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Wal-Mart shops Brazil unit stake to Advent, other funds: sources

SAO PAULO (Reuters) – Wal-Mart Stores Inc is in talks with buyout firm Advent International Corp and other funds to sell a major stake in its Brazilian operations, two people with direct knowledge of the matter said on Sunday.

Wal-Mart is being advised by Goldman Sachs Co, according to one of the sources who spoke on condition of anonymity. Other private equity firms that are looking into the investment in the Brazilian unit are GP Investments Ltd and Acon Investments LLC, the source added.

Wal-Mart officials in Brazil declined to comment. Advent and GP declined to comment. Goldman and Acon did not immediately reply to requests for comment.

Wal-Mart’s overseas business is not the growth driver it once was as it has continued to grapple with an economic slowdown in Brazil and competition from discount retailers in the UK.

In 2016, Wal-Mart Chief Executive Officer Doug McMillon flagged to investors that he was planning to review its global operations. His comments had sparked speculation that Wal-Mart would look to restructure or even pull out of markets where it has struggled. Brazil was among the countries most often cited by analysts as a potential target.

During the same year, Wal-Mart shuttered at least 10 percent of its stores in Brazil and shed non-core businesses across Latin America. It also sold its e-commerce business in China to Chinese e-commerce company and picked up a stake in instead of trying to crack the market on its own.

A partial exit by Wal-Mart from Brazil comes as Chief Operating Officer Judith McKenna takes over the international unit of the world’s biggest retailer. The move would give a new partner the chance to turn around a sprawling operation that has struggled to turn a profit.

Wal-Mart entered Brazil in 1995 and had grown into the country’s third-largest retailer following two major acquisitions in 2004 and 2005 and a period of rapid store expansion that came to a halt in 2013.

It currently operates 471 stores in Brazil, according to the company’s local website. The retailer’s Brazilian unit reported revenues of almost 30 billion reais ($9.4 billion) in 2016.

Wal-Mart has posted operating losses in Brazil for seven years in a row after an aggressive, decade-long expansion left it with poor locations, inefficient operations, labor troubles and uncompetitive prices, Reuters reported early in 2016.(

One of the people with knowledge of the deal said Wal-Mart’s operations in Brazil had not improved over the last two years, which coincided with the country’s harshest recession in decades.

Wal-Mart began sounding out possible investors in the unit several months ago but got no interest from rival retailers, which led the company to seek out buyout firms, the source said.

The retailer intends to keep a stake in the Brazilian unit to be able to recoup part of its losses in the country later if an economic recovery and restructured operations boost results, according to the source.

Retail sales in Brazil are starting to recover from the recession. Christmas sales were 5.6 percent higher than a year ago, according to credit data supplier Serasa Experian.

Earlier on Sunday, newspaper O Globo said private equity Advent was in talks to acquire 50 percent of the Wal-Mart unit. The paper did not say how it got the information or any details on the state of the talks.

Additional reporting by Marcelo Teixeira and Nandita Bose in New York; Editing by Brad Haynes, Paul Simao and Himani Sarkar

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Coro reaches Marimaca milestones

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Oil rises as Saudi Arabia says producers will cooperate beyond 2018

SINGAPORE (Reuters) – Oil prices climbed on Monday, pushed higher by comments from Saudi Arabia that cooperation between oil producers who are currently withholding supplies would continue beyond 2018.

Strong global economic growth and a drop in U.S. drilling activity also supported crude, traders said.

Brent crude futures were at $68.89 a barrel at 0315 GMT, up 25 cents, or 0.4 percent, from their last close. Brent on Jan. 15 rose to $70.37, its highest since December 2014.

U.S. West Texas Intermediate (WTI) crude futures were at $63.61 a barrel, up 24 cents, or 0.4 percent, from their last settlement. WTI climbed to $64.89 on Jan. 16, also its highest since December 2014.

Saudi Arabia, the world’s top oil exporter and de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), said on Sunday major oil producers were in agreement they should continue cooperating on production after their deal on supply cuts expires this year.

“There is a readiness to continue cooperation beyond 2018…The mechanism hasn’t been determined yet, but there is a consensus to continue,” Saudi Arabia’s Energy Minister Khalid al-Falih said in Oman.

A group of oil producers including OPEC and Russia, the world’s biggest crude producer, started to withhold production in January last year to prop up prices. The deal is set to expire at the end of 2018.

In the United States, declining drilling activity for new oil production further supported crude.

U.S. drillers cut five oil rigs in the week to Jan. 19, bringing the count down to 747, energy services firm Baker Hughes said on Friday.

Despite this, the rig count in 2017 and early this year remains much higher than in 2016, resulting in a 16 percent rise in U.S. production since mid-2016, to 9.75 million barrels per day.

Beyond supplies, strong global economic growth was also supporting oil prices.

“During the last four quarters, the underlying global growth dynamic began to shift… Global growth has become synchronized and accelerated above trend,” U.S. bank Morgan Stanley said over the weekend in a note.

In the latest indicator, Japanese manufacturing sentiment in January jumped to an 11-year high, the Reuters Tankan poll showed on Monday, highlighting the optimism driven by nearly two years of economic expansion.

Despite the well supported market, analysts warned oil markets had lost some steam since their peak early last week.

Bernstein Energy said on Monday that oil inventories might start rising soon due to a slowdown in demand which typically happens at the end of the northern hemisphere winter.

“We expect… an end to the strong (inventory) draws we have seen… With the strong correlation between inventories and crude prices, this perhaps means we should expect crude prices to moderate in the near term,” Bernstein said.

Reporting by Henning Gloystein; Editing by Kenneth Maxwell and Christian Schmollinger

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Leagold ups production outlook

Its guidance for the project it acquired from Goldcorp (CN:G) in April 2017 is for 215,000-240,000 ounces at an all-in sustaining cost of US$875-$925 per ounce.

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Toshiba considering IPO for memory chip unit: FT

TOKYO (Reuters) – Toshiba Corp is considering an IPO of its prized memory chip business if an agreed $18 billion sale to a Bain Capital-led consortium fails to gain antitrust approval by the end of March, the Financial Times reported on Monday.

The IPO is one of various contingency plans being looked at by Toshiba’s top executives, the FT said, citing people familiar with the plans. It added that some analysts and Toshiba shareholders favor it over the existing deal.

Toshiba agreed last September to sell Toshiba Memory, the world’s second-biggest producer of NAND chips, to a consortium led by Bain to cover billions of dollars in liabilities arising from now bankrupt U.S. nuclear power unit Westinghouse Electric Co LLC.

But the Japanese conglomerate no longer faces the pressure it once did to complete a sale, after raising 600 billion yen ($5.4 billion) with a new share issue to overseas funds late last year, which with tax write-offs gives it sufficient funds to cover its liabilities.

If the deal fails to win regulatory approval by March 31, Toshiba is free to walk away, sources familiar with the situation have told Reuters.

A Toshiba spokeswoman said there had been no change in its efforts to complete the sale of the chip unit. A representative for Bain was not immediately available for comment.

Hong Kong-based activist investor, Argyle Street Management Ltd, a hedge fund with $1.2 billion under management, has voiced opposition to the sale, saying it was no longer necessary and that the board should consider an IPO instead.

Toshiba shares hit a three-month high in morning trade, at one point rising as much as 4.7 percent.

Reporting by Makiko Yamazaki and Minami Funakoshi; Editing by Edwina Gibbs

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NGEX views Josemaria as standalone development

NGEX Resources (CN:NGQ) is looking at a separate development of its Josemaria deposit in San Juan, Argentina, part of its Constellation package of assets in Chile and Argentina, president and CEO Wojtek Wodzicki told Mining Journal Americas at the 2018 Resource Investment Conference in Vancouver.

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Latam exploration drilling reactivates

Exploration drilling in Latin America continues to recover, according to the increasing number of samples hitting the assay laboratories, Santiago Montoya, director of business development in south and Central America for ALS Global told Mining Journal Americas at the 2018 Cambridge House Resource Investment Conference in Vancouver, Canada.

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Fatality at Tahuehueto

The company said the worker was struck by a rock while conducting scaling operations for underground development and unfortunately succumbed to his injuries while being airlifted to hospital.

Telson CEO Jose Antonio Berlanga offered condolences and sympathies to the man’s family, friends and co-workers.

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The mine was temporarily suspended but resumed operations after preliminary findings attributed the accident to human error.

Telson said a team from the Ministry of Economy’s general mines department arrived on site on Friday to complete its investigations and the company also expected a visit from the Ministry of Labour’s worker’s compensation and safety arm this week.

Telson is advancing its two Mexican polymetallic projects, Tahueheuto and Campo Morado, towards commercial production this year.

Shares in Telson fell 1.43% to C69c but remain near the upper third of its 52-week range of 27c-89c.

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Exclusive: Philadelphia Energy Solutions to file for bankruptcy

(Reuters) – Philadelphia Energy Solutions LLC, the owner of the largest U.S. East Coast oil refining complex, announced to its employees on Sunday that it plans to file for Chapter 11 bankruptcy, according to an internal memo reviewed by Reuters.

The bankruptcy would come six years after private equity firm Carlyle Group LP (CG.O) and Energy Transfer Partners LP’s Sunoco Inc rescued Philadelphia Energy Solutions from financial distress, in a deal that was supported by tax breaks and grants that saved thousands of jobs.

Following an agreement with its creditors, the company has secured access to $260 million in new financing, and said it expected the bankruptcy filing to have no immediate impact on its employees, according to the memo, which was confirmed by a spokeswoman for Philadelphia Energy Solutions. The spokeswoman declined to comment further.

Philadelphia Energy Solutions owns two refineries, Girard Point and Point Breeze. It can convert about 335,000 barrels of crude oil per day to products such as gasoline, jet fuel and diesel. It employs about 1,100 people.

Part of the refiner’s financial troubles stem from a costly biofuels law called the Renewable Fuels Standard, which is administered by the Environmental Protection Agency and requires refiners to blend biofuels into the nation’s fuel supply every year, or buy credits from those who do.

Since 2012, Philadelphia Energy Solutions has spent more than $800 million on credits to comply with the law, making it the refiner’s biggest expense after the purchase of crude, according to the memo.

The Philadelphia refinery’s struggles have emerged as a potential flashpoint in the debate between Big Oil and Big Corn over the future of the Renewable Fuels Standard.

Critics have argued the company’s woes are an example of what is wrong with the program, while supporters say the company’s troubles are more closely related to its lack of access to cheaper crude oil supplies.

The $260 million in financing secured by the company involves $120 million in debtor-in-possession and exit financing, $75 million in additional capital from Sunoco Logistics, and a $65 million equity investment from the company’s shareholders, led by Carlyle along with the refiner’s management.

East Coast refiners have lower profit margins than other refineries across the country, largely because of a reliance on crude imports from West Africa and other markets.

Philadelphia Energy Solutions had strong profits in 2014 and 2015 because of investments in rail terminals that allowed the refiner to bring in discounted Bakken crude oil in mile-long trains from North Dakota.

But the boom turned to bust by the end of 2015 as oil prices plummeted and the discount for North Dakota crude disappeared. The fallout hit oil and gas explorers and producers hard, with scores of them, such as Linn Energy Inc and Breitburn Energy Partners LP, filing for bankruptcy in 2016.


Before Carlyle took over the complex, Philadelphia Energy Solutions was a “zombie” refiner at risk of being shuttered following the financial crisis, when demand for oil evaporated. In bringing in Carlyle as a majority investor in 2012, Sunoco agreed to contribute to the refinery’s assets and be a non-controlling partner.

The refinery owners enjoyed a taxpayer-funded rescue package, which included the creation of a tax-friendly zone, $25 million in grants and environmental liability waivers.

The company took on a $550 million loan that comes due early in 2018 to finish capital projects and pay out dividends to Carlyle and Sunoco.

Carlyle, which invested $175 million in 2012 in exchange for two-thirds of Philadelphia Energy Solutions, withdrew its plans to take the company public in 2016 at an expected valuation of $1.3 billion. In the same years, Carlyle also tried unsuccessfully to sell Philadelphia Energy Solutions.

Philadelphia Energy Solutions has also been grappling with its labor union, which threatened to strike last summer unless cuts to benefits were restored.

Reuters first reported in August that Philadelphia Energy Solutions had tapped investment bank PJT Partners Inc (PJT.N) for advice on dealing with its debt burden.

Philadelphia Energy Solutions will seek to restructure more than $100 million of its existing debt, and expects to complete the recapitalization process in the first quarter of 2018, according to the memo.

Reporting by Jessica DiNapoli and Jarrett Renshaw in New York; Editing by Paul Simao and Peter Cooney

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