Mon Aug 21, 2006 9:10 AM BST148

Xstrata not looking at bid for Anglo


LONDON, Aug 21 (Reuters) - Swiss-based Xstrata was not looking at taking part in a possible bid for miner Anglo American, a source familiar with the situation said on Monday, denying a newspaper report.

"Xstrata have just bought Falconbridge and are focused on integrating that so they would not be thinking of biting something off as big as that (Anglo)," the source told Reuters.

The Observer newspaper said on Sunday, citing unidentified sources in London, that Xstrata, Brazil's CVRD and Rio Tinto were looking at a possible bid to break up Anglo American and had hired financial advisers.

The source said Xstrata had not hired financial advisers.

Xstrata declined to comment on the report.

TradeSignals Copper Futures Morning Commentary

Aug 21, 2006 (TradeSignals via COMTEX) -- Copper:


Copper trade on ACCESS is showing higher prices in recent activity reversing the weaker tone seen during the prior session. Trend indicators are indicating a bearish market and the overall strength of the trend is strong, as indicated by the ADX. Momentum readings are also in bearish territory.


TREND INDICATORS:

Simple Moving Average (10-Day): Recent activity this morning has seen prices trade below this moving average. Also, the slope of the moving average is in a downward slope from the previous session indicating further weakness. As a result the 10-Day simple moving average has a strong bearish bias.

Simple Moving Average (25-Day): Recent activity this morning has seen prices trade below this moving average. Also, the slope of the moving average is in a downward slope from the previous session indicating further weakness. As a result the 25-Day simple moving average has a strong bearish bias.

Simple Moving Average (50-Day): Recent activity this morning has seen prices cross above this moving average. However, despite prices trading above the moving average line, the moving average is in a downward slope from the previous session. If prices trade below the moving average then the trend will be clearly established as up. However, this strength in the price will need to be watched. As a result the 50-Day simple moving average has a weak bearish bias.


ADX: The Average Directional Change (ADX) indicates the strength of a markets underlying trend. A rising ADX is interpreted as building trend strength, while a falling ADX indicates weakness in the underlying trend and the potential of a market reversal. On this market, the 14-Day ADX is rising, while the long term trend, based on a 50-Day moving average, is down. As the ADX is rising this indicates that the current trend is strong and should remain intact. Look for the current trend to continue.

MOMENTUM INDICATORS: MACD: The MACD is in bearish territory.

RSI: The 14-Day RSI is in neutral territory. (RSI is at 46.08). This indicator issues bullish signals when the RSI line dips below the oversold zone (currently set at 20.00); a bearish signal is generated when the RSI rises into the overbought zone (currently set at 80.00). Nevertheless with the RSI at 46.08 the market is somewhat oversold. However, this by itself isn't a strong enough indication to signal a trade. Look for additional evidence of strength from this indicator before getting too bullish here.

VOLATILITY INDICATORS:

Bollinger Bands (20-Day Average +/-1 Standard Deviation): As prices are closer to the bottom band than the top band, the Bollinger Bands are indicating oversold prices. Despite this oversold condition the market may become more oversold before turning higher. As a result, the market will look for additional strength in prices before turning bullish on this indicator.

RESISTANCE AND SUPPORT LEVELS:

3.7700 - Highest High in last 50-Days 3.7435 - Highest High in last 10-Days 3.7038 - 20-Day Simple Moving Average Plus 2 Standard Deviations 3.6156 - 20-Day Simple Moving Average Plus 1 Standard Deviation 3.5350 - 10-Day Simple Moving Average 3.5218 - 25-Day Simple Moving Average 3.4645 - High 3.4390 - 20-Day Simple Moving Average Minus 1 Standard Deviation 3.4345 - Last Price 3.4242 - 50-Day Simple Moving Average 3.4207 - 3-Day Simple Moving Average 3.3510 - Low 3.3508 - 20-Day Simple Moving Average Minus 2 Standard Deviations 3.3342 - 100-Day Simple Moving Average 3.2900 - Lowest Low in last 10-Days 2.9700 - Lowest Low in last 50-Days 2.7209 - 200-Day Simple Moving Average

Marianne Barriaux
Tuesday August 22, 2006
The Guardian

Why this rich seam should last - Booming prices and profits have led to a flurry of takeovers



The mining industry has never had it so good. Soaring commodity prices - nickel hit a record of $29,200 a tonne last week - driven by a shortage of supply and increasing demand have led to bumper profits for big and small mining groups.

The huge amount of cash generated has led to increasingly audacious mergers and acquisitions, as illustrated by Brazil's CVRD, one of the largest miners in the world, which recently launched a C$19.4bn (9.2bn) all-cash bid for the Canadian nickel producer Inco.

Xstrata has also secured its long-awaited acquisition of the Canadian miner Falconbridge for 9bn, after battling it out with Inco, Phelps Dodge and Teck Cominco for the best part of a year. Other companies are now regarded as potential targets. Even Anglo American, the world's third biggest miner, is said to be a target once it demerges its non-core paper and packaging division. In the current cycle of high commodity prices, it seems anything is possible.

Analysts acknowledge that these acquisitions are value enhancing. The integration of Falconbridge, a copper and nickel producer, will catapult Xstrata into the lucrative nickel market. Antofagasta's 211m bid for Equatorial Mining will give it control of the El Tesoro copper mine in Chile, increasing its presence in the global copper market.

But with worldwide demand surpassing worldwide supply, one area of concern remains. Existing operations have been running at full capacity for the past three years, and there is little excess to replace production shortfalls. More importantly, there is a shortage of major new mines coming on stream. The big groups are getting rid of their plentiful cash by returning it to shareholders - Anglo American delighted investors by announcing it would hand back $5bn (2.6bn) to shareholders after bumper results in the first half of the year and BHP Billiton is expected to announce a second share buyback of at least $2bn on Wednesday - but commodity users may well ask why they are not investing more of their excess cash in new projects to address future demand. Admittedly, BHP Billiton, the world's biggest miner, is developing $10bn worth of new projects. But it has forecast it will spend only $600m this year on exploration, and just $160m of that will be spent on mining. In fact, it is much cheaper and easier for a company to take over another valuable operator rather than invest in the exploration and development of a mine, which takes 10 years on average from the first discovery to the first tonne of metal produced.

"Growing organically is getting harder and harder," says Simon Toyne, mining analyst at Numis Securities. "There is a shortage of skilled workers, some of the equipment required, like trucks, can take up to three years to be delivered, and costs and lead times for everything from dynamite to tyres continue to rise."

BHP Billiton, for example, said that costs of the development of the Ravensthorpe nickel mine in Australia had soared 30% to $1.34bn and added it was further reviewing the budget and schedule of the mine.


Digging deeper

Moreover, exploration itself is getting harder. Access to prospective land is often restricted by environmental and community concerns, and miners are talking about the necessity of digging deeper to get at scarce resources - a process that would cost even more.

More importantly, though, miners have learned their lesson. During the 1980s, the mining industry was hit by a copper price boom that led to companies rushing into opening new mines. This in turn led to excessive amounts of copper on the market, a collapse in prices, and many companies were left with unprofitable projects.

In this context, growing acquisitively is more attractive for the bigger mining groups than investing in mines that could prove costly should prices fall. Junior companies are increasingly relied on for exploration, which the majors or mid-tier miners will take over or form a joint venture with. In 2005, according to accountants PricewaterhouseCoopers, the exploration budgets of junior companies accounted for 63% of total growth in exploration expenditure.

Analysts say consolidation is set to continue, but ultimately the level of mergers and acquisitions depends on the level of commodity prices. These in turn hinge on the global economy and demand. China, which accounts for the bulk of new demand, is growing at a rate of about 10% a year, but it could slow down. There are signs that the US economy is running out of steam.

Jason Burkitt, director of PwC's global mining practice, says that companies looking at potential acquisitions need to form their own long-term view rather than look at current prices. "Hedge funds and commodity traders have entered the fray, and any rise or fall is more pronounced. Also, the commodity prices are in US dollars, and the dollar has moved quite a lot."

Charles Kernot, mining analyst at Seymour Pierce, says exploration started increasing significantly only in 2002, which means that new mines will be coming into production around 2012. When that happens, he says, prices will fall. But others, like Mr Toyne, believe demand, and therefore prices, could remain strong for a while. "China continues to grow. Even if GDP growth slows to 7% or 8% per year, annual incremental commodity demand is still substantial relative to the global market. And by the time it comes to the end of its industrialisation phase, India could take over, with GDP/capita just entering the commodity-intensive zone."

He adds that even if copper prices halve, for example, they will still be higher than they were two years ago.

When prices fall, consolidation in the industry will slow down. Those small companies that started developing projects off the back of high commodity prices will be snapped up by mid-tier groups. As for the bigger companies, a slowdown in the cycle will not necessarily mean that costs will drop accordingly, which would lead to a margin squeeze, and an erosion in confidence to make further acquisitions.

Ultimately, though, analysts agree that investors need not worry about their mining stocks in the short and medium term. As PwC says in its annual mining review: "Let the good times roll."


Explainer: Labour unrest

High commodity prices have led to workers seeking a share of the mining companies' profits. As a result, the sector has recently been plagued by industrial unrest with miners striking for higher wages and bonuses.

Workers at the world's largest copper mine, in Escondida, Chile, which is majority-owned by BHP Billiton, have been on strike for two weeks. They are seeking a pay rise of 10 percentage points above inflation and a 15,355 bonus but BHP's latest improved offer was rejected on Sunday night. BHP closed the mine late last week after miners blocked the road to the site but yesterday the company said the mine, which accounts for 8% of world output, was running at about 50% of capacity. Copper is used in the electricity, electronics and construction sectors.

Inco is having to weather a strike at its Voisey's Bay mine in Labrador, Canada, which accounts for about 4% of global nickel output. Workers there are demanding wage parity with other mine workers at Inco mines. Nickel is used mainly in making stainless steel.

Two of Grupo Mexico's mines, Cananea and La Caridad, have been shut by strikes this year, causing mineral production to shrink 0.6% in the second quarter of the year. The company resorted to firing its workers at La Caridad to end the four-month strike, and has said it is re-hiring employees and repairing the damage.

Kumba Resources, the biggest iron-ore miner in South Africa, saw a strike at some of its subsidiaries end earlier this month after it offered an average 8.5% pay rise, as well as a 10% rise in the housing allowance. Iron ore is used for making steel.

Copper Falls; BHP May Replace Striking Chilean Mine Workers

By Katy Watson

Aug. 22 (Bloomberg) -- Copper prices fell as supply concerns eased after BHP Billiton Ltd. said it plans to hire workers to replace striking union members at Chile's Escondida, the world's biggest source of the metal.

Prices have more than doubled in the past year, partly because of supply disruptions. The mine is running at 40 percent to 50 percent of capacity, BHP spokeswoman Alejandra Wood said. Almost 1,900 workers rejected BHP's latest wage offer. Escondida accounted for 8.5 percent of global mining output last year.

``It's bearish for prices if they are going to stump up production,'' said Sean Corrigan, chief investment strategist at Lausanne, Switzerland-based Diapason Commodities Management SA, which overseas about $5 billion in assets.

Copper futures for December delivery fell 1.15 cents, or 0.3 percent, to $3.478 a pound on the Comex division of the New York Mercantile Exchange. A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.

Copper for delivery in three months dropped $30, or 0.4 percent, to $7,620 a metric ton at 6:30 p.m. on the London Metal Exchange. Before today, prices had jumped 75 percent this year.

BHP also invited workers to agree to individual contracts. Chilean law allows strikers to negotiate separately to return to work 15 days after a strike begins. The walkout began Aug. 7.

Escondida's workers are asking for a greater slice of record profit from Melbourne-based BHP Billiton. The company will say tomorrow net income for the six months ended June 30 jumped to $6.34 billion, according to the median estimate of five analysts surveyed by Bloomberg News.


Codelco

Chile's state-owned Codelco, the world's biggest producer of the metal, will begin labor talks later this year. Analysts including John Meyer at Numis Securities in London said the Escondida strike may trigger protests.

``Mine workers are closely watching the potential for settlement at Escondida and may seek to achieve similar improvements in salary and bonus,'' Meyer said. ``BHP may be reluctant to yield to union demands on base salaries because of the knock-on effect within the industry.''

Copper inventories monitored by the LME have climbed 26 percent this month, helping to weigh down prices.

``We've seen quite a healthy build during August,'' said Nick Moore, a London-based analyst at ABN Amro Holding NV.


Demand Slowdown

Global economic growth may slow, curbing metals demand, said Stephen Briggs, an analyst at Societe Generale, one of the 11 companies trading on the floor of the LME. The metal is used in wires and pipes.

There is a ``sense growth is set to slow significantly'' in the next 12 months, he said.

German investor confidence plunged to a five-year low in August on concern rising interest rates and taxes will hamper growth in Europe's largest economy.

The ZEW Center for European Economic Research index of institutional and analyst expectations dropped to minus 5.6, the lowest since June 2001, from 15.1 in July, the institute said in Mannheim today.

The Times August 23, 2006

Business in Brief - Escondida miners reduce demands


The striking union at Chiles Escondida, the worlds biggest copper mine, has agreed to reduce its wage and bonus demands on the sixteenth day of a strike that has rattled copper markets. The union trimmed its demand for a rise to 8 per cent from 10 per cent and its demand for a special copper-price-linked bonus to $19,000 (10,000) per worker, from $30,000. The mine is owned by BHP Billiton and Rio Tinto, the worlds biggest mining groups.

Copper Charts Look Shaky - Australia's CBA

Wednesday, August 23, 2006 10:28:28 PM ET
Dow Jones Newswires



LME copper chart patterns starting to look weak, says Australia's CBA bank: "Virtually any sort of dip here will confirm a slow downtrend is in place." LME 3-month $7,560/ton, down $60 on London PM, extending modest overnight losses on slight easing of tensions over Escondida mine strike. Loss of $7,500 level may spur downward spiral. However, even if Escondida strike reaches reasonably swift conclusion, "there's potential for strikes at other mines, so the issue is not yet dead." (JAD)

Copper Falls as U.S. Housing Data Signals Metal Demand May Slow

By Claudia Carpenter and Millie Munshi

Aug. 23 (Bloomberg) -- Copper prices fell in New York on signs that U.S. demand for the metal used in construction, plumbing and wires may slow.

Copper has dropped 14 percent from a record $4.04 a pound on May 11, even amid supply disruptions in Chile. Sales of previously owned U.S. homes fell in July to the lowest in more than two years, and the supply of unsold homes climbed to a record. Builders are the biggest users of copper in the U.S.

``There's not a great demand for copper now,'' said John Hanemann, president of Hanemann Trading Co. in New York.

Copper futures for December delivery fell 1.05 cents, or 0.3 percent, to $3.4675 a pound on the Comex division of the New York Mercantile Exchange. Prices dropped as much as 1.7 percent and gained as much as 1.4 percent during the session. Prices have more than doubled in the past year.

Copper for delivery in three months was unchanged at to $7,620 a metric ton on the London Metal Exchange. Inventories tracked by the LME fell 125 tons to 122,650 tons today, the second straight decline.

Copper pared losses in New York after striking Chilean miners at Escondida, the world's largest source of the metal, said they are ready to stay off the job for as long as 60 days. Prices dropped yesterday on speculation the strike may end soon.

BHP Billiton Ltd., which runs Escondida, said yesterday it would start to look for replacement workers. The strike started Aug. 7.

New Home Sales

The focus may shift to new U.S. home sales. A report from the Commerce Department tomorrow will probably show new-home sales declined to an annual rate of 1.1 million in July from 1.131 million in June, according to the median estimate of economists in a Bloomberg survey.

Builders account for about 40 percent of U.S. copper demand. An average single-family home contains about 400 pounds of the metal, according to the Copper Development Association.

Nickel for delivery in three months fell $950, or 3.2 percent, to $29,000 a ton in London, snapping a three-session surge. The metal yesterday reached to the highest in at least 19 years and the LME had imposed trading restrictions because of a shortage of the metal used in stainless steel.

``Consumers are holding back from doing longer-term business,'' said Herwig Schmidt, a trader at Triland Metals Ltd. in London ``It's difficult to justify these prices.''

Copper Declines After U.S. Housing Data Point to Slower Demand

By Feiwen Rong

Aug. 24 (Bloomberg) -- Copper in Shanghai fell on concern a drop in U.S. home sales will further slow demand for the metal used in plumbing, construction and wire in the world's largest economy.

Sales of previously owned U.S. homes dropped in July to the lowest in more than two years, and the supply of unsold homes climbed to a record, the National Association of Realtors said yesterday. Builders are the biggest user of copper in the U.S, the largest market for the metal after China.

There's ``pretty soft data from the U.S. housing numbers,'' Mark Pervan, head of research at Daiwa Securities SMBC, said from Melbourne. The housing report offset the impact of the strike at the world's largest copper mine in Chile, he said.

Copper for October delivery on the Shanghai Futures Exchange fell as much as 440 yuan, or 0.7 percent, to 67,570 yuan ($8,475) a ton. The contract traded closed the morning session at 67,770 yuan in Shanghai.

Workers at the Escondida mine, who have been on strike since Aug. 7, are ready to hold out for 30 to 60 days after lowering their wage and bonus demands, Luis Troncoso Munoz, president of the Escondida mine workers union, said yesterday.

The mine, run by Melbourne-based BHP Billiton, the world's largest mining company, accounted for 8.5 percent of all mined copper worldwide last year.

Copper for delivery in three months dropped as much as $20, or 0.3 percent, to $7,590 a metric ton on the London Metal Exchange, and traded at $7,600 at 12:35 p.m. Singapore time.

Copper Falls as Data on U.S. Economy Signals Demand May Slow

By Millie Munshi and Katy Watson

Aug. 24 (Bloomberg) -- Copper prices in New York fell the most in a week on signs demand may slow after new-home sales in the U.S. declined more than economists forecast in July and a measure of orders for durable goods dropped.

Copper has dropped 15 percent from $4.04 a pound, the highest ever, on May 11. The number of unsold houses climbed to a record, deepening a slump in an industry that fueled economic expansion for five years, Commerce Department data showed. Declines in demand for commercial aircraft and motor vehicles resulted in a 2.4 percent drop in total durable-goods orders in July.

``You've got this macro situation which is deteriorating and demand that is slowing,'' said David Threlkeld, president of Resolved Inc., a copper trading company in Scottsdale, Arizona. ``I think copper is going to collapse.''

Copper futures for December delivery fell 4.85 cents, or 1.4 percent, to $3.419 a pound on the Comex division of the New York Mercantile Exchange, the biggest percentage decline since Aug. 16. Prices still have doubled in the past year. Builders are the biggest users of copper in the U.S.

Copper for delivery in three months on the London Metal Exchange declined $180, or 2.4 percent, to $7,430 a metric ton on the London Metal Exchange.

Demand lagged behind supply in the first half, creating a surplus of 81,000 tons, the World Bureau of Metal Statistics said today. Consumption in China, the world's largest consumer of copper, fell 8.4 percent.

Escondida

Copper earlier climbed as much as 1.2 percent in London after Chilean workers at BHP Billiton Ltd.'s Escondida mine, the world's biggest source of the metal, said they are prepared to extend a strike, further squeezing supplies. Union members walked off the job on Aug. 7.

``I think the market has written these events into the price,'' said William Adams, an analyst at Basemetals.com in Saffron Walden, England. ``People are thinking this strike is not going to go on for too much longer.''

Nickel prices gained $150, or 0.5 percent, to $28,900 a ton in London after earlier climbing as much as 3.5 percent. Prices have more than doubled this year.

Inventories monitored by the LME dropped 240 tons, or 3.6 percent, to 6,426 tons today.

Prices on Aug. 22 reached $29,950, the highest in at least 19 years. Stockpiles of the metal used to make stainless steel have tumbled 82 percent this year, and the prospect of shortages prompted the LME to impose trading restrictions.

``The nickel market is likely to remain tight for some time, and critically low stocks could prompt further price strength and clearly more volatility,'' Robin Bhar, an analyst in London at UBS AG, said in a report.

Prices for immediate delivery exceeded benchmark three-month prices by as much as $5,250 a ton as of Aug. 22, tripling from Aug. 1 and signaling a supply squeeze.

Output has declined this year. A strike at Inco Ltd.'s Voisey's Bay mine in Newfoundland has curbed production since July 28. BHP said production at its Yabulu mine in Australia dropped by a third in the second quarter.

The shortfall in nickel will be 30,000 tons this year, according to Toronto-based Inco, the world's second-largest producer. Stainless-steel output will rise 8.6 percent to 26.4 million tons, according to the International Stainless Steel Forum.

Times Online August 25, 2006

Yunnan Copper, Chinas third-largest producer of the metal, aims to increase its mining output at home and overseas to 300,000 tonnes of copper in 2010, from about 130,000 tonnes at present.

Copper Declines After BHP Resumes Cathode Output in Chile

By Feiwen Rong

Aug. 25 (Bloomberg) -- Copper fell in Shanghai after BHP Billiton, the world's biggest mining company, resumed production of copper cathodes at the company's Escondida mine in Chile, where 2,052 workers went on strike Aug. 7.

Production at Escondida, the world's largest copper mine, remains at 50 percent of normal and the cathode plant, which converts the ore to a metal for shipment, is running at about 10 percent, company spokeswoman Alejandra Wood said yesterday in a phone interview from Santiago.

``The focus remains on Escondida, if BHP can bring back some of the production, that's bearish for the copper prices,'' Wang Zheng, metal analyst at Dalu Futures Co. in a phone interview from Shanghai.

Copper for October delivery on the Shanghai Futures Exchange fell as much as 650 yuan, or 1 percent, to 67,150 yuan ($8,421) a ton. The contract traded at 67,570 yuan a ton at 2:24 p.m. Shanghai time.

Negotiations between Melbourne-based BHP and its striking workers remain frozen, erasing about $16 million a day of profit for owners that include London-based Rio Tinto Group and Tokyo- based Mitsubishi Corp. Escondida produced 8.5 percent of the world's mined copper last year.

Copper for cash delivery in Changjiang, Shanghai's biggest spot market, fell as much as 1 percent to 68,190 yuan a ton. Chinese users have to pay 17 percent value-added tax, 2 percent import tax, premiums and freight charges for imported copper.

Marianne Barriaux
Friday August 25, 2006
The Guardian

Miners were the heaviest fallers among leading shares. BHP Billiton fell 25p to 989p as concerns continued over the strike at its Escondida copper mine in Chile. The shares were also hit by news that Marks & Spencer had replaced BHP on the focus list of investment bank ING.

Other miners were down as concerns over a US slowdown placed the future of the commodities "super cycle" in doubt. Lonmin was down 82p to 27.40, and Rio Tinto fell 89p to 26.40.

William Adams, of the news and research site BaseMetals.com, said: "With the US running a trade deficit, a slowdown in the US means the US will import less, especially from Asia and China. In turn, if these countries are not able to export as much, then they will not have to import so much raw material, and before you know it, demand for commodities suffers."

Dow Jones Newswires - Merrill Keeps Sell On Jiangxi Copper


STOCK CALL: Merrill Lynch keeps Sell on Jiangxi Copper on lower copper price outlook, pressures on margins for smelters' short mine concentrate.

JXC posted strong 1H net profit of CNY0.72/share this week, +97% on-year; but 10% below Merrill's forecast due to 14% lower gold output, higher tax rate.

Merrill stays concerned about sustainability of current copper prices of US$3.44/lb, particularly once strike at world's largest copper mine Escondida is resolved.

Dow Jones Newswires - 25 Aug 2006

Imperial Set To Drill Giant Copper Property


VANCOUVER, BRITISH COLUMBIA - Imperial Metals Corporation announces that drilling will begin shortly on a 1,500 metre diamond drillhole at its wholly owned Giant Copper property.


The AM Zone, a breccia pipe with a horizontal dimension of 300 metres by 200 metres, is the most explored zone on the Giant Copper property. The breccia pipe has been explored since the 1930's by drifting, raising and diamond drilling over a vertical interval of 460 metres, and remains open for expansion to depth. The planned 1,500 metre drillhole will test the depth extent of this zone, with emphasis on the extension of the higher grade mineralization which is focused on the northern nose of the breccia pipe.

Drilling in 1995 and 1996 by Imperial continued to expand the known mineralization in both the AM Zone and Invermay Zone. AM Zone hole GSC95-5 located in the southern part of the breccia intercepted 0.64 metres grading 8.12 g/t gold and 7.0 g/t silver, and 26 metres grading 0.417% copper, 0.313 g/t gold, 16.0 g/t silver and 0.012% molybdenum.
Invermay Zone hole GCS96-4 intercepted 3.0 metres grading 0.658% copper, 9.859 g/t gold and 26.7 g/t silver, not included in a longer interval of 92.4 metres grading 0.198% copper, 0.23 g/t gold and 7.8 g/t silver. Both of these holes are located outside the north nose of the AM breccia, which was the focus of historic exploration.


The 2,880 hectare property, located 220 kilometres east of Vancouver near Hope, hosts a copper-gold-silver-molybdenum system with an associated breccia pipe and base metal veins. All of the showings appear to be related to a central hydrothermal system driven by a multiphase porphyritic intrusive. Numerous widespread showings attest to the strength of the system, and all of the showings appear to be related to the central hydrothermal system.

Recent world wide exploration for high grade deposits at the root of porphyry systems and the buoyant commodity market encourages deep exploration at Giant Copper.

Steve Robertson, P.Geo. is the Qualified Person as defined by National Instrument 43-101 for the exploration program. The Company has filed a 43-101 Technical Report for the Giant Copper property which can be viewed on the Sedar website www.sedar.com or on Imperial's website www.imperialmetals.com.

Imperial is a mine development and operating company based in Vancouver, British Columbia. The Company's key properties are the Mount Polley open pit copper/gold producing mine (100% interest) in central British Columbia, the Huckleberry open pit copper/molybdenum producing mine (50% interest) in northern British Columbia, and the development stage Sterling gold mine (100% interest) in southwest Nevada.

Dow Jones Newswires - Monday, August 28, 2006

Copper Fundamentals In Hands Of Disruptions


Copper market in 2007 to be in similar position as in past 2 years - looks as though market could move into oversupply particularly if demand weak, but surplus remains dependent on delivery of projects on schedule, and less supply disruption than has been case this year, says Macquarie Research. Base case is for 190,000-ton surplus in refined copper in 2007, then if demand bounces back in 2008, refined copper market could move into deficit in first half of 2008; "this could mean some weakness next year, but a rebound in prices again in 1H08."

Mining Weekly - 28 August 2006

BHP to increase production at Escondida copper mine


BHP Billiton will seek to increase production in Chile at its Escondida copper mine, the biggest in the world, as more than 2 000 workers extend a strike that's cut output in half into a fourth week.

The mine may try to hire more replacement workers this week, adding to the 50 already employed, Alejandra Wood, a spokeswoman for the Melbourne-based company said late yesterday from Santiago. Neither BHP nor the labor union have plans to restart talks, which have been frozen since the union rejected the company's August 21 offer.

The goal is to produce as much as possible, given the situation, Wood said. Production is now at 50% of pre-strike levels. Output at the cathode plant, where copper ore is refined into a metallic form, is at 15%, Wood said.

Workers at the mine, which accounted for about 8,5% of the world's mined copper last year, began striking August 7 in pursuit of increased pay and benefits. They are seeking a bigger share of the company's profits after copper prices surged to a record this year.

BHP, which owns 57,5% of the mine, reported a 63% jump in full-year profit to a record $10,45-billion last week. Escondida's owners, which include London-based Rio Tinto Group and Tokyo-based Mitsubishi Corp., have said the strike is erasing about $16-million a day in profit.

Copper prices in Shanghai rose for the first day in four on concern rival copper mines may also face strikes. Labor talks are scheduled later this year at Chile's state-owned Codelco, the world's biggest producer.

Copper for October delivery on the Shanghai Futures Exchange gained as much as 570 yuan, or 0,8%, to 68 050 yuan ($8 537) a metric ton. The contract traded at 67 910 yuan a ton at 1:59 p.m. in Shanghai.

Copper supply in the medium term remains tight, Yu Mengguo, metal analyst at Jinpeng Futures Co., said by phone from Beijing. Stories of labor unrest in such a market make people more nervous about supply.

The Escondida union's lawyers are reviewing company plans to use subcontractors in new areas of the mine to increase production and may file a claim against the practice, union spokesman Pedro Marin said in a phone interview from Antofagasta, 1 200 km north of Santiago.

BHP's Wood said Chile's labor inspector in Antofagasta has approved of how the company is using subcontractors at the mine.

(AP Online via COMTEX) - SANTIAGO, Chile, Aug 28, 2006

Striking Miners Seek Share of Profits


The world's largest mining company has had a very good year, something not lost on its miners in Chile. Some 2,000 miners at BHP Billiton's Escondida mine in Chile have been striking since early August, demanding a larger slice of what one worker called "the cake" being enjoyed by the Anglo-Australian company in the form of record profits from soaring world metal prices.

The strike has roiled world copper markets, often setting off buying and selling waves. Copper from Escondida represents about 8 percent of world production, and the strike has brought about half that production to a halt - stoking fears of a shortage in an already tight market.

The strike is being closely followed across Chile, the world's largest copper producer, where the government is under pressure to spend more of its copper windfall and unions are waiting to see what kind of concessions the Escondida strikers gain.

But executives of BHP Billiton Ltd and other mining companies are wary of being locked into contracts that will mean significantly higher labor costs just as metal prices may be peaking.

There's no doubt, however, these are bonanza days for BHP Billiton. The Melbourne-based company reported it earned $10.45 billion for the year through June, an Australian corporate profit record.

When the Escondida miners' union last negotiated a contract with BHP Billiton three years ago, copper sold for about 80 cents a pound. Mines were mothballed. The industry was near the bottom of a bust cycle.

Since then, demand from fast-growing economies such as China and India have helped drive the price of copper to about $3.50 today. Strong demand, supply constraints and a broader rally in the commodities market pushed the price of copper to an all-time high of $4.08 a pound in May.

This time around, the workers want their share of the boom times. About 800 workers have been camped in tents in a sports center the company owns in the port city of Antofagasta since Aug. 7, having refused the company's contract offers.

The copper mine cuts a deep bowl into Chile's Atacama Desert, bordered by the Andes on the east and the Pacific Ocean on the west, outside of Antofagasta, 870 miles north of Santiago.

Oscar Moreno, 44, has worked 17 years at Escondida, where he drives the heavy-duty trucks and tractors used in mining operations. He lives with his wife and two of their children, in a house partly paid for with a loan from the company, in Antofagasta, about 125 miles away.

Moreno said he and the other workers generally work four 12-hour days, sleeping and eating at the mine, then have four days at home. He earns about $1,490 a month, plus quarterly bonuses.

"I feel my situation is good, compared to the general situation of workers in Chile," he said in a telephone interview from the strike camp. "I cannot complain, really, and I do not complain about my situation. My complaint is about the money that the company makes. We are asking for just one percent of the 'cake' it gets."

In reporting its annual profit - up 63 percent from the prior year - BHP Billiton noted the Escondida mine produced record volumes for the company.

But costs are on the rise, too. Labor is the company's third-largest cost, behind energy and mining expenses, according to the company's latest annual report.

BHP has offered workers a four-year contract that includes a 4 percent wage raise plus bonuses, up from an initial 3 percent offer. The workers want 8 percent plus bonuses, after initially asking for 13 percent.

"Our work force at Escondida is some of the highest-paid in Chile, and this is essentially the most attractive package that has been offered to the work force in that region," said Chief Executive Chip Goodyear, in a conference call.

Although the mine's name means "hidden" in Spanish, Escondida is now the center of attention for copper traders in New York and London. The slightest news or speculation will set off a flurry of buying or selling in the New York Mercantile Exchange, where millions of dollars in copper contracts change hands daily.

"Everyone is focused on Escondida," copper trader John Hanemann said.

The result of the Escondida walkout will have repercussions throughout the industry, traders and analysts say.

Contract talks at a number of copper mines - mainly in Chile - are due to expire in coming months, including Chile's state-owned Chuquicamate, the world's largest open pit copper mine. If workers at all six of the mines with expiring labor contracts opt to strike, 18 percent of world copper supply could be at risk, Merrill Lynch commodities strategist Francisco Blanch said in a recent report.

Chile represented about 36 percent of world copper production in 2005, well ahead of second-placed producer the United States, with about 8 percent of world output, according to the U.S. Geological Survey.

The country's leftist government has not intervened in the strike, although the impact on the economy is strong. Escondida paid $1 billion in taxes during the first half of this year alone, BHP Billiton's chief executive in Chile, Diego Hernandez, told the daily El Mercurio.

Other Chilean labor groups are also calling for some of the copper windfall, including powerful government-employee organizations representing school teachers and health workers.

And voices are emerging from inside President Michelle Bachelet's center-left coalition to increase government spending, especially in social sectors. The Christian Democratic Party, the largest in the four-party coalition, asked Bachelet for a double-digit increase in the 2007 budget now being drafted. Bachelet said the budget increase will be below 10 percent.

The Escondida miners, meanwhile, say they only want BHP Billiton to share a little of the bounty.

Carlos Munoz, a 45-year-old metallurgic plant operator, said the $1,080 he earns each month covers his family's basic expenses but not the needs of his 10-year-old daughter, Camila, who suffers from a chronic medical condition and needs an ear operation.

"Not even the bonuses are enough for me to give her everything she needs," he said. Bottom line, he said, "we live very tight."

Copper Falls as Rising Inventories May Signal Demand Is Slowing

By Millie Munshi

Aug. 28 (Bloomberg) -- Copper futures in New York fell as rising stockpiles fueled speculation that demand may be slowing.

Inventories monitored on the Comex division of the New York Mercantile Exchange jumped 52 percent last week, and a U.S. government report showed a decline in new-home sales. Builders are the biggest users of copper in the U.S.

``There were some extra stocks coming into the Comex warehouse,'' said John Hanemann, president of Hanemann Trading Co. in New York. ``There just doesn't seem to be a lot of demand.''

Copper futures for December delivery fell 0.65 cent, or 0.2 percent, to $3.425 a pound at 9:21 a.m. on the Comex division of the New York Mercantile Exchange. Copper, after more than doubling in the past year, has declined 15 percent since reaching a record $4.04 on May 11.

The London Metal Exchange is closed today for a national holiday.

Copper in China Little Changed as Traders Await Funds' Return

By Chia-Peck Wong


Aug. 29 (Bloomberg) -- Copper prices in Shanghai were little changed as traders sought new trading leads while waiting for the return of hedge and investment funds to the market.

Prices of copper have surged 63 percent this year partly due to buying from such funds, which are seeking better returns than those offered by the equity and bond markets. Traders such as Wang Zheng said these funds have been less active in trading commodities this quarter.

``The direction for copper isn't clear and trading activity in Shanghai has fallen,'' Wang, a trader and analyst at Shanghai Dalu Futures Co., said by phone today. ``We're hoping that the funds will return soon or some fresh news will stimulate trading.''

Copper for October delivery fell as much as 340 yuan, or 0.5 percent, to 67,540 yuan ($8,478) a metric ton on the Shanghai Futures Exchange. The contract, which earlier rose as much as 170 yuan, or 0.3 percent, traded at 67,850 yuan by the midday break at 11:30 a.m. local time.

News that union members at BHP Billiton's Escondida mine in Chile will begin demonstrations this week unless the company agrees to restart talks on wages isn't having an impact on prices, said Wang.

``Everyone's tired of the Escondida news,'' he said.

The strike at Escondida, the world's biggest copper mine, has entered its fourth week. More than 2,000 workers went on strike Aug. 7, and negotiations have been frozen since the union rejected BHP's latest offer on Aug. 21.

BHP, Rio Tinto

Copper for cash delivery in Changjiang, Shanghai's biggest spot market, rose as much as 2.4 percent to 68,600 yuan a ton. Chinese users have to pay 17 percent value-added tax, 2 percent import tax, premiums and freight charges for imported copper.

Metal for December delivery fell 0.05 cent to $3.450 a pound on the Comex division of the New York Mercantile Exchange at 11:45 a.m. Shanghai time.

Copper for three-month delivery gained $26, or 0.3 percent, to $7,586 a metric ton on the London Metal Exchange as of 11:41 a.m. Shanghai time. The metal, used in wiring and plumbing, has more than doubled in the past year. It rose to a record $8,800 on May 11.

BHP Billiton, the world's biggest mining company, owns 57.5 percent of Escondida. Rio Tinto owns 30 percent, while a group led by Mitsubishi Corp. owns 10 percent. The International Finance Corp. owns the rest. Mine management said Aug. 16 the dispute was costing the $16 million in lost profit a day.

Aluminum prices in Shanghai rose because more traders preferred to trade the lightweight metal after inventories declined, Li Rong, a metal analyst at Great Wall Futures Corp., said by phone from Shanghai.

``Aluminum's demand and supply factors seem to be better, especially after stockpiles fell so drastically last week,'' he said.

Aluminum stockpiles in Shanghai Futures Exchange warehouses plunged to their lowest level in 15 months as manufacturers used more of the metal instead of pricier copper, and exports increased.

Copper in Shanghai Falls on Concern Demand May Slow in U.S.

By Chia-Peck Wong

Aug. 30 (Bloomberg) -- Copper in Shanghai fell after U.S. consumer confidence dropped in August, increasing concern demand may be curbed in the world's second-biggest user of the metal.

The Conference Board's index of confidence fell to its lowest in nine months, as higher fuel prices raised inflation concern and the housing market slowed. Builders are the biggest users of copper, which has more than doubled in price during the past year as demand surged for wire and pipe.

``The consumer confidence data is a weak sign for copper,'' Li Ling, a trader at Star Futures Co., said from Shanghai.

Copper for October delivery fell as much as 860 yuan, or 1.3 percent, to 66,950 yuan ($8,413) a metric ton on the Shanghai Futures Exchange. It traded at 67,240 yuan by midday break.

The board's index dropped to 99.6 from 107.0 in July, the New York-based business group said yesterday. Sales of pre-owned U.S. homes fell in July to the lowest in more than two years, the National Association of Realtors said last week.

Copper for cash delivery in Changjiang, Shanghai's biggest spot market, fell as much as 1.2 percent to 67,800 yuan a ton. Chinese users have to pay 17 percent value-added tax, 2 percent import tax, premiums and freight charges for imported copper.