The metal & mining sector continues to remain under pressure amid a slowdown in China, the world’s biggest consumer of raw materials. Indeed, it was strong demand from China between 2000 and 2010 that led to the so-called "Commodity Supercycle."
Since 2011 though, as China has shifted its focus to consumption-led growth, the outlook for many metals & mining companies has turned bearish. It is unlikely that we will see demand return to the levels seen between 2000 and 2010 as China makes its transition; however, many of the companies have focused during this challenging period on bringing down costs and focusing on core operations.
For example, BHP Billiton (NYSE:BHP), one of the world’s biggest mining companies, has sold or spun off several of its non-core operations. Several other major mining companies have announced similar measures. Even smaller mining companies have sold high-cost properties and are focusing on core operations.
This restructuring of operations has also given some smaller companies an opportunity to acquire stakes in potentially valuable potential projects. This morning, Colt Resources Inc. (TSX-Venture:GTP), a Canadian mining company, announced that its associate company in the Middle East (Colt Resources Middle East or CRME) has acquired a majority stake in three significant Chagai Hills exploration licenses in Balochistan region of Pakistan. The licenses were formerly held by Lake Resources, an Australian global mineral exploration company.
CRME entered into a Shareholders Agreement further to signature of an exclusivity agreement in May 2014 with Lake Resources. The agreement sets out the terms and conditions that will govern the joint venture Pakistani company called Chagai Resources. Chagai Resources holds the three licenses previously held by Lake Resources. The newly formed company will now develop the license areas in the Chagai Hills in Balochistan, Pakistan.
Shahal Khan, Chairman of Colt Resources Middle East, said that by signing this agreement and securing these licenses, Colt is showing its commitment to investing in the natural resources of Balochistan in a fair and equitable way that could ensure significant economic and social development for its people.
Richard Quesnel, who is the President and CEO of Colt Resources Middle East, added that by partnering with Lake Resources, the local community and the Government of Balochistan, Colt believes it can become an engine that could potentially develop what could be a world class asset in the Chagai Hills copper/gold district.
Related Stories
