Canadian Mining Journal October 2013

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DRILLING

DEEPER Quebec miner straddles border to get gold from two provinces

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October 2013

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Departments 5 Editorial

This month Editor Russell Noble talks about Quebec’s proposed Charter of Quebec Values and why he thinks that an act would have a negative impact of Canada’s mining industry.

CANADIAN Mining Journal CONTENTS

6 Mining Matters

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

8 Investing

Ned Goodman’s regular “Investing” column looks at over-indebtedness and the bursting of economic bubbles on a global basis.

10 Law

Norton Rose Fullbright Canada’s Elisabeth Eljuri talks about resource nationalism and the shock of the law.

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MINING IN QUEBEC COVER STORY

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Richmont Mines of Rouyn-Noranda straddles the borders of Quebec and Ontario with gold mines in both provinces, plus it owns and operates a mill in Malartic.

12 In My Mine(d)

Guest columnist Russell Hallbauer, President of Taseko Mines of Vancouver, talks about his company’s proposed New Prosperity mine and local First Nations’ concerns.

28 Management

Stephen Koro, General Manager, Optimisation, at Ausenco, a Vancouver-based Engineering and Project Management company, takes an in-depth look at Asset Management.

38 Unearthing Trends

Daniel Roth, a partner at EY and leader of Infrastructure Advisory Services, looks at facing infrastructure challenges in Northern Quebec.

18 Rugged and Remote Glencore and Goldcorp overcome rugged conditions to operate mines in remote parts of Nunavik and Quebec.

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22 The road to riches Stornoway opens a truck road to its Renard Diamond Mine.

24 Facing the Face ’

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October 2013

DRILLING

DEEPER Quebec miner straddles border to feed mill from two provinces

ABOUT THE COVER This month’s cover image from the Beaufor Mine (Val-d’Or, Quebec), provided by Richmont Mines of Rouyin-Noranda, Quebec.

Canada Post Canadian Publications Mail Sales Product Agreement No. 40069240

New in November

Canadian Mining Journal’s annual Buyers’ Guide.

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Mining student gets ‘underground’ taste of the profession she intends to pursue after graduating from Queen’s University.

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

October 2013 • Canadian Mining Journal |

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Editorial

CANADIAN Mining Journal October 2013 Vol. 134 — No. 8 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 613-270-0213 mscales@canadianminingjournal.com

Faith in country is what matters

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

By Russell Noble

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“proposed” act and that’s ust when I thought that enough to possibly do damage nothing coming from Publisher & Sales in the eyes of some investors.

Quebec’s politicians Robert Seagraves 416 510-6891 I know it’s the Prime would surprise me, along rseagraves@canadianminingjournal.com Minister’s responsibility to comes Premier Pauline Sales have an answer for most of Marois and her Parti Western Canada, Western U.S.A. Bonnie Rondeau the country’s problems, but Québécois pushing for a 416-510-5245 unfortunately when Stephan “Charter of Quebec Values” brondeau@canadianminingjournal.com Toll Free Canada: Harper speaks, much of the to impose a dress code in 1-800-268-7742 ext 6891 or 5245 Another brow raiser. world still listens because he public-sector workplaces.

Toll Free USA: 1-800-387-0273 ext 6891 or 5245 is, after all, the leader of an internationNot since the Jim and Tammy Faye Group Publisher ally powerful country.

Bakker’s multi-million-dollar televangelism Doug Donnelly That said, and on a more positive note scandal and their PTL Club of the late 1980s President Vice-president from the Prime Minister’s office, comes have eyebrows been raised higher around

Bruce Creighton Alex Papanou word that the Canadian government is the world over religious issues thanks to this Established 1882 Canadian Mining Journal provides articles and information of practical planning a campaign to promote this proposed and repugnant Charter. use to those who work in the technical, administrative and supervisory aspects of exploration, mining and processing in the Canadian mineral exploration and In fact, one may go so far as to say that country’s mining sector abroad in an mining industry. Canadian Mining Journal (ISSN 0008-4492) is published 10 times a year by Business Information Group L.P. BIG is located at the proposed Charter of Quebec Values effort to attract skittish foreign investors 80 Valleybrook Dr., Toronto, ON, M3B 2S9. Phone (416) 442-5600. ranks right up there with many of the to look at what Canadian mining compaLegal deposit: National Library, Ottawa. Printed in Canada. All rights reserved.

The contents of this magazine are protected by copyright and may be used only other ‘brow-raising’ events of recent nies have to offer. 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 months; Syria, Kenya, the disastrous train We know how good Canadian mining obtain the permission of the owner of the copyright. For further information wreck in Lac-Megantic, Alberta’s summer companies are and it’s encouraging that the please contact Russell Noble at 416-510-6742.

Subscriptions — Canada: $47.95 per year; $76.95 for two years. USA: US$60.95 floods and naturally, Toronto’s Mayor Rob Canadian government is finally jumping on 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.

Ford to add comic relief. board to tell the world too. With more than GST registration # 809744071RT001.

My point is that anything “proposed” 260 diplomatic and consular offices in 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 or “passed” involving religious freedom about 150 countries, it shouldn’t be too difwish 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; makes headlines around the world and ficult to get the word out that Canadian E-mail: privacy officer@businessinformationgroup.ca; Mail to: Privacy Officer, I’m willing to bet that questions are now mining companies have a lot to offer, both Business Information Group, 80 Valleybrook Dr., Toronto, ON, M3B 2S9.

Publications Mail Agreement #40069240. PAP Registration No. 11000. We being asked around the globe as to “What’s at home and particularly abroad. acknowledge the financial support of the Government of Canada through the Publication Assistance Program towards our mailing costs. Return undelivergoing on in Canada?”

After all, we are among the top five able Canadian addresses to: Circulation Dept., Canadian Mining Journal, 80 Valleybrook Dr., Toronto, ON, M3B 2S9. E-mail: bigcirculation@bizinfogroup.ca It’s a question that I believe many of us producers of potash, uranium, nickel, Canada Post: Publications Mail Agreement PM40069240. Please forward are now asking ourselves too, but I also platinum, aluminum, diamonds and steelForms 29B and 67B to 80,Valleybrook, Toronto, ON M3B 2S9. think it goes beyond the question of reli- making coking coal in the world and from 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, gious freedom. News of this nature what I’ve heard, the world’s population NY. US postmaster: Send address changes to Canadian Mining Journal, PO Box 1118, Niagara Falls NY 14304. impacts on the entire country’s reputation will continue to grow and within the next We acknowledge the financial support of the Government of Canada through the Canada Magazine Fund toward our editorial costs. as being a sound and responsible place to decade or so, people will want as much as live, work, and invest. twice the amount of ore we produce now And it’s the ‘investing’ part that hits from our mines. close to home for the mining industry.

It’s a good position to be in, but not if While Prime Minister Harper recently ‘faith’ in the country dwindles because of said “I don’t think the Charter in its current issues that make headlines that suggest form is going anywhere,” the fact is, he that what we wear here determines our recognized and publicly mentioned the worth as individuals, and a nation. CMJ Canadian Business Press Indexed by Canadian Business Periodicals Index

October 2013 • Canadian Mining Journal |

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MiningMATTERS A LOOK AT WHAT’S NEWSWORTHY FROM ACROSS THE COUNTRY

COAL ASSOCIATION OF CANADA DRAWS A GREAT CROWD

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and CEO of Grande Cache Coal.

The CAC Award of Distinction recognizes demonstrated leadership in the Canadian coal industry.

CAC President Ann Marie Hann said, “Throughout his 30 year career in the Canadian coal industry, Bob Stan has demonstrated a strong passion and commitment to the Canadian coal industry. He’s known as the Founder, President and CEO of Grande Cache Coal, but for those who work in our industry, he’s a people-focused, communicative executive with an in-depth knowledge and understanding of the coal business and a champion of coal and the it brings fa.pdf 1 benefits 2013/09/10 4:48 PMto our economy and society.”

CMJ

An overall view of one of the crowded sessions clearly shows that delegates were extremely interested in the topics presented during this year’s CAC Conference and Trade Show in Vancouver.

Left to right: Ann Marie Hann, President, Coal Association of Canada, Robert H. Stan, former President and CEO of Grande Cache Coal, recipient of the 2013 Coal Association of Canada Award of Distinction, and David Turnbull, President, Hillsborough Resources, Chairman of the Board.

Photos by Mark Kinskofer.

he Coal Association of Canada’s Annual Conference and Trade Show was once again a huge success as delegates from around the world attended the three-day event held recently in Vancouver.

From its popular golf tournament, to numerous hospitality events, to the overflowing business sessions featuring speakers involved with all aspects of coal mining and production (to transportation including, trucks, rail, ports and ships), the three-day event provided something for everyone.

One of the many highlights of the event was the presentation of the Association’s new Award of Distinction, given year to A104150 AEL this GOLD AD 124x178 Robert H. Stan, former President

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Investing

Debt and the burst of global bubbles Ned Goodman is President and Chief Executive Officer of Dundee Corporation

By Ned Goodman

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wo of my favourite economists are Milton Friedman and Ludwig von Mises. Both of them are no longer with us but they were close in their thinking.

October will mark the 41st anniversary of Ludwig von Mises death and, as it happens, it coincides with the world going through a similar crisis to that which von Mises lived through and its origin is related to the same kind of over-indebtedness and bursting bubbles on a global basis.

If von Mises would be here today he would tell us that many of his predictions have become reality with the sovereign world debt approaching $50 trillion in total and where all central bankers are busily trying to arrange the elimination or disposal of these debts, mostly by printing paper currency.

The examples obviously include the Federal Reserve’s Quantitative Easing, the ECB’s similar programme, and the quantitative easing programmes that are being

8 | Canadian Mining Journal • October 2013

carried out by the Bank of England and the Bank of Japan. In this continuous run of governments issuing fiat money via sovereign debt in order to cover those always consistent deficits, some economists and I are questioning more and more how long this can be sustained – without a new crisis being developed.

But where would Mises and Friedman be on this dispute? The answer can be found in any one of their writings – for Mises see Money and Credit and for Friedman see Money Mischief. They each unequivocally condemn artificial printing of money, which Mises sees as a form of drug administered by governments to citizens. Friedman felt that fiat money creates a massive, distorting effect on the system of prices. They both say that the redistribution of income most importantly takes away the ability to control the loss in the purchasing power that the future increase in prices will generate.

Most economists believe that even just a little bit of inflation can contribute to economic recovery; but “if you are increasing the quantity of money, and you are not increasing the quantity of things which can be bought with money, you are only increasing the prices which are paid for them. And in time, if the increase in money continues, the whole system becomes a system without any meaning and really without any possible method of dealing with it.”

Others feel that increasing inflation creates a false expectation that the consolidation of public finances may be postponed, without taking into account that such action will contribute even more to making the economic system unsustainable.

However, sooner or later this will collapse through the abandonment of the individuals’ trust in a currency that has no value.

From this point of view, the vision Mises had about inflation as an illusion imposed is not so far from the idea that government bonds are not net wealth, since future generations will have to bear their burden.

Inflation and public debt, then, are two sides of the same coin, because they create substantial intergenerational redistributive effects that policy makers cannot evaluate ex-ante, or even care. Friedman told that, in his opinion, “the single most important and most thoroughly documented yet obstinately rejected proposition is that “inflation is always and everywhere a monetary phenomenon.” Friedman and von Mises views have been known by some scholars and men of affairs for hundreds, if not thousands, of years. Yet it has not prevented governmental authorities from yielding to the temptation to mulct their subjects by debasing their money – taxation without representation – while vigorously denying that they are doing anything of the kind and attributing the resulting inflation to all sorts of other devils incarnate.

CMJ www.canadianminingjournal.com

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Law

Resource nationalism: The shock and the law Elisabeth Eljuri is Head of Latin America, Partner Norton Rose Fulbright, Caracas

By Elisabeth Eljuri

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he breadth of various host government initiatives in recent years to reslice the world’s natural resources pie is, in many jurisdictions, breathtaking.

Resource nationalism has been a leading issue for Canadian and global mining companies and remains one today.

Ernst & Young’s 2013-14 Business risks facing mining and metals report (released in June 2013), says the risk of resource nationalism remains “every bit as critical as it was last year.” The report also says “in some respects, companies are becoming less sensitive to the shock of resource nationalism . . . (as it) has become more endemic, mining and metals companies have become better at managing this risk.”

As Canadian mining companies invest more and more outside our borders, the risks are enhanced. Natural Resources Canada (NRC) reported in January 2013 that Canadian mining assets (CMA) globally grew by 15% in 2011 to reach a new high of $215.3 billion. CMA abroad hit $146.2 billion in 2011, 16% more than 2010 and nearly 70% of CMA. NRC also reported that Canadian mining companies operated in 106 foreign countries in 2011, up from 102 in 2010. New jurisdictions in 2011 included Cambodia, Equatorial Guinea, French Guiana, Guinea-Bissau and Malawi.

With resource nationalism now being a fixture in the developing and developed worlds, what legal steps can they take to protect themselves from political risk?

What mitigation strategies are the most important?

Mitigating political risk in mining investment Although risk cannot be eradicated, the following mitigation strategies can help mining companies reduce risk and protect their interests. Agreeing to these forms of 10 | Canadian Mining Journal • October 2013

protection is challenging and requires careful negotiation as well as a willing State on the other side. Some countries have passed legislation that supports some of these strategies (for example, Peru).

Stabilization clauses These clauses aim to ‘freeze’ the contractual, legislative and regulatory environment of a company’s investment. They are most effective in thwarting creeping expropriation. The bargaining power for mining companies and states can ebb and flow with the need for resources (by companies) and the need for investment (by states). Notable exceptions to stabilization clauses can include protection of the environment by the State or public welfare.

Adaptation clauses Adaptation clauses seek to maintain an economic equilibrium of projects where the operating environment changes (such as commodity prices or operating costs).

They may be less susceptible to breach or repudiation due to their private law nature. When circumstances change, the clauses equip one or both parties with the means to amend contracts. Typically, from the private company’s perspective, what the company wants is to be protected from actions or governmental measures that diminish or adversely affect the company’s economic benefit under the contract or concession.

Further contractual provisions Depending on local laws, these can include a combination of penalty clauses (liquidated damages), international arbitration, compensation provisions and sovereign immunity waivers. It is essential that mining companies investing abroad are aware of the host state’s attitude to sanctity of

contract, procedures for enforcement and potential protection via investment laws.

Political risk insurance (PRI) PRI has evolved to increasingly cover developing markets. The leading private provider (Berne Union) covered $1.8 trillion worth of business in 2011, roughly 10% of world trade. The leading public providers have covered over $220 billion in more than 4,600 projects in developing countries in the last 40 years. PRI is useful only in certain situations however—namely when political risk has a high impact but a low probability of occurring. Although costly, PRI should only be considered as a last resort to address residual risk.

Bilateral investment treaties (BIT) BITs provide certainty to legal frameworks in foreign investment and have been successful in protecting many companies. BITs can protect investors where expropriation occurs, usually through arbitration. Uniform and common rights arising from BITs include fair and equitable treatment, full protection and security, most-favoured nation clauses and umbrella clauses. Sometimes treaty planning takes place—i.e. intentionally selecting a BIT between a host state and third party country that can better protect an investment in a foreign market. Treaty planning, structured and planned in a considered manner, is legitimate and can be of great benefit in mitigating political risk Conclusion The initial shock of todays’ era of resource nationalism may have passed, but it remains a critical factor for Canadian mining companies. Risk cannot be entirely avoided, but legal steps through structuring mitigation strategies can reduce it. CMJ www.canadianminingjournal.com

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In My Mine(d)

New Prosperity for the Tsilhqot’in First Nation Russell Hallbauer is President & CEO of Taseko Mines Limited.

By Russ Hallbauer

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aseko Mines is proposing to build a $1 billion dollar gold-copper mine in British Columbia.

The New Prosperity mine plan includes $300 million to save Fish Lake in response to local First Nations concerns.

The final weeks of the First Nations community hearing sessions of the federal environmental assessment for New Prosperity Gold-Copper Mine witnessed emotional testimony from many Tsilhqot’in First Nations people.

These communities, many with strong family ties, are working to heal some pressing social issues by strengthening awareness of their traditional practice and heritage amongst their youth as well as amongst the general population.

We applaud their efforts and understand and respect the importance of those traditions. In many respects the panel hearing has been a helpful process in providing much needed dialogue and greater mutual understanding of our respective interests and opportunities.

Some of the panel testimony, however, much of it from outside special interests, has unfortunately been designed to misinform and divide.

The local communities have been told that the proposed mine will cause massive environmental damage and that somehow the rivers will be poisoned, the fish, animals, vegetables will all die or won’t be fit to use and that there will no longer be any place in the vast region to practice the traditions and rituals that are so important to their culture, their spirituality and their heritage.

All of this unfortunate misinformation 12 | Canadian Mining Journal • October 2013

leads to confusion, it leads to mistrust, and it leads to fear. Sadly that too has been a reality of the panel hearings.

This misinformation isn’t really about the New Prosperity project; rather, it seems to be about the establishment of rights and title and the authority of Canada and British Columbia to approve projects in the area.

Aboriginal rights have been proven in numerous places across Canada in various court decisions and the Tsilhqot’in First Nations themselves have proven rights to hunt, trap and trade in the area.

However there exists an element of confusion in some circles around what limitations, if any, the existence of proven or asserted aboriginal rights and title might mean not only to our project but to other industrial developments in Canada as well.

We know from Judge Vickers ruling in William v. British Columbia that the Tsilhqot’in could not establish aboriginal title in respect of the Fish Lake area (the location of New Prosperity) though he felt they could establish it in other areas.

While that case is going to the Supreme Court of Canada, the findings of fact will not be reviewed by that court. As such, the Fish Lake area is perhaps the only place in Canada where we know aboriginal title does not exist.

Second, even where aboriginal title is proven to exist here, or in any other part of Canada, it is not inviolable. In the 1997 Supreme Court of Canada decision in Delgamuukw v. British Columbia the Court noted aboriginal title includes the right to choose the use to which land is

put, but Canada’s then Chief Justice Lamer went on to say this: “In my opinion, the development of agriculture, forestry, mining, and hydroelectric power… are the kinds of objectives that… in principle, can justify the infringement of aboriginal title.”

More recently, in 2004, Canada’s present Chief Justice McLachlin said this in Haida Nation v. British Columbia (Minister of Forests): “The Aboriginal “consent” spoken of in Delgamuukw is appropriate only in cases of established rights, and then by no means in every case. Rather, what is required is a process of balancing interests, of give and take.”

Even though the Tsilhqot’in could not prove aboriginal title in the Fish Lake area, Taseko has engaged in give and take and we have made extraordinary accommodations to save Fish Lake through our redesigned New Prosperity project.

Taseko is making every effort to respect Tsilhqot’in history, and to ensure the effects of the mine are minimized or avoided through mitigation and, where appropriate, compensation.

It’s not within our company’s abilities to right all of the past wrongs. We believe our responsibility and duty is to be responsible now and into the future. We believe that New Prosperity is a unique opportunity that will benefit all the people of the Cariboo.

We want to work closely with the Tsilhqot’in and Shuswap First Nations in the region, in a spirit of reconciliation.

Our door is open and we look forward to future discussions.

CMJ www.canadianminingjournal.com

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| Mining in Quebec

Minerals Borders Without

Richmont Mines: Producing gold from mines in two provinces

By Russell Noble

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ustralia has its “Gold Coast,” Toronto-Hamilton-Niagara Falls is known as the “Golden Horseshoe,” but the “Abitibi Gold Belt” that straddles the borders of Northern Ontario and Quebec is the ‘real deal’ when it comes actual gold.

In fact, unlike the “Gold Coast” and the “Golden Horseshoe,” the “Abitibi Gold Belt” is historically known for its ‘gold’ and since the area was discovered in 1901, more than 100 mines have produced approximately 170 million ounces of gold from the region.

Stretching about 500 km from Wawa, Ontario to Val-d’Or, Quebec, the Abitibi Gold Belt is a massive structure that has attracted some of the biggest names in Canadian gold mining.

From the early 1900s of the Hollinger, MacIntyre and Big Dome Mines, to the 14 | Canadian Mining Journal • October 2013

more recent Malartic and Detour Lake mines by Osisko Mining and Detour Gold respectively, the Abitibi greenstone belt, in which the “Gold Belt” is situated, has also been prolific with other minerals, including more than 35 billion pounds of zinc, 15 billion pounds of copper, and 400 million ounces of silver.

But it’s the gold that’s still the biggest attraction and that’s why Richmont Mines of Rouyn-Noranda, Quebec, is there today with properties in both provinces. Working from both ends of the “Gold Belt,” Richmont currently produces gold from its Island Gold Mine near Wawa, Ontario, where it has an onsite mill, and from its Beaufor Mine in Val-d’Or, with ore from this operation processed at its wholly owned Camflo Mill 50 km away in Malartic, Quebec.

It’s an enviable setup and one that

Richmont President and CEO Paul Carmel says has enabled the company to keep a tighter control on costs while at the same time producing more than 1.3 million ounces since it started mining in 1991.

Richmont has also had gold mining interests in Newfoundland in the past, but today focus is primarily on the Wawa and Val-d’Or, operations, that President Carmel says has put the company on the map.

“We are very pleased with some very notable improvements in the second quarter of 2013 at our Beaufor Mine in Val-d’Or where we’ve seen a 53 per cent decrease in cash-cost-per-ounce to $777 thanks to a selective mining approach and to our employees who have worked hard to help improve our productivity.”

Owning its own mill can certainly have its advantages and Carmel says the Camflo Mill is now operating at full www.canadianminingjournal.com

Beaufor Mine (Val-d’Or, Quebec)

capacity and he credits that to being a big factor in enabling the company to deliver lower unit costs.

With two mines and two mills on the go, one would think that Richmont Mines has its hands full but like all progressive mining companies, further exploration and development is on going and again, President Carmel says the company has a “selective mining” business plan for the future.

Part of that plan, says Carmel, is to move ahead with the company’s Monique property, an open-pit gold project, and the W Zone project, a near-surface ramp access satellite deposit on the Beaufor Mine property, both of which are located about 50km from the company’s Camflo Mill.

The Monique deposit has open-pit proven and probable reserves of 485,737 tonnes grading 2.29 g/t Au and contain

Monique Gold Project (Val-d’Or, Quebec)

Beaufor Mine (Val-d’Or, Quebec) Beaufor Mine (Val-d’Or, Quebec)

October 2013 • Canadian Mining Journal |

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| Mining in Quebec ing 35,698 ounces of gold, and additional 107,531 indicated resource tonnes underground, directly beneath the openpit, at 4.88 g/t Au containing 16,858 ounces of gold. The W Zone Project has probable reserves of 132,251 tonnes grading 7.21 g/t Au and containing 30,680 ounces of gold, 107,511 indicated resource tonnes at 6.76 g/t Au containing 23,377 ounces of gold, and additional 5,589 inferred resource tonnes at 7.95 g/t Au containing 1,429 ounces of gold.

“The potential addition of these operations to Richmont’s operating mines is consistent with our strategy to increase mine life and resources from our Quebec assets by bringing on additional sources for our mill,” says Carmel.

The new Monique open pit is expected to have a life of 19 months and a mining rate of 22,500 tonnes per month. It’s expected to produce approximately 30,000 ounces of gold at an average cost of $904.00 per ounce, with commercial production slated to begin in Q4 2013. The W Zone Project is

projected to generate 6,000 tonnes per month of commercial production, with commercial production also expected to begin in the fourth quarter of 2013.

Monique and the W Zone projects are without question, welcomed additions to the Richmont family of mines but as mentioned at the outset, it’s the Beaufor and Island Gold Mines, plus the Camflo Mill, that have put the company on the map and here’s a brief look at what each of these operations have to offer.

The Beaufor Mine has been central to the company’s operations over the years, based on the fact that it’s been in the Richmont family since 1996 and has so far produced over 500,000 ounces of gold for the company, and in excess of 1,000,000 ounces for various companies since the 1930’s.

It’s an underground operation featuring long-hole and room-and-pillar mining methods with a production shaft to the 648 m level. During the first half of 2013, 65,215 tonnes of ore were processed

at head grade of 5.63 g/t, and 11,553 ounces of gold were sold at an average price of $1,489 per ounce.

As President Carmel mentioned earlier, hard work by the company’s employees have helped increase productivity across the board and safety has also played a factor in that miners at the Beaufor Mine have recorded six years (1 million hours) without a lost-time accident.

At the Island Gold Mine, President Carmel admits that the operational performance was slightly below expectations in the first half of 2013 because of a haulage equipment shortage, but with the recent acquisition of four new 30-tonne capacity Caterpillar trucks, he expects production to increase.

During the first half of 2013, a total of 107,414 tonnes of ore were processed at an average head grade of 4.71g/t. That represented a 12 per cent decrease in tonnage from the 121,411 tonnes of ore processed in the first half of 2012 at an average head grade of 5.52 g/t.

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16 | Canadian Mining Journal • October 2013

Tel: 1 855 HEWITT8 hewitt.ca mining.cat.com

www.canadianminingjournal.com

The Island Gold Mine is an underground operation using a long-hole method of mining and while it may be slightly off in terms of production so far this year, when it comes to development, the mine is moving ahead as Richmont continues work on the mine’s access ramp as part of its development of the Island Gold Deep project.

Work so far this year has taken the ramp to a vertical depth of 510 metres, and is on track to attain a vertical depth of 570 metres by the end of 2013.

Located below the Island Gold Mine’s current infrastructure and reserve and resource base, the Island Gold Deep project has an estimated inferred mineral resource of 508,000 gold ounces at a grade of 10.73 g/t Au. The company is spending $17 million on the project in 2013 while also continuing to drill the zone, which remains open both laterally and at depth.

President Carmel says, “There’s an internal study currently underway to ascertain the optimal levels to establish an

exploration drift and our initial mining horizon. A total of 13,797 metres of exploration drilling were completed on the Island Gold Deep project during the second quarter, bringing the total to 25,389 metres year-to-date and in line with our expectations and budget.”

In keeping with the ramp development, Carmel says there are two drills working between the 400 metre and 500 metre levels aimed to converting existing resources into reserves and identifying new resources in the upper horizons of the Island Gold Mine.

And finally, there’s the Camflo Mill where all of the ore from the company’s Beaufor Mine and Monique and W Zone projects is processed. As with all mine mills, it’s the workhorse and backbone of the operation. It’s a Merrill-Crow conventional type mill with circuits designed for crushing, grinding, gold cyanidation and precipitation using zinc powder.

It has a rated capacity of 1,200 short tons per day.

Beaufor Mine head frame ((Val-d’Or, Quebec)

From Wawa to Val-d’Or, and stops in between, Richmont Mines has the “Abitibi Gold Belt” covered and thanks to its safe and “selective mining” operations, gold will continue to flow from this historic part of Canada for years to come.

CMJ

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October 2013 • Canadian Mining Journal |

17

| Mining in Nunavik and Quebec

RUGGED

&

REMOTE

TWO OF CANADA’S MORE ISOLATED MINES CONTINUE TO IMPRESS

N

By Russell Noble

unavik and Quebec’s Raglan Mine and Éléonore, operated by Glencore and Goldcorp respectively, are two of the larger and more successful mining operations in the country, but their locations are about as unfamiliar to most people as the northern landscapes where they are located.

In other words, most people don’t have a clue where they are on the map, let alone what the surroundings are like that far north.

Both mines are indeed, remote and somewhat isolated, but when it comes to mineral deposits, Raglan Mine and Éléonore are at the forefront and envy of the mining community across the country.

In fact, the world is also keeping watch as Glencore and Goldcorp continue to move towards making their Canadian operations two of the more productive mines on the globe.

Starting at the farthest point north at the Raglan Mine, which

18 | Canadian Mining Journal • October 2013

www.canadianminingjournal.com

is located in Nunavik approximately 1800 km northwest of Montreal or, about the same as Cuba is to the south, is near Deception Bay on the Hudson Straight and is linked by allweather roads to an airstrip at Donaldson.

About 900 people call the Raglan Mine home and since the mine was discovered in 1995, and started producing in December 1997, it has been a mainstay for employment in the area for the Inuit of Nunavik with the Makivik Corporation (which oversees the political, social and economic development of the Nunavik territory) and the two communities of Kangiqsujuaq and Salluit.

Raglan Mine is a nickel and copper operation that is located on high-grade ore deposits that stretch more than 70 kilometres from east to west, with a series of deposits scattered along its length.

To access the deposits, Glencore has built four underground mines along with a concentrator, a power plant, fuel storage tanks, and a fresh water supply, as well as accommodations and administration buildings.

The company has built a totally self-contained operation and with a capacity to treat 3,800 tonnes of ore per day with an estimated production capacity of 30,000 tonnes of nickel-in-concentrate annually, it has also created one of the company’s major business units in the supply of nickel to the world.

With 3.59 million (Proven) tonnes and 4.13 (Probable) tonnes of mineral reserves, the company is well positioned to continue shipping its concentrate south by icebreaker at least six times a year during the nine-month Arctic shipping season.

The nickel-copper concentrate from Raglan Mine is then sent to the smelter of the Sudbury Integrated Nickel Operations for additional processing before reaching Glencore’s Nikkelverk refinery in Kristiansand, Norway for refining.

As mentioned earlier, the Raglan Mine operation involves four underground mines and in keeping with the company’s business approach of moving forward, it continues to dig deeper

Raglan Mine’s port installation at Deception Bay.

Raglan Mine site, located in the Nunavik Region (62nd parallel), in Northern Quebec.

Truck transporting ore to the Katinniq mine at the Raglan Mine site.

October 2013 • Canadian Mining Journal |

19

| Mining in Nunavik and Quebec Main ramp access to the ore body and shaft stations.

Goldcorp’s Éléonore Mine.

A look at some of the underground work.

Rapid mine development using double Jumbos to advance the face.

and farther out in search of minerals.

And why not? Mineral resources show 4.41 million (Measured), 9.39 million (Indicated), and 19.3 million (Inferred) tonnes of mineral on the property.

Knowing what’s there is one thing but getting at it is another because the site, as already described, is situated in a sub-arctic permafrost region where the average annual temperatures are about -10 C with an average ambient temperature underground (in existing permafrost operations) is around – 15C. The climate is severe in both wind and temperature conditions. Winters are understandably very cold, but relatively dry, with temperatures remaining below – 30 C for extended periods and often dipping below -40 C. Because of these extreme conditions, working at the site is 20 | Canadian Mining Journal • October 2013

always a challenge and one company that knows this really well is J.S. Redpath Limited, headquartered in North Bay, ON. Known for its work in underground mining construction, the company has been working at the Raglan Mine since the middle of the 90s. In fact, Redpath -- and the joint venture Redpath-Nuvumuit (2007) — contributed to the construction of all Raglan Mine’s mines and the development of two of its mines, namely Kikialik (2008) and Qakimajurq (2012).

At Mine 2, for example, Redpath-Nuvumuit will be developing 420 m of Alimak raises, including vent raises and manways, until 2014, and at the Qakimajurq mine, the company has almost 100 workers involved to help develop 8200 m of ramp and lateral accesses, 580 m of Alimak raises, construction of electrical substations, explosives and detonator magazines, refuge stations, a service bay, underground fan room and other underground infrastructure.

Redpath will complete the work in 2014. The company has worked at the Raglan Mine for more than five years without a lost-time accident.

While the environmental conditions farther south at Goldcorp’s Éléonore mine aren’t nearly as severe as those at Raglan Mine, working at the mine is nonetheless, just as challenging… and rewarding.

As mentioned at the outset, the Éléonore mine is one of the more talked-about mining projects in Canada as Goldcorp continues to work towards its first production of gold in late 2014.

Located about 800 kilometres northwest of Montreal, the Éléonore mine is one of the main mines in the company’s development program that calls for a 7,000-ton per day facility, contributing to an average of more than 600,000 ounces of gold per year once the mine has ramped up to full capacity.

It’s an ambitious goal, but given Goldcorp’s long history of coming through and fulfilling its promises, it’s one the company says will happen.

In fact, with the amount of work that has already taken place at the mine, as well as the money spent on getting that work done, investors and other observers are confident that the mine will produce as promised.

Like most underground mines, much of the mining technology is out-of-sight but as every mine owner and operator knows, it’s those underground workings (and naturally, what they find) that make or break any project.

And Éléonore is no exception in that regard. www.canadianminingjournal.com

Starting with the development of the exploration ramp from surface, miners were given access through the 7 metre-wide by 5 metre-high passage for more than 2.3 km into the ground.

Adding to the mine’s sophisticated design and in keeping with Goldcorp’s business motto of “Safe enough for our families,” a concrete-lined Gaumond exploration shaft was also sunk to the 725m level to provide access through a safe and properly ventilated route.

The shaft is 7 m in diameter and in addition to providing proper ventilation, it will be also used by miners for exploration access and preliminary production for the mine.

Also in preparation for the start up of production, contractors are excavating another concrete-lined shaft, this one is 7 m wide and 1500 deep with six stations that is designed to hoist ore and waste at 7000 tonnes per day as well as transport personnel and material between surface and various work levels.

In addition to the two shafts at the mine, lateral development on the 650 and 690 levels is also ongoing off the Gaumond exploration shaft.

The shafts and drifts are now complete or on going and much of the success of the project is credited to the “family” approach taken by Goldcorp and its contractors at Éléonore.

One of the main members of this family insofar as the ‘out-of-site’ shaft and drift work is concerned is RedpathTawich-Norascon (RTN), a joint venture between Tawich Construction Inc., J.S. Redpath Limited, and Norascon Mining Inc. This joint venture was initially established in 2011 to support the development of the Éléonore Mine and its 130 employees are fully qualified to undertake projects anywhere in Eeyou Istchee (territory represented by the Grand Council of the Crees in Québec).

CMJ

A look at some of the underground work.

Hoist operator at the hoist console at Shaft #1, monitoring winch controls.

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October 2013 • Canadian Mining Journal |

21

| Mining in Quebec Stornoway’s Renard Mine Road during final surface preparation.

THE

ROAD TO

RICHES

New road connects diamond mine with other “Plan Nord” jobs

By Russell Noble

S

tornoway Diamond Corporation of Longueuil, QC is proud that its Renard Diamond Mine has been officially deemed “Quebec’s First Diamond Mine,” but the company is equally proud of one more of its achievements; its Renard Mine Road, a 97-kmlong portion of a 240-km route that now links the mine with the public highway, Provincial Route 167, and the popular mining communities of Temiscamie and Chibougamau.

The new road is a two-lane, 8.5-m wide gravel passage completed two months ahead of schedule and on budget. It’s an all-season road that will now enable the company to continue developing its Renard Mine year round without delays in the delivery of machinery, supplies, or people.

In fact, the new road brings a feeling of “community” with other Quebec mining companies in central Quebec because it now “connects” the mine and its workers with a permanent road to and from the site.

Since 1996 when the property was 22 | Canadian Mining Journal • October 2013

Aerial of two bridge structures under construction .

discovered, Stornoway’s geologists and field crews have relied either on a seasonal road or air support.

Today, with the road in place, construction vehicles will now be able to travel between 50 and 70 km/hour along a safe reliable surface to the mine site where Company President Matt Manson says “We’re now ready to build.”

After more than 17 years in the making, Manson says “The Renard Project is now permitted, connected by road, and the project’s large Mineral Resource, and its extensive exploration upside, offers a project producing up to 2 million carats of diamonds per year and projected annual revenues of up to $450 million dollars (Cdn) per year.” www.canadianminingjournal.com

“With its 11-year mine life, Renard is an outstanding development project and with financing discussions with lenders and prospective investors ongoing and progressing well, we have a view to first construction mobilization prior to the end of 2013.”

Probable Mineral Reserves, as defined under NI 43-101, stand at 17.9 million carats, total Indicated Mineral Reserves, inclusive of the Mineral Reserve, stand at 27.1 million carats, with a further 16.9 million carats classified as Inferred Mineral resources, and 25.7 and 47.8 million carats classified as non-resource exploration upside.

President Manson said that all kimberlites remain open to depth and that the pre-production capital cost stands at an estimated $752 million (Cdn), with a life-of-mine operating cost of $57.63/ tonne giving a 67% operating margin over the 11-year life of mine.

As mentioned earlier, the road (initially estimated to cost $77 million) is a major key to the future of the Renard Diamond Mine and Stornoway acknowledges that without the help of local Cree contractors, it would have been very difficult, if not almost possible to complete.

The knowledge and understanding of the local terrain by the Crees of Eeyou

Istchee helped Stornoway and its contractors map out the safest and most direct route to the site to help ensure minimal disruption to the environment.

Dealing with wetlands and harsh weather conditions posed many challenges but again, Stornoway credits much of the success of the project to the contractors listed in the adjacent box. CMJ

ROAD AND BRIDGE CONTRACTORS Stornoway’s contractors include: • The Eskan Company, the Development Corporation of the Cree Nation of Mistissini, and Swallow-Fournier Inc. for road construction.

• Nordic Structures Bois, a wholly owned subsidiary of Chantiers Chibougamau Ltee, for bridge construction.

• Jos Ste-Croix & Fils Ltee of Chibougamau for construction management.

• The Eenatuk Forestry Corporation for tree clearing.

• The Kiskinchiish Corporation for camp services and catering, and • Petronor, a wholly owned Cree enterprise, for fuel supply.

While the overall construction of the road stands at 50 per cent and is not yet open for public use, all temporary bridges have been completed and nine of 16 permanent, laminated-wood, single-lane structures have been installed to allow for truck traffic.

More than 80 per cent of all culverts have been installed, and approximately 1.6 million tonnes of gravel has been extracted from seven borrow pits along the route.

One the mine goes into production, Stornoway’s Diamond Project is predicted to be one of the more talked about diamond mines in the world and thanks to the new Renard Road, vistors will get a first-hand look at why the company is so excited about this project.

• • • •

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October 2013 • Canadian Mining Journal |

23

| The Next Generation

FACING FACE THE

Mining student embraces opportunity for hands-on underground work

By Samantha Olthof

Olthof

Learning through hands-on work.

M

y name is Samantha Olthof and last month I entered my fourth and final year of Mining Engineering at Queen’s University in Kingston, Ontario. By this time next year, I trust I’ll have my degree and hopefully will also have landed a job somewhere in mining; a profession that I love… so far.

I say “so far” only because I’m basing my feelings on two summer jobs (2012 and 2013) with a mining company that gave me my first real taste of what I’m studying at school.

Two summers ago I worked as a Mining Engineering Student for J.S. Redpath Limited at their head office in North Bay, Ontario. That job gave me a practical insight into what I’d been reading and hearing in lecture halls, but the more I learned from watching and listening to the people around me, particularly the miners I met during site visits, the more I wanted to find out what it’s like to actually work in a mine.

When I spoke with my supervisor last winter about what sort of job I was looking for this past summer, I requested to be sent to work underground. I believe that mining is an industry in which prac24 | Canadian Mining Journal • October 2013

tical experience is a valuable complement to the theoretical knowledge that we gain in school.

For me, it is important to gain practical experience early in my career. Every successive project that I undertake can only be enhanced on account of my varied education.

Getting a foot in the door at Redpath was a major step for me in 2012 and this past summer, I was lucky to get both feet in (so to speak) when my supervisor granted my request by arranging for me to work underground in Red Lake in a Goldcorp Inc mine.

As you know, Red Lake is a major hub of mining activity in Ontario and Goldcorp is one of the key players in the area with several mine sites that have been developed and redeveloped over the past few decades. In fact, the company has helped make the Red Lake region one of the more profitable gold mining centres in the world.

Goldcorp has multiple head frames connected through underground developments to allow for the transport of manpower, equipment, and ore throughout the different mines.

This complex, where I called home this www.canadianminingjournal.com

Olthof’s summer home.

Operating underground transport equipment was one of the easier jobs for Olthof.

Being part of a track crew called for long hours and a strong back.

past summer, is being extended to include the Cochenour Mine shaft which is currently being widened and extended to reach more of the Bruce Channel gold body.

This shaft will be connected to the current complex in order to utilize the existing milling facilities. The connection will

be accomplished with a 6200m tramming drift that is currently under construction.

Redpath has been developing the drift since September 2009 so when I arrived on the site in 2013, much of the work was already taking shape.

They seem to have gotten along well

without me but nevertheless, I had been entrusted to join the current workforce and as you can imagine, I was excited and anxious to be hands-on.

The drift I worked on will allow the transportation of ore in train cars from Cochenour mine to the existing milling facilities at the Red Lake complex. This project aims to cycle twice a day, once per 12-hour shift. A full cycle includes mucking out the previous round, shotcreting the walls and roof, installing ground support consisting of bolts and screens, drilling the next round, and loading the face with emulsion.

Naturally, blasting takes place between shifts and cycling at this pace allows for rapid advancement of the drift. Cochenor shaft is progressing simultaneously with the tramming drift. These two developments will eventually be connected with a ramp. Other work that must be completed alongside advancing the drift includes the development of drill bays for diamond drilling exploration, train haulage of waste rock, and the installation of exhaust ventilation, water and compressed air lines, sump and waste water removal. Twice during the life of this project, railway track was laid along the drift to catch up with the face. As of August 2013, the drift is 78% complete.

I worked underground from May through to the end of August on three full rotations of 28 days working; 14 days on the day shift and 14 days on the night shift while living in the on-site mining camp, followed by 14 days off.

October 2013 • Canadian Mining Journal |

25

| The Next Generation During my first few days on site, I was involved with placing railway track ties and heavy duty rails. We laid an impressive 2100m in nine days!

Working in a drift with such rapid development meant that I participated in every aspect of the mining cycle and witnessed the progress of a developing drift. I mixed shotcrete, learned how to install A well-deserved break.

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ground support and services, I hauled muck on the train, delivered supplies with the forklift, and loaded the face for blasting.

Unlike school, at a mine site, you are not taught how to do such job tasks in a classroom. After a two-day site and safety indoctrination, new miners are sent underground and from there on out, they are mentored by their co-workers. Any competent licensed operator of a piece of equipment can provide training however, trainees are not allowed to drive equipment independently until tested and signed off by a certified trainer.

My crew was a very keen group of instructors, always willing to show me something new.

The experience I gained on-site was relevant to my classes at Queen’s University – bolting and screening to my third-year Applied Rock Mechanics class; loading and blasting to my Drilling and Blasting class; installing services and sumps to my Ventilation and Hydraulic Systems classes; and the list goes on.

Having a touchstone upon which to base the studies we do in school gives a whole new level of understanding to the university projects that we develop, and the systems that we design.

Interestingly, not all I learned was technical. Other valuable and transferable skills that were instilled in me include a mentality focused on safety, teamwork, and an awareness of the ground.

Safety is a primary focus underground.

It is necessary to be aware of your surroundings at all times. This includes being aware of what is going on in the drift, being aware of heavy equipment and pedestrians nearby, paying attention to the ground for potential ground movement or, the condition of ground support near you, and being attentive to the condition of your equipment and Personal Protective Equipment (PPE).

In order for my crew to safely maintain the rapid progress of the tramming drift, it was essential to work cohesively with my co-workers, taking the initiative to not only cycle every shift, but also to install services and cables, and identify and repair potential safety hazards. The willingness of the crew to help out with any aspect of the cycle demonstrated a worker dedication to the project that I strongly admire. www.canadianminingjournal.com

Another essential lesson that I learned this summer is that mining is dictated by ground. No matter how efficient the team is working on the drift, you are always subject to the ground that you’re working in.

Shortly before I came to work at this project, the drift entered an area of talcchlorite schist, an extremely soft rock which is prone to sloughing and movement. The ground support methods were changed multiple times throughout my summer employment to adapt to changing ground strength or properties.

Furthermore, in the interest of safety, drift advancement was delayed temporarily in order to expand and rehabilitate an area in which movement had worsened requiring the installation of improved ground support.

It was frustrating, yet necessary, to modify techniques which had sufficed for the majority of a four-year project, rendered inadequate by changing host rock or ground conditions. This rehabilitation required a lot of hard work and flexibility from all levels of the project: miners, surveyors, supervisors, clients, and suppliers.

I learned plenty this summer about mining, the mining industry as a business, and the people who work in different aspects of the industry. My summer work

At the controls of one of the many underground machines Olthof operated during her summer in the mine.

with Redpath was a thoroughly educational experience enhanced by the supportive and instructive crew and supervisors with whom I worked.

As I said at the outset, I loved it and I highly recommend that any student plan-

ning on working in the mining field pursue on-site job opportunities. I am very grateful for having had this unique opportunity and I look forward to being able to work on site again once I complete my studies as a mine engineer graduate. CMJ

Not all work involved heavy equipment. Some of Olthof’s jobs called for a lighter touch.

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October 2013 • Canadian Mining Journal |

27

| Equipment Management

ASSET MANAGEMENT AND TODAY’S MINING INDUSTRY

By Stephen Koro

T

he current economic climate of low commodity prices and increasing costs means that only smart mining companies will see their operations survive through this current downturn.

While history tells us that the cycle will turn around and prices will go back up again, how many mining companies will be left to take advantage of the next upturn?

By “smart” mining companies, I am referring to those companies that have spent the time and money to optimize the performance of their current assets so that their plant and equipment will reliably deliver the business plan consistently for the life of the operations.

Those companies that look past tomorrow, and start to consider the whole of life of their asset’s performance, and the total cost of ownership will be the 28 | Canadian Mining Journal • October 2013

companies that will weather the storm and provide more consistent returns to their shareholders over the longer term.

Traditionally, the maintenance department has always been the “bridesmaid” and never the “bride” within the mining industry. Maintenance has always needed to respond to the needs of the mining operations and generally speaking, production has taken first priority, regardless of cost.

This operating philosophy works when things are good, but is found wanting when the economic climate is as it is today. What it also does is create an asset condition which deteriorates as time goes on, thus leaving those companies who have been poor asset owners at the mercy of a downturn, and to disappear into obscurity. www.canadianminingjournal.com

October 2013 • Canadian Mining Journal |

29

| Equipment Management

Machines and materials must be maintained and controlled to help ensure profits.

Asset management plan Part of the answer lies in the unassuming term “asset management.” This is, according to the UK-based Institute of Asset Management (IAM): “the systematic and coordinated activities and practices through which an organization optimally and sustainably manages its assets and asset systems, their associated perfor-

30 | Canadian Mining Journal • October 2013

mance, risks and expenditures over their life cycles for the purpose of achieving its organizational strategic plan.”

How important is asset management in today’s mining companies? IAM goes on to say: “This definition of asset management represents a significantly greater scope than just the maintenance or care of physical assets, and is closer to the central purpose of

an organization. Good asset management considers and optimizes the conflicting priorities of asset utilization and asset care, of short-term performance opportunities and long-term sustainability, and between capital investments and subsequent operating costs, risks and performance.

“Life cycle” asset management is also more than simply the consideration of capital costs and operating costs over pre-determined asset “life” assumptions. Truly optimized, whole life asset management includes risk exposures and performance attributes, and considers the asset’s economic life as the result of an optimization process (depending upon the design, utilization, maintenance, obsolescence and other factors).”

Given the usual relationship of Operations and Asset Management in mining, it may be radical to suggest that the asset management plan should be one of the main drivers for the mining operation.

Here’s why. If proper asset management systems and processes have been implemented to deliver the business plan

www.canadianminingjournal.com

and reliable plant and equipment, then in conjunction with mine planning forecasts, there is no reason why the planned maintenance activities cannot be followed religiously. Yes, there will be times when changes are required. This is part of reality.

But the implementation of a good asset management plan includes continual improvement and updating. What it will do, however, is start to highlight shortfalls in other parts of the business. And these need to be addressed in the same way.

When is the best time to do this?

When times are bad and the pressure is on? Of course not … or so you might think to be logical. But when do most companies start to do something? When there is a downturn.

The “smart” companies optimize their operations when times are good; when they can afford to make the changes required, and thus reap the benefits of increased revenue and profit when commodity prices are up. They are then positioned to be operating at their optimum

Complex equipment setups involve many components that must be monitored and taken into account when developing a proper asset management program.

when the cycle turns down.

Some years ago, the IAM facilitated the development of a “standard” on asset management, called PAS55. This standard is soon to be replaced by the incoming ISO 55000. PAS55 has made some inroads into the mining industry; but not to the degree that is required for long-term sustainability of mining companies. There

are a number of companies who are endorsed trainers and auditors by the IAM to the PAS55 “standard.” Along with PAS55, there are a number of tools available for use to assist with the implementation of asset managements systems; one such program being a fully integrated enterprise grade asset management software tool called Rylson8.

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October 2013 • Canadian Mining Journal |

31

| Equipment Management

A MINE OF SOLUTIONS Technical, economic and feasibility studies NI 43-101 technical reports Mine planning, design and simulation Plant design and simulation Project management EPCM projects Commissioning assistance Power generation Power transmission and distribution Process optimization and control

32 | Canadian Mining Journal • October 2013

IMPORTANT If good asset management systems and processes have been implemented, then managers can readily have answers to the following questions to help better manage their businesses: • What are my most critical assets? And why?

• What is the work I need to do on my assets to deliver the business plan reliably and safely?

• How can I ensure that the work I need to do will be done at the right time?

• How many people do I need to do the required work?

And what skill types are required?

• What parts and materials do I need for primary and secondary maintenance activities?

• What do my maintenance budgets look like; both operating and capital replacement?

• What is the critical path of my shutdowns and what other activities can be done during the shut without impacting on plant availability?

• What is the cost of my shuts?

• What does my whole-of-life cost profile look like?

• Have I minimized the total cost of ownership for the plant and equipment?

• Am I carrying the right critical spares as determined by a risk assessment? www.canadianminingjournal.com

QUESTIONS

• How do I record and report plant and equipment downtime?

• Have I got an effective defect elimination program in place? And do I have the right resources in position to ensure the plant is undergoing continual improvement?

• Do I have a good information management system in place to store the information generated and to give quick and easy access as required?

Only when you can answer “yes” to all of the above, can you honestly say that your company is doing the best that it can.

People will then ask, how much does all this cost?

If the asset management improvement plan being put into place is cost effective (benefit gained outweighs the cost); you will find that in most cases, the improvements identified will fund the costs incurred for implementation. You already have a budget approved; if a significant saving on that budget can be identified and realized, no additional monies will be required. The improvements will be self-funding.

In some, in this current economic climate; the question is not…”how can we afford to do that?” The question is…”how can we NOT afford to do that?”

October 2013 • Canadian Mining Journal |

33

| Technology

TEMPORARY POWER

SOLUTIONS PROVIDE SUSTAINABLE PRODUCTIVITY, SAFETY GAINS

By Steve Smart and Eric Bateman

T

he Canadian mining industry has a well-earned reputation as a powerhouse provider of precious commodities and critical raw materials, including gold, diamonds, nickel, platinum, potash, coal and iron ore. But to maintain this preeminent position on the global stage, Canadian mining companies realize the importance of continued investment in their current infrastructure, and the need to embrace new methodologies and technology for sustainable and profitable growth.

In a keynote address earlier this year, Pierre Gratton, president and chief executive officer of the Mining Association of Canada, suggested several focus areas for the mining sector to maintain its competitive edge. These include fostering a commitment to reducing debt, investing in critical infrastructure to support new mining projects, and keeping environmental protection and safety, and making these top-of-mind priorities.

Mining companies are investigating options to optimize various segments of their field operations, with these focus areas clearly in mind. Onsite power and cooling capabilities represent one area where changes to the status quo can yield significant benefits. The country’s vast mining operations—which include more than 800 mines and counting—are distributed far and wide, and consequently require different power solutions. Some are powered through direct connection to the existing utility grid while other operations, particularly those in remote areas, have their own dedicated power generation facilities. These mining operations often have just enough power for their existing needs, with little or no additional capacity to support expansion or the addition of new mining facilities.

34 | Canadian Mining Journal • October 2013

While the industry is making strides to expand its infrastructure by building new roads, railways, power plants, natural gas pipelines and liquefied natural gas (LNG) or compressed natural gas (CNG) refueling terminals, this is a multi-year process that does not solve a mining operation’s expansion needs in the short term. Utility rental solutions, such as the rental power generation and distribution services available from Aggreko Canada, provide a viable temporary solution until the grid or onsite power generation facilities are expanded in an existing or new mining region.

Modular turnkey rental power provides several tangible benefits, such as allowing a mining operator to capture short-term market opportunities by avoiding delays in their expansion plans. In many situations, these rental solutions help an operator improve their balance sheet by avoiding high-cost capital expenditure (CAPEX) commitments on short- to mid-term duration needs. This not only helps conserve cash, but it also mitigates risk associated with market volatility. Rental solutions are flexible, scalable and require no long-term commitments—regardless of the size of the plant or duration of the contract.

Rental options also exist for short-term, seasonal underground or above ground cooling. Modular chillers, cooling towers, bulk air handlers and heat exchangers can be delivered onsite to cool mineshafts or surface facilities experiencing high temperatures during warmer summer months.

This helps an operator avoid the large CAPEX required for permanent cooling solutions that might only be necessary for one to three months each year. These cooling options allow the client to meet their safety regulation requirements for personnel working in the mine or in above ground processing facilities, while also helping the mine maintain or improve production efficiency and ultimately, maximize revenue.

Rental solutions offer customized power and cooling options to a mining operation, depending on its individual requirements.

Large, multi-megawatt distribution plants are available to supply power from a central location, or individual generator sets can be deployed at strategic locations throughout the mine site.

The past few years have also seen a rise in client requests for environmentally sustainable power and cooling solutions. To that end, a range of natural gas, www.canadianminingjournal.com

LNG and CNG generators and power systems are available that reduce exhaust emissions and maximize fuel efficiency, thus minimizing environmental impact.

Generating success Mining operations worldwide are benefitting from the cost savings and operational efficiencies that power and cooling rental solutions provide. A remote mining site in North America, for example, was running on temporary, Tier-1 diesel generators while awaiting completion of its permanent power plant. The combined pressures of rising diesel costs and increased regulatory permitting requirements to reduce diesel emissions forced the operator to replace its generator sets with high CAPEX, Tier-4 units.

Through close collaboration with the operator’s engineering and environmental permitting departments, Aggreko delivered a 3.6-MW LNG power plant utilizing natural gas powered generators. This turnkey package included all required transformers, switchgear cryogenic vessels and vaporizers, as well as the supply of LNG. Aggreko’s clean-burning natural gas generators greatly reduced the mine’s environmental footprint. The mine successfully obtained a state permit thanks to the lower NOx level, while also saving more than US$1 million in power costs in one year.

In another application, a large North American mine generated high ambient temperatures resulting from the strata and thermal reaction of the mining process.

The expansion of the drift and elevated wet bulb in the mine also resulted in less fresh air available to miners. Concerned with worker safety under these conditions, the operator required a cost-effective cooling solution.

An Aggreko team of engineers worked with the operator’s engineers to develop a portable cooling solution containing a chiller/coil/pump system. The solution decreased ambient shaft temperature by -6 °C (20 °F), which met both the operator’s health and safety needs and governmental safety regulations.

The operational impact was immediate. Worker safety and time underground were significantly improved, resulting in increased productivity at reduced cycle

time. And because the equipment was rented, new cooling capacity was easily added to support field expansion at a lower cost.

These field applications are but a few examples of how rental power and cooling solutions can help mining operations minimize their CAPEX spending and boost productivity, while also improving

their environmental stewardship. The maximum benefit of these rental systems can only be realized by partnering with a provider with the right technical, engineering and project management expertise to execute a customized turnkey solution, for short- and long-term needs. CMJ Steve Smart and Eric Bateman are Business Development Managers for Aggreko North America.

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Exploration Opportunities

Infrastructure challenges in Northern Quebec

By Daniel Roth

E

conomic growth continues to put pressure on mining and metals companies to increase supply and develop new or existing mineral deposits. But new deposits are increasingly found in hard-to-reach places that lack infrastructure, like Northern Quebec. This vast region represents 750,000 square kilometres of untouched land. That presents a big challenge for miners suffering from high costs and capital constraints today.

The question of how to fund the cost of infrastructure development is taking centre stage. As projects move toward production, and with capital sources currently scarce, companies are reexamining their infrastructure funding solutions.

Challenges in Northern Quebec depend on the size and location of projects. Several of the smaller projects in the Labrador Trough and in the Abitibi-Temiscamingue region have access to existing rail and road infrastructure, as well as to electricity supply. That’s compared to larger projects in the Labrador Trough — the 1,600 km long iron ore-rich region straddling western Labrador and northeastern Quebec — that require additional infrastructure. These projects aren’t large enough, however, to justify carrying the full cost alone — an approach taken in the past when both the Quebec Cartier and the Quebec North Shore and Labrador (QNSL) railways were built to support individual projects. The outcome of Rio Tinto’s current sale of the QNSL as part of a broader transaction will be a factor in how much railway capacity is ultimately available to others.

The Port of Sept-Iles, an independent federally-chartered facility, is nearing completion of its docks and maritime capacity expansion, prompting big questions around the long-term capacity of the main north-south railway axis as well as of the availability of storage and handling terminals adjacent to the port. Answering these questions is increasingly important with several Labrador Trough projects ramping up to full production within the next 18 to 24 months. But to address concerns around terminal bottlenecks the industry must address the infrastructure financing gap.

Though governments managing the continued effects of economic uncertainty don’t have the cash on-hand to fund extensive infrastructure projects there’s still the potential for modest credit support or more direct investment through government-related entities. Governments can also clarify processes so that mining and metals companies can advance their infrastructure projects. This is especially important as much of the infrastructure development involves use of Crown land. While governments’ role in addressing the cur38 | Canadian Mining Journal • October 2013

Daniel Roth is a partner at EY and a leader of the firm’s Infrastructure Advisory Services.

He is based in Montreal.

rent funding gap may be unclear, the benefits of investing in infrastructure are not. Not only do these developments support local industry, they can be associated with investment in community education and health care facilities.

There’s also work to be done when it comes to energy supply in Quebec. Juniors developing new mines appear to be faced with the prospect of infrastructure delivered at full incremental costs with little opportunity for cost containment. Historically and by law, the Quebec provincial government has played a major role in setting rates for industrial customers, and in guiding power investment priorities. This is an area where government could clarify its policies or risk having companies rely on diesel power in the context of available electric capacity.

Approaches exist for companies to address their infrastructure financing challenges in advance for when market conditions improve. Those whose projects are nearing production must craft deals to access the available third-party infrastructure financing by coming to a collaborative arrangement with their regional peers and off-take customers — and fast. Major infrastructure projects today are only feasible if the funding and risks are shared among users. Government too should determine how to support this sector before investment seeks other markets. It’s about finding innovative solutions and having a willingness to share control. Companies that wait for government decisions and dollars to fund their projects may risk losing out to competitors in Quebec and elsewhere.

CMJ

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