Canadian Mining Journal September 2017

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Four new gold mines Agnico turns 60

SEPTEMBER 2017 | www.canadianminingjournal.com | PM # 40069240

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CANADIANMINING

SEPTEMBER 2017 VOL. 138, NO. 07

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CANADIAN MINING JOURNAL

FEATURES

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12 Iconic Canadian gold miner Agnico Eagle Mines celebrates its 60th anniversary.

18 Despite a tough environment for mine development, several new gold mines are coming online this year in Canada.

23 Profiles of the current generation of Canadian mine builders.

HEAVY EQUIPMENT 30 How automation is improving the performance of heavy equipment in

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surface mining.

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DEPARTMENTS 5 EDITORIAL | Welcome to the gold issue.

6 LAW | David Bursey and Sharon Singh of Bennett Jones outline how B.C. mining policy may shape up under the new provincial government.

8 FIRST NATIONS | AFN Ontario Chief Isadore Day shares a First Nations perspective on NAFTA. 9 CSR & MINING | Lawyer Michael Torrance discusses why global banks may start to apply the concept of “free prior and informed consent” to North America.

10 FAST NEWS | Updates from across the mining ecosystem.

34 UNEARTHING TRENDS | Iain Thompson, EY BC’s Mining & Metals Advisory services leader, discusses the current wave of digital transformation in mining.

30 ABOUT THE COVER

This month’s cover image: mbbirdy, iStockphotos.com

Coming in October Canadian Mining Journal looks at mining in Quebec and the Maritimes. Plus our semi-annual Equipment Maintenance & Repair supplement and a feature report on Energy Efficiency.

For More Information

www.canadianminingjournal.com SEPTEMBER 2017

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Please visit www.canadianminingjournal.com for regular updates on what’s happening with Canadian mining companies and their personnel both here and abroad. A digital version of the magazine is also available at www.digital.canadianminingjournal.com

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FROM THE EDITOR

CANADIANMINING September 2017 Vol. 138 – No. 7

38 Lesmill Rd. Unit 2, Toronto, Ontario M3B 2T5 Tel. (416) 510-6789 Fax (416) 510-5138 www.canadianminingjournal.com

JOURNAL

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Editor-in-chief Alisha Hiyate 416-510-6742 ahiyate@canadianminingjournal.com CANADIAN MINING JOURNAL Twitter: @Cdn_Mining_Jrnl

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News Editor Marilyn Scales mscales@canadianminingjournal.com Production Manager Jessica Jubb jjubb@glacierbizinfo.com Manager of Product Distribution Jackie Dupuis 403-209-3507 jdupuis@jwnenergy.com Publisher & Sales Robert Seagraves 416-510-6891 rseagraves@canadianminingjournal.com Toll Free Canada & U.S.A.: 1-888-502-3456 ext 2 or 43734 Group Publisher Anthony Vaccaro Established 1882

Canadian Mining Journal provides articles and information of practical use to those who work in the technical, administrative

and supervisory aspects of exploration, mining and processing in the Canadian mineral exploration and mining industry.

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All rights reserved. The contents of this magazine are protected by copyright and may be used only for your personal non-commercial purposes. All other rights are reserved and commercial use is prohibited. To make use of any of this material you must first obtain the permission of the owner of the copyright. For further information please contact Robert Seagraves at 416-510-6891.

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We acknowledge the financial support of the Government of Canada.

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Welcome to the gold issue Alisha Hiyate

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e couldn’t think of a better profile for our gold issue than Agnico Eagle Mines – a Canadian success story that will celebrate 60 years in business in October.

Simply put, the company represents some of the best qualities of Canadian mining.

Of Agnico’s eight mines, five are in Canada. Another – Meliadine – will soon make the tally six of nine.

The company has had a powerful impact on Nunavut, where its largest and first Low Arctic mine, Meadowbank, opened in 2010.

Because of its focus on quality assets and risk management, Agnico has been able to make acquisitions, actively explore and invest in new operations.

It’s also been open to innovation: Agnico is the first outside of South Africa to use the Rail-Veyor ore-conveying system at its Goldex underground mine in Quebec, where it recently declared commercial production from the Deep 1 zone.

Moreover, the company has had a deep and positive impact on local Inuit communities in Nunavut, which was described in an April article in Nunatsiaq Online. That impact is summed up best by Patrick Tagoona, the president of Nunavut Investments, who said in an April address to the Nunavut Mining Symposium in Iqualuit: “Meadowbank has literally created a new middle class. There are new opportunities that didn’t exist before.”

It all adds up to the kind of company we want the public to think of when they think of Canadian mining companies.

Also in this issue, this year will see four major new gold mines come online in Canada (profiled on Page 18). It’s notable that three are owned by single-asset juniors, and one is owned by an intermediate gold producer.

Most of the large gold producers are still digesting big investments made during the last market peak and avoiding large capital outlays. Instead, they’re looking to increase productivity at existing operations while they pay down debt.

Scrappy smaller companies, meanwhile, are taking advantage of the gold’s continued strength. So far in 2017, the gold price has held up, despite interest rate hikes by the U.S. Federal Reserve and the expectation of further hikes – to develop new mines. (No doubt, the strength in gold is in part due to the unpredictability and instability of U.S. policy and politics under President Donald Trump.)

In addition to the new gold mines starting production this year, there are a number of junior-owned gold development projects that will become mines in the near future. This points to the resilience and strength of Canada’s mining sector. As Stan Sudol points out in his story profiling the current generation of Canadian mine builders on Page 23 – some of whom are leaders of these juniors – there’s no shortage of visionaries in our industry.

Last of all, hopefully you noticed that Canadian Mining Journal has a new look!

We introduced our new logo on our website and in our e-newsletter, which is sent out to subscribers four times a week, in August. It’s been in the works for a while now because we recognize that the mining sector is changing and we wanted to reflect the modern industry with a cleaner, sleeker look.

We hope you’ll stick by us as we continue to evolve and focus on the conversations CMJ that matter in Canadian mining.

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LAW

5 mining policy areas to watch under BC’s new government

By David Bursey and Sharon Singh

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new government has been formed in British Columbia based on a New Democrat Party (NDP) and Green Party alliance recorded in their 2017 Confidence and Supply Agreement.

Premier John Horgan announced his cabinet on July 18 and sent each minister a mandate letter setting out the government’s priorities. The mandate letters, the agreement, and the NDP and Green Party policy platforms offer insights on what the mining industry can expect.

Michelle Mungall is the new minister of Energy, Mines and Petroleum Resources. She will be assisted by an experienced deputy minister, David Nikolejsin.

The NDP has talked about “revitalizing” mining, focusing on innovation and faster decision-making. With this context in mind, five areas are worth watching.

1. Greater involvement by Aboriginal communities in decision-making

The government committed to adopt the principles of the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) and the Calls to Action of the Truth and Reconciliation Commission. All the minister mandate letters include this commitment. How this commitment is implemented will affect how activities and projects are approved.

Managing the expectations of all interested parties will be a challenge. Without question, however, Aboriginal communities will have a greater voice.

2. New project approvals processes

Minister Mungall’s mandate letter directs her to “Develop an improved and properly resourced approval process to assess mining applications and increase industry safety by establishing an independent oversight committee.” The minister of Environment and Climate Change Strategy is directed to “Revitalize the Environmental Assessment process and review the professional reliance model to ensure the legal rights of First Nations are respected, and the public’s expectation of a strong, transparent process is met.”

The revitalization of the environmental assessment process may include: co-ordinating the federal and provincial processes; greater focus on cumulative effects; regional area planning; and greater incorporation of Indigenous values.

3. Strengthening the regulatory regime

The commitment to establish an independent oversight committee and review the professional reliance model builds upon 6 | CANADIAN

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current work to respond to the May 2016 provincial auditor general’s report on the Ministry of Energy and Mines (MEM) and the Ministry of Environment (MOE).

The report concluded that the ministries’ monitoring and enforcement of mining regulatory compliance is inadequate to protect the province from environmental risks. The AG recommended substantial changes, including the creation of an integrated and independent compliance and enforcement unit.

Expect clearer conditions in approvals; increased reporting, monitoring and inspection; and stronger measures to fulfill reclamation obligations.

4. Review of the fiscal measures and the tax burden

Several pro-mining policies will continue: • Continuing the flow-through share tax credit and the exploration tax credit; • Maintaining support for Geoscience BC; • Removing the PST from electricity used in mining; and • Investing in mining-related training programs like the training tax credit.

Other taxes may offset these benefits though. The carbon tax will increase by $5 per tonne per year, beginning April 1, 2018, and will include fugitive emissions, to meet the federal government’s carbon-pricing mandate. The government also plans to raise the general corporate tax rate to 12% from 11%.

5. Building physical and social infrastructure

The NDP’s commitment to improving social and physical infrastructure includes: Offering scholarships in geoscience and engineering; Improving apprentice sponsorship; Partnering with academic institutions and industry on innovation centres; Addressing housing affordability to attract workers; and Establishing a BC Mining Jobs Task Force.

The government’s commitment to invest carbon tax revenue into greenhouse gas-reduction technologies and “reinvigorate” the Innovative Clean Energy fund may assist mine operators implementing clean technologies to improve efficiency.

At the outset of a new government, the abundance of aspirational statements and the lack of detail is not surprising.

This government has the benefit of some current reform initiatives that align with previous NDP policy positions and should continue.

CMJ DAVID BURSEY is a partner and SHARON SINGH is an associate in the Vancouver Office of Bennett Jones LLP.

www.canadianminingjournal.com

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FIRST NATIONS

Indigenous Peoples on both sides of border need to be involved in NAFTA

By Isadore Day

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ast month, I met with the Potawatomi to learn about how trade, economy, culture and self-determination are vital to the survival of Indigenous Nations on Turtle Island – now known as North America.

The Potawatomi people met in the Unceded Territory of Walpole Island, known as Bkejwanong, (where the rivers divide.) This is the 17th annual gathering. Bkejwanong is located in the St. Clair River system, and is home to the Three Fires Confederacy People, the Ojibway, Odawa and the Potawatomi. Their historical economy and trade have existed from time immemorial – before there was a Canada/United States border.

The Anishinabe and Potawatomi peoples have settled in various parts of Canada and the U.S., forming economies vital to their Nations and the Three Fires Confederacy.

At a meeting on Aug. 4 in Bkejwanong, the tribal leaders focused on trade and economy. The sentiment is one of strong determination and rights assertion, with the intent to retain nationhood rights like title to ancestral lands, languages and political recognition and autonomy.

The Potawatomi people are one of many Indigenous Nations that have socio-economic and political rights that must be recognized in NAFTA because these rights have always been asserted and preserved as sovereign – meaning these rights are autonomous and not confined by colonial government policy and law. The Potawatomi people inherently own both sides of the St. Clair River – prior to confederation or delineation of the Canada/U.S. border and their inherent and treaty rights must be brought into the NAFTA context.

Issues like softwood lumber, agriculture, gaming, communications – these are just some economic activities that have socio-economic impacts on First Nations and must be acknowledged as a matter of sovereignty and recognition of constitutional rights transcending the Canada/U.S. border.

New economies and existing relationships between Indigenous Nations and tribes tie together an opportunity for inter-tribal trade across a border established that would separate pre-existing Indigenous trading territories.

Article 36 of the United Nations Declarations on the Rights of Indigenous Peoples (UNDRIP) states: Indigenous peoples, in particular those divided by international borders, have the right to maintain and develop contacts, relations and cooperation, including activities for spiritual, cultural, political, economic and social purposes, with their own members as well as other peoples across borders.

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I am the Ontario Regional Chief, and also an Anishinabe from the Robinson Huron Treaty of 1850, a treaty with the British Crown before Confederation. Treaties like this and the 1795 Jay Treaty are evidence that Indigenous rights are constitutional priorities, holding the highest legal value and must be respected in NAFTA negotiations. Pre-confederation treaty holders have strong ties to the Jay Treaty because many of those treaties were treaties of military alliance and trade.

Canada, the U.S. and Mexico must recognize the full spectrum of rights of First Nations and tribes in trade and equal sharing of the economic bounty of North America.

Article III of the Jay Treaty says: It is agreed that at all Times be free to His Majesty’s Subjects, and to the Citizens of the United States, and also to the Indians dwelling on either side of said Boundary Line freely to pass and re-pass by Land, or Inland Navigation, into the respective Territories and Countries of the Two Parties on the Continent of America… and to navigate all the Lakes, Rivers and waters thereof, and freely to carry on trade and commerce with each other...

“No Duty of Entry shall ever be levied by either Party on Peltries brought by Land, or Inland Navigation into the said Territories respectively, nor shall the Indians passing or re-passing with their own proper Goods and Effects of whatever nature, pay for the same any Import or Duty whatever. But Goods in Bales, or other large Packages unusual among the Indians shall not be considered as Goods belonging bona fide to Indians.

The NAFTA discussions are similar today, with the additional onus that both Canada and the U.S. have agreed to ratify UNDRIP, and by doing so, acknowledge Jay’s Treaty as a valid foundational law affecting trade. The status of North America’s Indigenous Peoples such as the Potawatomi Nation, whose trade practices were recognized well before NAFTA must factor into the dialogue. NAFTA must not go forward without full recognition of constitutional protected rights of Indigenous Peoples in North America and the implementaCMJ tion of UNDRIP. ISADORE DAY Wiindawtegowinini, is Assembly of First Nations Ontario Regional Chief.

WWW.CANADIANMININGJOURNAL.COM

2017-08-28 3:27 PM

CSR & MINING

Banks look to apply free prior and informed consent in North America

By Michael Torrance

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n May 22, 2017, an open letter was sent from 10 global banks requesting the Equator Principles Secretariat to reconsider how financial due diligence should be done in developed countries like Canada, the United States and Australia.

The Equator Principles (EP) is an agreement between 90 of the world’s largest financial institutions to conduct environmental and social due diligence before lending to projects anywhere in the world. EP financial institutions have in place internal teams of environmental and social risk experts and also hire “independent review” advisors to assist them in conducting this diligence. The reviews consider a variety of aspects of a project, such as resource efficiency, greenhouse gas emissions, biodiversity, health and safety, labour standards, resettlement issues, Indigenous peoples and human rights.

In less developed countries, projects are assessed against both local legal requirements of the project and the World Bank’s IFC Performance Standards on Environmental and Social Sustainability (IFC Performance Standards). The approach in more developed countries has been to only evaluate the project against local legal requirements. Financings can be conditioned (through contractual covenants) on compliance with these standards or on corrective actions being taken to bring the project into compliance. There can be events of default whereby disinvestment could occur if the project falls out of compliance with accepted standards. Ongoing monitoring and review of the project will also be conditions of financing.

The EP are viewed by member banks as a risk management strategy. The long repayment horizon of debt financing for projects means that banks are exposed to project risk for a long time. The EP conditions financing on the application of best practices for environmental and social risk management. The goal is to protect the lender’s reputation and also manage the financial and legal risks associated with a project.

The EP were updated in 2013. At that time, the EP drew a distinction between “Designated” (developed) and “NonDesignated” (developing) countries. While the EP apply globally, the distinction meant that the IFC Performance Standards would only be applied to Non-Designated countries. The theory was that developed countries’ legal systems were more or less in line with the IFC Performance Standards, whereas less developed countries may have gaps versus international standards. This was the source of some controversy. Project proponents and governments in Non-Designated countries argued that there was no reason to assume those legal systems set lower

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standards than the IFC Performance Standards. Some financial institutions also felt that the laws in developed countries often fell short of the IFC Performance Standards. This included in the area of Indigenous rights where the IFC Performance Standards expressly calls for the application of “Free Prior and Informed Consent” for certain projects that would impact on the rights of Indigenous communities.

In practice, several lenders have begun conducting gap analysis on legal requirements and the IFC Performance Standards wherever they do business. But the prevailing practice was not to do so and there was no express requirement in the EP for that to be done.

Recent controversies relating to the Dakota Pipeline project brought this controversy to a head. As set out in the May 22nd letter, EP banks associated with that project felt they were “harshly criticised for supporting a project where consultation with an Indigenous community did not involve (FPIC)…”.

They also felt they were criticized for “…not being able to intervene with the Sponsors (of the project) in order to help identify a solution that was agreeable to all parties in this context.” This experience led the 10 EP members (from Europe and Africa) to request the EP to reconsider its approach to drawing distinction between Designated and Non-Designated countries. In the letter, the group calls for the application of the IFC Performance Standards in every jurisdiction in the world.

The writers also call for more mechanisms in the EP to address project related disputes in a way acceptable to lenders. In response, the EP have established working groups to make recommendations on these matters before the end of the year.

For Canadian miners, the application of the IFC Performance Standards to projects in Canada would be a big change that could create very challenging hurdles for financing. Anticipating these future trends should lead companies that may seek financing to closely consider international standards like the EP and IFC Performance Standards in planning and executing projects. Access to capital for all may depend on the proponent’s ability to prove to lenders that the project can meet standards like FPIC, even if they are not required by law.

Traditional understandings of regulation are being disrupted by a growing emphasis on international CSR standards in global finance. This means that the goalposts for companies are ever shifting, but must be understood to preserve access to CMJ capital.

MICHAEL TORRANCE is a lawyer with Norton Rose Fulbright, Toronto.

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FAST NEWS • M&A |

Updates from across the mining ecosytem

Terrative Digital-MineRP combo to create leading tech provider

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undee Precious Metals has struck a deal to acquire a majority interest in MineRP Holdings PL, a provider of integrated mining technical solutions.

The agreement will see Dundee combine its proprietary wireless underground communications technology, managed within its Terrative Digital Solutions division, with MineRP. The combination will create a leading technology provider well positioned to further capture the rapidly growing demand in the mining industry for digital innovation.

MineRP, a private company founded in 1997 and headquartered in South Africa, is an independent software vendor for the mining industry. Its unique platform improves productivity in planning and operations by integrating various technical

• Reorganization |

and financial applications in the industry.

Since 2011, Dundee has also established itself as a leader in digital innovation across its asset base, particularly at its Chelopech mine in Bulgaria, where it developed wireless underground communications technology now held within Terrative.

The Dundee-MineRP deal combines complementary leading edge technologies that can be sold to existing and future clients in the mining sector as well as other industries, and it further establishes Dundee at the forefront of digital innovation by unlocking the full potential for further operational benefits at its existing sites.

Under the agreement, Dundee will transfer Terrative into a new Canadian

Metso to split its Minerals Services business

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etso is dividing its Minerals Services business into two separate areas: Minerals Services and Minerals Consumables.

Both new business areas will work in close co-operation with the Minerals Capital business to offer optimal end-to-end solutions for their customers. The heads of the business areas will report to Metso’s president and CEO and they will be members of Metso’s executive team. The organizational change will not affect Metso’s external reporting.

The Minerals Services business area will consist of spare parts and service solutions as well as supporting distribution and repair centre infrastructures. The Minerals Consumables business area will consist of wear part businesses together with the 10 | CANADIAN MINING JOURNAL

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subsidiary of Dundee and provide initial funding of US$20 million, the proceeds of which will be used to acquire an initial 78% interest in the common shares of the new company, repay existing MineRP indebtedness, and provide MineRP with working capital. Dundee has also agreed to provide up to US$5 million of additional financing, if required, to support the working capital and growth initiatives of the new company. The balance of the common shares in the new company will be held by an entity owned by MineRP management and employees. The new company will in turn own 100% of MineRP and Terrative.

Dundee will hold a 70% fully diluted interest in the common shares of the new company.

foundries and other manufacturing operations as well as supply chain infrastructure.

“The new structure will allow a natural split of the services businesses and a clearer focus to drive further growth for services in close co-operation with the minerals equipment businesses,” says Nico Delvaux, president and CEO of Metso.

The new organizational structure will become effective at the beginning of 2018, and each new business area will be headed up by its own president.

Metso had sales of about €2.6 billion in 2016 and employs over 11,000 people in more than 50 countries.

Mill lining installation by Metso at Minera Esperanza in Chile. CREDIT: PAOLA VILLAVICENCIO/METSO WWW.CANADIANMININGJOURNAL.COM

2017-08-28 3:30 PM

• Equipment |

Atlas Copco launches battery powered Boomer M2C drill rig

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tlas Copco recently launched its latest piece of battery powered, equipment – the Boomer M2C drill rig. With the addition of battery drill rigs, Atlas Copco now offers a full underground mining portfolio that includes loaders, trucks, face drills, ground support and production drills with diesel-free options. The company showcased its innovative battery technology in Sudbury earlier this month.

Atlas Copco’s new Boomer M-series face drilling rigs have become a key piece of equipment for mining and tunneling applications. As part of the company’s commitment to continuous improvement, the face drilling rig benefits from a comprehensive upgrade, focusing on improved safety, increased robustness, battery power, automated functions and lower operational costs.

Thanks to its efficient and powerful electrical motor and battery drivetrain, the Boomer M2C is able to perform long tramming in challenging conditions without any emission at all.

This means a safer working environment underground with better air quality. At the same time, the drill rig will charge the battery while drilling the face so there is no need to stop for

charging during tramming. All this has been achieved without changing the size and usability of the machine.

In addition to being clean and minimizing the need for ventilation, the Boomer M2C is also flexible. Thanks to the onboard charging there is no need to stop and charge. The Boomer M2C battery will charge during drilling and the operator can go directly to the next face when finished drilling.

The machine’s large battery capacity and powerful motors provide the ability to outperform diesel machines in most applications. And like all Atlas Copco equipment, the Boomer M2 is automation ready.

Guests at the launch event were given the opportunity to step into the driver’s seat of the Boomer M2 and Boomer S2 training simulators to see things from an operator’s perspective. The Automation Simulator on site allowed visitors to experience the operator viewpoint and observe the comprehensive benefits of Certiq, Atlas Copco’s telematics technology.

The launch also displayed the battery powered Scooptram ST7, the Minetruck MT42, Scooptram ST1030, Boomer 282 and Aramine L150.

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Agnico E

• GOLD

SOARS A The Meliadine project, in Nunavut, will see first production in 2019. CREDIT: AGNICO EAGLE MINES

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o Eagle

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We’ve worked our way through a number of challenges in a very tough business, but we find ourselves in the best position we’ve ever been in, SEAN BOYD, PRESIDENT AND CEO OF AGNICO EAGLE MINES. CONTINUED ON PAGE 14

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• GOLD

The Meadowbank mine in Nunavut.

CREDIT: AGNICO EAGLE MINES

We’re the only company of any size that never ever sold an ounce of gold forward when hedging was all the rage. We just don’t follow the pack. We just sort of do our thing.

SEAN BOYD, PRESIDENT AND CEO OF AGNICO EAGLE MINES

By David Godkin

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kay, sure. Just about any CEO of a successful mining operation will likely tell you the same thing. Things have never been better. The difference is not every mining company gets to celebrate their sixtieth year in business; nor are the superlatives always justified by the numbers.

In Sean Boyd’s case, they are: cash receipts from operations in the first six months of this year were $406.6 million or 8.4% over the same period last year. Gold production guidance was up to 1.62 million oz. from 1.57 million oz. and total cash cost guidance down from US$610 per oz. to US$595 per oz.

“We don’t run around patting ourselves on the back but of the TSX sixty companies over the past ten years, our returns were ranked number eighteen behind one of the banks at seventeen,” said Boyd. “All the other banks were behind us and the next closest mining company was fortieth and those returns were all negative over that ten-year period.”

The Harvard Business Review was certainly impressed. In its annual ranking of worldwide companies in November it placed Agnico Eagle at 55 on a list of 1,200. How does Boyd account for its ability to prevail where others fail, especially in volatile markets where gold prices can drop as easily as they rise? By doing things a lot differently than most companies in the resource industry.

“Most guys get caught up in this boom and bust mindset.

When things are looking good, they’re getting carried with investments in the business. And when things turn down, they 14 | CANADIAN

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panic and are forced to slash and burn.”

The reverse can happen, too, said Boyd. Between 2012 and 2015 when the competition was selling assets at depressed prices, slashing drill and head count, Agnico was investing in juniors, adding drills and growing production. And because it made those crucial investments at a time when others weren’t, Boyd notes: “We actually have one of the few companies in the gold space that can grow over the next two to three years.”

Milestones galore…

A quick look at the company’s history will show you Agnico Eagle’s recent success is no anomaly. From the very beginning, the company distinguished itself by managing risk better than other companies, Boyd says. It never set out to become the biggest.

Instead, Agnico management viewed their jobs “as building a solid, manageable business that generated above average returns for our shareholders, and a great place for people to work.”

A case in point: Paul Penna. Agnico Mines had already been in business for 15 years when Penna merged it with Eagle Gold mines in 1972 and took over as president. While the merged company would rely for the next decade on revenues generated by the gold mine as the price of silver foundered, Penna took an interest in a property in the Abitibi region of northwestern Quebec that others were ignoring – the Dumagami Mines incorporated in 1961. Penna soon entered into an agreement with Noranda to develop the property. www.canadianminingjournal.com

2017-08-28 6:01 PM

Scroll forward eight years to a major gold discovery on the property now named the LaRonde mine after its first general manager Don LaRonde. Noranda is out of the picture as Agnico Eagle’s stock price starts rising and the company begins raising $179 million in stock and bond offerings to bring LaRonde into production. This is perhaps the single most important milestone at LaRonde, mirrored last year, says general manager Daniel Paré, when it became the deepest underground mine in the Americas, reaching 3 km.

“The operation also poured its five millionth ounce of gold last year, so that’s two big milestones,” Paré says. “And now we have a diamond drill exploration program that extends to 3.7 kilometres deep.”

Not for the faint of heart…

In fact, LaRonde has expanded many times since 1988, said Paré, with a mill rate rising from 1,800 tpd to more than 7,000 tpd by 2001. He agrees with Boyd about the wisdom of making timely facility and equipment investments, even as others are cutting back.

“It’s easy to cut when budgets are very tight, but if we had stopped diamond drilling we would have been in trouble today because it takes a long lead time to put a mine into production.”

Considered the cornerstone of the company’s success, LaRonde still has 3.1 million oz. gold in proven and probable reserves totaling 18 million tonnes grading 5.4 g/t gold. That’s the highest grade of any of the company’s producing mines, with production expected to be 315,000 oz. in 2017 and average 363,000 oz. per year from 2018 through 2019.

In 2003, the company acquired the LaRonde Zone 5 project west of the LaRonde mining complex –the underground part of an old open pit mined in the ‘80s, Paré says. The company recently gave the green light to development of underground mining at Zone 5 by the middle of next year (pending permitting approval). Of particular assistance will be a mill located at the LaRonde mine for the nearby Lapa underground mine.

“Zone 5 is low grade so it has to be a lean project,” Paré says.

“But with the availability of the Lapa mill as the Lapa mine comes to an end next year, there was no capital required for the construction of a mill at Zone 5. So it was a perfect window to put that zone into production.”

Supporting Zone 5 will be a new underground ramp currently under lateral development along with a paste fill plant to be completed by next spring. At the LaRonde 3 project, meanwhile, studies are ongoing to evaluate the potential to mine below the currently planned depth of 3.1 km. The current resource in the western portion of the deposit is in the inferred category, extending to the 371 level.

Community counts…

Few things in the company’s history are as big as the February 2017 announcement of a US$1.2-billion investment in two gold properties in northwestern Canada. The nugget of the news release: development of the Amaruq satellite deposit near the existing Meadowbank gold mine and construction of the Meliadine project near Rankin Inlet in Nunavut.

Said Boyd at the time “We believe that between the Meliadine project and the Amaruq satellite deposit at Meadowbank, the SEPTEMBER 2017

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company has a significant mining platform that has the potential to produce gold for several decades.”

Both mines sit within a 4,400 sq.-km land package covering three major geological belts west of Hudson’s Bay that has grown 10 times in as many years, said Boyd. That includes Meadowbank, which will continue to produce a large amount of gold right through to the end of 2018. Boyd says the company will be ready later in 2019 for the recently discovered Amaruq Whale Tail deposit to start feeding ore into its Meadowbank processing facilities.

The target at Amaruq, said Boyd, is about 2 million oz. of gold produced between 2019 and 2024. At Meliadine, it’s about 5.3 million oz. of gold over 14 years of mine life.

The company expects a conventional open pit mining operation to begin on the Whale Tail satellite deposit (Phase I) in the third quarter of 2019 followed by the V Zone pit (Phase II).

Boyd reserves a large measure of his enthusiasm for the roles the Amaruq and Meliadine mines will play in the surrounding community life of Nunavut. Despite the tensions that have historically occurred between mining companies and Indigenous peoples, Boyd says, “in Nunavut, we see a place where you can do business. The people of Nunavut, particularly the Inuit, are open for mining.”

The proof of that happened 18 years ago, Boyd notes, when the Inuit in Nunavut used geological consultants to recover ownership over 18% of the land while negotiating their land claim settlement with the government of Canada.

CONTINUED ON PAGE 16

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• GOLD

Luc Chouinard, general manager of Meadowbank.

CREDIT: AGNICO EAGLE MINES

“They were basically looking for land that they could own directly that had the best geological potential,” Boyd says. Today, that includes benefits accruing from Amaruq and Meliadine: approximately $500 million per year in goods and services after 2019 and 2,000 jobs, 714 of them filled by the Inuit.

“They want that land developed. They want drills on it. They want companies that know how to build mines and it’s a perfect match for us,” says Boyd. With sixty years’ experience under its belt, Agnico Eagle also has a strong operating base of four mines in Quebec, with the logistical planning and support to expand its platform in Nunavut.

Existing platforms always a plus…

The bigger project by far, says Boyd, is the Meliadine project where Agnico Eagle is spending $900 million to build an entirely new mine 30 km north of Rankin Inlet. “The road’s in place, heavy construction’s under way, we’re doing concrete work, and we’re in the middle of the barge season, so all the steel’s coming,” Boyd says. Steel erection gets under way this year for an overall project start in 2019.

Meliadine and Amaruq collectively will produce between 700,000 and 800,000 oz. per year, at “good” cash costs, says Boyd.

But even better is the tremendous exploration potential that having an operating platform already in place at Meadowbank

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provides to support expansion into the Amaruq satellite deposits and Meliadine. Better still, says Boyd: exploration costs at a fraction of what a junior would have to spend to do that work.

“We can do a lot more exploration. We can stretch our exploration dollar. We’ve got huge budgets up there to continue to drill and add ground through staking and we just see Nunavut as being a part of Agnico for decades to come,” Boyd explains.

For its part, Meadowbank produces more than 300,000 oz. of gold annually. With Meadowbank’s existing open pit mine closing in on its end-of-mine life, a timely move will be the use of its existing infrastructure (mining equipment, mill, tailings, camp and airstrip) at the newly discovered Whale Tail mine, with a 72-km road built to create a direct link to the Meadowbank’s processing plant.

Rumbling along that road carrying the ore to Meadowbank will be a brand new fleet of modified long haul trucks – not your traditional rigid body mining haul trucks, says Meadowbank’s general manager, Luc Chouinard. “Our 150-tonne haul trucks don’t lend themselves to that 72-km road very well.” Instead, a modified tractor with two ore-carrying trailers arrangements normally used in the logging industry is being piloted.

“Western Star, Mack, Kenworth; they’d typically be that type of tractor trailer arrangement, but not the ones you’d see on the highway. They look similar but come in a larger size.”

Hiring local, training the best…

But Meadowbank is not done yet, due in part to a slight increase in mineral reserves at year-end 2016, and the mining of additional higher grade ore at its Portage pit. Agnico Eagle has also pressed forward with work at the Vault pit to recover more ore there, says Chouinard, “but also to keep some of our employees and fleet at work.” In the past year and a half, it’s also installed grade control systems, and been busy on earthworks and pre-stripping.

In fact, good local hires make all the difference at Agnico, says Chouinard. “Since 2012, all of our haul truck positions, for example, have been filled by Inuit employees,” some of whom, he adds, take advantage of Agnico Eagle’s career path program.

The program’s goal: to support internal promotion of its Inuit employees and ensure only Inuit candidates are hired to fill a position that is part of a specific career path.

“We just had our first Inuit employee complete the mine department’s career path to become a shovel operator a week and a half ago,” said Chouinard – a plum position at Agnico CMJ Eagle, he added. www.canadianminingjournal.com

2017-08-28 6:01 PM

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• GOLD

Rising TO THE

CHALLENGE

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www.canadianminingjournal.com

2017-08-28 4:09 PM

CANADA’S FOUR NEWEST GOLD MINES

I

By Alisha Hiyate

t’s been tough for the last several years to get mine financing, but these four new Canadian gold mines, all coming on stream this year, prove that it hasn’t been impossible. The challenges aren’t over once the financing is in hand or the construction is complete, however. Read how these mines are dealing with the issues – big and small – that come with working the bugs out of a new operation.

BRUCEJACK – Pretium Resources – B.C. Pretium Resources’ Brucejack mine, in B.C.’s Golden Triangle, achieved commercial production in July – only eight years after the super high grade Valley of the Kings deposit at the project was discovered.

The deposit was discovered in 2009

by Silver Standard Resources and a year later, Pretium Resources had its IPO and acquired the project. Ever since then, Pretium has been pushing hard to get the underground mine into production.

In fact, the mine achieved commercial production three months early.

Even before introducing first ore to the mill in May, the company was focused on achieving name plate capacity of 2,700 t/y as quickly as possible on low grade ore. That was achieved by the end of July, and the focus for the rest of the year is now on increasing the grade of the ore in the mill.

As the grade to the mill increases the company must also optimize the gravity circuit and then the float circuit at Brucejack: both gold doré and a gold-silver concentrate are produced onsite.

“The target is to be at steady state production levels by the end of this year,” said president and CEO Joseph Ovsenek in a late August interview. “That’s a big challenge, but I think everyone’s working hard to achieve it.”

Over its first eight years, Brucejack is expected to produce 504,000 oz. of gold annually, with production averag-

ing 404,000 oz. per year for the remaining 10 years of mine life. At base case metal prices of US$1,100 per oz. gold and US$17 per oz. silver and a 5% discount rate, a 2014 feasibility study pegged the project’s post-tax net present value (NPV) at US$1.5 billion and its internal rate of return (IRR) of 28.5%. In February, Pretium updated capital cost estimate for the mine to US$811 million – up from US$697 million previously.

The mineralization at Valley of the Kings is contained in quartz stockworks systems that vary in width from 20 to 50 metres, and typically grade 0.5 to 3 g/t gold, Ovsenek says. “Within that we have those high-grade veins where we get kilograms of gold per tonne.”

Valley of the Kings contains proven and probable reserves of 8.1 million oz. gold and 5.9 million oz. silver in 15.6 million tonnes grading 16.1 g/t gold and 11.1 g/t silver. The West Zone at Brucejack holds 600,000 oz. gold and 26 million oz. silver, hosted in 2.9 million tonnes grading 6.9 g/t gold and 279 g/t silver.

The high grade nature of the ore has led to one challenge in the mill: When the rock hits the SAG and ball mills, coarse visible gold is freed. The mills act as big centrifuges, forcing heavy gold particles to the outside, where they work their way into nooks and crannies.

In an August press release, the company revealed that a 4.7-kg grab sample taken from gravity recoverable gold trapped behind a SAG mill liner graded 23,547 g/t gold. Ovsenek says the gold

Construction of the power line to Pretium Resources’ Brucejack mine in B.C.

>

CREDIT: PRETIUM RESOURCES

LEFT TO RIGHT: An Arctic vehicle at TMAC Resources’ Hope Bay mine in Nunavut. CREDIT: TMAC RESOURCES. Atlantic Gold’s Moose River Consolidated mine in Nova Scotia. CREDIT: ATLANTIC GOLD. The ore stockpile at New Gold’s Rainy River mine in Ontario. CREDIT: NEW GOLD SEPTEMBER 2017

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CANADIAN MINING JOURNAL |

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• GOLD

The Brucejack mine, 65 km north of Stewart, B.C.

CREDIT: PRETIUM RESOURCES

will be recovered when the liners are replaced as they wear out.

To control dilution at the operation, which is being mined by longhole stoping, the company is finalizing a grade control plan that will see it sample drill cuttings from each of the blasthole rings to provide an estimated grade for each ring.

In addition, after mining out a stope, a LIDAR unit will be used to scan the stope so mined material can be compared to plan and corrective actions can be taken where necessary.

“Between those two approaches we figure we’ll have a good handle on dilution,” Ovsenek says.

In terms of innovations at the mine, Ovsenek points to work that’s gone into energy efficiency. While the mine is tied to the grid, the company has opted for little things like LED lighting and on the hightech end, variable frequency drives for the drive units in the mill building to conserve energy. The mill building also contains a state-of-the art water treatment plant.

HOPE BAY – TMAC Resources – Nunavut After pouring its first gold in February, TMAC Resources declared commercial production at the Hope Bay mine, 125 km southwest of Cambridge Bay in Nunavut, on May 15. Acquired by TMAC in 2013, the project contains three deposits: Doris, which is now being mined, Madrid, which is next to be developed, and Boston.

The underground mine is expected to produce 160,000 oz. of gold per year over a 20-year mine life at 2,000 t/d from the three deposits. A 2015 prefeasibility study pegged startup capex at $206 million, and sustaining capital at $436 million. At a discount rate of 5% and 20 | CANADIAN

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The Hope Bay site.

CREDIT: TMAC RESOURCES

US$1,250 per oz. gold, the study forecast the project’s post-tax NPV at $626 million and its IRR at 40%. All-in sustaining costs (AISC) are expected to be US$785 per oz. of gold, while cash costs should be under US$600 per oz.

As of December, TMAC had spent $350 million on development. The company negotiated another US$30 million in credit in July, amending an existing US$130-million loan agreement.

Mine development at Doris North has been progressing well.

However, issues in the processing plant have forced the company to take its ramp-up to full production more slowly than planned. In August, the company said it now expects to sell 50,000 to 60,000 oz. of gold this year, down from 100,000 to 120,000 oz. previously forecast.

In August, TMAC CEO Catherine Farrow said that the characteristics of the Doris ore have been in line with expectations and are not the cause of any complications in the plant recoveries.

In a conference call she explained that the plant issue is more complex than just one item.

“From where we feed the ore right through to where we refine the ore, it’s a systematic process of going through and optimizing pieces of equipment,” she said. “It’s more of just achieving stability, getting the plant very calm and running, and now systematically going through the plant and working on individual components to bring their performance up.”

Farrow said the company is first focusing on plant stability and getting it to run consistently at its design capacity of 1,000 t/d. As that’s achieved, TMAC will begin to tweak recoveries – which in June averaged only 67% compared to 90% projected in a 2015 prefeasibility study.

After it achieves steady state production of 1,000 t/d, the company will ramp up to 2,000 t/d next year. A second 1,000 t/d modular Python plant (supplied by Gekko Systems) is being delivered to the site this year.

Hope Bay currently hosts proven and probable reserves of 3.6 million oz. contained in 14.5 million tonnes grading 7.7 g/t gold.

Sixty kilometres south of Doris, TMAC has recommissioned a camp at Boston to support its first drill program there. Initial results have included a 22.3-metre interval of 15.3 g/t gold.

The three deposits at Hope Bay were discovered in the 1990s by BHP. The project has also been owned by Miramar Mining and Newmont Mining.

MOOSE RIVER CONSOLIDATED – Atlantic Gold – Nova Scotia Nova Scotia isn’t the first province that comes to mind when listing off top mining jurisdictions in Canada, but it’s actually a historic gold jurisdiction, says Maryse Belanger, Atlantic Gold’s chief operating officer.

“When you think about it, the first gold mining in Canada took place in Nova Scotia and that was back in the 1800s,” she says.

Those miners only went after the high grade gold in quartz veins, not recognizing that the gold extends past the veins into sedimentary rocks, Belanger adds.

When the disseminated shale hosted mineralization in the district is combined with those quartz veins, you can have 50- to 100-metre-wide bulk mineable zones that are a “no brainer” for an open pit, she says.

That pretty much describes Atlanwww.canadianminingjournal.com

2017-08-28 4:09 PM

Moose River Consolidated site.

CREDIT: ATLANTIC GOLD

tic Gold’s Moose River Consolidated (MRC) mine, about 85 km northeast of Halifax. Over a minimum 8.5-year mine life, MRC will produce 87,000 oz. gold per year from two open pit deposits: Touquoy and Beaver Dam. At a gold price of US$1,200 per oz., the initial capital cost to build MRC was projected at $137.3 million at a 5% discount rate, according to a 2015 feasibility study.

Its post-tax NPV was estimated at $168 million and its IRR at 30%. The study pegged cash operating costs at C$626 per

oz. and AISC at C$690 per oz.

Construction at the mine, which began in the second quarter of 2016, was 95% complete at presstime in August.

Commercial production is expected in early 2018.

Atlantic has an effective 63.5% interest in Touquoy (a private company with a carried interest owns the rest) and a 100% stake in Beaver Dam, and two other nearby deposits: Cochrane Hill and Fifteen Mile Stream. The company expects to release a prefeasibility study for a second phase of mining at MRC incorporating Cochrane and Fifteen Mile Stream as satellite deposits in October. Atlantic consolidated ownership of the deposits in September 2014.

Atlantic has done a number of innovative things at Moose River. For one, it opted for a fixed-price EPC contract – unusual in the industry – to avoid the capex cost overruns that have become routine.

“What it meant was more work on the front end on the detailed engineering side and equipment selection (for the contrac-

tor) to be able to say we will build a plant for this much money,” Belanger says.

The company is also using grade-control drilling on as close as 5 by 5-metre spacing to better define ore and waste, reduce dilution, and have information sooner for planning.

“It means that up to a year and a half before we mine that material, we have that information,” Belanger says. “So we sample and assay and get that information, and it allows us to adjust our resource model, get a more robust predictive model for short-range planning.”

As part of the grade-control drill program, Atlantic is the first company in North America to have a PAL (pulverize and leach) machine in the lab, a piece of equipment that allows it to analyze up to fifty 1-kg samples at once.

“With a disseminated deposit, you want a representative sample,” Belanger says. “Instead of doing what’s standard in the industry, a 30 or 50-gram fire assay, we assay a full 1 kg.”

In addition, as grinding typically accounts for 30-40% of the operat-

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CANADIAN MINING JOURNAL |

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• GOLD ing cost in processing, the company is paying attention to energy efficiency.

Belanger is also implementing a mineto-mill program to optimize fragmentation in the mine.

RAINY RIVER – New Gold – Ontario New Gold is an intermediate producer with several mines already in its portfolio. New Gold bought the Rainy River gold project, 65 km northwest of Fort Frances, Ont., in 2013. Slated for first production in September and commercial production in November, Rainy River will be the company’s fifth mine.

With a 14-year mine life, the open pit and underground operation is expected to produce 325,000 oz. a year over its first nine years at a rate of 21,000 t/d.

Proven and probable reserves total 3.8 million oz. gold and 9.4 million oz. silver in 104.3 million tonnes grading 1.13 g/t gold and 2.81 g/t silver.

A 2014 feasibility study on Rainy River used base case prices of US$1,300 per oz. gold, US$22 per oz. silver and an

exchange rate of US$0.95.

At a discount rate of 5%, the post-tax NPV was estimated at US$314 million and the IRR at 11.3%.

Cash costs were pegged at US$663 per oz., AISC US$765 per oz. and the preproduction capex at US$885 million.

The project hasn’t gone completely according to plan, however. In January, the company announced that first production would be delayed by three months (to September), and that the project would cost another $195 million due to a slower than planned ramp-up in mining rates. Layers of peat and basal till encountered during open pit development slowed production, with the company having to spend more on equipment and contractors. New Gold had already added another $125 million to costs last September, associated with a redesign of the project’s tailings management facilities.

Management changes and a revised plan for Rainy River in January, along with

The Rainy River mine in Ontario.

CREDIT: NEW GOLD

a US$173-million financing in March, may have put the mine back on track.

And on a second-quarter conference call, president and CEO Hannes Portmann pointed out that after spending US$515 million this year on Rainy River, the mine will soon go from consuming cash to generating it.

The company has applied for a Schedule 2 amendment needed to close off two small creeks within its tailings management facility, and expects to receive it in the final quarter. In the meantime, a starter tailings cell, expected to be completed in August, will allow for about six months of production.

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2017-08-28 4:09 PM

• MINING VISIONARIES

Nation builders The current generation of mine builders

Image: pawel gaul, iStockphoto.com

By Stan Sudol

I

n the February/March 2017 issue of CMJ, I highlighted the top ten mine builders in Canadian history and lamented that we recently passed the tenth anniversary of the takeover of historic Canadian companies Inco, Noranda and Falconbridge. These companies played a key role in opening up isolated northern regions and trained generations of worldSEPTEMBER 2017

23-29 September2017_Next Generation.indd 23

class mine finders and builders.

Notwithstanding an enormous amount of national angst about a “hollowing out” of the Canadian resource sector, the following list of current mine builders – who may end up on some future “Top 10” list – clearly indicates that we still have an enormous talent pool of visionaries who will continue to build and find mines

and create the next generation of homegrown corporations.

This list is in no particular order and is a very wide cross-section of industry players that range from junior mine builders to seasoned CEOs of multi-billion dollar corporations and represents a very small selection of Canada’s mining talent.

CONTINUED ON PAGE 24

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MINING VISIONARIES

• MINING VISIONARIES

Robert McEwen Robert McEwen

Robert McEwen founded Goldcorp, with the takeover of the aging and cashstarved Dickinson mine in Red Lake, Ont. The controversial out-of-the-box thinker is widely credited for renewing the Red Lake gold mining camp with his Goldcorp Challenge, which put historic and then current geological data from the mine online and solicited the best geologists around the world to identify new drill targets.

The resulting success turned a 50,000 oz. producer in 1997 into a 500,000 oz. producer in 2001 and lowered cash costs from US$360 per oz. to US$60. McEwen successfully initiated Goldcorp’s merger with Ian Telfer’s Wheaton River Minerals in 2005 and stepped down from his subsequent chairman position by the end of that year. He went on to establish McEwen Mining, which has producing gold/ silver mines in Argentina and Mexico and recently struck a deal to buy Primero Mining’s Black Fox mine in Ontario.

Ian Telfer

While McEwen founded Goldcorp and turned it into a mid-tier miner, it was Ian Telfer who propelled the rapidly growing company into global significance.

Telfer is a well-known mine entrepreneur 24 | CANADIAN

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Ian Telfer who is credited with building up several multi-billion-dollar mining firms.

In 2001, he purchased a junior company, Wheaton River Minerals, with legendary financier Frank Giustra. Through an aggressive takeover strategy and taking advantage of the exploding gold price, Telfer turned an insignificant shell company into a billion dollar gold producer in just four years. In 2005, he helped engineered the $2.4-billion share swap that saw Goldcorp absorb Wheaton River.

Within the same year, in a whirlwind of M&A transactions Telfer added another 10 assets to the portfolio, merging with Glamis Gold and acquiring the Canadian assets of Placer Dome, which was being taken over by Barrick, making Goldcorp the second largest gold producer in Canada. It is currently fourth largest in the world, earning Telfer enormous respect for his financial vision.

Terry McGibbon

Terry McGibbon founded Sudburybased FNX Mining which discovered the extraordinarily rich (but not yet developed) Victoria deposit. FNX merged with Quadra Mining which in turn was taken over by KGHM, a Polish company. McGibbon also founded INV Metals which is currently conducting a

feasibility study on its Loma Larga gold property in Ecuador. Another company, TMAC Resources recently celebrated its first gold pour at its new Hope Bay gold mine in Nunavut. McGibbon also guided Torex Gold Resources’ Mexican mine through its early acquisition, exploration and development.

TMAC Resources’ project is located on the 80-km-long, 20-km-wide Hope Bay greenstone belt, which has enormous potential for further gold discoveries. Like many of the visionary mine builders previously profiled, McGibbon and his team are building and developing a brand new gold camp in the isolated Far North and providing many economic opportunities for the local Inuit who are full supporting partners of the project.

Through FNX Mining, McGibbon played a key role in highlighting the continued viability of mineral discoveries in the 130-year-old mining camp in the Sudbury Basin at a time when many thought it was in decline. Sudbury continues to be one of the richest mining districts in North America.

Sean Roosen, John Burzynski and Robert Wares

Sean Roosen, John Burzynski and Robert Wares founded and brought into producwww.canadianminingjournal.com

2017-08-28 3:40 PM

Terry McGibbon

John Burzynski, Sean Roosen and Robert Wares

tion the Canadian Malartic Mine – the Mines and Yamana Gold after a hostile largest open pit gold producer in Canada. takeover attempt by Goldcorp. The three MIllLiners.qxp_Layout 1 5/18/17 4:40 PM Pagemen 1 changed the paradigm of gold minThe mine was acquired

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2017-08-28 3:39 PM

• MINING VISIONARIES

Clive Johnson a decade, Osisko Mining became one of the ten largest companies in Quebec.

With their new companies, Osisko Gold Royalties and Osisko Mining, the three mining entrepreneurs are consolidating properties in the Abitibi Greenstone region of Ontario and Quebec and other parts of Canada and are exploring for the next great gold deposit, focusing significant resources on the geologically unique high-grade Windfall Lake gold deposit located between Val-d’Or and Chibougamau.

The extraordinarily rich Abitibi Greenstone Belt – stretching from Timmins, Ont., in the east through Kirkland Lake to Rouyn-Noranda and Chibougamau, Que., in the west, is the source of Canada’s greatest gold mining camps on par with Nevada’s Carlin Trend and the Eastern Goldfields of Australia.

Clive Johnson

In 2007, B2Gold Corp. was founded by President and CEO Clive Johnson and the former senior management team of Bema Gold Corporation after that company was taken over by Kinross Gold for C$3.5 billion.

Purchasing a gold mine and improving and completing construction of a previously closed gold operation in Nicaragua 26 | CANADIAN

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Robert Quartermain quickly gave the new company valuable cash flow. This allowed B2Gold to make further strategic acquisitions of a gold mine in the Philippines and a gold project in Nambia.

B2Gold has become one of the fastest growing mid-tier gold producers in the world, increasing gold production from 108,700 ounces in 2010 to between 530,000 and 570,000 ounces in 2017.

Their most ambitious project to date is the Fekola gold project in Mali – West Africa’s legendary gold production was one of the major sources of the precious metal between 1000 AD to 1500 AD, well before the gold rushes in Australia and North and South America.

The Fekola mine is three months ahead of schedule for an October 1, 2017 start, on budget and will dramatically increase B2Gold’s production next year to between 900,000 and 950,000 ounces. The company has other deposits in neighbouring Burkina Faso as well as exploration projects in Colombia and Finland.

Robert Quartermain

Exploration geologist and mine developer Robert Quartermain has a long history of acquiring and building precious metal mines during bear markets.

In 1985, he took over a small junior called Silver Standard which had a market cap of $2 million and two employees.

When he resigned 25 years later in 2010, the company was worth around $2 billion thanks to an aggressive silver acquisition strategy.

One of the companies Quartermain acquired for its silver reserves had the Brucejack project located in Golden Triangle of northwestern British Columbia, which has seen improved hydro, road and port (Stewart B.C.) infrastructure over the past decade. When Silver Standard decided to sell the asset in 2010, Quartermain formed Pretium Resources and bought the project back.

With an average grade of 14.1 g/t, the Brucejack mine – which recently made its first gold pour – is estimated to be one of the highest grade new underground projects in the world, with proven and probable reserves of 8.7 million oz. gold and 31.9 million oz. silver – a definite company maker. Pretium is the largest land holder in the Golden Triangle with over 1,210 sq. km of land offering enormous future potential.

Tony Makuch

Tony Makuch took over the reins at Timmins’ Lake Shore Gold in 2008 to www.canadianminingjournal.com

2017-08-28 4:14 PM

Tony Makuch bring a bankable gold deposit into production. Not only was he coming back to his hometown, he was also working in the richest gold camp in the country – 72 million oz. and counting. Makuch had tremendous success finding new gold reserves on the West side of Timmins, which historically had been largely ignored, and significantly increased the company’s land package for future discoveries.

Bought out in early 2016 by Tahoe Resources in an almost $1 billion deal, Makuch had built up measured and indicated resources of 2.4 million oz. gold and inferred resources of 1.1 million oz. gold at Lake Shore’s two operating mines – and resources of about 6 million oz. gold in all categories at four exploration properties in the Timmins area. But most importantly, he significantly revitalized gold mining in the Timmins camp at a time when many thought it was in decline.

Makuch is now CEO at Kirkland Lake Gold, which has properties in Australia and Kirkland Lake – Canada’s second-richest gold camp at 45 million oz. and counting. The company’s legendary Macassa mine in the Kirkland Lake camp was built in 1933 and with about 2 million oz. gold in reserves at 20.8 g/t is among the richest in the country.

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Sean Boyd Sean Boyd

Agnico Eagle Mines’ Sean Boyd who has been CEO for an astonishing 19 years (an

amazing accomplishment in itself in these volatile times) has successfully grown the gold miner. When he became CEO

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2017-08-28 4:12 PM

• MINING VISIONARIES

Robert Friedland in 1998, the company produced about 150,000 oz. of gold. Last year the figure was almost 1.7 million oz. and with two new Nunavut projects expected to start production by the end of the decade, Agnico expects to dig 2 million oz. out of the ground by 2020 from global operations that also include Quebec, Mexico and Finland.

Agnico’s Meadowbank gold mine in Nunavut has made a considerable impact on the territory’s economy. A study reported that the mine contributes about 15% to the territory’s GDP and employs slightly over 300 Inuit at an average wage of $107,000 a year – the foundation of an Indigenous middle-class.

Agnico Eagle annually spends about $5 million on extensive internal skill training programs to help Inuit advance in the workforce and generates $280 million yearly in local business procurement. And royalties will be flowing to the Inuit through their umbrella organization, Nunavut Tunngavik.

Robert Friedland

Billionaire Robert Friedland’s impact on the Canadian mining sector – and his exceptional tier-1 mineral discoveries over the past 25 years – have been nothing short of astonishing. He continues to 28 | CANADIAN

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Stephen G. Roman be in mining’s international mining limelight and is a huge proponent of minerals, including copper and platinum, that need to be mined to support clean technologies and urbanization.

Discoveries by his flagship Ivanhoe Mines at its Kamoa-Kakula copper project in the Democratic Republic of Congo (DRC) have been independently verified as the largest in the history of African mining. Ivanhoe also is advancing development of its Platreef platinum discovery in South Africa and upgrading of the DRC’s Kipushi mine, whose resources of 34.9% zinc are the world’s richest.

Other high-profile discoveries by companies under Friedland’s leadership include Alaska’s Fort Knox gold, bought by Kinross, Newfoundland & Labrador’s Voisey’s Bay nickel/copper project, bought by Inco for $4.3 billion, and Mongolia’s Oyu Tolgoi – one of the world’s greatest copper/gold finds that saw Rio Tinto brought in to help build the initial mine in 2006 and take majority control in 2012.

Entering Vancouver’s wild junior mining scene in 1980, Friedland later made international headlines when the U.S. government alleged he was solely responsible for environmental conditions behind the failure of Colorado’s Summitville gold mine. A Canadian court issued

an extraordinary censure of U.S. misconduct in 1996, including withholding and misrepresenting key evidence, and awarded him costs totalling $1.25 million. He later reached a voluntary settlement to help restore the mine site.

Stephen G. Roman

Stephen G. Roman was introduced to mining at the very young age of five when he went underground at Denison Mine’s uranium operations, which his father, Stephen B. Roman (one of the most powerful mining magnates during the 1950s to 1980s) – was building in Elliot Lake. His sister, Helen Barber-Roman took over the company when their father died in 1988, becoming the first female CEO of a major mining company.

Stephen G. Roman has a great track record himself, building the Timmins Glimmer mine in 1996 (now known as the Black Fox mine) which was sold to Apollo Gold in 2002. His next significant project was the Gold Eagle mine in the Red Lake camp. He and his partners – who the won the PDAC Bill Dennis discovery award in 2016 – sold the deposit to Goldcorp for $1.5 billion in 2008.

Harte Gold, Roman’s current junior venture, is advancing the Sugar Zone located just 80 km east of the massive www.canadianminingjournal.com

2017-08-28 3:45 PM

Author’s Note: I consulted with many people during my research for this essay however, the following must be acknowledged for their time and sage advice: David Constable, corporate director, CMJ news editor Marilyn Scales, Peter Koven, former Financial Post mining reporter and currently at Bay Street Communications, Jane Werniuk, geologist at Agnico Eagle and former CMJ editor and John Ing, president and CEO of Maison Placements Canada. However, I take full responsibility for the final list!

Robert McLeod

Bruce McLeod & Catherine McLeod-Seltzer

Hemlo deposit. Roman and his team are currently developing the deposit and building a mill, with commercial production expected to begin by mid-2018.

So far, the junior has defined roughly half a million ounces of gold and controls the entire, largely unexplored, Dayohessarah greenstone belt. A year end updated gold estimate should considerably increase reserves.

The McLeod family

One can only marvel at the exceptional accomplishments of the multi-generational McLeod family centred around Stewart, B.C. It started with John McLeod, who immigrated from Scotland in the early 1900s to northern B.C. and worked as a miner and prospector. Two of his sons, Don and Ian, stayed connected to the region. Ian worked as a miner, owned the town’s major hotel, was Stewart’s mayor for 15 years as well as a high profile advocate for mining in the north. Don started as a miner but moved into prospecting and promotion. He was integral to the discovery of four producing mines in B.C. Two of Don’s children – Catherine and Bruce – and one of Ian’s – Robert – are all accomplished mining professionals. Catherine McLeod-Seltzer is well known for her junior mining partnerships SEPTEMBER 2017

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that have led to the discovery of Arequipa Resources’ rich gold deposit in Peru that was bought by Barrick for $1.1 billion; the Peru Copper Toromocho copper deposit, which was bought by Chinalco for $840 million; and co-founding Stornoway Diamond, the company that opened Quebec’s first diamond mine, along with her brother Bruce.

Bruce, a mining engineer, has won the E.A. Scholz award for excellence in mine development for his role in building the Minto copper-gold deposit in the Yukon.

He founded Sherwood Copper, which was sold to Capstone Mining for $244 million in 2008. He is currently CEO of Sabina Gold & Silver and is working towards building the company’s Back River deposit, which contains about 7.2 million oz. of gold in all categories, in Nunavut.

Bruce and Catherine’s cousin Robert, the youngest of the three, is a geologist. He was founder of Underworld Resources which was acquired by Kinross Gold for $140 million in 2010 for its Yukon White Gold deposit that contained resources of over 1.4 million oz. of gold. Among a variety of exploration projects, he is also currently CEO of IDM Mining and is focused on developing the company’s Red Mountain project – a low cost, high grade gold deposit

located near his hometown of Stewart.

And like his father, Robert is an enthusiastic proponent of the enormous mineral potential of northwestern B.C.’s Golden Triangle.

CMJ Stan Sudol is a Toronto-based communications consultant and owner/editor of a mining news aggregator website: www.RepublicOfMining.com.

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2017-08-28 3:47 PM

• HEAVY EQUIPMENT

ON THE PATH TO AUTOMATION Caterpillar offers stepping stones to full automation

By Craig Watkins

M

A Cat 793F autonomous trucks at a loading face.

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ining has always been a challenging industry, and low commodities prices have contributed to those challenges during the last several years. The focus has shifted from producing as much as possible to carefully controlling the cost of getting minerals out of the ground. Miners are focused on getting the most from their capital investments – and mobile equipment automation is proving to be a cost-effective solution.

Automation offers a means to control costs and variability and to improve safety and productivity. New technologies and process advancements make it possible for mines to automate more than a few machines. With each passing year, new advancements automate more and more phases of the mining cycle – with the possibility of a completely autonomous mine site in the future.

But an autonomous mining operation is not something that will be built overnight. The journey to autonomy www.canadianminingjournal.com

2017-08-28 3:58 PM

A Cat 793F CMD mining truck at an iron ore operation.

is composed of a number of building blocks, which can be categorized generally as machine guidance, automation and autonomy.

At all levels, automation helps make operations more predictable and consistent while reducing the number of people working in potentially hazardous areas.

The result is enhanced safety, improved production and increased efficiency.

Building automation Caterpillar describes autonomy as a journey, and individual mines start their journey in different places. Some will begin with a technology product such as Cat Terrain, which uses satellite guidance technology for drilling, grading and loading operations. Others start with Cat Fleet, which serves as an operational ecosystem that provides realtime tracking of machines and material movement.

There are different levels of automation, as well. For example, Caterpillar offers truck-spotting and load-positioning technologies that leverage pieces of SEPTEMBER 2017

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While full autonomy may be the ultimate goal, individual technologies can be used alone or combined in multiple ways to take advantage of immediate productivity, efficiency and safety gains.

Cat Command automation to improve manned operations. In the semi-autonomous realm, remote-control dozing allows operators to take control of machines that perform production dozing autonomously.

The significant benefits of automation can be realized with even the simplest of applications. While full autonomy may be the ultimate goal, individual technologies can be used alone or combined in multiple ways to take advantage of immediate productivity, efficiency and safety gains and serve as the building blocks leading to autonomous mining operations.

Autonomous trucks set the pace By the end of 2017, 100 Cat 793F CMD autonomous trucks will be operating on three continents and in three different applications. The total includes 54 trucks that constitute the largest single fleet of autonomous trucks, which have achieved 20% greater production than manned trucks operating in the same mining complex. This fleet of autonomous trucks operates in a space with more than 150 manned vehicles – graders, loaders, water carts, light vehicles, dozers – and all dispatched through Cat MineStar System.

There have been no lost time injuries associated with the autonomous trucks in the field during the 4.5 years since operations began. The Cat Command for hauling system obviously reduces the number of people working in the active mining area, which reduces exposure to risk. Additionally, the system offers a minimum of 2+1 layers of protection to help ensure safe operation. The autonomous trucks system has also proven reliable – with greater than 99.95% system CONTINUED ON PAGE 32

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• HEAVY EQUIPMENT

From Left: A Cat D11T operating semi-autonomously; A Cat drill equipped for semi-autonomous operation.

availability. In short, the system is productive, safe and reliable.

Autonomous trucks achieve performance advantages over manned operations by working more hours each day and by working faster. Higher utilization of 2.5 hours a day on average results from no shift change, no breaks and no lunch.

Refueling and inspection is the only stop on most days.

The Cat autonomous trucks system ensures that the trucks operate consistently – with no difference in operator skill level slowing down truck cycles. All trucks react the same way to environmental variables and drive to the design capability of the truck at all times. The system is fully dynamic and reacts in real-time to changing variables, which leads to continuously optimized assignment and management.

Currently demand for retrofitting trucks for autonomous operation is considerably greater than demand for purpose-built units. To meet customers’ needs, Caterpillar is designing retrofit kits for Cat and other brands of large mining trucks. In addition to retrofit, Caterpillar is expanding the number of autonomous models available from the factory.

Automating blasthole drills Caterpillar is field testing an autonomous blasthole drill this year in preparation for 32 | CANADIAN

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commercial launch of the Cat autonomous drilling system in early 2018. The autonomous system will be available for Cat and other brands of drills. The system is designed for easy integration with other brands of drills and is configured so that the manual controls remain functional and ready for use when needed.

The system builds on Cat Terrain for drilling technology, which uses satellite positioning technology to show the operator the locations of the holes to be drilled. At the site, Terrain monitors asset utilization and reports on consumables usage and operator performance.

The next step up in drill automation is the semi-autonomous system, which was launched in 2016. This system allows the operator to position the drill at the beginning of a row of holes and then to set up the machine to drill the entire row autonomously.

An optional arrangement includes a remote operator station that can be located near the bench or in a remote location.

This allows a remote operator to position the drill at the beginning of the next row and start a new cycle again, or to manually drill holes from a remote location.

Semi-autonomous dozer operation Caterpillar is developing a semi-autonomous dozer system that leverages automated functions built into Cat large

dozers and remote-control technologies, which are part of the proven Cat Command for dozing capability set. Caterpillar is first to develop such a system for mining dozers and, by the end of 2017, will have 19 Cat D11T dozers working semi-autonomously in field trials at four customer sites.

The system is currently designed for a remotely located operator to manage four machines doing production dozing. Development work is progressing on push-to-edge applications, and this capability will be offered in 2018.

Through the use of Cat Terrain with Blade Control, Automatic Blade Assist and Auto Carry, the dozer cuts to plan using best practices. When operating autonomously, the dozer optimizes reverse speed. Consistency in operation pays dividends in lower operating costs.

With the operator/controller working from a comfortable, remote station, and fewer operators required, human exposure to health and safety risks is significantly reduced, and fatigue for the single operator is diminished. Another benefit of remote operation is reduced need to stop for shift change, breaks and meals – which translates into higher utilization of each dozer.

CMJ Craig Watkins is technology manager for Caterpillar Global Mining. www.canadianminingjournal.com

2017-08-28 3:58 PM

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UNEARTHING TRENDS

The digital disconnect in mining

by Iain Thompson

C

ontrary to the hype, digitization isn’t new to the mining industry. The sector has seen multiple waves of digital transformation since the 1950s – from computer simulations to modern GPS-controlled heavy haulers. The question is how much has the industry benefited from previous digital waves, and how much will it benefit from the latest wave?

For example, the manufacturing sector adopted a digital mindset to help remove variability and improve productivity.

With productivity being the number one operational risk in the mining sector, companies ought to consider any approach that lowers that risk.

In mining, variability always exists. By applying three key manufacturing concepts, mining companies can now focus on managing variability, rather than removing it. The three key elements to this approach are: 1. Align digitization to the productivity agenda.

2. Take a market-to-mine approach to business.

3. Make sure leadership and overall company culture support the elimination of loss.

Learning from the past to move forward

The link between the manufacturing mindset, digitization and productivity is probably best summed up by the idea that digitization enables new ways to drive productivity and manage the challenges of variation across the value chain.

Yet experience shows us that from the first computer simulations 50 years ago to the GPS-controlled heavy haulers of today, there has been a gap between what companies want to achieve and what they actually achieve: we call that the digital disconnect.

I see this disconnect characterized by a skepticism of new technologies which serve as a barrier to adoption in mining organizations. Most of us can think of an instance where a new technology was deployed with the best intent yet languished because users failed to adapt.

With the renewed focus on productivity in the sector and the disruption in all sectors around things like artificial intelligence, Internet of Things, cloud computing and advanced analytics, there’s enthusiasm for the current wave of technologies in mining. With these variabilities in mind, the mining sector is experiencing the perfect opportunity to adopt the manufacturing mindset and adopt digitization.

A marginal upswing in commodity prices is accelerating technology implementation and providing capacity to take on transformative initiatives. In a recent survey, EY asked where 34 | CANADIAN MINING JOURNAL

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digitization ranked on companies’ agendas. We found that just over 62% of our clients had either started the journey or had digitization embedded as a part of their day-to-day business.

Many companies need to ask themselves questions like: • How could knowing more about my orebody improve mining and processing productivity?

• Would monitoring and modelling real-capacity losses and bottlenecks across the value chain help me with my overall productivity?

• How would I respond differently to unforeseen impacts from things such as weather events if I were able to change my production strategy?

Companies need to start thinking about how to integrate a full cultural shift. In Canada’s mining sector, we’ve seen a rapid increase in digital initiatives over the past 18 months. Most companies are planning on deploying multiple solutions including: real-time decision-support solutions, real-time performance management systems, augmented reality solutions, artificial intelligence solutions, advanced mine-production management systems, and predictive maintenance solutions.

Mining events are once again filled with exhibition floors of enthusiastic technology vendors eager to demonstrate how they can solve productivity and safety challenges with the latest technology.

Our experience shows that for mining companies to extract the full value of the next wave of opportunities, they’ll need to develop a comprehensive digital implementation strategy to close the gap created by the digital disconnect.

Connecting the disconnected

In addition to developing a strategic path forward, when considering digital solutions mining companies will also need to address the perception of high costs, accountability for digital projects and their benefits, how educated employees are on new technologies, and how to use existing systems and processes that are not being optimized.

The digital agenda needs to be paired with a market-to-mine approach to business, strong leadership and a culture that supports reducing loss and increasing output. Companies that maintain the status quo can expect the same results. Those that adopt a manufacturing mindset when building their digital agenda have a higher probability of improving productivity. CMJ IAIN THOMPSON is EY BC Mining & Metals Advisory Services Leader.

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