Infographic: The Story of Voisey's Bay: The Auction (2 of 3)
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The Story of Voisey’s Bay: The Auction (Part 2 of 3)

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Part 1: The DiscoveryPart 2: The AuctionPart 3: Voisey's Today

The Story of Voisey's Bay: The Auction (Part 2 of 3)

Part 1: The DiscoveryPart 2: The AuctionPart 3: Voisey's Today

The Story of Voisey’s Bay: The Auction (Part 2 of 3)

Presented by: Equitas Resources, “Nickel exploration in Labrador”

Preface

The hit at diamond drill hole #2 of 33m of massive sulphides turned Voisey’s Bay from caribou pasture to one of the most exciting stories in the mining world. For a full recap of the events leading to this point, check out Part 1 of the Voisey’s Bay story.

In Part 2 of this series, we look at the ensuing bidding war that occurred once it was clear that Voisey’s Bay had all of the action. Again, we have turned to Jacquie McNish’s fabulous book The Big Score, which documents the history of the discovery, biographical elements of Robert Friedland’s life, and the ensuing bidding war between Inco and Falconbridge that led to one of the most spectacular takeovers in mining history. If you like these infographics, then look into buying Jacquie’s book. It was gripping and full of information.

Setting the Stage

The discovery of massive sulphides with Hole #2 brought increased attention to the former diamond play. However, the stock price didn’t really explode until the assays came in: 2.23% nickel, 1.47% copper, and 0.123% cobalt. Diamond Fields now traded in December 1994 at $13.50 per share, up from $4.65 just a month prior.

The company doubled down on drilling, and up until January 1995 they had hit nothing after Hole #2. The price dribbled down to $11.00.

However, it was in February 1995 that the results for Holes #7 and #8 were released, and they were some of the most significant holes for the entire project. The holes were in the Ovoid, which would soon be a famed and ultra-high rich section of the Voisey’s Bay discovery.

Hole #7 was 104m long and had 3.9% nickel, 2.8% copper, and 0.14% cobalt. Hole #8 was 111m long and had 3.7% nickel, 2.78% copper, and 0.13% cobalt. This propelled the stock price to $20.00 in February 1995.

Continued exploration of the Ovoid revealed a bowl-shaped orebody lying just below surface. This deposit had surface dimensions of some 800m by 350m, and extended to depths of about 125m. More nickel from Ovoid came in every month, and the stock price continued to rise.

At this point, Diamond Fields could no longer fly under the radar. Major mining couldn’t stand to watch as one of the world’s greatest base metal deposits blossomed outside of their influence.

The Suitors

Three major mining companies vied to get in on the action. Here’s some history on each of them:

Teck

At this time, the Canadian diversified mining company Teck had nine mines in operation and had a reputation as a swift deal maker.

  • In 1947, Teck’s founder Norman Keevil Sr. was one of the first to use magnetic survey technology that was first employed by the US Military to find submarines. With this technology, he found one of the richest copper deposits in Canada.
  • He once impressed a plane load of investors by flying them over a 150-foot copper vein that was exposed to the air. It shone like a newly minted penny as they passed over, stunning even the most skeptical investors. (He had previously parachuted a crew in to polish the ore in the bush.)

Inco

The International Nickel Company was founded in 1902 and for most of the 20th century it remained the dominant player in nickel exploration, production, and marketing.

The company virtually invented the nickel market:

  • In 1890, global output of nickel was 3,000 tonnes
  • Nickel was mainly used for military purposes but sales dried up at the end of WWI
  • The company discovered nickel alloys that were marketed for use in automobiles, pipes, industry, coins, and even kitchen sinks
  • By 1951, the world consumed 130,000 tonnes of nickel a year with 90% of it supplied by Inco

By 1995, Inco was still the market leader in nickel, producing 26% of the world’s nickel with $2.3 billion in sales each year.

Falconbridge

In 1901, American inventor Thomas Edison found a nickel-copper ore body in the area northeast of Sudbury, Ontario.

However, it wasn’t until 1928 that Thayer Lindsley, the founder of Falconbridge, bought these claims and began to turn it into its first mine.

At the time, Inco had the only technology in North America to refine nickel, so Falconbridge sent its production to Norway where it purchased an operating refinery.

The company was smaller than Inco, but seen as more aggressive and nimble. The company produced 11% of the world’s nickel in 1995.

The Bidding Begins

While Inco, Falconbridge and up to a dozen other global miners spent resources on calculating the value of Voisey’s Bay, Teck was the first to approach with a different strategy.

In less than a day, and despite seeing any core, Teck was able to do a simple deal less than four pages long: $108 million for 10% of the company, or the equivalent of $36 per share. Teck also surrendered their voting rights to Friedland to prevent future hostile takeovers.

That got the market talking. Days later, the stock would trade at over $40 per share with a market capitalization of more than $1 billion.

In May 1995, after much posturing between Inco and Diamond Fields executives, another deal was struck. This time, Inco bought a 25% stake of Voisey’s Bay for US$386.7 million in preferred shares and cash, as well as 8% of Diamond Fields from company co-founder Jean-Raymond Boulle and early investor Robertson Stephens.

By the time the deal closed in June 1995, Diamond Fields’ stock price doubled again to $80.00.

After months of drilling misses outside of the Ovoid, finally in August there were signs of light: 1m of massive sulphides were hit on Hole #166.

In November, drill hole #202 retrieved 40m of massive sulfides, the largest section of sulfides found outside the Ovoid. It was now clear that there was a series of deposits at Voisey’s Bay. The hole assayed 3.36% nickel and became a part of what is known as the Eastern Deeps.

The Showdown

In December, Inco and Falconbridge both began to aggressively pursue Diamond Fields.

First, Inco presented a deal in principle for $3.5 billion, or $31 per share. Then, Falconbridge intercepted with an official offer for $4.0 billion, or $36 per share. This was a risky move for the smaller company, but it limited its downside by adding in $100 million in fees to the agreement in the case the deal were to not be finalized.

Next, the two competitors (Inco and Falconbridge) teamed together through a mutual connection to present an offer in tandem.

It was instantly shot down by Friedland.

Finally on March 26th 1996, Inco announced a takeover bid of its own for $4.5 billion of Diamond Fields – the equivalent of $43.50 per share or $174 pre-split. Inco’s stock price dropped but it held on, making the total value of the deal closer to $4.3 billion. On April 3, the deal was officially signed by all parties.

Part 3: Voisey’s Bay Today

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Energy

The Periodic Table of Commodity Returns (2012-2021)

Energy fuels led the way as commodity prices surged in 2021, with only precious metals providing negative returns.

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commodity returns 2021 preview

The Periodic Table of Commodity Returns (2022 Edition)

For investors, 2021 was a year in which nearly every asset class finished in the green, with commodities providing some of the best returns.

The S&P Goldman Sachs Commodity Index (GSCI) was the third best-performing asset class in 2021, returning 37.1% and beating out real estate and all major equity indices.

This graphic from U.S. Global Investors tracks individual commodity returns over the past decade, ranking them based on their individual performance each year.

Commodity Prices Surge in 2021

After a strong performance from commodities (metals especially) in the year prior, 2021 was all about energy commodities.

The top three performers for 2021 were energy fuels, with coal providing the single best annual return of any commodity over the past 10 years at 160.6%. According to U.S. Global Investors, coal was also the least volatile commodity of 2021, meaning investors had a smooth ride as the fossil fuel surged in price.

Commodity2021 Returns
Coal160.61%
Crude Oil55.01%
Gas46.91%
Aluminum42.18%
Zinc31.53%
Nickel26.14%
Copper25.70%
Corn22.57%
Wheat20.34%
Lead18.32%
Gold-3.64%
Platinum-9.64%
Silver-11.72%
Palladium-22.21%

Source: U.S. Global Investors

The only commodities in the red this year were precious metals, which failed to stay positive despite rising inflation across goods and asset prices. Gold and silver had returns of -3.6% and -11.7% respectively, with platinum returning -9.6% and palladium, the worst performing commodity of 2021, at -22.2%.

Aside from the precious metals, every other commodity managed double-digit positive returns, with four commodities (crude oil, coal, aluminum, and wheat) having their best single-year performances of the past decade.

Energy Commodities Outperform as the World Reopens

The partial resumption of travel and the reopening of businesses in 2021 were both powerful catalysts that fueled the price rise of energy commodities.

After crude oil’s dip into negative prices in April 2020, black gold had a strong comeback in 2021 as it returned 55.01% while being the most volatile commodity of the year.

Natural gas prices also rose significantly (46.91%), with the UK and Europe’s natural gas prices rising even more as supply constraints came up against the winter demand surge.

Energy commodity returns 2021

Despite being the second worst performer of 2020 with the clean energy transition on the horizon, coal was 2021’s best commodity.

High electricity demand saw coal return in style, especially in China which accounts for one-third of global coal consumption.

Base Metals Beat out Precious Metals

2021 was a tale of two metals, as precious metals and base metals had opposing returns.

Copper, nickel, zinc, aluminum, and lead, all essential for the clean energy transition, kept up last year’s positive returns as the EV batteries and renewable energy technologies caught investors’ attention.

Demand for these energy metals looks set to continue in 2022, with Tesla having already signed a $1.5 billion deal for 75,000 tonnes of nickel with Talon Metals.

Metals price performance 2021

On the other end of the spectrum, precious metals simply sunk like a rock last year.

Investors turned to equities, real estate, and even cryptocurrencies to preserve and grow their investments, rather than the traditionally favorable gold (-3.64%) and silver (-11.72%). Platinum and palladium also lagged behind other commodities, only returning -9.64% and -22.21% respectively.

Grains Bring Steady Gains

In a year of over and underperformers, grains kept up their steady track record and notched their fifth year in a row of positive returns.

Both corn and wheat provided double-digit returns, with corn reaching eight-year highs and wheat reaching prices not seen in over nine years. Overall, these two grains followed 2021’s trend of increasing food prices, as the UN Food and Agriculture Organization’s food price index reached a 10-year high, rising by 17.8% over the course of the year.

Grains price performance 2021

As inflation across commodities, assets, and consumer goods surged in 2021, investors will now be keeping a sharp eye for a pullback in 2022. We’ll have to wait and see whether or not the Fed’s plans to increase rates and taper asset purchases will manage to provide price stability in commodities.

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Mining

Visualizing the Scale and Composition of the Earth’s Crust

This animation shows the handful of minerals and elements that constitute the Earth’s crust.

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Visualizing the Scale and Composition of the Earth’s Crust

For as long as humans have been wandering the top of Earth’s crust, we’ve been fascinated with what’s inside.

And Earth’s composition has been vital for our advancement. From finding the right kinds of rocks to make tools, all the way to making efficient batteries and circuit boards, we rely on minerals in Earth’s crust to fuel innovation and technology.

This animation by Dr. James O’Donoghue, a planetary researcher at the Japan Aerospace Exploration Agency (JAXA) and NASA, is a visual comparison of Earth’s outer layers and their major constituents by mass.

What is the Composition of Earth’s Crust?

The combined mass of Earth’s surface water and crust, the stiff outermost layer of our planet, is less than half a percent of the total mass of the Earth.

There are over 90 elements found in Earth’s crust. But only a small handful make up the majority of rocks, minerals, soil, and water we interact with daily.

1. Silicon

Most abundant in the crust is silicon dioxide (SiO2), found in pure form as the mineral quartz. We use quartz in the manufacturing of glass, electronics, and abrasives.

Why is silicon dioxide so abundant? It can easily combine with other elements to form “silicates,” a group of minerals that make up over 90% of Earth’s crust.

Clay is one of the better-known silicates and micas are silicate minerals used in paints and cosmetics to make them sparkle and shimmer.

MineralMajor ElementsPercentage of Crust
Plagioclase FeldsparO, Si, Al, Ca, Na39%
Alkali FeldsparO, Si, Al, Na, K12%
QuartzO, Si12%
PyroxeneO, Si, Mg, Fe11%
AmphiboleO, Si, Mg, Fe5%
Non-silicatesVariable8%
MicasO, Si, Al, Mg, Fe, Ca, Na, K5%
Clay MineralsO, Si, Al, Mg, Fe, Ca, Na, K5%
Other SilicatesO, Si3%

2. Aluminum and Calcium

SiO2 bonds very easily with aluminum and calcium, our next most abundant constituents. Together with some sodium and potassium, they form feldspar, a mineral that makes up 41% of rocks on Earth’s surface.

While you may not have heard of feldspar, you use it every day; it’s an important ingredient in ceramics and it lowers the melting point of glass, making it cheaper and easier to produce screens, windows, and drinking glasses.

3. Iron and Magnesium

Iron and magnesium each make up just under 5% of the crust’s mass, but they combine with SiO2 and other elements to form pyroxenes and amphiboles. These two important mineral groups constitute around 16% of crustal rocks.

Maybe the best known of these minerals are the two varieties of jade, jadeite (pyroxene) and nephrite (amphibole). Jade minerals have been prized for their beauty for centuries, and are commonly used in counter-tops, construction, and landscaping.

Some asbestos minerals, now largely banned for their cancer-causing properties, belong to the amphibole mineral group. They were once in high demand for their insulating and fire-retardant properties and were even used in brake pads, cigarette filters, and as artificial snow.

4. Water

Surprisingly, even though it covers almost three quarters of Earth’s surface, water (H2O) makes up less than 5% of the crust’s mass. This is partly because water is significantly less dense than other crustal constituents, meaning it has less mass per volume.

Breaking Earth’s Crust Down by Element

Though there are many different components that form the Earth’s crust, all of the above notably include oxygen.

When breaking down the crust by element, oxygen is indeed the most abundant element at just under half the mass of Earth’s crust. It is followed by silicon, aluminum, iron, calcium, and sodium.

All other remaining elements make up just over 5% of the crust’s mass. But that small section includes all the metals and rare earth elements that we use in construction and technology, which is why discovering and economically extracting them is so crucial.

What Lies Below?

As the crust is only the outermost layer of Earth, there are other layers left to contemplate and discover. While we have never directly interacted with the Earth’s mantle or core, we do know quite a bit about their structure and composition thanks to seismic tomography.

The Upper Mantle

At a few specific spots on Earth, volcanic eruptions and earthquakes have been strong enough to expose pieces of the upper mantle, which are also made of mostly silicates.

The mineral olivine makes up about 55% of the upper mantle composition and causes its greenish color. Pyroxene comes in second at 35%, and calcium-rich feldspar and other calcium and aluminum silicates make up between 5–10%.

Going Even Deeper

Beyond the upper mantle, Earth’s composition is not as well known.

Deep-mantle minerals have only been found on Earth’s surface as components of extra-terrestrial meteorites and as part of diamonds brought up from the deep mantle.

One thing the lower mantle is thought to contain is the silicate mineral bridgmanite, at an abundance of up to 75%. Earth’s core, meanwhile, is believed to be made up of iron and nickel with small amounts of oxygen, silicon, and sulphur.

As technology improves, we will be able to discover more about the mineral and elemental makeup of the Earth and have an even better understanding of the place we all call home.

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