Matt Geiger ((MJG Capital)

a lot of impetus to other companies to move in this direction. They are banding together and creating scale to test technologies and build datasets that they can rapidly adopt at a lower risk.”

When asked if he was surprised by the level of appetite for a collaborative organisation focused on mine electrification, Stanway points out that an ‘ESG force’ has been building in the sector over the last five or six years. “Therefore, I wasn’t surprised on the thematic but I was surprised by just how eager the companies were to collaborate in this form. It is rare for the sort of companies in the Consortium to openly work together like this in a fairly broad-based way. But that’s just testament to the trend and demonstrates how important it is to these companies and how interested they are in accelerating to zero carbon outcomes.”

A rare trifecta

So, what benefits do this vast array of companies along the mining value chain see in electrifying mine sites? On its website, the Consortium describes a ‘rare trifecta’ of environmental, economic and health value waiting to be realised through the transition.

Aside from the welldocumented environmental value, Stanway firmly believes that the health benefits associated with the electric transition deserve more emphasis, particularly in Australia where older mines are mostly powered by dieselfired equipment. Research has shown that diesel particulates are the second most carcinogenic contaminant in the country, therefore posing a significant health threat to mine site employees working amongst toxic diesel fumes.

“In Australia over a million workers are exposed to unhealthy levels of diesel particulate, so this is a big issue in the industry. Notwithstanding the PPE in place, the first prize is to eliminate the hazard, which means electrification, particularly in underground mines.”

And on the economic side of the trifecta, Stanway acknowledges that the mobile equipment required for electrified mines is currently more expensive than similar

“The mining members and partners we have in place are leading the process. Just simply the composition of the membership has given a lot of impetus to other companies to move in this direction. They are banding together and creating scale to test technologies and build datasets that they can rapidly adopt at a lower risk” Graeme Stanway, State of Play co-founder

equipment for traditional operations, although he likens it to the EV market, where prices continue to come down with scale.

Based on research in State of Play’s Electrification research paper, a fully electric mine will eventually reduce operating costs by 7-15%, including 3050% savings on energy, 25% maintenance costs reduction and a 40% drop in expenses relating to ventilation. “These are big cost reductions, to the extent where we’re even seeing some of the smaller entrepreneurial companies looking for assets that can be electrified, as opposed to looking for subsidies. Overall, it’s pretty rare you have such an obvious trifecta like this, which is why it’s moving quickly.”

Overcoming the challenges

The current costs associated with the electric mine transition are one of two major technical hurdles highlighted by Stanway, with the other being the need for greater renewable energy storage infrastructure in Australia and other mining jurisdictions globally.

The Consortium would also do well to bridge the gap between OEMS and mining companies with regards to electric equipment procurement. Stanway also suggests that risk-averse financiers could obstruct the path to fully electrified mines.

“There wouldn’t be a reason for the Consortium if there weren’t some challenges to overcome, and none of them are insurmountable,” he says. “The first steps are to nail these current challenges that are potentially holding us back; the storage challenge, the equipment challenge, the mine design and the infrastructure challenges. The Consortium is really hitting those hard at the moment.”

So far, the Consortium has helped convert a light vehicle fleet to battery electric across multiple member mine sites and simulated a range of mines and mining methods to establish electrification performance benchmarks, a business case and future mine designs, and tested mine scale remote energy storage through installation of multiple technologies at multiple sites.

The next steps for the Consortium will be to ramp up its data transfer between companies in order to accelerate knowledge sharing and eventual adoption, according to Stanway. “Then I think the team will broaden its outlook to the elements related to zero impact or zero carbon [mining]. There’s quite a few areas beyond the challenges we are currently focusing on; I’m confident we will address those further down the line.”

THE COPPER MARK

The new global standard for responsibly sourced copper

In December 2019, The Copper Mark was created in response to a growing collective awareness of the need for the copper industry to improve its ESG credentials. Initially developed and funded by the International Copper Association (ICA), The Copper Mark was founded on the understanding that a credible assurance framework must be separate from the industry it assesses. Its stated vision is to have all participants in the copper supply chain recognised by their employees, neighbours, customers, investors and civil society as having internationallyaccepted responsible operating practices, while making significant contributions to the UN’s Sustainable Development Goals It seeks to achieve this through partnering with copper producers, refiners, fabricators and even copper recycling outfits. For an organisation within the global copper supply chain to gain affiliation with The Copper Mark, they must commit to meet the requirements of its Assurance Process. Assurance is the process by which The Copper Mark ensures that the claims made by participants are credible and trustworthy, with each site independently verified to meet the standard criteria through a rigorous site-level assessment process. In June 2021, RGN’s editor Jacob Ambrose Willson spoke to The Copper Mark’s executive director Michèle Brülhart, as part of RGN’s deepdive focus on ESG in the mining sector.

Jacob Ambrose Willson: Michèle, what role does the copper industry have to play in the global decarbonisation agenda and why is it vital for copper to be produced in a sustainable manner?

Michèle Brülhart: The use of copper is central to countless renewable energy technologies. It really is one of those raw materials – or ‘transition minerals’ as they are sometimes referred to as – that is fundamental to allow us to move to clean energy. It’s used in batteries for electric vehicles (EVs), solar panels, wind turbines and the electricity grids that are going to recharge those EV batteries. So, we really can’t have a clean energy transition without copper. What that means is it’s vital to ensure that the growing demand for copper does not create negative impacts for people and the environment where its produced and processed.

That is where systems like The Copper Mark come in. Our goal is to ensure that copper is responsibly produced so that consumers and customers can be confident that the copper used in their product was created responsibly and also to make sure that investors are able to continue investing in copper as a sustainable investment opportunity. One thing to add here, if we’re looking at mine to end user, is the importance of a value chain approach. The Copper Mark’s current scope identifies responsible production as mining, smelting and refining of copper. However, we’re also working to add fabrication into scope to cover any entity that provides a copper product. In addition, with decarbonisation comes an increasing demand for recycled material. So, what’s the impact of using more recycled material on the decarbonisation of the industry itself? And then also

what does it mean to produce recycled copper responsibly? There’s a whole range of issues not just linked to the extraction of copper, but also further down the value chain that we need to keep in mind if we want to make sure we have a responsible raw material to enable us to move to clean energies.

JAW: Looking broadly across the global copper value chain, what do you think are the key environmental, social and governance challenges facing the copper industry in 2021?

MB: What you’re seeing are often quite content-specific operations in different countries. There may be specific issues around water management, community engagement and pollution. But what we observe overall is a rapidly evolving demand when it comes to performance around decarbonisation of copper itself; ie the carbon footprint and use of renewable energies, as well as responsible sourcing. Responsible sourcing means there is an expectation to know where copper is sourced from, understanding whether it’s sourced from areas that are considered conflict-affected or with weak governance structures, and then looking at what this means in terms of risks related to human rights abuse or support to armed groups, bribery, corruption and other types of risks that may occur. I think we’ve seen a bit of shift today compared to three to five years ago, when there was a lot more focus on just responsible sourcing and human rights. We’ve seen other stories in the news about the tailings dam failure in Brumadinho, Brazil and the destruction of cultural heritage sites in Australia.

So, it’s really important to look at all ESG issues in copper today, because if we have too narrow a focus on a specific topic, we risk losing sight of other issues that may be just as important. JAW: How exactly does The Copper Mark seek to help players across the copper value chain tighten up their ESG credentials?

MB: We work through our Assurance Framework predominantly as the core element of The Copper Mark. We define what it means to be a responsible copper producer in concrete terms across all ESG issues. We set expectations for responsible production: these are the criteria of the Risk Readiness Assessment created by the Responsible Minerals Initiative. We then offer guidelines on how to meet those requirements, whether that concerns engaging with communities, working to reduce the carbon footprint or social and labour conditions at the operations.

The second way we help producers is by providing our Assurance Process to help them review their performance. It starts with self-assessments, then goes

“Our goal is to ensure that copper is responsibly produced so that consumers and customers can be confident that the copper used in their product was created responsibly and also to make sure that investors are able to continue investing in copper as a sustainable investment opportunity” Michèle Brülhart, The Copper Mark executive director

into independent reviews and requires on-site audits from independent third parties for every participating site. Overall, this is a way for companies to look at the criteria and see if they can match that with their operations. How do they perform against those criteria, where are potential gaps? Getting independent third party opinion through the audit itself then allows them to identify areas of improvement. Our participants have to be fully conformant with all requirements within two years of signing up to join The Copper Mark. We regularly check in with them and make sure there is progress in areas where they need to improve on. Again, the improvements they have made need to be independently audited and validated at the end of the day. All of that is the core system we operate to try and make sure companies move along. But a lot of the work we do is one-on-one assistance with participants. We’ve spent considerable amounts of time on the phone and in virtual meetings, going through the expectations, looking at their specific circumstances and looking to provide assistance where we can.

Systems like ours also have a benefit in terms of peer learning. We often see participants connecting amongst each other to the extent that they are able to do so in respect of competition and anti-trust laws. This kind of cooperation helps companies understand how others have dealt with issues while sharing best practices. Lastly, we invest significantly in training and capacity building. All our training modules are made publicly available and are typically translated into English, Spanish and Chinese, so that we provide an entry point for as many people as possible.

FREEPORT MCMORAN’S THE COPPER MARK-APPROVED CERRO VERDE SITE IN PERU

JAW: What kind of reputation has The Copper Mark built in the industry over the last 18 months since it was formed?

MB: We are still a young organisation, so we need to spread the word a bit more widely about who we are and what we do. The positive news is the fact that we’ve had encouraging levels of early adoption and uptake. We now have 23 sites from eight different companies and that includes some of the largest

copper mines in the world and some of the largest copper producers. We also have 10 partner organisations from the fabricator and end-user sectors of the value chain. Having these partners on board has already sent strong signals in terms of raising the profile of the organisation itself, as has the first addition of an Asian-based site earlier this year with LS-Nikko Copper joining us with their smelting site in South Korea. We’re a very small team and organisation so the extent to which we can leverage a broader network within the industry and through our partners to support us in raising awareness is particularly helpful.

JAW: Should the copper industry expect new regulations and more challenging customer and investor expectations on responsible sourcing in the coming years? How should it respond to these demands? MB: The short answer is absolutely yes. I don’t think there’s much doubt about that today. We have seen over the past decade a very rapidly evolving trend on responsible raw material production, not just limited to specific materials, but an expectation that what goes into a product is responsibly produced. In terms of customer expectations, we’re observing an expansion from regulated materials to increasingly battery materials as well as these transition minerals that are critical to the clean energy transition, which includes copper.

We’re already seeing, in the EU in particular, legislation efforts that impact mineral supply chains. This includes for example discussions around horizontal due diligence laws for human rights, battery regulations or the EU taxonomy. Whether they explicitly mention copper today or not, these regulatory efforts can be expected to have a broad impact and reach into supply chains. We are trying to do our best to raise awareness in the industry about that and to also make sure there is a comprehensive approach to responsible practises.

We often see that companies who focus on a single issue will then constantly have to adjust them and struggle to keep up with evolving expectations. That is why we recommend and encourage companies to set up robust management systems across all ESG areas so that they are ready for whatever new regulations and trends or demands that will come their way, because we do believe it will intensify and intensify rapidly.

JAW: Finally, how significant are the latest addition of eight sites and three new partners (in June and July 2021) to The Copper Mark, in terms of demonstrating how the organisation is quickly becoming the new standard for responsible copper mining?

MICHÈLE BRÜLHART, THE COPPER MARK EXECUTIVE DIRECTOR

MB: Every addition is important. In the last batch of sites to have joined us, it’s great to see further support from one of our biggest participants Freeport McMoRan with five additional sites, but also from smaller producers like Southern Peaks Mining, who have signed up one of their sites. That gives a testament to our mission of moving the whole industry forward. We’re not just about trying to capture the best performers, we’re trying to capture the bulk of the market and really promote responsible practices across the industry. These latest additions are an important signal to show that there is increasing awareness across all types of actors in the copper industry.

Equally, the fact that three of the last four partner additions were from the fabricator sector again shows there’s an increased awareness. These are direct customers of copper products and are the companies that have a very direct ability to decide whether they want to ensure their suppliers are responsible and whether that is a consideration in their purchasing practices. That to us is very encouraging and shows that the conversation is moving beyond a handful of companies and reaching a much broader segment of the market.

GUANAJUATO SILVER COMPANY

A diamond in the rough silver-gold opportunity in Guanajuato, Mexico

Experienced Canadian mining executive James Anderson spent seven-and-a-half years leading junior precious metals explorer NuLegacy Gold to drilling success in Nevada’s Cortez Trend, before seeking pastures new South of the Mexico-US border. “I got a chance to take over a company called VanGold; they had what I consider to be a ‘diamond in the rough’ mining project in Guanajuato, Mexico. It’s a city of 150,000 people and it’s been a mining community for 480 years,” Anderson tells RGN. In June 2021, the outfit renamed itself Guanajuato Silver Company to better illustrate the region and commodity it is focused on. “The project itself was a very high grade past producer about 110 years ago. A British and an American company were ostensibly mining two halves of the same epithermal system. In 1906 they decided to merge those two companies. That corporate entity became listed on the NYSE and they mined 400 tonnes per day of very highgrade material up until the time of the Mexican Revolution. The violence of that conflict drove the Americans home and that project just hasn’t had a chance to get going again since then.” The project in question is El Pingüico, which was the highest grade silver-gold mine in the region during its time of operation from 1890 to 1913, when it processed ore in what was then heralded as a state-ofthe-art facility.

Anderson reveals that the availability and accessibility of historic stockpiles at El Pingüico put Guanajuato Silver in pole position to acquire another asset - the El Cubo mine and mill complex – located just 8 km away by road.

After conducting a considerable amount of due diligence on the asset, which has been on care and maintenance for the last 18 months, Guanajuato Silver finalised the acquisition in March 2021 for an exceptionally low entry fee of US$15 million, given that Endeavour Silver purchased the property for $200 million back in 2012.

“When Endeavour closed it in 2019, they did it for a couple reasons but mostly because silver was $16 [per ounce]. Things change quickly in our business. They also closed it because it could no longer offer the returns for a big company like Endeavour, with its billion+ dollar market cap. For us, it’s very different.”

Instead, Guanajuato Silver saw El Cubo as the perfect stranded asset that could be brought back to life to provide the nucleus for a combined project using the El Pingüico stockpiles as initial ore feed for the El Cubo mill.

The TSXV-listed company is wasting no time with this undertaking and anticipates a four to six month refurbishment period for the El Cubo mill, at which point it will be ready to process silver

GUANAJUATO SILVER

AT A GLANCE

STOCK TICKER: TSXV:GSVR

MARKET CAPITALISATION:

US$93.4 million (as of June 21, 2021) and gold concentrate from the combined project in the fourth quarter of 2021.

Leading with locals

The acquisition of El Cubo resembles the execution of Guanajuato Silver’s longheld strategy to develop a portfolio of past producing projects in the Guanajuato region. This not only offers the chance to combine synergistic assets for scale, but also an opportunity to build a distinctly local company with a broad understanding of the intricacies involved in creating a mining project in the Mexican context; from geology to social components, mining laws and more.

“If you look at a lot of the other junior companies out there, a lot of them will have a project in Peru, another in Mongolia and one more in BC. I’m sorry but you can’t do that,” Anderson stresses. “We’re not even putting a mine into production, we’re putting a mine and mill back into production that’s only been suspended for about 18 months, but there’s so many things to consider in such a short period of time, like who do you sell the concentrate to? What kind of terms are you going to get on that? What does the local community think about you coming back into production?”

So, what has Guanajuato Silver learnt with regards to the wider implications of its ambitions in Guanajuato and how well does it understand the idiosyncrasies of this particular mining jurisdiction? First and foremost, Anderson believes that the operation should be run by local experts – namely the company’s COO Hernan Dorado and his father Gerardo.

Hernan is a fifth-generation Mexican mining engineer and has worked on projects all over

We have a mine here that has been operating for 200 years on-off and there will be people mining here for another 100 years” James Anderson, Guanajuato Silver Company president and CEO

VIDEO

the world, before excelling to his current position at Guanajuato Silver thanks to his extensive knowledge of the El Pingüico deposit.

“It’s not a position that a lot of Mexican mining engineers get to take on in their own country. I think it makes a big difference to our employees; having a local voice instructing them every morning, as opposed to me telling folks what to do.” The company has also taken the time to learn its position within the 480-year mining history of Guanajuato - where the continued preservation of the local ecology is of upmost importance - in tandem with best practice mining methods and corporate governance befitting a 21st century operation.

As such, Guanajuato Silver maintains a strong connection with its local communities and strongly adheres to all local, state and federal regulations, particularly with regards to disposing mine tailings in a safe and sustainable manner.

Valuable stockpiles

The surface stockpile at El Pingüico is around 185,000 tonnes of material at 105 g/t silver equivalent (Ag eq) per tonne, according to the firm. This is moderate grade material by today’s standards, but during the mine’s former life over a century ago, it was deemed waste rock.

“They decided there wasn’t enough value in there to matter; well it matters to us. We did a 1,000 tonnes bulk sample in June last year, so we know about the metallurgy and how it will recover in a flotation mill and we are very confident on the grade.

“Underground, there is another stockpile. We think it’s about 150,000 tonnes of material as do the Mexican geological survey, who made an estimation back in 2012, although American engineering firm Behre Dolbear & Company were less generous in our recently completed preliminary economic assessment [PEA], giving us around 25,000 tonnes of material in the underground stockpile.”

However, the underground material is of a higher grade – around 300 g/t Ag eq per tonne – and it floats well in a mill according to the company’s preliminary metallurgical work. The only challenge remaining is for the engineers to figure out how to bring the stockpile to surface safely.

“That material is very important. Hernan always says it’s like oxygen for us to be able to put the thing back into production; knowing that the material is there to put