B.C. ghost town could become major natural gas hub

An entrepreneur is trying to breathe new life into the B.C. ghost town of Kitsault by making it a major hub in the province`s growing liquid natural gas infrastructure.

Krishnan Suthanthiran, an Indo-Canadian businessman who made his fortune selling medical supplies throughout North America, bought Kitsault in 2004 for $5 million in cash.

"I think I saw an article that the town was for sale and I started reading about all the things the town has. And it intrigued me," he said.

• Energy plan for B.C. ghost town to be unveiled
• B.C. molybdenum mine approved despite Nisga'a objections

The town, which is located north of Prince Rupert on Alice Arm, was constructed nearly overnight in the early 1980s by U.S. mining conglomerate Phelps Dodge.

The company hoped to mine the nearly 109 million tonnes of molybdenum, a metal used in steel production, from the ground around Kitsault.

Phelps Dodge built about 100 detached homes, apartment buildings and all the amenities of a vibrant community: a recreation centre with a curling rink and movie theatre, a fully equipped hospital, a shopping mall and a swimming pool.

About 1,200 mine workers moved to Kitsault with their families.

"It was a great place," says Larry Payjack, a shop owner and one of Kitsault`s original residents.

"It had the store, it was great for kids, fantastic fishing. It was set up as a permanent place for people to be.”

Just 18 months later, however, they had all moved out. In 1983, commodities markets crashed and Phelps Dodge closed the mine, bought back houses from workers and ordered everyone to leave.

Suthanthiran bought the town 21 years later, hoping to make Kitsault a resort destination.

He hired a summer caretaker, Indhu Mathew, who is currently the town's only resident, to take care of the place until his vision could be realized.

In January of this year, however, Suthanthiran formed Kitsault Energy and began pitching the empty town as an ideal location to build a liquid natural gas plant and pipeline terminal to ship B.C.'s vast natural gas resources to markets in Asia.

Suthanthiran says it has cost him about $2 million just to keep the town from crumbling, and liquid natural gas may be the only way to keep paying the bills.

The project will require up to $30 billion to get off the ground, so he's currently trying to gather international investors.

"I think with Kitsault Energy, the pipeline will be shorter. The housing infrastructure is there," he says.

"So, I think this will be the thing that brings Kitsault back to life."

Centerra Gold swings to Q2 profit as Kyrgyz mine kicks into gear, raises guidance

Canadian miner Centerra Gold has reported a second-quarter profit of $1.6-million, or $0.01 a share, compared with a net loss of $48.9-million a year earlier, as gold output surged 89% year-on-year, boosted in particular by a strong performance by its flagship Kumtor mine, in Kyrgyzstan.

The company late on Wednesday said it had produced 99 426 oz of gold in the quarter ended June 30, including 72 365 oz at Kumtor and 27 061 oz at Boroo, in Mongolia, compared with 52 482 oz (41 307 oz from Kumtor and 11 175 oz from Boroo). The increased output helped to offset a 14% decline in the realised gold price of $1 376/oz for the quarter.

Revenue climbed 43% to $128.2-million, compared with $89.7-million, despite mining and processing operations being impacted at Kumtor between May 30 and June 1 as a result of an illegal protest that blocked the road leading to the mine, disrupting supplies deliveries.

Second-quarter results included charges totalling $2.8-million, mainly comprising a charge of $2.2-million for the write-off of certain infrastructure assets at Kumtor that could not be relocated as a result of the accelerated movement of the central valley waste dump. Movement were reported to have stabilised following mitigation actions.

The miner lifted its consolidated gold production outlook to between 615 000 oz and 675 000 oz.

Azhikkal, Ponnani Ports in Modernization Mode

The feasibility study of Azhikkal and Ponnani ports development has been finished.

The ports will be exclusively used for cargo handling. Director of Ports Jacob Thomas said: “The Ponnani port is expected to be operational in two years and Azhikkal in three years. The ship channel in Azhikode will be six metres and Ponnani will be 13 metres.”

Azhikkal port allows anchoring of ships of up to 7,000 BWT and the Ponnani port can cope with larger vessels of up to 15,000 BWT, as reported by newindianexpress.com..

The project in Azhikkal tends to create a multipurpose terminal by developing the existing wharf, and a second multipurpose terminal in the land available at the southern side of river mouth in the first phase.

Read more: Fenwick Island Beach Renourishment Project Starts

Beach restoration work has begun in Delaware, reports worldnow.com.

The Fenwick Island project is expected to take 3-4 weeks, depending on the weather.

As the mdcoastdispatch.com reports, during the project, roughly 389,000 cubic yards of sand will be pumped onto the beach in Fenwick from offshore borrow sources and spread over about 6,500 feet of shoreline.

The dunes ravaged during Hurricane Sandy last October, and other storms last winter and early spring, will also be restored to their pre-storm conditions.

Federal aid from the more than $60 billion Superstorm Sandy recovery package will cover the entire cost of the project.

Obama Praises JAXPORT Deepening Project (USA)

Mitsui O.S.K. Lines, Ltd. announces that U.S. President Barack Obama visited MOL’s TraPac Jacksonville terminal with U.S. Transportation Secretary Anthony Foxx on July 25, as a part of his economic tour.

President Obama and Secretary Foxx were met by TraPac General Manager Dennis Kelly, JAXPORT interim CEO Roy Schleicher and ILA representative Fred Wakefield, who escorted and briefed them during the visit.

Following the visit, President Obama also delivered a speech in which he discussed the importance of port investment. The following are some excerpts of President Obama’s remarks:

“I want to thank Jacksonville Port Authority Chairman Joe York…I want to thank the CEO of MOL (America) Tsuyoshi Yoshida. I want to thank everybody here at JAXPORT for having me here today. I would like to recognize the folks from the port and TraPac for showing me the cranes you’ve got back at the terminal. Those are some big cranes.”

“We’ve got to create more jobs today doing what you’re doing right here at JAXPORT…We need modern ports so that we can move more goods made in America out to the rest of the world. If you want to create jobs right now, but also jobs that will have impacts for years, here is the way to do it…We know strong infrastructure is a key ingredient to a thriving economy…So that’s why last year I acted without Congress, and I took executive action to speed up the permitting process that gets workers breaking ground on projects like this one.”

Two infrastructure improvement projects at the Jacksonville Port Authority – channel deepening and on-dock rail – have been recognized for their national significance by President Obama.

“We appreciated the opportunity to meet with the President and discuss the importance of these infrastructure projects,” said Tsuyoshi Yoshida, President/CEO of MOL (America) Inc.

“I am impressed that the President grasped the value of these projects and optimistic that his commitment will benefit the transportation and logistics industry. After his speech, I thanked him for the visit and his strong support. He thanked me for the opportunity.”

Victor Mine's biggest diamond

De Beers is touting a 35 carat diamond from its open pit mine near James Bay, which will be used to promote Ontario fancy gems.

Crossworks Manufacturing, which purchased the stone, is cutting and shaping it into a square pattern. It will then take the gem on an international tour.

The head of the Canadian Jewellers Association, David Ritter, told the Toronto Star that the finished diamond could be worth a lot.

"In Canada, this is somewhat rare," he said.

"Could it be worth a million dollars? Yeah, it could."

Victor is a 5,000 ha diamond mine located high in the Canadian Arctic, approximately 90 km west of the community of Attawapiskat, which lies on the shores of James Bay in northern Ontario.

Victor is the first diamond mine for the province of Ontario and De Beers second Canadian mine. It is regarded as an operation that will produce a great deal of gem quality diamonds.

The mine was officially opened on July 26, 2008. Actual mine life is estimated at 12 years and total project life is expected to be 17 years.

Mining stocks take TSX lower

The Toronto stock market was slightly lower Monday as mining stocks fell back ahead of a slate of earnings reports.

The S&P/TSX composite index slipped 16.94 points to 12,630.96.

But the market found some support from Hudson’s Bay Co. (TSX:HBC) as Canada’s oldest retailer said it is buying U.S. luxury retailer Saks Inc. in for US$2.9 billion, paying US$16 per Saks share plus assumed debt. HBC plans to keep Saks as a separate unit headquartered in New York and open seven Saks department stores in Canada. HBC’s other holdings include The Bay and Lord & Taylor in the U.S. Its shares ran up $1.14 or 6.91 per cent to $17.63.

The Canadian dollar edged up 0.08 of a cent to 97.42 cents US while traders wait for the latest reading on Canadian economic health. Economists expect Statistics Canada to report Wednesday that gross domestic product grew by 0.3 per cent during May.

U.S. indexes were lower as the number of Americans who signed contracts to buy homes dipped in June from a six-year high in May.

The Dow Jones industrials fell 63.24 points to 15,495.59, the Nasdaq lost 13.86 points to 3,599.31 and the S&P 500 index was 7.81 points lower at 1,683.84.

The National Association of Realtors says its seasonally adjusted index for pending home sales ticked down 0.4 per cent to 110.9 in June. The May reading was revised lower by a percentage point to 111.3, but it was still the highest since December 2006. The slight decline suggests higher mortgage rates may be starting to slow sales. Still, signed contracts are 10.9 per cent higher than they were a year ago.

Traders also awaited a heavy slate of other U.S. economic data this week with second quarter U.S. GDP data being released Wednesday, the non-farm payrolls report for July on Friday and a scheduled announcement on interest rates Wednesday by the U.S. Federal Reserve.

Markets are particularly interested in any indication from the Fed on tapering its monthly US$85 billion of bond purchases, which have kept long term rates low and fuelled a rally on equity markets.

Expectations for the U.S. growth data are muted, largely due to the effects of the sequestration, a series of across the board U.S. government spending cuts worth US$85 billion that took effect March 1.

“(It) hit the economy hard in Q2, likely slowing growth to 1.2 per cent from the tax-hike-depressed 1.8 per cent pace of Q1,” said BMO Capital Markets senior economist Sal Guatieri, noting that along with spending cuts and the layoff of government workers, “sequestration concerns also undercut business spending.”

On Friday, the U.S. Labour Department is expected to report the economy cranked out about 190,000 jobs during July. Canadian labour data for July won’t released until August 9.

Commodity prices turned mixed and the metals and mining component was the lead decliner, down almost two per cent as September copper added a penny to US$3.11 a pound. Teck Resources (TSX:TCK.B) fell 35 cents to C$24.76.

The base metals sector has had a positive month, up about four per cent during July as investors bought into a sector badly beaten down amid weak commodities and a slow global economic rebound. The component is still down about 27 per cent year to date and investors have been selling off miners over the last couple of sessions ahead of a slew of earnings reports coming down from the resource sector.

Expectations are low since these companies have suffered from low prices for oil and metals.
Miners reporting this week include Lundin Mining (TSX:LUN) and uranium miner Cameco (TSX:CCO).

It’s a very heavy week for energy company earnings with Canadian Oil Sands (TSX:COS), Talisman Energy (TSX:TLM), Suncor Energy (TSX:SU) and Imperial Oil (TSX:IMO) posting results.

Turquoise Hill Resources (TSX:TRQ) fell 64 cents or 11.75 per cent to a new 52 week low of $4.811 as it said it’s expecting a delay in developing its Oyu Tolgoi copper project in Mongolia due to the government’s financing process. Turquoise Hill’s primary operation is its 66 per cent interest in the Oyu Tolgoi copper-gold-silver mine.

The September crude contract on the New York Mercantile Exchange lost seven cents to US$104.63 a barrel and the energy sector drifted 0.8 per cent lower. Canadian Natural Resources (TSX:CNQ) fell 66 cents to $31.54.

The gold sector was off 0.4 per cent while August bullion rose $8.10 to US$1,329.60 an ounce. Barrick Gold Corp. (TSX:ABX) faded 15 cents to C$18.13.

The telecom sector led TSX gainers with Rogers Communications (TSX:RCI.B) down 44 cents to $41.80.

European bourses were mixed with London’s FTSE 100 index down 0.29 per cent, Frankfurt’s DAX rose 0.26 per cent and the Paris CAC 40 was up 0.04 per cent.

Plunging prices take shine off gold mining profits

The second-quarter gold earnings were expected to be noisy, and they have not disappointed so far.

Writedowns, plummeting profits and a vast range of realized prices have been key themes in the reports. Most importantly, the miners are unveiling the cost and capital spending reductions that they merely hinted at for most of the year. They are a crucial step to preserve balance sheet strength amid a bear market for gold.

On Thursday, Vancouverbased Goldcorp Inc. announced it is slashing spending by $200-million US in 2013, and reiterated mine closures are a possibility if gold sinks below $1,200 US an ounce for an extended period. It also cut exploration and general and administrative expenses. Rival Agnico Eagle Mines Ltd. plans to cut more than $200-million US from next year's budget.

The moves come just as credit rating agency Moody's warned the gold producers "must take action" to protect their ratings and minimize earnings deterioration. Miners in virtually every commodity are trying to slash costs and spending right now, but there is a greater urgency in gold because of the rapid decline in price.

"They're starting to show the first signs of capital discipline," said Greg Taylor, a portfolio manager at Aurion Capital.

While they have announced some aggressive measures to preserve cash, Veritas analyst Pawel Rajszel said that details have been limited so far, and that companies are largely pushing spending into the future rather than cutting it.

"I think all the gold companies are talking more than walking," he said. "It would be easier to have confidence in the cost cuts if they laid out a more detailed plan of where they will be coming from."

The second-quarter results provided evidence of why many companies need to cut, as they reported sharp declines in profit. But because the price of gold was so volatile throughout the quarter, the magnitude of the drop depended largely on timing.

Alamos Gold Inc. timed its sales well and came through the quarter with a solid realized gold price of $1,423 US an ounce. On the other hand, Goldcorp's production was weighted toward the end of the quarter, when the price fell sharply. As a result, its realized price was $1,358 US, a full $65 US less than Alamos.

Goldcorp also had about 14,000 ounces of unsold inventory at the end of the quarter at its Red Lake, Ont. mine. That is a positive, as the price improved in July.

Goldcorp's adjusted earnings came in below analyst estimates at 14¢ US a share, but they gave the company credit for good operating performance. Production met expectations, and Goldcorp maintained its guidance for production of 2.55 to 2.8 million ounces this year at cash costs of $1,000 to $1,100 US an ounce.

The results were overshadowed by a massive $1.96-billion US writedown on the Penasquito mine in Mexico, which reflects reduced value for the project's exploration potential. While it is a non-cash charge, it is a slight embarrassment for Goldcorp. Until now, the company avoided the wave of writedowns that have plagued rivals like Barrick Gold Corp. and Kinross Gold Corp. this year.

Goldcorp and Agnico both maintained their dividends, demonstrating their strong financial positions. Newmont Mining Corp. made an expected cut to its dividend because of its price-linked dividend policy, and many analysts expect Barrick to lower its payout when it reports next week.

CN Rail Realizes the Importance of the Canadian Oil Sands

One fact that typically gets lost on most is that the majority of oil reserves around the world are restricted from private sector involvement unless local governments extend an olive branch. Need proof? Four out of the top five countries by crude oil reserve levels include Venezuela, Saudi Arabia, Iran and Iraq. Fortunately for the rest of the world, Canada falls directly in the middle of that Middle Eastern-heavy list. All told, the Oil & Gas Journal reported that only 19% of world oil reserves are readily available to the private sector. Of that 19%, the oil sands region, and its 169 billion barrels of proved reserves, is supposedly directly responsible for over half.

The word is out

This fact hasn’t been lost on some of the largest oil producing companies in the world that have chosen to set up some form of operations here. With U.S. production reaching 7.4 million barrels per day (bpd), it only has about 9-10 years of proved oil reserves (not counting unproved and shale oil) remaining. If this supply is depleted, Canadian oil could become more important than ever. Unfortunately, infrastructure, regulatory and technological limitations have kept Canadian oil sands production in check. In fact, Canada and its vast reserves aren’t even predicted to eclipse 6.7 million bpd by 2030.

For those of you thinking that seems like a respectable figure, imagine if the oil sands continue to remain restricted in terms of take-away capacity; just like that, the 3.4 million bpd increase it is supposed to account for could remain a pipedream (Pun intended? I’ll let you decide). Some of you might be thinking, “Hey, railroads have stepped up admirably in terms of oil transportation growth. Won’t they continue to pick up the slack?” To that I would reply that they haven’t even been able to pick up all of the slack that existed prior to a very wise business move by several North American C-suite conductors. Pipelines have historically accounted for 90% of oil transportation, so despite rails prolific growth in 2012 and year-to-date in 2013 it still has a lot of ground to make up.

Let’s do the math

To shine a little bit of light on this sticky situation, TransCanada’s (TSX:TRP,NYSE:TRP) Keystone XL pipeline would play water slide to 830,000 bpd of oil from Canada into the United States. Even in an optimistic report from the U.S. State Department, railroads like Canadian National Railway (TSX:CNR,NYSE:CNI) would only be able to transport 200,000 bpd to the Gulf of Mexico. Even discussing these figures seems trivial in comparison to the expected 3.5 million bpd increase in production that is expected.

In all likelihood, it’s going to require a blend of each with rails taking over in the short-term and pipelines securing the capacity from 2015-16 and beyond. Any sooner than this is a pretty bold claim given that if the Keystone XL pipeline is even able to break ground in 2013, it won’t be completed until sometime in 2015. And right now, that’s a big if.

Is the U.S. enough?

One thing Keystone XL fails to address is the fact that U.S. oil consumption is 2 million bpd less than it was in 2005 and is expected to continue declining as natural gas use increases and vehicles gas mileage requirements rise in accordance with regulations. Wouldn’t Canada prefer to ship its oil to markets that are expected grow? Say, to China? This option is yet another game changer which would allow Canadian oil to both increase in production AND price as it gains greater access to the international markets.

Because both of these geographies will factor heavily in the success of the Canadian oil sands, I am looking at Canadian National Railway has a huge beneficiary over the next 3-5 years. The infrastructure that it has in place cannot be topped for these two purposes in my mind. Don’t believe me? Then you better look up because a train carrying a 150% increase in oil shipments over last year is barreling down the tracks at you. While gains like this are unlikely to continue as scale eventually chips away, aggregate growth is as close to certain as it is establishing a plan to add the oil sands to its portfolio with heated rail cars.

The Foolish Bottom Line

So far this year, CNR’s stock has chugged along, adding 8.2% to its price, but don’t let that detour you. Any further delays in the Keystone XL or other rail projects meant to add access to external markets for Canadian oil could prolong the newfound oil boom. I am believer that these profits are here to stay for several years to come. Are you? If so, a closer look at CNR’s operations might be in order.

Canada’s rail companies are some of the best businesses that this country has to offer.  For a glimpse at 3 of the best that our neighbors to the south can muster

Teck, Husky Energy earnings help push Toronto stock market slightly higher

The Toronto stock market was slightly higher on Thursday amid well-received earnings reports from the resource sector and mainly lower commodity prices.

The S&P/TSX composite index climbed 14.25 points to 12,686.55 after earnings released from Teck Resources and Husky Energy beat expectations. But global fertilizer producer PotashCorp weighed on the TSX as it missed expectations and lowered its 2013 profit forecast.

The Canadian dollar rose 0.39 of a cent to 97.33 cents US.

U.S. indexes turned higher amid earnings from General Motors and Facebook that also beat expectations and the Dow Jones industrials edged up 9.3 points to 15,551.54.

The Nasdaq gained 22 points to 3,601.6 and the S&P 500 index was up 3.36 points to 1,689.3.

Teck reported a second-quarter adjusted profit of $197 million or 34 cents a share, down sharply from $398 million of profit a year ago but three cents above estimates. One of Canada's largest coal producers and a major miner of copper, zinc and other commodities, Teck said it's increasing cost-reduction efforts to deal with lower prices for its products. Its shares advanced 99 cents to $24.68.

"Obviously, they can beat expectations that have been lowered," said Allan Small, senior adviser at DWM Securities, who owns Teck shares. "(But) it's going to be a little while yet before we see Teck doing well."

He pointed out that "many in the investment world are not expecting much out of the base metal miners," in large measure because of slowing growth in China and falling demand.

But he also noted that a rising U.S. dollar is also depressing prices and "as the currency gets more expensive, you tend to buy less."

A stronger greenback makes it more expensive for holders of other currencies to buy oil and metals, which are denominated in U.S. dollars.

Husky Energy gained 56 cents to $30.14 as it said quarterly profit rose 40 per cent from a year ago to $605 million or 59 cents a share. Earnings ex-items were 62 cents, five cents better than estimates.

Meanwhile, Goldcorp Inc. reported a $1.93-billion US net loss in the second quarter, as it was hit by a massive writedown of its Penasquito mine in Mexico due to the falling price of gold and its impact on the project's exploration potential.

The Vancouver-based mining company says it would have been profitable in the second quarter without the writedown, but its adjusted earnings were still down from last year and missed analyst estimates. Its shares lost 23 cents to $29.01.

Shares in PotashCorp fell 84 cents to $38.33 after it cut its profit estimate for the current year and reported a quarterly profit of $643 million, or 73 cents per diluted share, up from $522 million, or 60 cents per share a year ago. The results missed estimates for a profit of 79 cents per share.

In the U.S., General Motors says second-quarter net income fell 16 per cent to $1.26 billion or 75 cents a share as slowing international profits and losses in Europe offset strong North American earnings. Still, GM soundly beat Wall Street expectations. Excluding one-time items, it made 84 cents per share. Analysts polled by FactSet expected 75 cents.

Revenue was up four per cent to just over $39 billion, beating Wall Street's estimate of $37.7 billion and GM shares lost early momentum and headed down 33 cents to $36.80.

Facebook shares rocketed up 26.22 per cent to $33.46 after the social network company said that it earned $333 million, or 13 cents per share, in the April-June period, up from a loss of $157 million, or eight cents per share, a year ago. Adjusted earnings were $488 million, or 19 cents per share, above the 14 cents that analysts were expecting. Facebook's revenue grew 53 per cent to $1.81 billion, well above the $1.62 million that analysts were expecting.

Mobile revenue was $655.6 million, or 41 per cent of the quarter's total advertising revenue of $1.6 billion.

Commodities turned higher with the September crude contract on the New York Mercantile Exchange up 14 cents to $105.53 US a barrel. Crude shook off early losses in the wake of a report that showed U.S. durable goods orders for June surged 4.2 per cent, after running up 3.7 per cent in May.

The energy sector was up 0.16 per cent. Precision Drilling ran up 39 cents to $10.31 as the company posted a quarterly profit of only $473,000 profit, worth less than a penny per share. That was down from a profit of $18 million or six cents per share a year earlier as the company felt the impact of softer conditions in the oil and gas industry. However, analysts had expected a one cent share loss and revenue also came in better than expected.

The Teck results helped push the base metals sector up 0.87 per cent while September copper was unchanged at $3.18 US a pound. Elsewhere in the sector, Turquoise Hill Resources rose seven cents to $5.39.

The gold sector was ahead 1.1 per cent with August bullion $6.90 higher to $1,326.40 US an ounce. Iamgold gained 18 cents to $5.50.

In other corporate news, BlackBerry is laying off 250 workers in its new product testing facility in Waterloo. Its shares slipped two cents to $9.28.

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Miners pull back on project amid weak commodity prices

With commodity prices still weak, major Canadian mining companies are looking for ways to tighten their purse strings, and in some cases are delaying costly projects.

Teck Resources has pushed back production plans at a coal mine in British Columbia until demand for metallurgical coal recovers. It also announced a copper mine in Chile has been slowed by environmental permits so construction won’t begin until 2016 at the earliest.

“Teck is adapting to current market conditions,” president and chief executive Donald Lindsay told analysts during a conference call Thursday. “We are prudently deferring projects and capital expenditures.”

Patricia Mohr, vice-president and commodity market specialist at Scotiabank, said long-planned copper production is starting to come on stream, after years of no growth, so the move is affecting prices.

“You’re beginning to see a much more disciplined approach to capital spending, with some mining companies beginning to defer some new mine projects,” Mohr said.

Also Thursday, Goldcorp Inc., a Vancouver-based mining company, took a whopping $1.96 billion (U.S.) write-down of its assets as it reported second-quarter earnings.

It joins other gold mining companies that have announced at least $13 billion of write-downs in the past two months, as gold prices had their biggest quarterly slide in more than nine decades. Miners are trying to pare down costs and defer mine development as gold prices fall.

Mohr noted gold prices had soared in recent years because of various central bank policies like quantitative easing in the U.S., where the government buys $85 billion (U.S.) each month in long-term bonds and mortgage-backed securities as a way to kick-start the economy.

“In recent weeks, gold has picked up again,” Mohr said, noting U.S. Federal Reserve chairman Ben Bernanke has tried to calm markets about when it will reduce those purchases.

“It could very well move down again, when the Fed does start to taper its bond asset program. I wouldn’t be surprised to see gold move down again,” she said.

Goldcorp said it would have been profitable in the second quarter without the one-time charge. It added that market factors forced a reassessment of the book value of Goldcorp’s portfolio, primarily related to its Penasquito mine in Mexico.

Last month, Barrick Gold Corp. said first production from its Pascua-Lama gold and silver venture in the Andes would be delayed by more than 18 months, with production slated for mid-2016 instead of the original 2014 target. As well, it forecast taking a write-down of up to $5.5-billion (U.S.) on the South American project.

These announcements reflect the highly cyclical nature of the mining business, where prices can directly influence production.

“We have been buoyed over the last five years by China,” said University of Toronto business professor Laurence Booth. “Normally, you would expect that a recession this deep in the United States and Europe would reduce the demand for commodities, particularly copper,” he said.

Yet Canada quickly bounced back from the 2008 financial crisis, though recent concerns about weaker growth in China are prompting some companies to reassess whether certain projects should go ahead.

Booth said companies are asking themselves: “Does it make sense to expand and extract at the moment, at current prices today?”

As companies pull back, the ripple effect will be felt in Toronto, where more than half of the world’s public mining stocks trade on either the Toronto Stock Exchange or the venture exchange.

That means the army of lawyers, investment bankers and accountants may not be needed if deals are being done, Booth said.

“If they are the pre-eminent mining exchange, and commodity prices collapse, there’s a huge downdraft,” he said.

Mohr added that merger and acquisitions activity could very well heat up next year. But for now, she said prices are low.

“For retail investors, now is not the time to be selling base metal stocks,” she said. “The next 12 months would be the time to start building positions because it is going to come back.”