U.S. economy grew faster than expected in 2nd quarter

Paul Sancya/AP - In this file photo a chassis assembly line supervisor at a Chrysler plant in Detroit, checks a vehicle.The Commerce Department said Wednesday that the nation’s gross domestic product increased at a 1.7 percent annual rate during the second quarter of 2013, almost twice as fast as many economists had predicted.

The economy grew faster than expected in the spring, according to data released Wednesday, easing fears that government spending cuts would weaken the recovery’s momentum.

The nation’s gross domestic product increased at a 1.7 percent annual rate during the second quarter, almost twice as fast as many economists had predicted. The data from the Bureau of Economic Analysis showed that consumer spending remained strong despite higher taxes and that businesses ramped up their investments in inventory. The real estate market, both residential and commercial construction, was also essential to the expansion.

“Given the worries that we had, this is a real plus,” said Beth Ann Bovino, senior economist at Standard & Poor’s, who said she had been nervous that her own forecast of 1.4 percent growth was too high. Some economists had even floated the possibility that the recovery flatlined.

That said, the pace of economic growth remains far below pre-

recession levels. In a statement, the Federal Reserve characterized the pace as “modest” in the first half of the year. The central bank wrapped up its regular policy-

setting meeting in Washington on Wednesday and said it would continue to spend $85 billion a month on long-term bonds to boost the recovery.

The Fed pointed to the housing rebound as a bright spot in the economy but also noted for the first time the recent rise in mortgage rates. And it continued to cite fiscal policy as a drag on growth.

Still, the reductions in government spending were not as painful as expected. Federal budget cuts lowered GDP by just one-tenth of a percent last quarter after shaving off more than one percentage point at the end of 2012.

In addition, there were signs that the economy may have picked up more steam since spring. A private estimate of labor market growth by human resources provider ADP that was also released Wednesday morning showed the countryadded 200,000 jobs in July. It marks the second month of strong job creation, with hiring by small businesses driving the increase.

The ADP report revealed a pickup across a broad range of industries. Professional and business services added 49,000 jobs, the most of any sector. But trade, transportation and utility jobs also boomed. The construction industry added 22,000 positions, more than the previous month. Manufacturing continued to slip, however, losing 5,000 jobs.

“Job growth remains remarkably stable,” said Mark Zandi, chief economist at Moody’s Analytics, which compiled the ADP report. “The job market has admirably weathered the fiscal headwinds, tax increases and government spending cuts. This bodes well for the next year when those headwinds are set to fade.”

The ADP report is viewed as a bellwether for the government’s monthly estimate of job growth and unemployment, which is ­slated to be released Friday. That data will help shape the Fed’s decision on when to begin scaling back its support for the economy.

Chairman Ben S. Bernanke said last month that the central bank would probably beginwinding down its bond-buying program later this year if the job market continues to improve and the economy expands. He said the Fed could end the program altogether when the unemployment rate hits 7 percent, which is expected to occur in mid-2014.

But Bernanke cautioned that the timeline would adjust to incoming economic data. A weaker recovery could force the central bank to extend the purchases, while more robust growth could accelerate its plans.

Some economists anticipated that the better-than-expected GDP report, if coupled with encouraging data in the job market, could encourage the Fed to pull back its support for the economy sooner.

“The takeaway for the Fed today is that the economy is improving,” said Eric Green, global head of research for rates and foreign exchange at TD Securities. “The Fed will focus on the pattern of growth.”

Nonetheless, the Fed warned that the recovery continues to face several risks, including weak inflation. Officials acknowledged for the first time that persistently low inflation could stymie growth but emphasized that they still expect prices to rise over the medium term.

Western Areas warns of impending write-off

Nickel miner Western Areas has flagged an anticipated impairment charge of between A$90-million and A$100-million for the full year to June.

The company told shareholders that the majority of the impairment charge related to historical exploration expenditure over the company’s tenement package, and a write-down of the undeveloped Diggers South project, which would require higher average nickel prices to deliver positive returns.

“While no company wants to recognize impairment charges to their assets, we believe at a time when the nickel price is trading at a cyclical four-year low, it is appropriate to review carrying values,” said MD Dan Lougher.

He noted that from a funding perspective, there was no impact on the convertible bonds or on the fully undrawn finance facility of A$125-million from ANZ Bank.

Read more: Australia shares set for cautious start, miners to gain on metal prices

New Zealand's benchmark NZX 50 index was up 0.8 points at 4,538.7 in early trade.

* The S&P 500 finished a volatile session nearly flat on Wednesday as the Fed gave no hint that a reduction in the pace of its bond-buying program is imminent.

* Copper rose more than 2 percent on Wednesday, supported by upbeat economic data from the United States which boosted market sentiment.

* Toll roads operator Transurban Group said its net profit for the year ending June 30 was A$174.5 million on a statutory basis, up 198 percent on the prior year.

* Australia introduced a 12.5 percent tax hike for tobacco on Thursday, a measure set to fill budget holes. ----------------------MARKET SNAPSHOT @ 2257 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG S&P 500 1685.73 -0.01% -0.230 USD/JPY 97.86 -0% 0.000 10-YR US TSY YLD 2.5876 -- 0.000 SPOT GOLD 1324.29 0.14% 1.800 US CRUDE 105.15 0.11% 0.120 DOW JONES 15499.54 -0.14% -21.05 ASIA ADRS 138.69 0.06% 0.09 -------------------------------------------------------------

* S&P 500 ends flat after Fed keeps easy money in play * U.S. crude oil higher driven by late technical rally * Gold down for day, ends July with big monthly gain * Copper up, strong US data helps ahead of Fed decision

For a digest of the day's business stories in Australian newspapers, double click on

(Australia/New Zealand bureaux; +61 2 9373 1800/+64 4 471 4234)

(Reporting by Maggie Lu Yueyang; Editing by Joseph Radford)

UK: Ecosse Subsea Systems Prepares for Business Growth

Subsea technology specialist, Ecosse Subsea Systems (ESS) has moved to larger premises as it prepares for significant business growth.

ESS was established in 1996 and has a number of innovative patented technologies, including the SCAR plough and trenching system, which is in demand for specialist projects in the oil and gas and renewables sectors.

The company has just completed its largest contract to date, a multi-million pound boulder removal and cable trenching project on behalf of Siem Offshore Contractors on a wind farm in the Baltic Sea.

The move from Aberdeen to Brathens Eco-Business Park in Banchory gives the company the facilities to expand its team, which currently includes 13 office staff and 50 offshore personnel.

The relocation represents an investment of £400,000 and includes a research and development manufacturing unit.

A recruitment drive is underway to fill a number of senior management, business development, accounting and administration positions and the total workforce could double in the next three years.

Ecosse Subsea managing director, Mike Wilson, said: “Our business has taken huge leap forward in terms of growing our revenue and extending our client base in new markets and we are planning for the future.

“Our new office gives up the ability to grow our capability and we have easy access to some of our major clients at Westhill, the city centre and the airport. There has been a marked increase in the number of tenders we have been invited to bid for and we envisage doubling our workforce in the short to medium term.”

Brathens Eco-Business Park also fits with ESS’s environmental objectives and makes sustainability a core issue, providing office heating from a biomass wood fuel system and renewable solar electricity.

Mr Wilson added: “The green ethos at Brathens fits well with our philosophy of trying to be carbon neutral and the majority of staff have reduced their individual carbon footprints by cutting down on mileage and travelling time.”

Murmansk Port: Jan De Nul Dredging Fleet Arrives (Russia)

A fleet of dredgers of Luxembourg-registered Jan De Nul Group arrived in the waters of the Port of Murmansk on the Kola Peninsula.

The dredging fleet will be engaged in dredging at the Port of Sabetta. The vessels are now passing clearance and then will proceed along the Northern Sea Route.

Permissions from the Federal Agency of Maritime and River Transport and the Northern Sea Route Authority have been obtained. Dredging works will commence as soon as the Port of Sabetta is clear from ice.

Thirteen dredging vessels, including one of the world’s most powerful Cutter Suction Dredger (CSD) with diesel plant rated power 23.5 MW, will have in a short time (2.5 months) to perform dredging and excavate some 10 million cbm of soil.

Jan De Nul Group’s Russian subsidiary, Jan De Nul NV Russia, won in a tendering process with participation of contractors from the Netherlands and Belgium and was awarded the major dredging contract.

The tender was carried out by JSC USK MOST which was appointed by the Russian Government decree (№ 1716-r of 17.09.2012) the sole contractor for the state order – the construction of facilities of a seaport in the area of Sabetta settlement.

The dredging project is scheduled for completion in 2016. During the 2014-2016 period, the fleet of Jan De Null is expected to dredge up to 60 million cbm of material.

Kalgoorlie ramping up for Diggers and Dealers

Organisers of this year’s Diggers and Dealers mining event are gearing up for an influx of about 1,800 mining executives and financiers.

Chairman Barry Eldrige said despite difficulties facing the mining sector registrations numbers have been strong, the ABC reports.

But he conceded delegate numbers are down on previous years.

The AFR reports it is the first time delegate numbers have fallen in six years.

Keynote speaker on the bill is President Barack Obama's former chief economic adviser, Austan Goolsbee who will be discussing international economic activity and the demand for commodities.

The annual forum hosted by Western Australian mining towns Kalgoorlie-Boulder runs from August 5 to August 7.

Read more:  USA: Corps to Solicit Bids for Delaware River Dredging

The U.S. Army Corps of Engineers, Philadelphia District, has announced a plan for the Delaware River dredging project.

This deepening program will include dredging of the Delaware River channel at Philadelphia Harbor and Tinicum Ranges, and dredging of the Delaware River at Beckett Street Terminal, located in the vicinity of Camden.

The solicitation for this development project will be issued on or about 8 August 2013, with bid opening date of 10 September 2013 at 11:00 a.m.

The period of performance will be approximately 180 days, and the estimated cost range of the project is between $25 mln and $100 mln.

100 jobs lost and more to come as mining services wind down

Another mining service company has been hit by the downturn with 100 jobs slashed at Mining Equipment Maintenance in Central Queensland.

90 jobs were slashed at Mining Equipment Maintenance in Rockhampton, while ten jobs were also cut at the company’s MEM Engineering business in Mackay.

Eighteen people are still employed in Mackay but will lose their positions as the business is scaled back. Work is also continuing in Rockhampton as a number of employees remain to complete existing orders.

The two businesses are part of the DPSA Group, a Brisbane-based service and supply group which went into receivership, The Bulletin reported.

Receiver John Greig said the cuts were made as a result of weaker orders from the mining industry.

"Should any of the companies ultimately be placed into liquidation, there is also support available from the Federal Government's Fair Entitlements Guarantee scheme," he said.

"We appreciate this is a difficult time for all affected employees and we will do everything we can to ensure they are kept informed of developments."

Mining service companies continue to bear the brunt of cost-cutting measures across the resource sector.

In June, mining equipment company Hastings Deering cut 200 jobs across its Rockhampton and Mackay sites.

"The Australian resources industry has experienced a significant slowdown as a result of reduced demand for resources, lower commodity prices, falls in productivity and a significant reduction in capital expenditure," the company’s managing director Scott Cameron said at the time.

Oceana Gold takes $85.5m impairment on price slump

Dual-listed gold miner OceanaGold on Friday reported an $85.5-million impairment on the carrying value of its assets, citing the significant decline in gold prices.

For the quarter ended June, the TSX- and ASX-listed company reported earnings before interest, tax, depreciation and amortisation of $42.5-million and a net loss of $70.5-million.

“Like the rest of the gold mining industry, the company is currently faced with tougher economic realities that require a proactive approach to ensure a healthy business plan,” said MD and CEO Mick Wilkes.

He noted that OceanaGold was committed to preserving shareholder value.

“To date, we have reduced our operating budget by $100-million over the next 18 months and continue to look for additional opportunities to optimise the business. Didipio will continue to drive down our cash costs per ounce, while increasing our production profile,” he added.

Wilkes noted that with cash flows increasing over the next few years and with significant cost reductions at the New Zealand operations, OceanaGold was well positioned for the new economic environment in the gold industry.

Meanwhile, Wilkes reported that for the three months to June, OceanaGold produced 68 353 oz of gold and 5 710 t of copper, with gold production in the second quarter higher than the 67 463 oz produced in the first quarter, as the Didipio and Reefton operations increased production.

Commercial production was declared at Didipio in April, and the project produced some 13 676 oz during the second quarter, along with 5 710 t of copper, while first-half production has been set at 20 553 oz of gold and 9 373 t of copper.

In New Zealand, the Reefton operation delivered higher production as it delivered additional tonnes, with the mine delivering 14 614 oz. The Macreas operation delivered some 40 063 oz during the quarter.

OceanaGold expected production from its New Zealand assets to progressively increase over the remainder of the year, with the fourth quarter expected to be the strongest.

Australia's N.Territory not backing gas deal for Rio alumina plant

SYDNEY - Australia's Gove alumina refinery owned by Rio Tinto could be left looking for new sources of fuel to stay in business after the Northern Territory government said it would not back a proposed deal to supply the gas.

Earlier this year, the government offered 300 petajoules of gas over 10 years from its domestic supply source to save the loss-making refinery, operated by Rio Tinto subsidiary Pacific Aluminium.

Rio Tinto threatened to close the refinery due to high operating costs and market pressures unless it could find sources to replace expensive diesel with natural gas.

"The original proposal by Pacific Aluminium was always conditional on a rigorous due diligence process and unfortunately the results have revealed unacceptable risk to the NT economy and taxpayers," Northern Territory Chief Minister Adam Giles said.

Oz Minerals lowers gold production forecast

Metals miner Oz Minerals on Thursday lowered its gold forecast for the full year on the back of lower production during the June quarter.

The miner had previously warned shareholders that production during the three months ended June would be lower than the previous quarter, as a consequence of the overburden slip experienced at the south wall of the Prominent Hill openpit operation, which limited safe access to the mining area below the slip.

In April, Oz also downgraded its full-year copper production guidance to be between 82 000 t and 88 000 t of copper, compared with the previous estimate of between 90 000 t and 95 000 t of copper.

The ASX-listed company said on Thursday that gold production has been downgraded to between 120 000 oz and 130 000 oz, from the previous estimate of between 130 000 oz and 150 000 oz.

For the quarter ended June, Oz Minerals produced 17 379 t of copper and 31 018 oz of gold, bringing production for the half year to 37 853 t of copper and 62 808 oz of gold.

The miner has maintained that the second half of the year would achieve higher production levels, as remediation work on the south wall continued during the quarter under review.

Normal mining operations restarted in the area below the slip in July.

Meanwhile, at the Ankata mine, some 303 247 t of ore was mined during the quarter under review, at an average grade of 1.87%, with mining undertaken at the Charlotte, Voilet and Bessie stopes.

With mill throughput at 9.4-million tonnes a year, the Ankata operation produced 17 379 t of copper during the year.

Oceana Gold marks loss on NZ mines

OCEANAGOLD Corp has declared a $US70.5 million ($A77.29 million) net loss in the second quarter, reflecting a $US85.5 million non-cash writedown in the carrying value of its New Zealand gold mining operations.

The result for the three months ending June 30 reflects falling gold prices, which have seen the company say it will reduce production from its NZ mines, including the mothballing of its Reefton mine from mid-2015.

That move alone will strip $NZ40 million to $NZ45 million ($A35.18 million to $A39.58 million) of future capital costs from its plans, and is part of a plan to cut costs by $US100 million or more in the next 18 months.

The company, in a statement to markets, says its share price has declined so much that its market capitalisation was below the carrying value of net assets.

Market prices of gold have also declined significantly to below levels used in the company's forecasts, resulting in a decision bring forward Reefton's mothballing.

The quarter includes the first period of full production from the Didipio gold and copper mine in the Philippines, where costs of mining were $US586 an ounce higher than returns from 11,086 ounces of gold and 5073 tonnes of copper sold, while cash costs in the New Zealand unit were $US918 per ounce on gold sales of 59,620 ounces.

Total sales from all operations in the second quarter came in at $US131.2m, up from $US95.6m the previous quarter.

Earnings before interest, tax, depreciation, and amortisation for the quarter was $US42.5m, against $US47m the previous quarter.

Cashflows from operating activities were down substantially at $US9.9m for the quarter, compared with $US21.4m the previous quarter.

Cash and cash equivalents on hand at June 30 stood at $US17.9m, compared with $US96.5m at balance date, December 31.

The company said in its statement that with cash flows increasing over the next few years and with significant cost reductions at our New Zealand operations, it was well positioned for the new economic environment in the gold industry.

A Polish village says 'no' to fracking

As greater Europe argues the potential profits and possible environmental harms of hydraulic fracturing, or fracking, the debate is being played out in a far more immediate confrontation in the east Polish village of Zurawlow. Here, a group of farmers and residents are occupying a plot of land to prevent Chevron, which is backed by the state, from exploring for shale gas.

The people of Zurawlow once supported the proposal to drill in the "Grabowiec concession," a gas-rich region running beneath southeast Poland, in the hope that it would create much-needed jobs in the region. But that changed when two families' well water turned black after Chevron's seismic tests in 2010. People researched fracking online and found evidence that contradicted what they had been told.

"We were at a village meeting with the head of Chevron Poland. He told us the chemicals they will inject into the ground will be salt and lemon juice. That's when I realized they treated us like we were ignorant," says Wieslaw Gryn, whose 600-hectare (1,400-acre) farm is one of the most productive in Poland.

RECOMMENDED: Fracking. Tight oil. Do you know your energy vocabulary?

In response, the farmers organized grass-roots resistance to the mining efforts. In March 2012, they successfully blocked Chevron from drilling an exploratory well on a plot within the Grabowiec concession known as G7, by invoking an environmental law that prohibits any kind of fieldwork that would threaten birds' habitats during breeding season, which lasts several months. The Grabowiec concession lies within one of the European Union's protected ecological areas.

Although Chevron initially announced it would pull out of the Grabowiec concession, it returned early June 3 and began to install a fence on the G7 plot. A score of local villagers sped to the scene to stop Chevron's contractors from working. They blocked the lot with tractors and started a round-the-clock vigil with the help of some 200 supporters, including a local priest.

'WE HAVE BEEN MONITORING THEM'

The protesters claim Chevron has no legal right to set up the fence because the concession is only valid for seismic testing until Dec. 6, 2013. They maintain that neither the local nor the federal government ever granted authorization for drill testing. They also have legal documents stating that Chevron withdrew the application to drill in the concession.

"We have been monitoring them for a year and a half, and always catch them with some missing documents, breaking the law," says Barbara Siegienczuk, a print-shop owner and one of the leaders of the protest. "Now, we have checked all the documents, and they are up against the wall. It turns out they have no concession."

Chevron says it has all the necessary documents to proceed with drilling on the G7 site, yet protesters wonder why it hasn't begun working if that were the case.

Grazyna Bukowska, spokeswoman for Chevron Poland, brushes the question aside.

"We truly believe the views expressed by a small group of protesters do not reflect the views of the rest of the country that supports shale gas mining," she says.

AN INFORMATION BLACKOUT

But Andrzej Sikorski, a local journalist who lived in Maryland and covered fracking in Pennsylvania, says people only support shale gas because there is an information blackout in Poland. He claims the news media only focus on the potential profits of fracking while the experience of Zurawlow receives very little media attention.

"The communities here are split between pro- and anti-gas. But when they see the damage fracking does to this beautiful country, they will become united. But then it will be too late," he says.

On June 26, Prime Minister Donald Tusk signed a bill that facilitates shale gas exploration by overriding the requisite environmental impact report. The law came into force two weeks later, and Chevron is expected to work on the G7 plot soon.

The protesting farmers say they are fighting for the protection of their land and will not budge from the site.

"I understand the consequences [of fracking]; therefore, I do not support the government's decision," says Father Zygmunt Zugewski, who stops by the site often to offer spiritual support. "The balance of nature can be destroyed."

Kumba Iron Ore feeling tailwind of two-year wage agreement

Iron-ore miner Kumba Iron Ore is feeling the tailwind of its two-year wage agreement.

The JSE-listed Anglo American-group company, which concluded a two-year wage agreement in July 2012, will not have to negotiate remuneration at a time when the employee relations in the mining sector remain difficult.

In terms of the agreement, the company’s 12 651 employees automatically receive pay rises of from 8% to 10%.

Kumba CEO Norman Mbazima on Tuesday described as stable the labour environment that the company had experienced in the first half of this year.

“We are fortunate to not have been affected by the labour unrest,” Mbazima said at the company’s presentation of results, adding that the company had completed the first half of the year with no loss of life incidents.

Kumba this year spent R310-million on new homes for its employees, bringing the total spend on housing since 2006 to R2.2-billion.

Moreover, more than 6 000 worker shareholders each became pretax half-millionaires last year when R2.7-billion was paid out to staff in the first phase of an employee share ownership plan (Esop).

Sishen Iron Ore Company (SIOC) Community Development Trust, in the half-year used its dividend to fund 140 projects worth R850-million, benefiting 360 000 people in the five communities around Kumba’s mines.

In addition, Kumba will be spending R77-million on early childhood, skills, enterprise and infrastructure development for near-mine communities.

Only six months ago, however, Kumba’s Northern Cape operations were rocked by unprotected strikes, which led to dismissals and replacement recruitment has only now been completed.

This time six months ago, people were asking how employees who had made so much money as shareholders could go on strike.

“Just remember, it was a small number of people who went on strike, and not the entire workforce,” Mbazima told Mining Weekly Online in a video interview (see attached).

Any day now, each employee that is part of the Esop will receive another interim dividend; this time R12 000 in cash.

“My number one priority is to make sure that my employees are happy, that we are happy and that we are all productive,” Mbazima said.

EMPOWERMENT BONANZA

Kumba continues to make a significant contribution to South Africa’s broad-based black economic empowerment (BBBEE) through both capital appreciation and the payment of substantial cash dividends to empowerment shareholders.

SIOC, in its interim dividend for 2013, will return a further R2.3-billion to its BBBEE shareholders, bringing the total returned since listing in 2006 to more than R19-billion.

The JSE-listed black-controlled Exxaro, which confers black economic-empowerment credentials on Kumba, will receive R1.8-billion for its 20% interest in SIOC.

In the six months, the community development trust that owns 3% of SIOC and which is valued at more than R6-billion, received R262-million for its community development projects.

SISHEN’S DOWNSIDE RISK

Sishen has had a few issues over the years.

The mine is earmarked to produce at a rate of 37-million tons a year, but its openpit is currently constrained.

Kumba is finding it “very challenging” to meet the production marker following the last year's fourth-quarter strike, and Mbazima is warning of a downside risk in the near-to-medium term.

Coming to the rescue is the new Kolomela, where there is potential to increase production beyond the nine-million-tons-a-year level from the current pits.

In addition, ways of turning lower-cost Northern Cape production to account are being considered, for example, a reconfiguration of the Kolomela mine to make its output incremental rather than a single additional step of six-million tons a year.

Sishen’s geology and mining are being continually reviewed and costs are poised to rise there to provide increased flexibility in the pit.

“We’ve done an extensive review of Sishen now and I think we’re getting to the bottom of it,” Mbazima told Mining Weekly Online.

Pit limitations knocked 10% off Sishen’s production in the half year, reducing it to 16-million tons.

Considerable B-grade Sishen resource has been relegated to even lower C-grade resource, for which metallurgical capacity is not available to convert to sellable product.

“We’re looking at a number of technologies and one of them is very promising,” Mbazima told Mining Weekly Online, adding that it was not long ago that B-grade material was turned to very positive account with the help of jig technology.

State-owned rail provider Transnet has proved highly efficient in its dealings with Kumba.

“The port had a few maintenance issues but everything sent there was shipped,” he added.

THE BIG OPPORTUNITIES

The first big opportunity for Kumba is to deliver on its growth projects in the Northern Cape and Limpopo.

The second is to look for a second footprint in Africa because in 18 years’ time Sishen will have been depleted and will need replacing.

The third is to find the technology to turn the C-grade material into saleable product.

LEGAL TUSSLES

Kumba is involved in six legal disputes, the most noted being its legal issues with the Department of Mineral Resources (DMR), Imperial Crown Trading (ICT) 289 and steelmaker ArcelorMittal South Africa (AMSA).

On September 3, the DMR and ICT will ask the Constitutional Court of South Africa to set aside North Gauteng High Court and Supreme Court of Appeal (SCA) judgements that give Kumba’s SIOC full rights to the Sishen mine.

A dispute also arose between SIOC and AMSA in February 2010, in relation to SIOC’s contention that the contract mining agreement concluded between them in 2001 had become inoperative as a result of AMSA failing to convert its old-order mining rights.

This dispute has been referred to arbitration but the hearing of the arbitration has been postponed until after the final resolution of the DMR and ICT mining rights dispute.

The sale of iron-ore from the Sishen mine to AMSA currently remains regulated in terms of an interim pricing agreement concluded in December 2012 and applies to the period from January 1 to December 1, 2013, or finalisation of the arbitration, whichever is sooner.

A dispute also exists between AMSA and SIOC about AMSA’s contention that SIOC must supply it with iron-ore produced from the Phoenix project in Thabazimbi.

AMSA referred this to arbitration in February and SIOC is continuing to engage with AMSA on this matter.

Another dispute declared by AMSA centres on historical cost recovery by SIOC at Sishen, which Kumba intends defending.

In another matter, Lithos Corporation is claiming $421-million from Kumba for damages at the Falémé project in Senegal; but on April 9 this year Kumba’s application for absolution was upheld and the Lithos' claim dismissed with costs.

On June 18, Lithos launched an application to apply for leave to appeal to the SCA, which Kumba will oppose.

Kumba initiated arbitration proceedings against La Société des Mines de Fer du  Sénégal Oriental, or Miferso, and the State of Senegal under the rules of arbitration of the International Chamber of Commerce in 2007, in relation to  the Falémé project.

Following the arbitration award on July 2010, a mutually agreed settlement was concluded, but that settlement was revised in June this year, when parties agreed that the terms would remain confidential.

“I would like to see progress on bringing all these to a resolution,” Mbazima commented to Mining Weekly Online.

Kumba's operations generated cash of R17-billion in the six months to June 30. The company returned R5.1-billion to shareholders, the biggest being Anglo American, and paid R3.6-billion to the South African government in income taxes and mineral royalties.

The company expects to invest up to R6-billion capital expenditure this financial year, after spending R2.3-billion in the first half.

Record quarter for Western Areas despite weak prices

ASX-listed Western Areas has reported record quarterly nickel sales, despite the weak commodity environment.

The miner said on Tuesday its nickel sales for the quarter ended June had reached a record 46 053 t of concentrate, containing 7 222 t of nickel, allowing the company to achieve a free cash flow of A$22.6-million during the quarter.

Total production for the three months reached 6 031 t of nickel in ore, at an average grade of 4.7%, while full-year nickel in ore production at 27 639 t exceeded the guidance of 27 500 t.

Total nickel in concentrate was 6 634 t, resulting in a full-year production of 26 918 t of nickel.

The Flying Fox mine produced 73 716 t of ore, at 4.7% nickel during the June quarter, for a total of 3 447 t of contained nickel, while the Spotted Quoll underground mine produced 53 465 t of ore, grading 4.8% nickel for 2 584 t of contained nickel.

The Forrestania nickel operations processed some 146 256 t of ore during the June quarter, with the Cosmic Boy concentrator producing 41 203 t of concentrate grading 16.1% nickel, for 6 634 t of nickel.

For the full year, the Cosmic Boy concentrator treated 586 254 t of ore, at an average grade of 5.1% nickel, and a total of 181 608 t of concentrate was produced, containing 26 918 t of nickel.

However, Western Areas has deferred the expansion of the Cosmic Boy mill from its nameplate capacity of 550 000 t/y to 750 000 t/y until later this year, as a result of the weaker commodity prices.

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Mirabela maintains its trend in Q2

 ASX- and TSX-listed nickel miner Mirabela Nickel has continued on trend for the second quarter ended June, with production figures in line with the previous three months.

During the three months to June, Mirabela produced 4 080 t of nickel in concentrate, compared with the 4 151 t produced during the first quarter, from its Santa Rita mine, in Brazil.

During the quarter, some 1.7-million tonnes of ore was milled, at an average grade of 0.47% nickel, and at an average recovery rate of 51%. The company noted that ore quality limitations were the most significant limitation on nickel production during the quarter; however, recovery performance remained in line with expectations.

Mirabela reported that sales for the quarter were also on par with the first quarter, reaching 4 168 t during the three months to June.

The company previously downgraded its full-year production guidance from between 22 000 t and 24 000 t, to between 17 000 t and 18 500 t, with the miner citing maintenance work and disruption to the explosives supply as the main reason.

True Gold gets $23.5 million backing from Liberty Mutual Insurance

Vancouver-based True Gold Mining Inc. (TSX VENTURE:TGM) will receive an invest boost of $23,450,931 from Liberty Metals & Mining Holdings, a subsidiary of Liberty Mutual Insurance, according to this press release Thursday.

The investment involves "a combination of a non-brokered private placement of True Gold common shares as well as the sale of a 2% net smelter return royalty on the company's interest in the Karma Gold Project in Burkina Faso."

Summary terms of the transaction:

• Purchase of 52,755,248 Shares at a price of $0.33 per Share for gross proceeds of approximately $17.4 million
• Purchase of the Royalty for a purchase price of approximately $6.04 million. The Royalty is subject to the following repurchase options retained by True Gold:
  • 50% of the Royalty may be repurchased subsequent to the third anniversary of commencement of commercial production at fair market value
  • 50% of the Royalty may be repurchased on March 31, 2014 for approximately US$12.5 million
• LMM's right to nominate one individual to True Gold's Board of Directors as long as LMM's percentage equity ownership is at least 7.5%
• Participation right for LMM to maintain its pro-rata equity ownership, if LMM's percentage equity ownership is at least 7.5%

Ralated Article: Traders to focus on earnings reports from wide variety of Canadian corporations

TORONTO — Traders will turn their attention to a slew of earnings spanning several sectors this week but expectations are muted for the resource stocks that make up such a large portion of Canada’s markets.
The Toronto Stock Exchange finished last week up 223 points or 1.8 per cent, the fourth consecutive week of increases. The S&P/TSX composite is now up two per cent for the year to date.
The TSX and other markets have found lift from a steadily improving U.S. economic climate, seen most recently in a strong U.S. manufacturing report and data that signalled job creation has done better than expected.
Earnings at U.S. companies have also, for the most part, shown more positive surprises than disappointments.
Andrew Pyle, senior wealth advisor and portfolio manager for ScotiaMcLeod in Peterborough, Ont., observed that three-quarters of U.S. companies that have reported so far have beat earnings expectations.
“We’ve actually seen decent activity in the U.S.,” Pyle said. “But in Canada we see a different environment.”
A large part of that difference is that the Canadian market is dominated by resource and financial stocks and these are not good times for the mining and energy sectors.
“I wouldn’t expect fantastic earnings out of the resource sector in the second quarter,” said Patrick Blais, managing director and portfolio manager at Manulife Asset Management.
“A lot of the underlying commodities continued to drop and that will impact the revenues as well as the bottom line earnings.”
Blais said China is a big source of the headwinds facing resource companies as the world’s second-largest economy slows. More importantly, he said, the composition of the country’s growth is changing.
He said China is shifting away from capital intensive growth to more service and consumer-led growth “and that will have a serious impact on the demand for base metals.”
Teck Resources (TSX:TCK.B) is the biggest Canadian mining company to report this week and analysts forecast the Vancouver-based company will post adjusted earnings of 33 cents a share on Thursday, down from 53 cents a year ago.
Its stock has been badly battered, falling to about $24 from the 52-week high of $38.13 that was established about a year ago.
Gold miner Agnico-Eagle Mines reports after markets close on Wednesday and expectations for that sector are minimal as well, as bullion prices have their own particular sort of pressure.
“At the end of the day, gold is an inflation hedge or it’s a safety trade,” said Blais.
“And there is no indication of inflation in the market with respect to the safety trade given the stability. There is no real reason to hold gold at this time so we expect the gold price to remain under pressure and for gold equities as well to be challenged by a declining gold price.”
The consensus calls for Agnico Eagle to post eight cents per share of adjusted earnings, excluding options expense, compared with 40 cents in the second quarter of 2012.
Agnico Eagle traded Friday at about $29, a far cry from its 52-week high of $56.99. But then the TSX Global Gold index has tumbled about 44 per cent so far this year.

In the energy sector, traders will receive earnings reports from Cenovus Energy (TSX:CVE) and Encana (TSX:ECA) on Wednesday and Husky Energy (TSX:HSE) on Thursday.

Outside of the resource sectors, grocer Loblaw Cos. Ltd. (TSX:L) reports results Wednesday. The company, which last week announced it is buying Shoppers Drug Mart (TSX:SC) in a $12.4 billion cash and stock deal, is expected to hand in earnings of 58 cents per share of adjusted earnings, which would be up from 56 cents in the comparable quarter last year.

Other companies reporting earnings this week include Canadian National Railways (TSX:CNR) on Monday and Canadian Pacific Railway (TSX:CP) on Wednesday.

The lowered expectations for earnings follow generally disappointing first quarter earnings.

Statistics Canada has reported that corporations earned $74 billion in operating profits in the quarter, down 1.2 per cent from the previous quarter.

“I think the quarter will be lacklustre, don’t expect strong positive surprises,” added Blais.

“But that said, we’re setting up ourselves for better second half mainly based on a rebounding U.S. economy.”

It is a relatively quiet week for economic news.

The major Canadian data point for the week is May retail sales, which comes out Tuesday morning. The consensus calls for a 0.3 per cent rise following a 0.1 per cent rise in April.

In the U.S., economists are looking for healthy home sales data for June. Existing home sales are expected to rise 1.4 per cent from May to an annualized rate of 5.25 million. And new home sales are expected to climb 1.7 per cent to an annualized rate of 484,000 even as higher U.S. bond yields translated in higher mortgage rates.

Further evidence of a strengthening manufacturing sector is expected to be reflected in the June durable goods orders report. Economists anticipate to see orders go up by 1.1 per cent amid rising aircraft sales. Excluding transportation, orders are expected to rise by 0.5 per cent.

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