TSX: NG) the Environmental Assessment Certificate for the com-pany's Galore Creek copper-gold-silver project in northwestern British Columbia, following a comprehensive review led by B.C.'s Environmental Assessment Office.
Geotech Sandra Carlick at the Galore Creek copper-gold-silver project site in northwestern British Columbia.
Initiated in February 2004, the Galore Creek environmental assessment process is part of the comprehensive assessment effort. NovaGold entered into the collaborative study and review process with the Tahltan First Nation, B.C. Provincial and Canadian Federal agencies, and U.S. federal and Alaska State agencies. The process culminated in a detailed plan for the development, operation and closure of a mine with minimum overall environmental impact. To gain public input, the company hosted a series of public meetings in northern British Columbia and Alaskan communities.
The Tahltan Central Council backs the plan. In their comment letter to the British Columbia Environmental Assessment Office, the chair of the Council, stated, “The Tahltan believe that NovaGold provides the leadership, management and vision, in partnership with the Tahltan Nation, to make the Galore Creek project socially and environmentally sustainable. The present leadership of NovaGold is creative and transformative in its approach to the relationship with the Tahltan Nation and in taking mining to the next level of social and environmental responsibility. NovaGold is the mining industry leader in Tahltan territory and will ensure mining brings more benefits than impacts to the Tahltan and BC citizens.”
NovaGold President and CEO Rick Van Nieuwenhuyse had this to say, “We are very pleased to have received the timely approval of our Environmental Certificate for the Galore Creek project. This is a major step toward the development of what will be one of the largest new mines in Canada. The issuance of the Environmental Certificate is the culmination of three years of dedicated collaborative work by our Galore Creek project team and contractors, staff at the various government agencies and our partners the Tahltan First Nation. We are grateful for the contributions from everyone who worked to achieve this major milestone for the project.”
“We look forward to developing Galore Creek as a model of how a mine can be built and operated in a socially and environmentally sustainable manner,” he added.
The Project has also been subject to a comprehensive level review under the Canadian Environmental Assessment Act (CEAA) due to authorizations required by Fisheries and Oceans Canada, Transport Canada, Environment Canada and Natural Resources Canada. The Assessment Office and federal agencies harmonized the Environmental Assessment process, preparing a joint Comprehensive Study Report/Assessment Report for the decision makers. The final public comment period on the Report, as required by the Canadian Environmental Assessment Act (CEAA), was completed February 19, 2007.
The joint Provincial and Federal Report concludes that effects from the project will be within acceptable levels, subject to adherence to the application's design components and implementation of mitigation measures and commitments agreed to by NovaGold.
Issuance of the Environmental Certi-ficate clears the way for next steps: issuance of various permits and authorizations required to construct and operate the mine. If approvals are received in the second quarter as expected, construction can begin by mid-2007.
Exploration drill core at Galore Creek
The Environmental Assessment Certificate entails commitments that NovaGold must implement, or continue to implement, throughout the phases of the project. Ongoing assessment of water treatment options, maintaining aquatic, fisheries and wildlife monitoring programs, continuing the collection and analysis of water, sediment, and biota, developing a long-term maintenance and mitigation strategy for the tailings impoundment dam and spillway, and developing a wildlife mitigation and monitoring plan to identify measures to further reduce effects on wildlife all form part of the commitment.
Located in northwestern British Columbia, Galore Creek is one of the largest undeveloped copper-gold-silver projects worldwide. As envisioned, the Galore Creek deposit would be developed as an open-pit mine at a 65,000 tonne-per-day processing rate over a minimum 20-year mine life. The project will create up 1,000 jobs during construction phase and approximately 500 direct employees during operation.
In February 2006, NovaGold entered into a comprehensive agreement with the Tahltan First Nation to support development of the Galore Creek project. This agreement supports Tahltan Nation principles of environmental stewardship, economic sustainability and self-determination, as well as ensuring ongoing collaboration during the Environmental Assessment review and permitting process.
NovaGold Resources Inc. owns 70% of the Donlin Creek gold project in Alaska, one of the world's largest gold deposits. The Company is rapidly advancing toward production at its 100%-owned Galore Creek copper-gold project in northwestern British Columbia, and expects to achieve production in mid-2007 at its 100%-owned Nome Operations in Alaska, which include Rock Creek, Big Hurrah and Nome Gold. Also in Alaska, NovaGold is earning a 51% interest as manager of the high-grade Ambler copper-zinc-silver-gold project in partnership with Rio Tinto. NovaGold is well financed with no long-term debt, and has one of the largest resource bases of any exploration or development-stage precious metals company. NovaGold trades on the TSX and AMEX under the symbol NG. For more information, visit www.novagold.net.
Grand Chief Beardy says Aboriginals don’t have enough say in mining development up north
By Chinta Puxley
Ontario is allowing mining companies to strip natural resources from northern Aboriginal communities without giving First Nations a veto power over projects or a share in the profits, an Aboriginal leader said February 26th.
The province is granting companies permission to exploit Aboriginal land when those companies should be dealing directly with the affected communities, said Stan Beardy, the grand chief representing 49 northern Ontario First Nations.
While the Liberal government in Ontario is drawing up guidelines on how to consult Aboriginals on mining and exploration, the Nishnawbe Aski Nation grand chief said the consultations are meaningless if Aboriginals have no power to negotiate development on their traditional land.
First Nations want to be an equal partner, not an afterthought, Beardy said.
“We want to share in the wealth,” he said in an interview on February 26th. “Billions of dollars come out of (our) territory on an annual basis… none of that wealth comes back to our communities. As a result, we're very, very poor.”
Many of the Nishnawbe Aski Nation communities have lived under boil-water advisories and are plagued with substandard housing, high unemployment and suicide rates.
The province has drawn up a discussion paper regarding Aboriginal consultations but the document rules out giving First Nations a veto on development and doesn't make any mention of profit-sharing.
“Nothing in there tells me things are going to change for my people,” Beardy said. “It's a gesture but it's not what we're looking for. We keep hoping we will be dealt with fairly and honourably.''
Increasing mining activity in northern Ontario has caused friction between the province and Aboriginal communities. The Nishnawbe Aski Nation is a vocal opponent to an open-pit diamond mine on the western coast of James Bay, saying the mine could threaten the boreal forest.
Another of its members, the Kitchenuhmaykoosib Inninuwug First Nation, is in court-ordered talks with junior exploration company Platinex over drilling in the Big Trout Lake area, some 600 kilometres north of Thunder Bay, ON.
Minister of Northern Development and Mines Rick Bartolucci was not available for comment, but spokesperson Laura Blondeau said the province takes its responsibility to consult with Aboriginals very seriously.
The Supreme Court ruled in 2005 that governments have a duty to consult Aboriginals when decisions affect their treaty rights. The ruling also stated Aboriginal groups do not hold a veto over proposed projects, Blondeau said.
“That's a Supreme Court ruling, that's not us,” Blondeau said.
“We are very much looking forward to meeting our constitutional obligations and that involves full consultation.” The Liberals will take the next six to nine months to consult Aboriginals before they draw up any guidelines, she added.
NDP Leader Howard Hampton said Aboriginals deserve more than guidelines. Aboriginals are virtually the only inhabitants in Ontario's Far North and it doesn't make sense for either Ottawa or bureaucrats in Toronto to decide the fate of their land, he said.
“People of Toronto would find it very strange if somebody in Big Trout Lake said we're now going to lay down the rules for (the city's) development,” said Hampton.
“I think it's equally strange that a provincial or federal government would attempt to mandate what the rules are in a large part of Ontario where there are virtually only Aboriginal people.
“Aboriginal people… deserve the majority decision-making in these issues.”
Doreen Sangris – happy at home
Bu Shirley Collingridge
Doreen Sangris does not stray far from her hometown of Yellowknife, Northwest Territories. Nor has she strayed far from her job as a department administrator for Aboriginal Relations with Canada’s second diamond mine – owned by Diavik Diamond Mines Inc. In fact, Sangris seems perfectly content to stay just where she is. This spring, the Dene native will celebrate her 10th anniversary with Diavik.
Born and raised in Yellowknife, Sangris explains, “When I was in my teens, I started out working for Indian and Northern Affairs. Then from there, I just moved up and moved on to different positions. Eventually I ended up working for my band.”
In 1997, the Yellowknife Dene First Nation ran out of funds to pay their receptionist’s salary and Sangris was laid off. Fortunately, the congenial woman was not without a job for long.
She recalls, “Doug Willy was the vice president of community affairs at that time for Diavik. He approached me [at a meeting] while we were all outside taking a breather. He asked if I would submit my resume. They hired me right away as a receptionist.”
The position proved ideal for Sangris. “Because I was the front person, everybody that came in would see me first. It was good because I know most of the people.”
Even the training was pleasant. In Banff, St. Albert, and at home in Yellowknife, Sangris underwent first aid and other instruction.
“We had our computer courses as we upgraded,” she added. “When we first started, we learned as we moved along. We had to take courses for computer, for doing travel, and how to pay bills on line. We do everything on the computer now – not like before.”
”In 1999, I became a department administrator to community affairs [now called Aboriginal Relations]. I am still in that position,” she said. “I really enjoy working here. I like the people that I work with.”
In fact, Sangris says people are her favourite part of the job. “My best part of the day is meeting and greeting the public,” she said. “Because I work with community affairs, we do get a lot of people that come in – say, from the communities. They know me, so they will ask for me.”
Thanks to her multilingualism, Sangris easily facilitates appointments between community members and Diavik personnel. “I speak Dogrib and I speak Chipewan,” she said. “I will translate for people that come into the office. Say if an Elder came in and wanted to talk to my boss, then I would just go in there and just say exactly what she wanted and that’s it.”
Despite her multilingual background, Sangris makes it clear she is not an interpreter. “I leave that to the professionals,” she explained. “I am happy where I am. I like going to communities and talking to people and meeting people.”
Community members also enjoy Sangris, and many see her as a role model. “A lot of the young people that started with Diavik say, ‘Well how long have you been there?’ I say 10 years. They say, ‘Holy. Yea, really?’”
Unlike many mine employees, Sangris sleeps at home every night.
“Our office is right in Yellowknife. I do not work up at the site. I work here 8 to 5 Monday to Friday,” she said. There, she is close to loved ones. “I have the whole family here.”
Well, not quite the whole family. Her son “works at BHP – at the other diamond company,” chuckled Sangris. “He lives in Edmonton and commutes back and forth but he is planning to move back here to Yellowknife.”
This would be a special time for him to return said Sangris, because “He’s going to make me a grandma in September.”
Even today, Sangris does not stray far from home. She attends the New Year’s drum dances – “just across the lake from us so it’s just driving distance.”
“Next month I’m going to Fort Simpson with my girlfriend for the Beaver Tail Jamboree – it’s a big carnival. We travel there every March. There’s a jigging contest, singing contest – I don’t participate in that, but I will do the dancing,” she laughed.
Sangris does not even leave home to hunt because caribou hunting is her son’s domain. “Usually he’ll take the summer off and work at McKay Lake Lodge. He sends me fresh fish and meat. He does his hunting – he’s the only one I think out of my whole family because the rest all work and he takes the summer off just to do that,” she said.
Perhaps the reason Sangris gets along well with people because she believes in truthfulness. “Honesty is important,” she said. Rather than talking behind someone’s back, “Be honest and say, hey you’re not doing this right or you’re not doing this properly.”
She has other advice for others considering going into her field. “Usually what I tell young people who come here for training – if you got in trouble, what you do now will eventually affect you in the future – will prevent you from having jobs. I always tell them, stay in school and stay out of trouble because what you do now will eventually affect your future down the road.”
Sangris’ own early role models were, “our elders – like Michelle Paper and Isadore Tsetta,” she said. “When I first started, we used to go to minesite and they used to talk to us about what to do and what not to do at the minesite – Michelle Paper especially. We used to have meetings with them. They would tell us I want you guys to do the mine this way and not that way. That’s how we built the mine with what our elders told us,” she said.
In the meantime, Sangris plans to continue staying at home with her current job. “I still like it. I will probably go for another 10 years!” she declared.
Highland Valley Copper mine extended to 2019
By Shirley Collingridge
Déjà vu. In September 2005, Teck Cominco Limited (TSX – TCK.A; TCK.B; NYSE – TCK) announced it would extend the life of its Highland Valley copper mine near Kamloops, British Columbia by half a decade. In February 2007, the company announced a further six-year extension of the life of the mine – from 2013 to 2019.
The latest extension brings good tidings to many stakeholders, according to Teck Cominco President and Chief Executive Officer Don Lindsay. “This is good news for the workforce at Highland Valley, local communities, the Province of B.C. and for Teck Cominco shareholders,” he said. “Highland Valley is one of the most efficient mining operations in the copper industry, and this extension significantly adds to its potential for the future.”
Thanks to the extension, an expected additional 247 million tonnes of ore will come in from an expanded Valley pit and continued mining of the Highmont pit will produce 1.5 billion pounds of copper and 21 million pounds of molybdenum in concentrate.
Six added years of expenses are high. The capital cost associated with the mine life extension at Highland Valley is approximately $300 million (in 2007 dollars), consisting of $167 million in incremental waste stripping and the balance for mobile equipment. Another $50 million in mobile mining equipment will be ordered in 2007 to permit waste stripping to commence in 2009.
However, the company stands on firm financial ground. Teck Cominco enjoyed record net earnings in the fourth quarter of 2006 and almost doubled its net annual earnings over the preceding year.
“Our fourth quarter earnings were a record $866 million, up substantially from $510 million a year ago,” said Lindsay. “The increase was driven by significantly higher commodity prices and higher sales volumes of Red Dog concentrates as poor weather conditions in the third quarter shifted some sales into the fourth quarter. Net earnings for the full year were $2.4 billion compared with $1.3 billion in 2005.”
“We are very pleased that our core operations achieved outstanding operating performance in 2006 allowing them to take advantage of the high commodity prices and generate record operating profits,” he added.
Copper production during the extension period from 2013 to 2019 should average 295 million pounds per annum. Life of mine copper and molybdenum grades are expected to decline by approximately 10% as a result of the inclusion of lower grade ore in the mine plan.
In February, the company also announced its intention to purchase up to 20 million of its outstanding Class B subordinate voting shares by way of a normal course issuer bid and, subject to shareholders’ approval, to implement a two for one share split of its Class A common shares and Class B subordinate voting shares.
“The Board has carefully considered a range of options for our growing cash balance,” said Lindsay of the proposal. “Our first priority continues to be to strengthen and grow the company through the development of current projects in our portfolio and the possible acquisition of new, high quality assets. In the meantime, the proposed share repurchases will provide an opportunity for us to effectively return some capital to shareholders, while preserving substantial capacity for future growth. Our intention would be to use these normal course purchases to maintain our cash balance at a reasonable level for this point in the cycle, taking into account potential alternative investments.”
The company believes that purchase of the Class B shares is an appropriate use of cash, given its substantial cash balance. The number of Class B shares to be purchased and the timing of those purchases will be determined by Teck Cominco from time to time based on prevailing market conditions and other considerations.
As well, the company plans to implement a two-for-one subdivision, or “share split,” of its issued and outstanding Class A common shares and Class B subordinate voting shares. The split was approved by Teck Cominco’s Board of Directors and must be approved by shareholders at the company’s annual and special meeting April 25, 2007. If approved by shareholders, the record date for the share split is expected to be May 7, 2007.
Teck Cominco is a diversified mining company, headquartered in Vancouver, Canada. Shares are listed on the Toronto Stock Exchange under the symbols TCK.A and TCK.B. and the New York Stock Exchange under the symbol TCK. Teck Cominco is a world leader in the production of zinc and metallurgical coal and is also a significant producer of copper, gold and specialty metals.
For more information, visit www.teckcominco.com.
Diavik completes second Aboriginal Leadership Program
Diavik Diamond Mines Inc. (DDMI) is pleased to announce the successful completion of Diavik’s second Aboriginal Leadership Development Program.
Designed and delivered by SAIT Polytechnic in collaboration with Diavik, the program is aimed at preparing Aboriginal employees of both DDMI and its contractors to take on increasing work responsibilities. Over half of the Diavik workforce is employed by Aboriginal firms who, together with DDMI, are helping increase employment and business capacity in the Aboriginal community.
The leadership program comprises eight modules that addressed 16 leadership competencies, and includes over 160 hours of leadership training, augmented with mentoring from Diavik staff. Course content is built around SAIT’s Applied Management Certificate Program, but is customized to take into account Diavik’s 24-hour, 365-day mining operation and the varying work schedules of its workers.
The 11 graduates are: Stella Johnson with Ekati Services, Sheila Warren and Dolphus Nitsiza with I&D Management, Len Tuckey Jr. with SecureCheck, Ian Erasmus and Arny Steinwand with Tli Cho Logistics, and Seth Bohnet, Ray Eskelson, Brian Mitchell, Kerry Rabesca, and John Wifladt with DDMI.
“Anything worthwhile takes time to develop and so the course went from April till December. We were given very demanding homework. You were constantly challenged to look within yourself and be honest with yourself. Not so easy to do – that’s when we really start to learn,” said graduate Brian Mitchell.
The event was marked with a graduation ceremony at the Explorer Hotel in Yellowknife.
Diavik employs over 700 workers, the majority of whom are north-ern residents. Approximately half of the northern workforce is Aboriginal.
The Diavik Diamond Mine, located 300 kilometres northeast of Yellowknife, Northwest Territories, is an unincorporated joint venture between DDMI (60%) and Aber Diamond Limited Partnership (40%). Both companies are headquartered in Yellowknife, Canada. DDMI is a wholly owned subsidiary of Rio Tinto of London, England, and Aber Diamond Limited Partnership is wholly owned by Aber Diamond Corporation of Toronto, Ontario. DDMI is the operator of the project.
For further information, visit the DDMI website at www.diavik.ca, and/or contact Tom Hoefer, Manager External & Internal Affairs, at (867) 669-6500.
Winter road blues a thing of the past?
By Shirley Collingridge
Last year’s winter road blues are in the past and important lessons have been learned. By mid-February, the Joint Venture Management Committee (JVMC) of the Tibbitt to Contwoyto Winter Road Joint Venture reported that 3,000 truckloads of fuel and general freight had trundled their way northward to the NWT diamond mines and projects – tripling last year’s loads for the same period.
With 75 to 85% built over water, the 568 kilometre winter road winds over a series of lakes interconnected by 64 portages. It is the main supply road for the EKATI, Diavik and Jericho diamond mines, the Lupin gold mine (currently inactive), the Snap Lake mine development and several other mineral exploration projects. The companies typically ship a full year’s supplies over the winter road.
Last year’s record warm winter caused a myriad of problems, with truckers enduring long layovers in Yellowknife and ultimately necessitating the hiring of a Hercules aircraft to bring in the most critical supplies. This year, Mother Nature has been more helpful.
“Temperatures so far this winter have been much more cooperative than those experienced last year,” said Tom Hoefer, Spokesperson for the Winter Road and Manager of External & Internal Affairs at Diavik Diamond Mines Inc. “Keep in mind, last winter was the warmest here in 60 years.”
“We certainly learned from last year's experience and have taken additional steps to help create a successful road season this year,” said Hoefer.
“From last year, we learned to avoid building ice road over ‘shoals’ or areas in the lakes where the water is shallower,” he said. “This year, we used helicopters in summer, and ground penetrating radar in winter to identify such shallow waters within lakes. The radar can ‘see’ through the ice and water to the lake bottom below and reveal shallows.”
“In addition, we have hired additional flooding crews to help us enhance the ice thickness. We simply drill holes in the lakes and pump water onto the ice to build it up quicker,” he added.
Most problems occur in the southern 100 kilometres of road, where the temperatures are typically warmer. The cooler winter enabled Nuna Logistics Ltd. – the Inuit company that builds and operates the road on behalf of the JVMC – to clear snow earlier, using lighter tracked vehicles to plough snow off the ice route or simply to pack it down.
“Both methods help remove the insulating snow blanket, and allow the winter cold to build thicker ice along the winter road route,” said Hoefer. “As a result of going in early, the ice thickened sufficiently to allow us to put our usual snowploughs on the ice after Christmas. This allowed us to maintain a similar construction schedule as in normal years.”
As well, EBA Engineering provided quality assurance on ice construction, using such technology as ground penetrating radar. By mid-February, EBA confirmed that minimum ice thicknesses had passed 36 inches (90 cm). SecureCheck crews then monitored traffic to ensure the ice was protected through strict observance of speed limits and other rules of the road.
New pathways are also ensuring smoother passage. “We are twinning the road on several lakes, in order to make sure we don't have bottlenecks if the road weakens,” added Hoefer. “Finally, we have also identified an additional ‘insurance route’ at the southern end to share trucking loads.”
This secondary route to Gordon Lake is constructed and managed to the same standards as the main route. It will merge with the main route approximately 70 kilometres up the regular ice road.
This year, the JVMC estimated that 10,000 truckloads of fuel, explosives, equipment, and assorted freight would be transported over the road.
JVMC is managed by a Joint Venture Management Committee comprised of Diavik Diamond Mines Inc. and BHP Billiton Diamonds Inc. The JVMC is committed to constructing, operating and maintaining the winter road in a safe and environmentally responsible manner.
“With the weather on our side, and with the additional steps we are taking,” he said, “it is our hope that we will have a successful winter road and will not require flying as per last year. That being said, if the weather is not on our side and we need to fly, there are aircraft like the Hercules available that can fly supplies and fuel.”
In February, a strike by CN Rail workers promised to stir up new troubles for northern minesites. The Mining Association of Canada (MAC) suggested the strike would strongly impact those mining companies dependent on rail to transport fuel in or to transport products and by-products from operations. The Association called the situation in Canada's north “very serious,” indicating the strike is already causing a shortfall of essential fuel shipments to the diamond mines in Northern Canada. The Mackenzie Northern Railway connects the Northwest Territories to Alberta. Its workers were not part of the strike, but CN Rail has been unable to provide enough tank cars to Edmonton refineries to meet the annual fuel re-supply commitments.
At press time, CN and the United Transportation Union had reached a tentative deal to end the strike by 2,800 railway conductors and yard-service workers.
Mining Association “digs” BC budget
The Mining Association of BC (MABC) applauds BC Budget 2007.
“We appreciate the government recognizes that the strength of the BC economy continues to come from land-based industries such as mining and oil & gas," said MABC President & CEO Michael McPhie February 20th.
Specifically, the MABC welcomes:
- Extension of the New Mines Allowance to January 1, 2016 from January 1, 2010. The allowance encourages new mine development and expansion in the province.
- The increase of the mining exploration tax credit for areas impacted by the Mountain Pine Beetle.
- Increased staff capacity in the Mining & Minerals Branch of the Ministry of Energy, Mines & Petroleum Resources.
- Increased funding and capacity for the Environmental Assessment Office. With nearly half of all major mine development projects in Canada located in BC, this capacity is critical to the future development of the mining industry.
- Increased funding for trades' training and apprenticeships, particularly for Aboriginal people.
"Combined, these initiatives will contribute toward ensuring our province remains one of the world's most competitive and advanced mining jurisdictions," added McPhie."Despite this good news, more work needs to be done," concluded McPhie, "Encouraging exploration will only bring long term benefits, if new mines come on-stream while prices are high."
The government is projecting diminished revenues from the mining sector over the next few years as commodity prices fluctuate. If mining is to remain a key component of the provincial economy and a critical provider of high paying jobs in all regions, then new mine approval is essential. The challenge before government and industry is to translate the more than 25 major mining projects in BC currently under review into operating mines that contribute to this province's economic engine.
Cumberland Agnico-Eagle transaction
win-win situation
By Shirley Collingridge
In February, Cumberland Resources Ltd. (TSX: CLG; AMEX: CLG) signed an agreement with Agnico-Eagle Mines Limited (NYSE: AEM; TSX: ABM) to make an all-share exchange offer for all of the outstanding and fully diluted common shares of Cumberland.
Cumberland is known for its 100% interest in the Meadowbank gold project located 70 kilometres north of the hamlet of Baker Lake, Nunavut - Canada’s largest pure gold open pit gold reserves. Meadowbank reserves include approximately 2.9 million ounces contained within a gold mineral resource of approximately 4.0 million ounces.
The Cumberland/Agnico-Eagle agreement is subject to several terms and expectations:
- Exchange Ratio of 0.185 of an Agnico-Eagle share for each Cumberland share
- Represents a 28.8% premium to Cumberland’s closing share price on February 13, 2007, or a 23.7% premium to the TSX volume weighted average prices based on the trailing 20 trading days from that date
- Values Cumberland at approximately Cdn$710 million based on approximately 80 million fully diluted common shares outstanding, at February 13, 2007
- Cumberland shareholders (excluding Agnico-Eagle) will own an approximate 10% proforma interest in Agnico-Eagle
- Transaction approved by the Boards of Agnico-Eagle and Cumberland
- Directors and Officers of Cumberland, representing approximately 10.5% of the fully diluted common shares outstanding, have agreed to tender their shares in an agreement with Agnico-Eagle
Should the acquisition be completed, Agnico-Eagle expects:
- its proforma gold reserves to increase by 28% to 13.3 million ounces, 82% of which are located in Canada
- its projected gold production to rise a further 39% in 2010 to more than 1.3 million ounces
- its proforma cash position to increase to over US$550 million, with no additional funding expected to be required to build its pipeline of five development projects
Kerry Curtis, President and Chief Executive Officer of Cumberland, looks forward to completion of the deal. “I believe this transaction is a good example of a win-win situation for both Cumberland’s shareholders and those of Agnico-Eagle,” said Curtis. “The Meadowbank project will be in the good hands of a proven mine builder in Agnico-Eagle, and they have the financial capacity and expertise to continue to expand the reserves and resources of the project and perhaps improve upon the projected annual gold output.”
Curtis expects community relations to remain positive following the transaction. “I am also confident that Agnico-Eagle will continue to adhere to the highest standards of corporate responsibility, and will work very closely with the community of Baker Lake, the regional Inuit organizations and the Government of Nunavut,” he said.
As the transaction opens the Arctic to the company, Agnico-Eagle also anticipates a long-term, respectful, and mutually beneficial relationship with the people and government of Nunavut, drawing upon its 35-year experience in Quebec.
Cumberland’s Board of Directors has unanimously recommended that its shareholders accept the offer. The recommendation is shored up by a fairness opinion from Cumberland’s financial advisor, Genuity Capital Markets. Financial advisor Dundee Securities Corporation issued a fairness opinion to a special committee of the Cumberland’s Board of Directors. In a show of solidarity, Cumberland Directors and Officers committed to tender their own shares under the offer.
Shareholders will receive the formal offer and take-over documentation via mail-out as soon as practical, but they will have to respond quickly. The offer is open for acceptance for a minimum of 35 days following the date of the mailing.
Besides shareholder approval, conditions of completion include: absence of material adverse changes; acceptance of the offer by Cumberland’s shareholders owning not less than two-thirds of the Cumberland common shares on a fully diluted basis; and receipt of all requisite regulatory approvals. Once the two-thirds acceptance level is met, Agnico-Eagle intends to take steps to acquire all outstanding Cumberland common shares.
Agnico-Eagle typically has grown through a series of smaller, friendly acquisitions and discoveries following periods of detailed research and due diligence. Company officials say this acquisition is consistent with its strategy because it has:
- Exploration upside suggesting the development of a long term mining “camp”
- Low political risk in a supportive, mining friendly region of Canada
- Proposed mining and processing plans which are very straightforward
- Major permits already in place
- Minor shareholder dilution of approximately 10%, with no new financing required to build the project
- A timeline for construction matching the availability of the Company’s proven mine-building team
Upon announcement of proposed takeover, Cumberland’s stock leapt upward. Typical of the takeover bid, Agnico-Eagle’s shares fell, essentially recovering by press time.
Agnico-Eagle is a long-established Canadian gold producer with operations located in northwestern Quebec and exploration and development activities in Canada, Finland, the United States and Mexico. Agnico-Eagle's LaRonde Mine in Quebec is Canada's largest gold deposit in terms of reserves. Agnico-Eagle has full exposure to higher gold prices consistent with its policy of no gold hedging. It has paid a cash dividend for 25 consecutive years.
The company currently owns 2,037,000, or 2.6%, of the outstanding shares of Cumberland on a fully diluted basis. Under certain circumstances, if the transaction does not proceed to completion, Agnico-Eagle will be entitled to receive a fee of Cdn$21 million, or approximately 3% of the implied transaction value.
Cumberland is a well financed mineral development and exploration company which is positioning itself to become a mid-tier gold producer by developing its 100% owned Meadowbank gold project to production. The shares of Cumberland are traded on the Toronto Stock Exchange and American Stock Exchange under the symbol CLG.
Strongbow gets deal with Native group to expand exploration of Silvertip project in Nunavut
Strongbow Exploration Inc. (TSXV:SBW) has struck an agreement in principle with Nunavut Tunngavik Inc. to explore 4,087 hectares of Inuit owned lands in the Back River volcanic belt in Nunavut.
The property will form part of Strongbow's 11,300-hectare Silvertip project, where the company is exploring for gold and silver, Strongbow said in a release February 13th.
Under terms of the deal, Strongbow and Nunavut Tunngavik Inc. have 90 days to conclude a formal exploration agreement allowing the company to earn a 100 per cent stake in the property by completing an exploration program.
In another development, the Vancouver company revealed it has scrapped a 2004 deal to sell subsidiary Ulster Minerals Ltd. to Tournigan Gold Corp.
Ulster holds two mineral exploration licences in County Tyrone, Northern Ireland, including the Curraghinalt gold deposit.
Under the termination agreement, Tournigan will issue 500,000 common shares to Strongbow.