Rusoro makes bid for Gold Reserve

This just gets worse and worse to watch. Rusoro is now launching and all share bid for Gold Reserve, read the details of the proposed deal here. The offer values GRZ and its Las Brisas property at a buck 8. Yes, that's a possible 10 million ounces of gold worth...61 million dollars? Am I doing my math right? Rusoro obviously talks like they are doing something great here offering them a 108% premium to Friday's closing price and over 200% premium to the last 30 days trading but my goodness. They are obviously avoiding the fact that the reason the stock is worth garbage is because they entered into an agreement with the Venezuelan government in November announcing they were going to rob Gold Reserve and Crystallex of the land they have been working so hard on developing all these years.

This is an insult to the mining and investment community. Venezuela and Rusoro created the stock collapse of GRZ, it was purely fabricated so they could sweep in and "legally" take over the asset. Worse part is that I have no doubt that those snakes bought at those low, low prices, they knew exactly what they were going to do, not only will they be stealing a huge gold deposit but they will make millions in the process. It's lunacy! How can we sit and watch this unfold without acting, this will set a dangerous precedent if it is allowed to develop the way it is going and we as investors and miners will be setting ourselves up for more of it unless we take a hard stand.

It's one thing to accept your losses and move on but it is another to submit yourself to the will of others. Gold Reserve deserves better, I doubt they will receive it, but this just isn't right.

Barrick, taking the lead in innovation

This is a story that I enjoy very much, Barrick last year announced they were going to award a $10 million prize to the winner of a contest. The goal? to improve their silver recoveries at their Veladero gold mine in Argentina where they were struggling with 6 to 7% recovery of the metal. Barrick was unlocking a fraction of its estimated 180 million ounces of silver at the mine so they decided to let the general public and scientific community help them out in finding environmentally safe and economic ways to better the extraction process.

So far nine finalist have advanced to the final testing process and they have each been given a $25,000 prize, the remainder of the research and test costs will be covered by Barrick.

I wish all the candidates the best of luck and hope that the winning method greatly improves the silver recoveries.

Mining bailout?

Am I reading this right? The Canadian Conservative government wants to add the mining industry to its proposed bailout list? It doesn't make a whole lot of sense to me right now but we also haven't really seen what they are proposing, it's not like they can give money to big producers who made bad decisions and force them to keep mines open. Unless they can manipulate the commodity prices there's not much a government can do.

If subsidies is what they're after it's a different story and it's about damn time we get the respect we deserve, as Canada's leading industry, mining is what makes us a world power and it's what makes our economy one of the strongest in the world. For too long we were taken for granted to provide high paying stable jobs and generate millions in taxes.

When the times for mining are good we're ignored and they try to squeeze every penny out of us. Now the times are bad and they are reversing course to "save jobs", it's all become a big show. Facts and basic economics are being ignored for the sake of a stimulus package that is being forced down the throats of Canadians. I'm sorry, but I'm not buying it. Mining in Canada is controlled by investors and the cycles of commodity prices, not by governments.

Shareholders sue Crystallex

So shareholders of Crystallex have launched a class action law suit against the company claiming fraud. As has become common practice lately when a company gets screwed, the shareholders think they were entitled to certainty and security and want some of their lost money back. Sorry, but you invested in an extremely volatile sector (junior mining) in an extremely risky part of the world (Venezuela). You knew your investment was a big risk, if you didn't know and believed every word the company said well I'm afraid you've just been taught a big lesson in due diligence.

Yes, you were robbed, Venezuela played you and Crystallex for chumps, good luck in your other investments. I hope this case gets thrown out of court though, Crystallex will be busy enough fighting (and failing) to win their claims to Las Cristinas in courts. They don't need this side drama.

Labour shortages in mining, continued

As the onslaught of negative news from miners flood the news, from Rio Tinto cutting 14,000 jobs to Sudbury losing more mines and Cameco laying off staff, closures and project cancellations are everywhere. Good, skilled workers are sent to the streets to look for more work and the lucky ones get severance or early retirement packages. These aren't average jobs or low paying wages either, the mining industry is the highest paying industry in Canada with weekly salaries at over $1000 on average.

Miners shell out big bucks to grab top talent, experienced engineers, geologist, drillers, miners, heavy equipment operators and metallurgist can easily make over $100,000 a year. Forestry workers were flooding over to mining in the last few years, students at Universities were hired before graduating and promised jobs making $300+ a day. But the sad reality is that this industry is hard on people and a lot of individuals can't cut it and quit after a few years or months. The isolation, long rotations and harsh environments can take a tole on any person.

I remember working 90 or 95 days without ever having a day off. Stuck in a shack no bigger than a living room for months on end through a northern Ontario winter. I remember pulling rods from the top of a drill tower at 2am on a cold November night and I remember getting ready for a big staking rush the very next week. I recall walking through a swamp with my map over my head for fear of getting it wet and I remember (3 hours ago) trying to map over a mile underground, with 2 scoops loading trucks and a jumbo drilling right by my side. The air was dusty and it must of been 40 degrees or more with the exhaust of the equipment running. For some, they thrive in this environment, others just can't be bothered.

Many mines or exploration projects are located in isolated areas and long rotations are a given, being away from family and friends just isn't worth it for some people. Fortescue in Australia just recently announced they wanted to reduce the amount of fly in fly out people, too many marriages and families were being broken they claimed. They are 100% right too, anyone who's worked in mining for a while knows of someone who's gone through something like this. The big mines in Sudbury or Timmins don't have a hard time getting staff, it's the ones in the Arctic or northern Saskatchewan that do.

Whatever the case, someone who works in mining has to be passionate about what they do, otherwise no amount of money will keep them working.

Labour shortages in mining

The skilled worker shortage that has gripped mines, exploration companies, contracting firms, mining supply chains and every thing else related to mining was a very big issue for the last few years and it will be an even larger one by the time the next commodities boom arrives. Having a lack of qualified and trained engineers, geologist, miners, drillers and other important mining personnel can cripple, delay, make them less efficient or profitable or even downright shut them down. As cliché as it sounds, the most important thing for any company is not its assets, properties or cash reserves, it is the men and women who make up its workforce.

This latest crash in commodities has been devastating for skilled mining industry workers but the huge shortage of people that was already in place has helped people in finding new work. Most mines were operating short an engineer or geologist, two or three in some cases. Good miners and drillers were harder to find than deposits and it wasn’t uncommon to find exploration companies delay drilling programs because they had no one to log the core. The causes of these shortages were numerous; the infrastructure to train and educate mining industry people simply didn’t exist or were woefully inadequate and underfunded being the biggest factor. Most older geologist will talk of the early 1990’s when jobs for geologist were almost non-existent, this pushed many to look for work in different industries. Enrollment into Mining Engineering or Geology programs dropped drastically and funding for those programs were greatly reduced. By the time Universities and Colleges caught up with the industry it was almost too late. Just last year Confederation College in Thunder Bay started offering diamond drilling and line cutting courses. A good idea but 5 years too late, I wouldn’t be surprised if the program gets cut or its funding reduced in a year or two when no one signs up for it.

It’s a terribly frustrating cycle, but the next boom will be even worse because of our ever aging workforce. It’s no secret that our skilled workers are primarily made up of people close to retirement age, this crash will probably speed up the process and force many into retirement. By the time the next boom comes along, and be sure that it will come, we will be so unprepared and short of workers it’ll be a scary place out there. For geologists like me, it’ll be great, but for an investor, mine manager or project manager, it'll be a hard fight to get the few qualified and experienced personnel running their projects and most will suffer as a result. Many drill programs will be delayed, many mines will be inefficiently run and a lot of job postings will be featured on InfoMine.

Be sure of it.