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December 23, 2005: Megadeal caps a golden year for mining

B.C.

Megadeal caps a golden year for mining

Scott Simpson, Vancouver Sun

Published: Friday, December 23, 2005

Thursday's $12.1-billion takeover creating the world's largest gold producer capped a year of stunning deal-making, explosive profits and frantic exploration in British Columbia's mining industry.

Soaring commodity prices grabbed headlines all year long, led by copper, gold and coal, filling the balance sheets of established miners with black ink and breathing new life into mine projects that had languished for a decade or more.

But it was two Vancouver gold companies that stole the spotlight, as first Wheaton River Minerals, then Placer Dome were taken over by Toronto-based competitors in multi-billion-dollar deals.

Exploration investment -- crucial to the industry's future in B.C. -- is expected to reach almost $200 million, according to B.C. Ministry of Energy and Mines estimates for 2005. That's up from $130 million in 2004 and five times the total in 2001, when industry analysts were warning that annual exploration investment totals were far too low to facilitate the orderly replacement of exhausted mines with new ones.

The ministry also reported that 47,000 mineral claim units were staked via a new online system, the most in 13 years.

Commodity prices and a more mining-friendly provincial government drove that activity.

Scotiabank Group economist Patricia Mohr noted in a recent review that, by October of 2005, the group's commodity price index had advanced 31 per cent year-over-year, and reached what she describes as "a new all-time record high."

Overall, Scotiabank's metal and mineral price index shows an average four-per-cent annual growth for the last 10 years -- but a 22.7 per-cent increase year-to-date in 2005.

Teck Cominco's money machine and Goldcorp's bold ambition were also focal points for the industry this year.

Teck's most recent quarterly performance, topped up by earnings from copper and coal, was stronger than Canada's presumed top mining companies Inco and Falconbridge-Noranda combined.

Profits in the company's copper division are up 70 per cent over last year at $691 million through nine months -- and up almost 2,000 per cent compared with 2003.

Coal boosted revenues for Teck, and for smaller producers emerging in the vicinity of Tumbler Ridge, most notably after April 1 when annual contract prices kicked in at an unprecedented $125 per tonne.

About 900 workers at Teck's Highland Valley copper mine also received good news when the company announced a five-year mine-life extension.

Teck broadened its commodity base in September with an $850-million investment in Alberta's Fort Hills oilsands project, earning accolades from most analysts for a forward-looking investment out of its record revenues.

Goldcorp turned heads when it announced in October that it was a $1.35-billion participant in Barrick Gold's surprising $9.2-billion US hostile offer to take over Placer Dome. That deal culminated on Thursday after Barrick sweetened the pot to $10.4 billion, and Placer Dome accepted.

ssimpson@png.canwest.com

http://www.canada.com/vancouversun/news/bu...