Canadian Mining Journal June/July 2013 by The Northern Miner Group

’

CANADIAN Mining Journal c

www.canadianminingjournal.com

PRAIRIE

PEOPLE ADD PRIDE & PERSONALITY TO CANADIAN MINING

June/July 2013

CRUSHERS, FEEDERS, SIZERS a brand of

Gundlach’s roll crushers deliver higher quality cubical product, minimal fines and consistently repeatable performance for sizing coal, coke, oil sands, glass, fertilizer, potash, salts, lime, limestone, soft ores, friable materials and industrial minerals.

Phone: +1 (618) 233-7208 n E-mail: BetterCrushers@GundlachCrushers.com

a brand of

Jeffrey Rader electromagnetic vibratory feeders can process 1,800 TPH and are found in operation worldwide–primarily in mining and quarry operations, but also in aggregate, chemical and industrial processes. Additional feeder applications include coal, minerals, oil sands and various blending materials.

Phone: +1 (864) 476-7523 n E-mail: Sales@JeffreyRader.com a brand of

The Mountaineer™ II Sizer is a rugged, high-capacity crusher that can be used in primary and secondary applications. Its low horsepower requirements and abrasion-resistant construction make it ideal for the reduction of abrasive materials such as oil sands.

Phone: +1 (610) 544-7200 n E-mail: Buster@PennCrusher.com

Handling a World of Materials

Departments 5 Editorial

This month Editor Russ Noble talks about “Annual Reports” and why it’s important for companies to reassure investors that even during tough times, most Canadian mining companies are resilient and can withstand down times, even when working in foreign lands where some governments make it difficult to conduct business and turn a profit.

6 Mining Matters

Canadian Mining Journal’s popular look at what’s making news across the country.

9 Investing

Ned Goodman’s regular “Investing” column talks about investor confidence and asks the question: “Is it gone?”

10 Law

This month Norton Rose’s Michael Torrance talks about “Equator Principles” (EP… An agreement amongst more than 75 of the world’s leading banks and financial institutions) and how they apply to international projects.

12 In My Mine(d)

“Taking preventive actions for the health of miners” is the topic of this month’s column by Health & Wellness Expert Michele Morrison of Medisys, Corporate Health Services, Vancouver.

28 Company Profile

This month’s featured company is ABB in Canada.

60 CSR and Mining

Marketa Evans, Extractive Sector, CSR Counsellor, Government of Canada, talks about human rights and how they are a team effort between Canadian mining companies and the governments in the countries where they are working.

62 Unearthing Trends

Jim MacLean, a partner and leader of mining tax services at Ernst & Young, Toronto, looks at “Tax Planning from the backroom to the boardroom.”

CANADIAN Mining Journal CONTENTS

THE PRAIRIES

14 Great recovery (Cover Story)

Claude Resources’ Seabee gold mine in Saskatchewan doubles output despite dip in gold prices.

18 Potash mine gets a boost

PotashCorp Saskatchewan (PCS) continues to meet offshore demands thanks to new mining in New Brunswick.

22 Maintaining dominance

Thickened tailings help miners recover fine particles while at the same time, provide safer disposal and more environmentally friendly ponds. 26

26 No place like it! Potash and Uranium respectively help Saskatchewan maintain its status as being a world-leading producer.

’

CANADIAN Mining Journal c

www.canadianminingjournal.com

June/July 2013

ABOUT THE COVER This month’s cover features Mario Frenette, an underground jumbodrill operator at the Seabee Gold Mine in Saskatchewan.

PRAIRIE

PEOPLE ADD PRIDE & PERSONALITY TO CANADIAN MINING

Canada Post Canadian Publications Mail Sales Product Agreement No. 40069240

Coming in August

Canada’s “Top 40” miners and a look at promising junior mining companies across Canada.

For More Information

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

www.canadianminingjournal.com June/July 2013 • Canadian Mining Journal |

MANY CLAIM TO BE CAPABLE BUT DMC MINING SERVICES DOES IT SAFELY. THE ROAD TO ZERO HARM LEADS TO LOWER COST AND AVOIDS SCHEDULE DELAYS. WHY TAKE A CHANCE. BRING US TO YOUR NEXT PROJECT.

Engineering design and feasibility studies Property development through equity investment, partnerships or joint ventures Contract mining Shaft sinking Raise boring and raise excavation Mine construction and infrastructure Mine development and rehabilitation Head frames and hoisting plants Ground freezing and grouting programs

John Marrington 9555 Yonge Street, Suite 200, Richmond Hill Ontario Canada L4C 9M5 Direct: 416-903-2084 Email: jmarrington@dmcmining.com Phil Buck 488 East 6400 South, Suite 250, Murray Utah, USA 84107 Direct: 801-908-1045 Email: pbuck@dmcmining.com

www.dmcmining.com Thank you to BHP Billiton in selecting DMC Mining Services as your shaft sinking partner on the Jansen project.

Editorial

CANADIAN Mining Journal June/July 2013 Vol. 134 — No. 5 80 Valleybrook Drive, Toronto, Ontario M3B 2S9 Tel. (416) 442-5600 Fax (416) 510-5138 www.canadianminingjournal.com Editor Russell B. Noble 416 510-6742 rnoble@canadianminingjournal.com Field Editor Marilyn Scales 613 832-9087 mscales@canadianminingjournal.com Art Director Mark Ryan roduction Manager Print Production Manager P Steve Hofmann Phyllis Wright Circulation Manager Cindi Holder 416 442-5600, ext. 3544 cholder@bizinfogroup.ca Publisher Robert Seagraves 416 510-6891 rseagraves@canadianminingjournal.com Sales Western Canada, Western U.S.A.

Bonnie Rondeau 416-510-5245 brondeau@canadianminingjournal.com Toll Free Canada: 1-800-268-7742 ext 6891 or 5245 Toll Free USA: 1-800-387-0273 ext 6891 or 5245 Group Publisher Doug Donnelly President Bruce Creighton

Vice-president Alex Papanou

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. Canadian Mining Journal (ISSN 0008-4492) is published 10 times a year by Business Information Group L.P. BIG is located at 80 Valleybrook Dr., Toronto, ON, M3B 2S9. Phone (416) 442-5600. Legal deposit: National Library, Ottawa. Printed in Canada. 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 Russell Noble at 416-510-6742. Subscriptions — Canada: $47.95 per year; $76.95 for two years. USA: US$60.95 per year. Foreign: US$72.95 per year. Single copies: Canada $10; USA and foreign: US$10. Canadian subscribers must add GST and Provincial tax where necessary. GST registration # 809744071RT001. From time to time we make our subscription list available to select companies and organizations whose product or service may interest you. If you do not wish your contact information to be made available, please contact us via one of the following methods: Phone: 1-800-668-2374; Fax: 416-442-2191; E-mail: privacy officer@businessinformationgroup.ca; Mail to: Privacy Officer, Business Information Group, 80 Valleybrook Dr., Toronto, ON, M3B 2S9. Publications Mail Agreement #40069240. PAP Registration No. 11000. We acknowledge the financial support of the Government of Canada through the Publication Assistance Program towards our mailing costs. Return undeliverable Canadian addresses to: Circulation Dept., Canadian Mining Journal, 80 Valleybrook Dr., Toronto, ON, M3B 2S9. E-mail: bigcirculation@bizinfogroup.ca Canada Post: Publications Mail Agreement PM40069240. Please forward Forms 29B and 67B to 80,Valleybrook, Toronto, ON M3B 2S9. Canadian Mining Journal, USPS 752-250. US office of publication: 2221 Niagara Falls Blvd., Niagara Falls, NY 14304-5709. Periodicals Postage Paid at Niagara Falls, NY. US postmaster: Send address changes to Canadian Mining Journal, PO Box 1118, Niagara Falls NY 14304. We acknowledge the financial support of the Government of Canada through the Canada Magazine Fund toward our editorial costs.

Canadian Business Press Indexed by Canadian Business Periodicals Index

Punched out by low blows By Russell Noble

ow that the “Annual Report” season is almost over and shareholders are wondering “What the hell happened?” it’s time to look forward and talk about the Canadian mining industry in general and why it’s still a good place to invest. First of all, as we all know, mining has always been subject to a good beating every once in a while and so far this year, many companies (especially those involved with gold) have been literally pummeled into submission. Historically, many companies succumb to the harsh blows of falling prices and rising costs while others, thankfully, dust themselves off and regroup by taking a serious look at what went wrong. In many cases, getting ‘punched out’ of the business is the result of something that’s beyond control and unfortunately, it’s something that’s becoming far too common for mining companies. Losing a fight because of poor planning and incompetent management is one thing, but to be counted out because of dirty tactics is criminal and that’s what I think is partly to blame for more and more companies going broke. Never in recent memory have there been so many mining companies forced to walk away from their projects because of cost overruns, or even more concerning, because of governments or other local authorities changing the rules mid-way through the game. Call it ‘cheating,’ or whatever else you want, but it’s a helpless situation that is taking its toll both on mining companies but moreover, on shareholders who are also losing faith because they feel they’re being robbed of their investments. As you all know, mining projects don’t happen over night but what’s most disturbing lately is that they can go dark in a minute thanks to the simple flip of a political switch. Too many governments, particularly in countries where most of the world’s abundant minerals are found, are getting away with hostage-like behaviour once they see what Canadian technology can achieve.

Like I said earlier, it’s almost criminal what some countries are getting away with when it comes to permitting and royalties but moreover, the blatant theft of minerals and their right of ownership. Rarely do I mention projects and countries specifically, but I’ll make the exception with Barrick Gold’s Pascua-Lama project on the Chile-Argentina border because I think it serves as a perfect example of what I’m saying about ‘disgraceful.’ I know many people have mixed feelings about Barrick Gold because of some of the issues the company has been accused of in the past, but regardless of what is fact or fiction, there’s no question (in my mind at least) that the world’s largest gold producer is being screwed because of a Chilean court-ordered work stoppage at the mine. And now they’re being fined! Talk about shooting itself in the foot. As we all know, Chile has deep roots in mining and for it to upset a key player like Barrick is ludicrous. I know that working in someone else’s backyard has always been a bit of a risky venture because like it or not, greed and sometimes hostility seem to almost always creep into agreements once production gets underway. It’s a basic trait of human nature to resent the prosperity of others and as selfish as that may be, it’s becoming increasingly obvious that foreign owners don’t like strangers coming in and taking their stuff. Sure they like the idea of foreigners coming in and investing millions to help improve the living conditions for those in the communities where the deposits are found, but the truth of the matter is that many of the people living in those communities don’t even know what’s going on other than their quality of life (in many cases) has improved since the miners arrived. I wonder what they’ll think when the miners leave and things start to fall apart? Perhaps their government will have a phony excuse for that too! CMJ June/July 2013 • Canadian Mining Journal |

Mining Matters Volume 134

University welcomes The Goodman School of Mines Laurentian University, located in Sudbury, recently hosted a reception in Toronto to officially introduce The Goodman School of Mines and some of its faculty to more than 100 guests from across Canada and around the world. The school is named after Ned Goodman, chief executive officer of Dundee Corporation (and a 2012 inductee into the Canadian Mining Hall of Fame), and in recognition of the Goodman Family Foundation’s contribution. The aim of The Goodman School of Mines is to establish Laurentian University as one of the top education and research providers in the world across the entire mining cycle from Aboriginal consultation, grassroots exploration, and environmental assessment through mine planning, construction, and development, occupational health and safety, and brownfields exploration to mine closure, environmental remediation, and environmental monitoring. Another focus will be on the creation of executive programs

June/July 2013

(Left to right): Bruce Jago, Founding Executive Director, Goodman School of Mines, Ned Goodman, and Dominic Giroux, President and Vice- chancellor, Laurentian University.

at the undergraduate and graduate levels. “We want to be associated with Laurentian University because it’s undoubtedly the go-to university for mineral exploration and mining in Canada. When I heard about Laurentian’s plans for a new innovative School of Mines, I knew I wanted to be a part of it,” said Goodman.

INNOVATIVE THOUGHT powering

PRACTICAL SOLUTIONS.

Worldwide expertise. Consulting engineering focused in the areas of mining solutions, backfill, tailings management.

705-523-1040 | www.koviteng.com FOR CAREER OPPORTUNITIES visit our website

6 | Canadian Mining Journal • June/July 2013

www.canadianminingjournal.com

Annual CIM convention attracts thousands

“Global Leadership – the Courage to Change” was the theme at the recent Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Convention in Toronto. It set the direction and tone of the presentations, dialogues and face-to-face exchanges over the course of the three-day conference. The CIM Exhibition also offered delegates the opportunity to make the necessary industry connections with more than 400 exhibitors providing information to help drive design, purchasing and operational decisions. Next year’s convention will be in Vancouver.

Canadian manufacturer expands to meet demand Global demand for zero-emissions electric mining vehicles has resulted in PapaBravo of Saskatoon moving to a new 34,000 sq ft facility to manufacture its line of mining equipment. Two new products include a four-wheel drive, halfton truck suitable for both shaft and ramp access mines and a larger, heavy-hauling platform available up to 25 ton GVW that covers a wide range of specialty applications. All of the electric vehicles can travel 120 km on a single charge and can re-charge in as little as an hour.

Building potash capacity today. Building our communities every day. At PotashCorp, we’re more than a global company helping to feed the future. We’re a neighbour who believes in the strength of our communities and the potential of our people. Our $6.1 billion potash expansion program isn’t just increasing our operational capability, it’s also fueling economies, driving employment and generating growth in our communities. To learn more about PotashCorp’s community commitment, visit us at PotashCorp.com.

June/July 2013 • Canadian Mining Journal |

’

a t

www.canadianminingjournal.com

Buyers’ Guide

on’t miss out on the chance to be listed in Canada’s only Buyers’ Guide for the Mining and Mineral Processing industries. You can include your listing anytime on the online version of the Buyers’ Guide at www.canadianminingjournal.com/esource. Your listing will appear on our online directory and the information will be picked-up when we do the print edition in November. Total distribution is over 10,000 print copies.

Update your current listing at any time at www.canadianminingjournal.com/miningonline For more information please contact: Robert Seagraves 416-510-6891 1-800-268-7742 ext 6891 U.S. 1-800-387-0273 ext. 6891 rseagraves@canadianminingjournal.com

Investing

Is investor confidence gone? You bet it is! Ned Goodman is President and Chief Executive Officer of Dundee Corporation

By Ned Goodman

ast June the CFA (Chartered Financial Analyst) Institute – of which I have been a member since 1967 – published a brochure entitled “Currency Wars III” in which there was an article that asked the question: ”Does the world risk a chaotic, catastrophic collapse of investor confidence?” Today, more than a year later, I can answer that question with a very positive – Yes! The article started with a quote from German Chancellor Angela Merkel: “The primacy of politics over markets must be enforced.” I (Ned, not Angela) find currency wars in history very interesting. There have been two previous currency wars in my world: One during the Great Depression, which I only know about from reading history, and the other during the inflationary spiral of the 1970s which, when it raged, I was witness to some of the worst and most interesting economic episodes for my newly started career. The bond mavens at PIMCO (a global investments solution provider) today are saying: “And now it begins again. Look around the world,” says Scott Mather – head of global bonds at PIMCO. “Is there any country that wants a strong currency?” Yes, the US says it does, but when you watch what American Economist Ben Bernanke does behind the scenes, you can see that the US is included in Angela Merkel’s above quote. Some of you may remember from my Dundee Annual Report message of last year (2011) where I wrote, “We are currently living through a new time of economic and financial events which are related to a new global currency war.” “A war which emanates directly from the financial crisis of 2008, which – as I have stated many times – will remain in the

memory of investors for a long time.” I thought then that the current global currency war started in 2010, which may have been a little early forecast. James Rickards, an American lawyer, economist, investment banker, and the author of the book I was quoting at that time, told us that, “currency wars are one of the most destructive and feared outcomes in international economics.” At best they offer the sorry spectacle of countries continuous stealing of growth from their trading partners. At worst, they degenerate into sequential bouts of inflation, recession and, yes, sometimes (such as Greece today and likely Spain soon) actual violence as the austerity programs recommended by Angela Merkel hit home to the poor unemployed populations of these countries. Currency wars always end economically badly. The one saving grace that used to be talked about in the 1970s was that the US dollar was regarded as an acceptable world reserve currency. It took former Federal Reserve Chairman Paul Volcker’s 18% interest rates to protect that position in the 1970s. Today, US interest rates are historically extremely low because Mr. Bernanke is not trying to protect the dollar. He is trying to protect the US from going bankrupt. As it is today, and was for me in the 1970s, the US has:

President Obama has moved to a pre1916 election program. He is playing off the rich (he says Republicans) against the poor (he says liberal Democrats). It is a wellknown fact that if you keep taking from the rich to give to the poor, it’s pretty soon that you have only poor. And if you keep spending money you do not have and must borrow or print it in order to spend, you pretty soon either go bankrupt and/or devalue your currency so that everything you must buy and pay for will cost much more. But if the poor are the ones who vote for you, obviously there are many more of them to do so. By 2015 the Obama family, with nine dollar inflation-adjusted minimum wage and a flock of people looking to work for that salary, should have no problem getting Michelle Obama to win the right to stand for President in the year 2016 election.

• Too much debt • Too much unemployment • A dysfunctional political system • A Presidential family that wishes to tax, borrow and spend, spend, while working to • eliminating the powers of his competitive political party – the Republicans.

The United States and its Presidential family, after studying at the best schools the US could provide, have not learned anything in 2067 years. The only positive outlook they could have for the spend, spend, spend, program is to get Michelle Obama elected in 2016 as the first woman US President. CMJ

Two thousand and sixty-seven years ago a man by the name of Cicero (in 55BC) said: • The budget should be balanced • The Treasury refilled • The public debt reduced • The arrogance of officialdom should be lessened and controlled • The assistance to foreign lands to be curtailed • Rome should be left to go bankrupt • People must again learn to work instead of living on public assistance

June/July 2013 • Canadian Mining Journal |

Law

Equator Principles Banks: The New Global Regulators By Michael Torrance

o, you are confident you can make a business case to your financier as to why they ought to invest in your mining project. You are also sure your project will meet regulatory requirements of local governments. It is a good start, but thanks to a paradigm shift in global regulation of mining activity, it is probably not enough. To get a project off the ground, many mining proponents will also need to demonstrate compliance with the environmental and social regulations of their financiers in accordance with the Equator Principles (EP). What are the Equator Principles? The EP is an agreement amongst more than 75 of the world’s leading banks and financial institutions to apply international regulations and conduct due diligence to manage “environmental” (meaning resource efficiency, pollution prevention, biodiversity and management of living natural resources) and “social” (meaning labour, OHS, indigenous rights, human rights, resettlement and cultural heritage) risks for projects they finance. The third iteration of the EP (EP III) is set to be released in 2013 and by all accounts it will look much different from previous versions, increasing the compliance requirements on mining companies seeking financing from EP banks. A Complex Layer of Environmental and Social Regulations for Miners While there are only 10 EP principles, they incorporate by reference the detailed requirements of host country regulations 10 | Canadian Mining Journal • June/July 2013

and the International Finance Corporation (IFC) Performance Standards on Environmental and Social Sustainability (IFC Performance Standards) and the World Bank Environmental Health and Safety Guidelines (EHS Guidelines). Together, these regulatory frameworks establish literally thousands of rules based requirements and guidelines for companies to comply with. The rules apply to any industry, but special environmental, health and safety rules exist for the mining sector. Banks as the New Regulators Under the EP, financial institutions sit in the role of “regulator” overseeing EP implementation for a financed project. This role overlaps and inter-relates with State based regulation of the same activities by local governments. No “Tick the Box” Exercise The EP require financial institutions to apply a process of due diligence to ensure that their clients (i.e. corporations receiving financing) actually comply with the rules. This involves impact assessments, management plans and action plans to mitigate identified risks. Compliance with the EP is very “back end” loaded, requiring financial institutions to implement monitoring and review processes that are applied over the life of the financed project. There are hard consequences for borrower non-compliance. Unwillingness or inability of a project proponent to comply with the EP will limit access to capital and can even result in disinvestment or an event of default where investment has already occurred.

Expansion of the EP and Related Requirements in 2013 The new EP III will be more expansive than earlier versions, covering more types of financings and including disclosure and reporting requirements on environmental and social risks and management processes. There will also be specific reporting requirements for reporting Greenhouse Gas emissions on projects and requirements and for an alternatives analysis where emissions exceed certain thresholds. As in previous versions of the EP, borrowers will continue to be required to implement grievance mechanisms and engage in formalized stakeholder engagement with workers and local communities. The release of EP III follows a major revision of the IFC Performance Standards in 2012. The new IFC Performance Standards and therefore the EP now require Free Prior and Informed Consent (FPIC) of indigenous communities in certain circumstances, human rights due diligence and the application of labour standards throughout supply chains, among many other requirements. Legal Risks The EP compliance process creates legal risks that are easily overlooked. The process requires legal compliance, diligence and reporting on legal compliance that can bring additional scrutiny from regulators. Public disclosures required by the EP give rise to legal implications from a securities, privacy and confidentiality perspective. The EP are enforced through covenants in the legal documentation www.canadianminingjournal.com

Law

Michael Torrance is a lawyer at Norton Rose in Toronto.

that structures financings. Noncompliance with the EP may cause an event of default. These characteristics create complex risks (reputational and legal) for both EP banks and their clients. It is still a very open question what exactly these risks entail and how they should be addresses, but the potential legal ramifications means that knowl-

edgeable legal counsel should be actively engaged in (even overseeing) the EP compliance process. Regulatory Compliance for Access to Capital In the post EP world, bankers are the new global regulators of environmental and social practices and regulatory com-

pliance is the qualifying condition for investment by EP banks. With the release of the expanded EP III, this new paradigm will only be reinforced. Adapting to this new world may therefore require a rethinking of business strategy, whereby regulatory compliance is viewed as a critical step in ensuring continued access to capital. CMJ

Alternative

Building Solutions

Norseman Structures delivers clear-span building solutions to mines around the world. Our structures are ideal for: Storing oversized equipment and machinery Workshops, garages and maintenance

Concentrate and bulk storage Raw material storage

Visit us at CIM 2013 - Booth #1320

1.855.385.2782 I norsemanstructures.com

June/July 2013 â&#x20AC;˘ Canadian Mining Journal |

In My Mine(d)

Taking preventive actions for the health of miners Michele Morrison is a Health & Wellness Expert with Medisys, Vancouver.

By Michele Morrison

here is no question that Health & Safety is an important aspect of all mining activities, but often the “health” component of these programs is neglected, or never implemented at all. When developing risk mitigation strategies, a plan to minimize the health risks of employees working around mining equipment, and quite often, in fairly remote locations, should always be included. To ensure the consistency of your mining operations, well-established periodic medical assessments with a fitness component, as well as a health surveillance and awareness program should be determined, implemented and supported by upper management. It is a surefire way to reduce injuries, disability leaves and absenteeism, and ensure productivity for the work life of your mining employees. Common causes behind mining injuries Although the advent of machinery, technology and other labour-saving devices has helped productivity, many miners are still required to do manual labour that includes heavy lifting, significant manual handling and exertion of high forces, often with less than optimal postures, and frequently in poor environments. Over time, these tasks are physically taxing and can lead to injury. Technological advancements have also caused more workers to do sedentary jobs, like truck and dozer operators. Sedentary positions come with a very 12 | Canadian Mining Journal • June/July 2013

unique set of challenges. When employees in these positions are called upon to perform infrequent physical tasks, they are at greater risk of overloading the musculoskeletal systems. What’s more, with an increasingly aging workforce, younger, often inexperienced workers are called upon to do manual tasks that are not part of their job, increasing the risk of injury. To make matters worse, miners are evaluated for their fitness for work at the start of employment, but not reassessed over time for changes in fitness levels due to such aspects as aging, injury, stress, health status and weight gain. Preventable health issues faced by miners “A lack of fitness is identified as the number 1 ranking factor contributing to workrelated injury.” —Tony Parker and Charles Worringham, Queensland University of Technology, Brisbane, Australia Other common issues faced by miners include poor cardiovascular health, high cholesterol, high body mass index and high glucose which are factors that put miners at greater risk of a heart attack. These factors are often negatively affected by shiftwork, which can lead to poor sleeping and eating patterns. Implementation of relevant health programs To counter the unhealthy effects of working in labour-intensive mining occupations, a relevant health program contain-

ing two major components should be implemented. The first component involves periodic medical assessments, where a medical team of experts perform complete medical exams, and evaluate lung function, back fitness, blood profile and vision, as well as strength, aerobic fitness and flexibility. Since many miners, especially in more remote areas, often do not have access to a family doctor, this type of program would provide them with an opportunity to address any health issues or concerns with a medical professional, thereby contributing to treatment and prevention. The second component involved in keeping miners healthy is the provision of a health surveillance and awareness program. It should test things like blood glucose and cholesterol levels and measure blood pressure and body mass index, among others. The program should also include a detailed medical questionnaire that can be used in goal setting and to assess lifestyle risk factors such as smoking and eating habits. In addition to the results, miners should get advice and education on how to take their health in their own hands. Resulting recommendations would empower them to make improvements to their overall health, lifestyle, fitness and nutrition. In the end, offering your mining employees periodic medicals and health surveillance and awareness programs can mean the difference between years of exceptional job performance and avoidable and ongoing health issues. CMJ www.canadianminingjournal.com

Self-tensioning ROSTA-motor mounts for friction belt drives self tensioning • slippage-free • belt protecting • maintenance-free • overload proof •

standardized for motors 1,5 kW – 250 kW

ROSTA ROSTA Inc. 12 Douglas Road, Unit #6 CA-Uxbridge, Ontario L9P 1S9 Phone: ++1 (905) 852 19 29 Telefax: ++1 (905) 852 18 61 E-Mail: info@rostainc.com Internet: www.rostainc.com

June/July 2013 • Canadian Mining Journal |

| Mining in the Prairies

GREAT

RECOVER Claude Resources to double output at Seabee as operation continues to grow By Field Editor Marilyn Scales

14 | Canadian Mining Journal â&#x20AC;˘ June/July 2013

www.canadianminingjournal.com

June/July 2013 â&#x20AC;˘ Canadian Mining Journal |

| Mining in the Prairies

Aerial of Claude Resources’ Seabee location in northern Saskatchewan and below, a close look at what the project is all about.

aving poured its one-millionth ounce of gold last summer, Claude Resources is well on the way to doubling the output of its Seabee project despite this spring’s dip in the gold price. Exploration success in northern Saskatchewan is the reason. Claude is currently mining the Seabee and Santoy 8 underground gold deposits located about 125 km northeast of the town of La Ronge, SK. Longholing is the predominant mining method. Completed in January this year, the Seabee shaft deepening to 980 metres from 600 metres has cut mining costs by reducing ore hauling distance, maintenance and labour. It has a skipping capacity of 1,000-t/d, that currently hauls waste and ore. Waste is also used as backfill in the mine. Ore is treated on site in a 1,050-t/d mill, currently operating at between 750 and 850 t/d. This is a conventional carbon-inpulp mill with a gravity circuit that recovers about 30% of the gold. After electrowinning and refining into doré bars, the overall gold recovery rate is 95%. The Seabee operation produced 49,570 oz of gold in 2012 from a record mill throughput of 275,235 tonnes grading 5.86 g/t Au. Unit cash costs came in at $997 per oz. The company flies its employees into the camp on a two-week

16 | Canadian Mining Journal • June/July 2013

rotation or in the case of management, on a four days in/three days out schedule. About 150 of its 350 employees are at the site at any one time. Supplies are trucked in over a winter road. So how is Claude faring after this spring’s dip in the gold price? The company has the flexibility to decrease expenditures fairly rapid. Claude has already decreased overall expenditures in 2013 by 20% from 2012 and plans to make further adjustments. The company began a review of cash flow optimization in November 2012, well ahead of the softening gold price. It is scrutinizing the non-revenue generating business units.

www.canadianminingjournal.com

Nonetheless, the company remains bullish on the longer-term price of gold. That, coupled with plans to double output, will leave it in an excellent position to prosper. The opportunity to double production – from about 50,000 oz/year to nearly 100,000 oz – is directly attributable to the discovery of not one but two high grade deposits in 2011. Both are near the Seabee operation, so they can be developed using much of the existing infrastructure. The first discovery is the 8.8-g/t Santoy Gap deposit. It is east of the Seabee mine and mill and north of the Santoy 8 mine, and will soon be reachable from Santoy 8 by an 800-metre exploration ramp. With resources of 281,000 indicated oz and 357,000 inferred oz, Santoy Gap is the best discovery ever made in the Seabee gold camp. It’s a big game changer for Claude, and the company is moving as quickly as possible to get it into production during the second half of 2014. That as much as anything will provide the expected boost to output. The other recent discovery is the L62 deposit that is west of, and accessible from, the Seabee Mine. L62 contains approximately 110,000 oz of gold at a grade of 7.6 g/t. Daily mucked tonnage is variable depending on the development schedule. More success on the horizon With so much exploration success near its Seabee operation, Claude is also turning its attention to two other projects. It owns the Madsen gold project, a former producer 16 km west of Red Lake, Ont. A restart there could be accomplished very quickly thanks to the existing infrastructure. The land package includes a fully permitted 500-t/d mill, tailings management facility and underground mine with a 1,220-metre shaft. Production from 1938 to 1976 totaled 2.45 million oz. There remain 2.3 million indicated tonnes at 8.93 g/t Au for 928,000 contained oz and 788,000 inferred tonnes at 11.74 g/t for 297,000 contained oz. The 2012 Madsen drill program extended the 8 zone at depth and confirmed the conceptual potential beneath the Austin Tuff. Work is currently underway on a scoping level analysis of the project. Claude’s other notable exploration property is the Amisk gold project located in Saskatchewan, 20 km southwest of Flin Flon, Man. The project is still in its earliest stages, but 30.15 million indicated tonnes at 0.85 g/t AuEq and 28.65 million inferred tonnes at 0.70 AuEq has the company thinking this deposit may have open pit potential. The deposit is classified as a volcanogenic massive sulphide gold-silver occurrence. The company is completing a preliminary economic study for Amisk, and it was to be completed by the end of June 2013. However, the estimated 1.4 million contained gold-equivalent ounces is not enough to justify development at current gold prices. To take advantage of its exploration successes in northern Saskatchewan and elsewhere, Claude Resources has assembled a loyal workforce, many of whom have been with the company for 20 years. The company has also recently beefed up its environmental and technical departments with new hires from other mines. The people and the assets together will ensure a profitable future for a well-managed junior. CMJ

Resource class

Zone

Tonnes

Grade (g/t)

Contained gold (oz)

Proven & probable

Seabee

947,100

7.26

221,100

628,100

4.45

89,900

6.14

311,100

Santoy 8

Total 1,575,200 Indicated

Seabee

45,400

4.86

7,100

Santoy 8

59,300

3.28

6,200

Santoy Gap

994,000

8.80

281,200

Porky Main

160,000

7.50

38,600

Porky West

111,000

3.10

11,000

7.82

344,200

Total 1,369,600 Inferred

Seabee

355,600

8.55

97,700

Santoy 8

518,700

5.91

98,600

Santoy Gap

1,875,000

5.92

356,900

Porky Main

70,000

10.43

23,500

Porky West

138,300

6.03

26,800

6.35

603,400

Total 2,957,600

The mine’s headframe stands out against the flat surroundings of the site.

June/July 2013 • Canadian Mining Journal |

| Potash

POTASH MINE GETS A BOOST By Correspondent David Godkin

decade ago managers peering out the office window at Penobsquis mine in Sussex, New Brunswick would have been pleased by all the activity outside. For years a world-wide glut of potash had driven potash prices into the basement of the commodities market; now those prices were staging a comeback, so much so that PotashCorp Saskatchewan (PCS) purchased the Penobsquis mine, mill and port facility as part of a larger US $112 million transaction from Rio Algom. The future looked promising. That future looked even brighter, says Stewart Brown, because of what lay about a kilometre beyond the Penobsquis mine.

18 | Canadian Mining Journal • June/July 2013

“There’s was always an understanding that there was probably potash mineralization across the highway from the existing mine,” PotashCorp’s project manager says looking out the same window in 2013. “But during drilling for natural gas in 2000-01, the extent of the ore zone became more evident.” By the mid-2000s seismic studies revealed a delineation of potash thicker and flatter than the Penobsquis property, lending itself to something other than the hard rock mining approach at the Penobsquis mine. “The ore body at Penobsquis dips at 50-60 degrees so we use cut-and-fill mining here to extract the ore.” By contrast,

the ore body at Picadilly is flatter and features twinned, parallel access drifts, established in salt below the ore zone that extend eastward from two vertical, concrete-lined shafts. These provide access, through cross-cuts, to the evaporite area where potash deposits are located. “We will cut straight ahead for the better part of a kilometre, turn around, widen the drift, go down and cut the floor over the same distance, then widen that out.” The result, says Stewart, should be an excavation approximately 12 metres wide and 20 metres high and an increase in production at Picadilly that will more than double the 750,000 tonnes of potash PCS

www.canadianminingjournal.com

currently sends through Barrack Point potash terminal in Saint John. “Our operational capability from Picadilly is going to be 1.8 million tonnes of potash per year.” Water, water everywhere… To set the stage for all that additional potash production, PCS first had to address the nemesis nearly every potash operation faces: water. Water is a necessary part of the brine process in potash mining but in 1997 excessive brine proved the undoing of PCS’s Cassidy Lake mine about 50 km from Sussex when it flooded and was lost after 10 years of operation. Today, Brown says, PCS spends “a significant amount of money” on drilling and grouting to manage an inflow at Penobsquis of about 1,200 gallons per minute. “It’s kind of like the little Dutch boy with his finger in the dyke; you could seal one crack and it comes out another crack.” Adds Brown, that inflow could increase once grouting operations stop at Penobsquis and Picadilly is up and running. Two decisions were made that will avoid that scenario. The first came during an earlier construction stage when PCS ruled out as ‘too expensive’ the use of vapour recompres-

A close look at the serious cutting face of one of the mine’s many pieces of heavy equipment.

sion evaporators to rid Penobsquis and Picadilly of excess brine. Instead it built a 30-kilometre brine pipeline to ship excess brine from the Penobsquis mine site to the company’s brine pond at Cassidy Lake and into the Bay of Fundy. This lowered the daily volume of brine hauled away to less than half the 2008 volume.

The second decision, Brown says, was to not connect the two mines in order to shield Picadilly from the brine inflow that occurs the day Penobsquis mine closes and is permitted to flood. “If we connected Picadilly to Penobsquis and the flow increased, we could potentially impact the Picadilly

Aerial view of PCS’s potash operation in New Brunswick.

June/July 2013 • Canadian Mining Journal |

| Potash An inside look at some of the equipment now operating at the mine.

20 | Canadian Mining Journal • June/July 2013

Mine. We don’t want the mine to flood.” The brine pipeline was an important first milestone. The second milestone occurred in 2011 with the construction of the head frames for the 900 metre production shaft. “We knew the project was going to go ahead,” Brown stresses. “This is not an exploration project. This is going to be a producing mine.” Within days, Brown’s crew had driven piles down to solid rock and removed the overburden before laying the concrete floor to support the head frames. PCS also decided those head frames would be permanent rather than temporary: a permanent head frame not only saves time, says Brown, “It provides a lot more efficient transition to permanent hoisting than a temporary head frame.” The head frames at Picadilly went up quickly, over two and a half weeks. Once the head frames were in position, crews installed hoisting equipment to sink the shafts. Here’s where some of the tougher work occurred, says Brown. For one thing, underground conditions didn’t entirely match the geological model grouting crews had been expected to work to. The main obstacle: anhydrate. “Mining machines can cut in salt and in potash but anhydrate is more of a limestone type feature that is a harder rock that mining machines can’t cut. So we drill and blast.” As the drilling and blasting proceeds, a concrete liner is installed from behind. “So at the end of the day a circular shaft is in place, reinforced with concrete anywhere from two to three feet thick.” Throughout construction, PCS had its eye on one target: to produce enough granular potash to meet world markets. By the summer of 2011, both pairs of 100metre high concrete head frames for the production and services shafts as well as a brand new compaction plant had given the company what it wanted – the ultimate ability to produce 1.5 million tonnes of granular potash to meet those markets, notably in Brazil’s potash-hungry agriculture sector. “Brazil is a huge consumer of granular product used in mechanized farming,” Brown says. “So here in New Brunswick, 85 per cent of our production right now is granular product and 15 per cent is standard product that goes to Cuba, for example, where potash is spread manually.” Equally important, says Brown, will be www.canadianminingjournal.com

the ability to change the ratio of granular to standard potash as the demand for both types of potash fluctuates. Picadilly will give PCS that flexibility. That most valuable of resources…people. It was one thing to increase capacity at the production and service shafts, as well as at the compactor operations, but just how big a construction fleet did PCS need to build all that? “Huge,” replies Brown, none more extensive than the fleet of mobile cranes supplied by Irving Equipment. “I think we had every manufacturer of some sort of crane over there,” he chuckles. From rubber-tired mobile cranes and smaller man lifts and scissor lifts designed and manufactured by firms like Genie, right up to giant Manitowoc and Liebherr cranes. “Some of the longer term installations had the big 600 tonne crawler mounted cranes for putting up the tanks for example. And as the project got a little more complete we had the 200 tonne cranes that come down the highway from Saint John to lift pumps, structural steel etc. and then go back to Saint John.” In addition to the cranes, another plus, says Brown, was Irving’s ability to supply the talent. Unlike PCS’s new potash shafts in Saskatchewan where labour is sometimes in short supply, skilled trades are plentiful in New Brunswick, in large part because the economy is hurting and skilled trades are eager for work. In fact, outside of the Nuclear Generating Station refurbishment in Point Lepreau, PCS’s potash operations at Penobsquis and Picadilly represent the largest construction project in the province. A far bigger challenge has been bringing in new hires for the actual mining operations at the mill and underground. “We’ve bought mining machines for our Picadilly project that have never been used in North America. For example, we have six Sandvik MF420 twin rotor mining machines and four Sandvik MB670 drum miners and in the past year, our focus has been working with some of our employees training them how to operate and maintain these machines.” In 2008, PCS employees at Penobsquis numbered 370. By the time Picadilly is up

and running next year, a staff of 500 will have risen to more than 600. Some of them are already hard at work installing hoist ropes and permanent conveyance systems in the service shaft. “And as we finish that, we’ll start on the change over at the production shaft and we would hope to have permanent hoisting there in early 2014.” As impressed as Brown is by the scope

of the project and the technology brought to bear at Penobsquis and Picadilly, he reserves most of his praise for the people. The enthusiasm for working on a new mine is contagious, he says, driven by an entirely new generation of miners in New Brunswick. “They’re stepping up and putting in that extra effort to bring it on line. It’s pretty gratifying.” CMJ

Drill rigs and more

s tor ers a r w ne Ge ht To rs ig sso ers &L e r low mp Co & B c uli nts a r e d r Hy chm we o a t P l At ria s t s l u Ind Too

& rts e a P vic r Se

800-465-4777 www.atlascopco.ca

June/July 2013 • Canadian Mining Journal |

| Tailings

REACHING A TIPPING POINT TO GAIN

DOMINANCE? By Frank Palkovits*

ave thickened tailings reached a ‘tipping point’ at which they become the preferred or default option for tailings disposal? If not now, the point is likely not far off when traditional sub-aqueous disposal loses favour and becomes the exception. To understand how this change will come about, it helps to look at an earlier technology that was gradually replaced -the move from wind-powered ships to coal-fired steam. While the benefits of self-propelled ships may be obvious in retrospect, in reality it took decades for steam power to offer a better solution than sail. The steamships of the 1820s were prone to explosions and not all that practical, gulp22 | Canadian Mining Journal • June/July 2013

ing coal in huge volumes. They had no hope of competing with sail for long voyages on the open ocean. But engineers persisted, with better boilers and a move from paddle-wheelers to screw propulsion. By around 1870, the growing flood of technology improvements helped coal-fired steam take over more and more of sail’s previous functions. For several decades, dual-propulsion ships were common — with sails to provide backup to the engines when winds were good. But gradually, sailing ships were pushed off the world’s oceans and into the history books. While traditional sub-aqueous disposal is still the technology of choice in many mines around the world, is the industry

undergoing its own “1870 moment” in which the balance is tipping towards thickened tailings? Signs are that an ongoing flow of improvements in thickened tailings technology has reached a tipping point to where it is becoming the default means of tailings disposal. Concern about sub-aqueous Sub-aqueous disposal once had several factors in its favour: it was seen as lower-cost, it was familiar, and it was widely accepted by regulators and financial sources. Now, all those factors are shifting. While conventional tailings ponds may be lower-cost initially, an overall global cost is often quite different, as the “long tail” of ongoing maintenance and legal liability www.canadianminingjournal.com

has been shifting the cost equation towards a long-term stable and sustainable solution. The cost of dams, water recycling, water consumption, water rights, permitting, and the time factor for permitting all exact greater and greater costs compared to 10 and 25 years ago. The general public, the regulators who respond to their concerns, and the financial community that is influenced by public and regulatory acceptance, are all voicing growing concern about the long-term risk posed by tailings dams. Recent stories in the news of dams that were breached or overtopped, or damaged in seismic events, have put a focus on the problems of this disposal technology.

There is also concern about whether disposal facilities that require maintenance “in perpetuity” will actually receive that attention forever. Increased uncertainty associated with more frequent storms and widely varying weather patterns presents increased risk to markets, lenders, bond holders and communities like. One of the biggest trends in business today is towards “sustainability,” and there are increasing questions being voiced whether conventional sub-aqueous disposal fits into that paradigm. So, it appears that the mining world is increasingly willing to consider alternatives that are long-term, low-maintenance that reduce, or even eliminate, the need for vulnerable tailings dams.

Thickened tails The same forces that are causing concern about sub-aqueous disposal are causing growing interest in thickened tailings disposal. One of the biggest factors is closure. Financial sources are becoming more concerned about the long tail of legal liability that extends from sub-aqueous disposal to use tailings in paste backfill. Thickened tailings can be progressively and readily put into closure or care and maintenance, with soil cover and vegetation added to remove the threat of the tailings being eroded by wind and precipitation, reducing the potential for acid generation and metals leaching into surface or ground water courses. Greater understanding of the design of landforms that support long-term stability is helping to improve the durability of these mines’ closure plans. These technological improvements are being supported by lessons learned in Alberta’s oilsands, where thickened tailings are a growing part of the closure plans that help settle fine particles out of the water in tailings ponds. There is also greater understanding of how paste (which is produced at a slightly higher density than thickened tailings) can help improve recovery rates, reduce dilution, improve ground stability and safety in underground mining operations. It is increasingly common to use pastes to back-fill mined-out stopes, faster and at lower manpower levels than with cemented rockfill and cemented hydraulic fill. Higher productivity and improved head grade increases productivity and profitJune/July 2013 • Canadian Mining Journal |

| Tailings ability, and pushes sustainability to the next milepost. This underground disposal is able to offer a long-term stable solution to disposal of at least part of the tailings produced by the mine. More circumstances Just as steam technology’s proponents mentioned earlier worked on a wide range of the technology’s limitations to make it practical, there has been significant improvement in the ability of thickened tailings technology to meet needs. Larger: Just a few years ago, there were few thickened tailings facilities at mines over 5,000 tons of ore per day. Now, the tanks, pumps and other equipment have been scaled to the point where thickened tailings are being used at mines of over 100,000 tonnes a day. More versatile: Advances in flocculants and thickener technology, a well as proven placement concepts demonstrate the ability to apply the technology over a wider range of projects in all metals and oil sands, fertilizers, and sludges.

Whatever your liquid storage need Westeel has an engineered solution manufactured to exceed all government and industry standards. Our products include: n Single wall and double wall Above Ground Storage Tanks (ASTs) n Fire rated ASTs n Underground storage tanks n Heated ASTs n Mobile service tanks n Above ground water storage tanks n Secondary containment systems n Corrugated water tanks n BBL tanks n Aqua-Sweeps™ n Stainless steel ASTs n Custom fabricated tanks

Mining

Aviation

Firefighting

Forestry

Rain Water Storage

(800) 665-2099 | westeel.com WesteelMining Liquid Storage Multi•2013 CMJ.indd 1 Canadian Journal June/July 2013 24 |22608

Westeel: Liquid Storage Multiproduct Ad

MF22608-0313

Because you can’t afford to spill a single drop, there’s Westeel.

Westeel offers primary and secondary liquid containment solutions for:

2013-03-20 2:10 PM www.canadianminingjournal.com

More knowledge: No longer a niche technology, thickened tailings application is becoming more familiar to a wider range of mining professionals around the world. Mining education programs such as that at Laurentian University offer it as part of their curriculum. New Internet-based information-sharing technologies also help mining professionals learn from each other about what works and what doesn’t. Just as the transition from sail to steam was gradual, the adoption of thickened tailings has taken time. As sail and steam were combined on some ships to get the benefits of both technologies, some mining operations can benefit from using both disposal options but it seems likely that in mining, the choice will be increasingly away from sub-aqueous disposal and towards a technology that promises a more sustainable future. CMJ Frank Palkovits, P.Eng., is President of Kovit Engineering Ltd., Sudbury, which provides mine backfill and tailings management, including strategic studies, consulting to detail engineering services, plant design and implementation.

Mineral Processing and Laboratories Services

Geoanalytical solutions in:

Mineral Processing and Metallurgical Testing

w Lab, bench and pilot-scale testing w Process engineering and development for uranium, potash, rare earth elements, gold and base metals w Process optimization w Environmentally sustainable extraction processes w Effluent treatment and tailings management Tel: 306-964-2008; Fax: 306-933-7446; Email: mineralprocess@src.sk.ca

Advanced Microanalysis Centre™

w Qemscan® w Custom analytical packages (XRF) w Quantitative Mineralogy (EPMA) w Trace Element Analysis (LA-ICP-MS) w Isotope Analysis (HR-ICP-MS) w High Magnification Imaging (SEM) w Qualitative and quantitative analysis (XRD) w Petrography-slide preparation and interpretation Tel: 306-933-7893; Fax: 306-933-7446; Email: microlab@src.sk.ca

Uranium

w U3O8 (wt%) analysis w Multi-element ICP-OES and ICP-MS packages w Trace element ICP-MS and high resolution ICP-MS w Gold and base metal and rare earth element analysis w Licensed radioactive facility

Potash

w ICP-OES and ICP-MS analyses w Dedicated facility Tel: 306-933-8118; Fax: 306-933-5656; Email: geolab@src.sk.ca

Diamonds ISO/IEC 17025: 2005 Accredited Facility

w Macro and micro diamond recovery w Kimberlite indicator mineral processing and recovery w High security facility Tel: 306-933-7177; Fax: 306-933-7197; Email: geolab@src.sk.ca

Contact the Saskatchewan Research Council (SRC) for a complete list of services or visit our website at www.src.sk.ca and click on labs. June/July 2013 • Canadian Mining Journal |

| Mining in the Prairies

Minerals

PLACE LIKE IT Saskatchewan is a mining giant. Mineral production reached $9.2 billion in 2011, the second highest in Canada.

The province has the largest potash industry in the world, accounting

for half of known global reserves. Existing companies plan $13 billion in expansion projects in the next decade. And several international mining companies, including BHP Billiton, Vale and Rio Tinto, have announced their intentions to

become part of this growing industry.

SASKATCHEWAN IS CANADA’S MOST DISTINCTIVE PROVINCE By Russell Noble

hen it comes to a distinct ‘footprint,” no other province can match Saskatchewan in terms of recognition. In fact, its arrow-like borders make it one of the more widely known provinces in the country and certainly the most prominent of the Prairie provinces. Centred between Alberta and Manitoba in the heart of Canada’s “west,” Saskatchewan boasts 651,036 km2 of land and water and when it comes to mining, it’s the largest potash producer in the world and the second largest source of uranium on the planet. Add gold and diamonds to that, plus base metals, clays, rare earth elements and the platinum group of metals, and the province is home to one of the more active mining areas in Canada. With more than 30 operating mines in the province, Saskatchewan was rated the sixth-best mining investment jurisdiction in the world by the Fraser Institute in the

26 | Canadian Mining Journal • June/July 2013

The world’s richest uranium deposits are located in the northern Saskatchewan, currently providing a fifth of the world’s production.

Saskatchewan is also home to one of

international Annual Survey of Mining the world’s largest fields of diamondCompanies 2011/2012 and, according to bearing kimberlite. The discovery Natural Resources Canada, the value of has led to extensive exploration and mineral production in 2011 was approxidrilling for diamonds. mately $9.2 billion (second highest in In addition, Canada) up fromthe $7province billion has in 2010 and deposits of gold, copper, zinc, $4.6 billion in 2009. rare earth minerals and Thenickel, province’s Ministry of the Economy platinum group elements. also reported equally bullish numbers in 2011 by showing that Saskatchewan’s international exports increased by 24% to $29.6 billion and that more than one half (about $16.7 billion) was attributed to mining and oil & gas exports. As mentioned at the outset, potash has largely been responsible for the province’s position on the world’s mining map and will continue to do so as potash miners continue their dramatic capacity expansion programs to existing and new mines under construction. Exploration expenditures support these plans for further growth as the

Uranium

Potash

Natural Gas

Coal

Oil

Ministry says that an estimated $293 million was spent looking for new deposits in 2011, with figures expected to reach $325 million in 2012. It’s already known that Saskatchewan’s potash resources are among the largest in the world and without boasting, the province (by conservative estimates) is confident that it could meet the world’s demands at current levels for the next several hundred years. From its 10 potash mines (eight underground, two solution), Saskatchewan

www.canadianminingjournal.com

increased its production by 13.9% to 10.4 million tonnes with a sales value of more than $8 million in 2011. More figures from the Ministry of Economy show that because of the increasing global demand for its potash, the Saskatchewan industry is spending $13 billion to increase ‘brownfield’ production capacity by 90% by 2020. To help ensure that the producers have buyers for their product, the potash industry has its own marketing company (Canoptex) in place to ‘promote’ Saskatchewan potash, specifically to foreign buyers. In a recent overview of ‘mineral’ activity in the province, the Ministry said that about 45% of Saskatchewan’s potash exports go to the United States, while most of the remaining exports are sold to the Pacific Rim and Latin America. And, typical of many other Canadian mineral exports, Asia continues to show significant growth potential for the product. Inasmuch as potash leads the way in terms of most of the mining activity in the province, uranium (as mentioned earlier) isn’t far behind as mining companies continue to produce and develop more properties. In fact, the province has ‘high expectations’ for more uranium discoveries thanks to increased exploration levels. About $955 million was spent on 150 projects from 2003 to 2011, resulting in many new discoveries, advanced exploration projects and naturally, the Cigar Lake Mine, the world’s second largest uranium deposit with grades that are supposedly 100 times the world average. With production scheduled for this year, the Cigar Lake Mine is a “jet-boring” operation where the orebody is being frozen prior to mining to improve ground conditions, prevent water inflow and

Exploration

Development

Production

improve radiation protection. The ore will be removed by a non-entry method jet-boring system that will be deployed within access tunnels being developed about 25 metres below the orebody. Technically, “jet boring” involves the use of high-pressure water strong enough to carve out cavities in the orebody and then collecting the resulting ore slurry through a network of pipes. The Cigar Lake mining processing also involves backfilling the cavities in the orebody with concrete once the ore is removed. Ore collected by the jet-boring system will be taken to underground grinding and thickening circuits and then pumped to the surface as slurry. Once on top, the ore will be loaded in special containers for truck transport for milling. The Cigar Lake Mine is a huge undertaking that is expected to employ approx-

imately 250 people permanently when the project is in full production. As mentioned earlier, Saskatchewan is also home to a number of other minerals, including diamonds in the Fort a la Corne area where one of the world’s largest kimberlite fields (200 hectares) is located. The Star-Orion South Kimberlite project, for example, indicates potential for more than 34 million carats. Gold, too, is being produced at four locations and Saskatchewan is also the third largest producer of coal in Canada with an estimated resource of 5.1 billion tonnes. Saskatchewan’s physical shape makes it Canada’s most “distinct” province but within those straight borders lies one of the more diverse sources of minerals in Canada and as exploration and mining continues in the province, those minerals will also become the focus of the world. CMJ

June/July 2013 • Canadian Mining Journal |

| Company Profile â&#x20AC;&#x201D; ABB in Canada Building structure for a grinder system

28 | Canadian Mining Journal â&#x20AC;˘ June/July 2013

www.canadianminingjournal.com

Ring geared mill drive.

Friction mine hoist.

Mine TO Market

Company provides up-front solutions to mining problems By Russell Noble

ABB

Inc. is a name found near the front of most phone books around the world but more than that, it’s also a name synonymous with being “up front” when it comes to providing solutions to mining problems and other challenges. Since its arrival in Canada in the 1900s from Sweden, ABB has been providing the mining industry with one of the more indepth sources of answers to mining and mineral processing questions. In fact, the engineering, design and customer support resources within the company are unparalleled in terms of diversity and its team approach to delivering imaginative and innovative solutions has earned it documented trust and thanks of appreciation from customers coast to coast. With more than 45 manufacturing, engineering, service and distribution centres located across the country, the company’s 5,000 employees look at each and every mining project as a new opportunity to provide customers with a solution to whatever challenge the project may present.

From initial consultation with mine designers, to entire turnkey operations where ABB in Canada’s engineers and technologists take full responsibility from groundbreaking through production, the company has tackled it all. And, because of the company’s national exposure involving mining operations from Newfoundland to British Columbia, and almost every other region in between, ABB in Canada is familiar with the variety of challenges each and every regional project presents. Daniel Assandri, CEO of the company, confirms ABB in Canada’s commitment to being a leader in power and automation solutions by saying that: “Supporting the mining industry is an important focus for ABB in Canada and our solutions cover the entire product value chain from the mine to the final product in market. “Our priority is servicing the customer needs by putting together the most advanced equipment, highly skilled people and world-class service for a completely customized solution.” As mentioned earlier, the company has June/July 2013 • Canadian Mining Journal |

| Company Profile — ABB in Canada

Conveyor and map of Canada showing ABB locations.

earned its customers’ appreciation because of those solutions but as Assandri adds: “Our history of service to the mining industry is also a growing chapter and I am pleased that ABB is an integral part of this important Canadian story in the global economy.” From “Mine to Market” should be the company’s motto because as CEO Assandri just said, ABB’s business plan includes almost everything mine related, particularly when it comes to the specifics of power and automating the various components involved with mining and mineral processing. As every mine owner and operator knows, power distribution, control and optimization of the energy required to operate a mine is as important to the success of any operation as the mineral resources themselves and that’s where ABB excels with substations. In fact, the company is known for its complete package of solutions including process control and automation systems designed for everything from building a Greenfield plant, to extending or modernizing an existing plant, to substations and conversion of high, medium and lowvoltage equipment for switching and distributing electrical power. 30 | Canadian Mining Journal • June/July 2013

Drive train and control systems are two other vital components in almost every mine operation and there again, ABB’s designers and engineers have met strict industry demands for safe, energy-efficient systems based on industrial technology. The applications include crushers, conveyors, grinding mills and multi-level man and material hoists. When it comes to driving grinding performance to higher levels, ABB also offers a wide range of solutions: gearless mill

drives, ring-geared mill drives and drives for high-pressure grinding rolls. Technically, energy-efficient gearless mill drives (GMD) for grinding eliminate the typical mechanical components of the drive train (shaft, gearbox, pinion and ring gear). ABB delivered the first GMD ever in 1969, which is still in operation today. But it’s the company’s hoisting systems mentioned earlier that are perhaps some of the company’s proudest and most noteworthy achievements, particuwww.canadianminingjournal.com

larly in Saskatchewan where ABB has already installed 10 complete friction hoisting systems and in the area of underground mining, the company has also supplied more than 700 hoist and automation projects and over 100 standalone hoist brake system projects in more than 30 countries worldwide. Although ‘friction hoisting’ is not new (it was invented in Europe in 1877 and brought to North America in 1955) ABB’s Tim Gartner, Manager of Underground Mining and Mill Systems, North America, Process Automation Division and Paul Henri (Sales and Marketing Manager, Montreal) recently co-wrote a paper in which they gave an historical perspective of the system explaining why ABB has such confidence in friction hoisting for mining. “Friction hoisting, as an ore haulage method, is a somewhat new development in North America when compared to some of the other major mining centers. It is well known that the idea of the friction hoist was introduced by Frederich Koepe in the late 19th Century in the German coal mining industry,” says the Gartner/Henri paper. Technically, early friction hoists, like drum hoists, were normally ground mounted and used tower mounted headsheaves to centre the conveyance ropes within the shaft compartments. As mine operators and hoist manufacturers gained experience with the friction hoist concept, new developments and methods came on stream. These included improvements to friction lining materials, the use of two and sometimes three hoist ropes and in some cases installing the entire friction hoist within the headframe tower. These early friction hoist configurations gained widespread usage in Scandinavia, Germany, Belgium, Holland and France, and by the early 1940s, friction hoisting systems dominated in the mining industry in the above-mentioned countries to the point where drum hoists were rare and were, in some cases, converted to friction hoists. With the friction hoist configuration, higher payloads at depth were possible through the use of multiple head ropes, with all the ropes equally sharing (ideally) the payload mass. Generally speaking, friction hoists were touted as having the ability to han

Control room for a ringgeared mill drive system.

dle heavy payloads with comparatively smaller mechanical equipment configurations resulting in comparatively smaller electrical drives. The Gartner/Henri paper goes on to say that at the time, appropriate consideration was given to the area of rope selection, rope tension equalization, rope slip, brake systems, pushbutton operation and other areas of relevance to friction winding configurations (all of which remain true today). While the friction hoisting concept was well accepted in most parts of Europe, they were still regarded with some suspi-

cion in North America, South Africa and even Great Britain. It was only after the development of large capacity Multi-Rope Friction hoisting systems that serious consideration was given to their use in North America. Like many systems used in mining today, they are based on success and failure. Historically, the concept of mining hasn’t changed that much but thanks to companies like ABB in Canada mining and mineral processing is one of the safer and productive industries around and through continued research and development, it will remain that way for centuries to come. CMJ

A ring-geared mill drive system.

June/July 2013 • Canadian Mining Journal |

CSR and Mining

Human rights are a team effort Marketa Evans is the Government of Canada’s Extractive Sector CSR Counsellor. The CSR Counsellor is a special advisor to the Minister of International Trade. The Counsellor has no policymaking role and does not represent Government of Canada policy positions.

By Marketa D. Evans

he recent collapse of a garment factory in Savar, Bangladesh, killing more than 700 workers, again brought questions of business and human rights to the fore in Canada. It was the worst disaster ever in the garment industry. A flurry of possible responses was quickly hashed out in the media, ranging from a recommendation to “buy Canadian” to a caution that Bangladeshi workers might be better off if companies stayed on and worked with suppliers to improve conditions and standards. The independent Center for Global Development in the US for example, noted that consumer boycotts or corporate departures would hurt the people in Bangladesh who are already struggling – mostly poor women whose livelihood alternatives are often worse than those found in the garment factories. This tragic situation again made it clear that we need nuance in our public debates, as the issues are often far more complicated than they appear at first glance. The macro issue of “who is responsible for human rights?” – a common issue for mining companies operating in emerging markets – underpinned quite a bit of our Canadian debate. What was markedly missing in the Canadian conversation though, was a recognition that global dialogue and practice have moved substantively in the past decade. Canadian business decisions need not take place in a vacuum any longer. A substantive and serious body of global work has been created that provides solid guidance on these difficult questions. 32 | Canadian Mining Journal • June/July 2013

Sorting through the tricky domain of business and human rights has not been easy. For many years, a polarized debate raged on, between those who saw corporate responsibilities in upholding state treaty obligations such as the Universal Declaration on Human Rights; and those who saw no real value in a human rights agenda for business. After years of this stalemate, and a number of efforts to sort through the different opinions without much substantive progress, then-UN Secretary General Kofi Annan appointed Professor John Ruggie to try to advance understanding. In his sixyear term as the UN Special Representative on Business and Human Rights, Ruggie crisscrossed the globe, built bridges within and between sectors, and created a significant body of empirical work. After his first term, he came up with a “Framework” to explain who does what. States, the Framework noted, have a duty to protect citizens from human right abuses of third parties, including the private sector, a duty that is grounded in law. Companies for their part have a responsibility to respect human rights – not to uphold state treaty obligations but definitely to respect human rights in all aspects of their daily operations (including supply chains). Finally, people who suffer negative impacts must have more ways of getting redress and remedy. In 2011, at the conclusion of his second term, Professor Ruggie elaborated the Framework in a practical document on implementation, call the “Guiding Principles on Business and Human Rights.”

So what does this mean for the mining industry? The Protect, Respect and Remedy framework, and the Guiding Principles that flowed from the Framework, have received wide support and pickup. They were deeply informed by dozens of stakeholder consultations and input from business and civil society groups and by pilot programs field testing some of the recommended actions. The Guiding Principles are now reflected in many other institutional documents, from the OECD Guidelines to the IFC Performance Standards, from ISO 26000 to the American Bar Association. The bottom line is that the Ruggie mandate forged a broad based consensus that both business and government have human rights responsibilities. The expectation for management at a minimum is to understand possible adverse impacts and work to address them and, an ability to demonstrate the work the company is undertaking. It is a due-diligence approach, comprising of policy, procedure and practical actions. As one example, for the mining industry that would include an understanding of potential human rights risks that come with the hiring of private security forces, and actions to mitigate those risks. The Guiding Principles themselves are available at http://www.ohchr.org/Documents/ Publications/GuidingPrinciplesBusinessHR_ EN.pdf We invite you to contact us and learn more. www.csr.gc.ca email: csr-counsellor@international.gc.ca CMJ www.canadianminingjournal.com

PROFESSIONAL DIRECTORY Advertisers Index Amalgamated Mining Services ltd.................. 13................................. www.ams-ltd.ca Atlas Copco.......................................................... 21...........................www.atlascopco.ca B.I.D Canada........................................................ 33....................www.bidcanadaltd.com DMC Mining Services.......................................... 4........................www.dmcmining.com Dundee Capital Markets.................................... 36..................www.dundeewealth.com Fortis....................................................................... 6............. www.fortiscorporation.com Kovit Engineering.................................................. 6............................ www.koviteng.com Motion Canada.................................................... 35.............www.MotionIndustries.com Norseman Structures......................................... 11.......www.norsemanstructures.com Northern Miner................................................... 33..................www.northernminer.com PotashCorp............................................................ 7...................... www.PotashCorp.com ROSTA Inc............................................................ 13.............................www.rostainc.com Saskatchewan Research Council.................... 25....................................www.src.sk.ca SRK Canada......................................................... 33......................................www.srk.com TerraSource........................................................... 2.....................www.TerraSource.com Westeel................................................................. 24............................. www.westeel.com

DON’T MISS THIS OPPORTUNITY TO GROW YOUR BUSINESS IN 2013. List in the Canadian Mining Journal’s Professional Directory Cost as low as $150.00 per issue Includes listing in our online professional directory – increases your presence on the web!

Consulting assistance for mining clients from grass roots exploration through to mine closure.

Cradle to cradle

Contact: ROBERT SEAGRAVES 416-510-6891 Fax: 416-510-5138 rseagraves@canadianminingjournal.com

>1,500 professionals • > 45 offices • > 20 countries • 6 continents

     

Over 2300 mining companies 700 producing mines 625 advanced stage projects 6300 exploration properties 42 focused search criteria Continually updated data

Visit www.northernminer.com/subscribe/ Or call: 1-800-668-2374

June/July 2013 • Canadian Mining Journal |

Exploration Opportunities

Tax planning from backroom to boardroom Jim MacLean is a partner and leads mining tax services at Ernst & Young. He is based in Toronto.

By Jim MacLean

esource nationalism and more tax controversy are challenging mining and metals companies like never before. Because of this, tax planning is increasingly becoming not only a key component of cost reduction and cash maximization, but mine planning and business strategy. Ernst & Young’s most recent “Global Mining and Metals Tax Survey” finds that the role of the tax director has changed from a largely compliance-driven role to a more commercial and strategic focus. Those mining companies that haven’t yet invited their tax directors and advisors into the boardroom should take note. Natural resources tax policy As resource nationalism continues to gain momentum, having a consistent approach when responding to tax-related policy and legislative changes around the world is even more important. Resource nationalism impacts investor confidence and affects investment decisions. As such, mining companies need to balance increased government engagement with transparency about what their mine can bring to a community — all while being clear about the expectation of shareholder return. Because increased taxes are a cash cost of production that are likely to impair projected investment returns, if the mine becomes uneconomic, the entire investment may become impaired. This makes transparency of both the tax administration process and taxpayer behavior necessary, and a consistent application of laws and regulations critical to the long-term 34 | Canadian Mining Journal • June/July 2013

sustainable development of a country’s natural resources. Aligning the tax agenda Tax and royalties are some of the largest components of cash costs and now, with increased scrutiny by tax authorities and new legislative requirements, mining companies have become more conservative in their approach to tax planning. Factor in the continued external pressures — a weak global economy, continued resource nationalism, greater pressure on mining companies to be transparent and increased aggressiveness by revenue authorities — and the payoff of engaging the tax director at the board level becomes fundamental. Globalization More than ever, transfer pricing and taxeffective supply chain management that support the business strategy will help to maintain competitive advantage and give value to shareholders. Increasing globalization and the growing tax rate differential between countries with natural resources and those without is increasing the importance of transfer pricing optimization, and jurisdictions without natural resources are seeking to take advantage of resource wealth in other ways. These countries are leveraging their favourable tax regimes, an abundance of legal and financial services, stable fiscal and legal regimes and a good network of tax treaties to attract mining companies to set up downstream functions in their jurisdictions. Tax authorities, however, are taking a closer look at transfer pricing structures

and tax efficient supply chains. Meanwhile, in producer nations, governments are paying attention to the potential of lost tax revenues through international activity that may reduce corporate tax bases. And the penalty burden is increasing as countries implement more marketbased pricing rules and tax authorities are adding staff devoted to transfer pricing. The reality is that mining companies simply can’t be complacent on their evolving transfer pricing risk. A growing controversy Taking into account the harsh financial and reputational penalties that can result from a major tax controversy, proactively managing uncertainty is critical. With tax administrators increasingly taking a global view of companies, managing things like changing business models, a shifting economy, complex and fast paced legislation, and a rapidly evolving approach to tax enforcement requires a global vision and strategy. The pendulum of risk It’s clear that rising resource nationalism activity, increased focus on cash savings, globalization and a rise in controversy have all contributed to a momentous shift towards a more conservative risk appetite, but striking a balance with a more assertive stance could lead to better tax outcomes. Taking a more proactive approach in order to align tax planning with the strategic imperatives of global operations will help companies to navigate and stay ahead in a dramatically changing global mining and metals landscape. CMJ www.canadianminingjournal.com

Whether the job is piling limestone or loading a dump truck, fluid power is the driving force. And, at the heart of every hydraulic system is the pump. Eaton’s line of open circuit piston pumps delivers maximum energy savings, at high power densities. With a long history of proven performance and reliability, choose Eaton’s higher pressure, more efficient open circuit piston pumps to keep you up and running. And, you can find Eaton open circuit piston pumps at your local Motion Canada location. Our local sales and service specialists are experts in application and technical support, providing the parts and the know-how you need to stay up and running. The brands you count on from the people you trust…that’s Eaton and Motion Canada. ©2013 Motion Industries, Inc.

Over 50 locations More than 4 million products Industrial maintenance training courses Call. Click. Visit.

1-800-526-9328 for the location nearest you MotionIndustries.com

We’re not a bank. We’re miners and geologists with money to invest. We are Dundee Capital Markets and we offer you a full service investment dealer whose principal business includes investment banking, institutional sales and trading, private client advisory, and investment management. We have the capital to assist the development of large - or small - scale resource ventures and the experience to spot good potential much earlier than others. We are looking for smart investments, big and small, in the global resource sector and have the resource industry expertise and the balance sheet to help your company when you need it most. Others invest only when you’ve proven yourself; we invest so you can. If this sounds like a group you’d like to do business with, talk to me. My name is Ned Goodman.

nedgoodman@dundeecorporation.com — 416-365-5665