New Gold, Peak Gold and Metallica Combine: On June 30, 2008, New Gold, Peak Gold and Metallica Resources announced completion of a business combination of the three companies. The transaction was structured as an all-share purchase by New Gold of the other two companies for New Gold shares valued at about $1.37 billion.

The merged company is based in Vancouver and has proven and probable reserves totaling about 3.2 million oz of gold. Its assets include three operating mines, the Peak mines in New South Wales, Australia, and the Amapari mine in Brazil from Peak Mines and the Cerro San Pedro mine in San Luis Potosí state, Mexico from Metallica. Production from the three mines is expected to total about 297,000 oz of gold in 2008 and 335,000 oz in 2009. Metallica is also 30% owner of the El Morro copper-gold project in Chile, where Xstrata is 70% owner and operator.

New Gold owns 100% of the mineral rights to its New Afton project, located 10 km west of Kamloops, British Columbia. New Afton will be an underground mine, having an annual average production of 78 million lb of copper and 82,000 oz of gold over a 12-year mine life. Production is expected to begin toward the end of 2009.

On May 15, 2008, Metallica announced completion of a technical report on the El Morro project. The report, prepared by Pincock Allen & Holt, foresees average annual production of 203,000 mt of copper and 302,000 oz of gold during the first five years of operation. Average annual production over the currently estimated 14- year mine life is projected at 172,000 mt of copper and 313,000 oz of gold.

HudBay Acquires Skye Resources: On June 23, 2008, HudBay Minerals and Skye Resources announced an agreed transaction whereby HudBay will acquire Skye in an all-share transaction valued at about $450 million. Skye’s principal resource is the Fenix laterite nickel project in Guatemala. The transaction was expected to close by late August 2008. Assuming closure, Hud- Bay will add nickel to its predominantly zinc and copper business, which includes mines, concentrators and metal production facilities in northern Manitoba and Saskatchewan, a zinc oxide production facility in Ontario, the White Pine copper refinery in Michigan and the Balmat zinc mine in New York state.

The Fenix property is the renamed site of Inco’s Exmibal nickel mine and smelter, which were completed in 1977 and operated until 1980, when the facilities were placed on care and maintenance due to low nickel prices. Skye acquired the property in 2004. Redevelopment plans include refurbishing and expanding the existing mine and plant to process the property’s saprolite resources. Modifications to the plant would include replacing the existing oilfired dryer with a larger coal-fired unit, converting the existing oil-fired kiln to coal-firing, installing a second kiln, and adding a ladle refinery to produce ferronickel. The existing electric furnace would be upgraded to 90 MW. Production is targeted at about 48.5 million lb/y of nickel. Skye has also completed a preliminary assessment of the potential for doubling production based on hydrometallurgical processing of the property’s limonite resources.

Inmet Bidding for Petaquilla Copper: On July 6, 2008, Inmet Mining said it would make an all-cash offer for Petaquilla Copper at a price of C$2/share, valuing Petaquilla at about C$345 million. The offer would represent a 108% premium to the prevailing value of Petaquilla on the Toronto Stock Exchange on July 4. Full details of the offer were to be included in a formal bid circular to be filed with securities regulatory authorities and mailed to Petaquilla Copper shareholders. Conditions would include acceptance of the offer by shareholders owning not less than 50.1% of Petaquilla common shares.

On July 14, a Petaquilla press release said the company would not formally comment on the Inmet offer until it was officially commenced. However, the press release suggested that the proposed offer appeared to be inadequate and that the Petaquilla board would likely not respond positively to the offer as outlined.

Petaquilla is currently disputing Teck Cominco’s right to earn a 26% interest in the Petaquilla copper project in Panama (E&MJ, June 2008, p. 5). Inmet has a 48% interest in the project. Inmet has supported Teck Cominco in the dispute. Petaquilla Copper would own 52% of the project if it prevails in its dispute with Teck Cominco, or 26% if not.

Inmet has indicated some impatience with Petaquilla as regards its dispute with Teck Cominco. A takeover of Petaquilla by Inmet would allow that dispute to be put aside, and Inmet and Teck Cominco could focus on developing the Petaquilla project.

Eldorado Gold Acquires Frontier Pacific: On July 3, 2008, Eldorado Gold announced that it had acquired 93% of the shares of Frontier Pacific, based on a shares-and-cash offer valued at about C$170 million. Eldorado extended its offer for the remaining shares to July 15 and said it would then pursue compulsory acquisition of any remaining shares.

Frontier Pacific’s primary asset is its Perama Hill gold project in northeastern Greece, which is in the advanced permitting stage. Eldorado operates its Kisladag gold mine and has begun construction of its Efemçukuru gold mine, both in western Turkey.

Perama Hill is expected to produce a total of 1.2 million oz of gold over a nine-year mine life at cash costs of $171/oz. The mine life waste-to-ore ratio is 0.4:1. The proposed annual milling rate is 1.25 million mt/y through a conventional CIL plant. Estimated initial capital cost is $97 million.

Eldorado restarted its Kisladag mine on March 6, 2008, following a temporary shutdown related to regulatory issues. The mine is expected to produce about 190,000 oz of gold across 10 months of operation during 2008.

Eldorado began construction at Efemçukuru in early June 2008. Access to the underground mine will be by adit and ramp from portals at each end of the deposit. A trackless operation will extract ore by mechanized cut-and-fill and long-hole stoping methods, with consolidated backfill. Crushed ore will be transferred from underground via a conveyor to the process plant on surface. Ore will be processed at 1,100 mt/d through a SAG/ball mill grinding circuit followed by gravity and flotation, and concentrate will be shipped to Kisladag for further processing and recovery of gold. Production is expected to average 112,000 oz/y. Efemçukuru’s proven and probable reserves total 1.22 million oz.

Chinese Companies Acquire Yukon Zinc: On June 26, 2008, Yukon Zinc announced that all shareholder and regulatory approvals had been received regarding acquisition of Yukon Zinc by two Chinese companies, Jinduicheng Molybdenum Group and Northwest Nonferrous International Investment Co. The all cash transaction at C$0.22 per Yukon Zinc share valued Yukon Zinc at about $122.3 million, plus additional sums to be paid for outstanding options and warrants.

Yukon Zinc is focused on development of its silver-rich Wolverine zinc project in southeast Yukon and its large exploration land holdings in the Finlayson and Rancheria districts. A feasibility study completed for the Wolverine project by Wardrop Engineering in January 2007 indicated favorable project economics. The project has all of its main development permits. Average annual production from an underground mine is projected at 53,450 mt/y of zinc, 4.9 million oz/y of silver, 4,680 mt/y of copper, 5,860 mt/y of lead, and 20,200 oz/y of gold in separate zinc, copper and lead concentrates.

Jinduicheng is the largest producer of molybdenum and associated products in Asia and reportedly the third largest in the world. It is publicly-traded on the Shanghai Stock Exchange after a recent $1.3 billion IPO. Jinduicheng’s operations are concentrated in Shaanxi province, China. Northwest Nonferrous represents the Shaanxi state geological bureau and in terms of revenue and technical capacity is one of the top five exploration and mining bureaus in China.