Canadian Mining Journal August 2014 by The Northern Miner Group

’

CANADIAN Mining Journal c

www.canadianminingjournal.com

C A N A D A’ S PRODUC E RS A LOOK AT OUR BEST MINERS

August 2014

Departments 5 Editorial

Publisher Robert Seagraves comments in this month’s Editorial about the recent decision by the Supreme Court of Canada and the First Nations.

6 Investing

Columnist Ned Goodman talks about ‘stagflation,’ a term used to describe a period of stagnant economic growth and soaring rates of inflation.

8 Law

Norton Rose Fulbright Canada’s Martin Valasek, a Partner with the company, takes a look at investor-state arbitration and the Canadian mining industry.

60 In My Mine(d)

This month’s guest column is written by Shane Troyer, a principal with the firm of Grant Thornton LLP. He talks about why small and mid-cap companies are prime targets for regulatory headaches.

62 Unearthing Trends

This month’s regular column by Ernst & Young LLP, Vancouver, talks about Resource Nationalism and why it is a key business risk for the mining sector.

CANADIAN Mining Journal CONTENTS

CANADA’S TOP 40 MINERS

Not much has changed

Canadian Mining Journal’s annual look at the top performers in mining in Canada.

DEVELOPMENT

22 Waking the giant

TerraX Minerals works at bringing Yellowknife’s historic Giant mine back to life.

26 On top of what’s below

TANCO Mine’s Bernic Lake mine in Manitoba poses many challenges.

30 In for the long haul

Copper Mountain Mining overcomes transportation challenges to get equipment to B.C. mine.

34 Flying high

Yukon prospector Shawn Ryan comes up with a great way to make exploring less expensive and more reliable.

38 Stepping out in big, big way

Detour Gold’s Ontario mine thrives as the company continues to step out for more gold in its own backyard.

46 Without limits

Nova Scotia’s Department of Natural Resources says ‘prospects’ are good.

50 Looking positive

Newfoundland and Labrador continue to report a strong performance.

54 A busy season An AME-BC look at prospecting and development ’

CANADIAN Mining Journal c

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C A N A D A’ S PRODUC E RS A LOOK AT OUR BEST MINERS

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August 2014

ABOUT THE COVER This month’s cover clearly shows robust activity at a mine site while also serving to convey the message of productivity that is evident by the financial rewards of this year’s Top 40 mining companies in Canada. To see what we mean, see the Top 40 Report starting on page 11. Cover photo provided by Caterpillar.

Coming in September ‘Gold’ will be the main theme of the September issue.

activities in the province.

56 Site of all sites

CMJ’s Eastern Correspondent D’Arcy Jenish reports on his recent tour of Sweden.

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 August 2014 • Canadian Mining Journal |

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CANADIAN Mining Journal August 2014 Vol. 135 — No. 6 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

Editorial

“Rule of Law” wins the day By Robert Seagraves, Publisher

anada had always prided itself on its adherence Production Manager Print Production Manager to the “rule of law.” As Steve Hofmann Phyllis Wright such, the recent and seismic Circulation Manager Cindi Holder ruling by the Supreme Court 416 442-5600, ext. 3544 of Canada regarding the First cholder@bizinfogroup.ca Nations is a chance for the Publisher & Sales Robert Seagraves resource companies of 416 510-6891 Canada to “walk the walk.” rseagraves@canadianminingjournal.com This has been a ruling 40 Sales Western Canada, Western U.S.A. and Quebec years in the making with Joelle Glasroth aboriginal groups winning 416-510-5245 jglasroth@canadianminingjournal.com every land claim challenge along the way. Now there is Toll Free Canada: 1-800-268-7742 ext 6891 or 5245 no more need to challenge. Toll Free USA: Clarity has come to the 1-800-387-0273 ext 6891 or 5245 land claim wars between President Vice-president resource companies and the Bruce Creighton Alex Papanou First Nations. If there is no Established 1882 treaty signed, and the Canadian Mining Journal provides articles and information of practical use to those who work in the technical, administrative and supervisory aspects aboriginals can prove title to the land, of exploration, mining and processing in the Canadian mineral exploration and resource companies and governments mining industry. Canadian Mining Journal (ISSN 0008-4492) is published 10 times a year by Business Information Group L.P. BIG is located at must get consent. 80 Valleybrook Dr., Toronto, ON, M3B 2S9. Phone (416) 442-5600. Legal deposit: National Library, Ottawa. Printed in Canada. All rights reserved. Now it is no longer good CSR policy to 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 consult and get permission - it is the law. commercial use is prohibited. To make use of any of this material you must first To quote the ruling from Chief Justice obtain the permission of the owner of the copyright. For further information please contact Russell Noble at 416-510-6742. Beverly McLachlin, title to the land means 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: the aboriginal group has “the exclusive US$10. Canadian subscribers must add GST and Provincial tax where necessary. right to decide how the land is used, and GST registration # 809744071RT001. From time to time we make our subscription list available to select companies the right to benefit from those uses.” 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 But this is not an absolute right. There of the following methods: Phone: 1-800-668-2374; Fax: 416-442-2191; are a few caveats, such as if the government E-mail: privacy officer@businessinformationgroup.ca; Mail to: Privacy Officer, Business Information Group, 80 Valleybrook Dr., Toronto, ON, M3B 2S9. can show that the project has a “compelling Publications Mail Agreement #40069240. PAP Registration No. 11000. We acknowledge the financial support of the Government of Canada through the and substantial public interest.” I am sure Publication Assistance Program towards our mailing costs. Return undeliverthere will be a lot of arguments that the able Canadian addresses to: Circulation Dept., Canadian Mining Journal, 80 Valleybrook Dr., Toronto, ON, M3B 2S9. E-mail: bigcirculation@bizinfogroup.ca financial well-being of the province is a Canada Post: Publications Mail Agreement PM40069240. Please forward Forms 29B and 67B to 80,Valleybrook, Toronto, ON M3B 2S9. compelling reason to proceed with certain Canadian Mining Journal, USPS 752-250. US office of publication: 2221 Niagara projects, such as the Northern Gateway Falls Blvd., Niagara Falls, NY 14304-5709. Periodicals Postage Paid at Niagara Falls, NY. US postmaster: Send address changes to Canadian Mining Journal, pipeline, or closer to home here in Ontario, PO Box 1118, Niagara Falls NY 14304. development of the Ring of Fire. We acknowledge the financial support of the Government of Canada through the Canada Magazine Fund toward our editorial costs. The Liberal government of Ontario has so mismanaged the economy of Ontario that it now appears they are banking on the Ring of Fire to help save the province from a potential bankruptcy. Thankfully, much of Canada is covered by treaties. Art Director Mark Ryan

Historical treaties of Canada.

British Columbia has the most work to do in terms of establishing who owns title to the land as historically, very few treaties were signed. It will be in the interests of both parties to establish their claims of ownership but First Nations’ claims will supersede claims by the province. Aboriginal groups are obviously ecstatic over the decision. If they can prove title to the land, they must be taken as equal partners in the economic development of natural resources. In truth, this is all they have been asking for, and as a country that prides itself on rule of law, this is the least we can give them. Will there be drop in resource development in B.C.? Well, it certainly got tougher to proceed with projects but provinces that have treaties may in turn see an increase in development, such as Ontario and Saskatchewan. When all is said and done, this was a ruling that had to be made. Other than a few resource companies, the only ones unhappy with the ruling will be the lawyers but I’m sure they will be busy now working out who has title to certain lands. CMJ

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August 2014 • Canadian Mining Journal |

Investing

Who remembers Stagflation? Ned Goodman is Chairman of Dundee Corporation.

By Ned Goodman

tephen Johnston wrote an interesting book about “Cantillon’s Curse.” Cantillon was an economist in the 1680s who, as part of his career, was able to study the collapse of the Mississippi Company and along with it the terrible effects brought on by the ‘unbridled” money printing by the French economy. The so-called curse is simplistic and we are living through it today. Its basic idea is that inflation does not happen by accident. It is caused by excess money printing much as the U.S. has been doing since 2009. The simplistic economics is that as money is printed, its purchasing power is transferred to the first receptor from those who receive it later, and it falls in value over the longer term. We are now living in a wobbly world with a global economic system that will soon catch the negativity related to Cantillon’s Curse, or a world where certain privileged groups are silently misappropriating the wealth of the U.S. middle class. My personal career in investment management was started during the stagflationary days of the 1970s and from that experience, it is clear to me that printing of currency by the many countries in the world that have done so, but especially the United States, with an economy that has much too much debt and a continuing large deficit problem, both of which are being funded by printing of paper dollars which should soon lead to stagflation. The so-called Quantitative Easing of the U.S. is printing of U.S. dollars. To quote none other than John Maynard Keynes whose Keynesian writ6 | Canadian Mining Journal • August 2014

ings are what President Obama and Ben Bernanke have been working with, “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose...” As we all know, the Federal Reserve in the U.S. has not only been Quantitative Easing printing of currency but they also have kept interest rates for the banking community and the government at all time historic lows – ZIRP as low as zero. This was Cantillon’s Curse and his view of currency devaluation. The U.S. dollar has lost 97% of its purchasing power since the inception of the Federal Reserve in 1913. And according to Johnson, the Canadian dollar has had a similar 95% loss since the inception of the Bank of Canada, our version of the Federal Reserve. I was in the gold mining business in the 1970s when the Bank of Canada paid $68 per ounce of gold only to then sell the same gold to the U.S. Federal Reserve for $35 per ounce. They thought they were saving jobs for the gold miners. Today, according to Johnson, if gold were to be remonetized, the Canadian dollar would face an almost 100% devaluation in purchase power. Europe’s version of a misled central banker is Mario Draghi, and he has invented something new – NIRP – where he lends money at negative interest rates. If anything is likely to destroy purchasing power of a currency, NIRP is a no brainer.

The consequence of all this is that the U.S. and Euro have created an era of “competitive currency devaluation which has lead and is leading to a global loss of purchasing power (also known as global inflation) in all those currencies that play the Quantitative Easing, ZIRP, NIRP game. Remember the 1970s? I built my investment career during those years. The time was known as the “Me Decade” and a significant case of something that was labeled “Stagflation.” This was a period of stagnant economic growth both in the U.S. and Canada, along with soaring rates of inflation. Of course, all of this did not lead to full employment. In fact, unemployment was also a serious problem. Well, Stagflation is coming back again, both in Canada and the U.S.. The World Bank just lowered its projected global growth rate for 2014 to 2.8% from its previous 3.2% and the International Monetary Fund lowered its forecast for U.S. growth from 2.8% to 2%. And even more recently, the U.S. gave out its economic performances for the first quarter of 2014 which came in at a scary minus 2.9%. This is the continuation of the 2008 recession which they have been trying to tell us is over and that the U.S. economy is in recovery. Minus 2.9% growth is worse than the most pessimistic of pessimists was calling for and large unemployment in the U.S. will continue for some time yet. Negative Quarters are rare, but Minus 3 is Recession! Are you prepared for a 2014 correction? CMJ www.canadianminingjournal.com

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Law

Investor-state arbitration and Canadian mining Martin J. Valasek is a Partner with Norton Rose Fulbright

By Martin J. Valasek

n December 1, 2013, Canada became the 150th state to ratify the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID). It was a long time coming: the other members of the G7 all did so between 1966-71. This is a very important development for the Canadian mining industry. During an era of renewed resource nationalism in many countries where mining activity takes place, ICSID reduces the risks of investing abroad by providing an effective mechanism for the resolution of investor-state disputes. International Centre for the Settlement of Investment Disputes (ICSID) ICSID is widely considered to be the leading international arbitration institution devoted to investor-state dispute settlement. It is a unique mechanism in that it is insulated from national law and courts: any challenge to an ICSID award goes before an “annulment committee” constituted by ICSID, not before a national court. Also, countries that have ratified ICSID have committed to enforcing ICSID awards as if they were final judgments of their own courts. Finally, states have an important incentive to comply with awards issued under the rules of ICSID (a branch of the World Bank), since noncompliance could adversely affect the country’s borrowing ability with the IMF and the World Bank. Following Canada’s ratification of ICSID, Canadian mining companies now have access to this mechanism, as long as their investment is protected by an instrument in which they have agreed to ICSID arbitration, and the host state has also ratified the ICSID Convention. Investments by Canadian mining companies in foreign countries may be protected by international investment agreements, such as Canada’s Foreign Investment Promotion and Protection Agreements (FIPA), or by investment chapters of bilateral free trade agreements or multilateral free trade agreements (such as Chapter Eleven of NAFTA). Protections may also be available under a contract with a host state or through the host state’s foreign investment legislation. Protection under Investment Treaties Protection that is provided under investment treaties commonly includes protection against uncompensated expropriation, the guarantee of a minimum standard of treatment (either as specifically defined in the treaty or as understood under customary international law) and the guarantee of nondiscrimination

(whether vis-à-vis nationals of the host state or nationals of others states). Several recent cases demonstrate the importance of these safeguards. For example, in 2012, the Canadian company Rusoro filed an arbitration against Venezuela under the CanadaVenezuela bilateral investment treaty (BIT) following the state’s nationalisation of the company’s gold mining concession. More recently, and taking advantage of Canada’s ratification of ICSID, the Canadian company Infinito Gold Ltd. filed an arbitration against Costa Rica under the CanadaCosta Rica BIT and the ICSID Convention, alleging mistreatment by the state of the company’s mining project. While the outcome of these pending cases is unknown, all of the claiming companies are likely happier to be before an international arbitral tribunal applying international investment-protection standards rather than before the national courts of the host state applying the local law. Protection under a Contract Mining companies can also provide for investment protection in their contracts with foreign states. Such tailormade instruments are only effective, however, if they are insulated against changes in domestic law. This can be achieved by including a “legal stability” clause and selecting neutral law or international law to govern the contract. A valid and effective arbitration clause needs to be included as well. A recent example of an investor-state case under a contract involves Canada’s Brilliant Resources’ claim against Equatorial Guinea. The company alleges that the state failed to provide certain mining concessions that were due to its subsidiary Ivory Resources in exchange for the exploration work that it did in the country. By providing for international arbitration in the contract, the company has avoided the local courts of the host state for the resolution of this dispute. Advice for Canadian Mining Companies The best way to mitigate the risk of resource nationalism is to combine solid substantive protections with the procedural safeguards of ICSID arbitration. At a minimum, Canadian mining companies should insist on arbitration clauses in their contracts with foreign states. Where possible, they should incorporate ICSID arbitration rules, and also structure their investment so as to be protected by an investment treaty. Because the specifics relating to these matters are complex, and beyond the scope of this column, it is best to seek specialized legal advice in respect of any particular transaction or dispute. CMJ August 2014 • Canadian Mining Journal |

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| Canada’s Top 40 Miners

CANADA’S TOP

NOT MUCH HAS

CHANGED But gold miners are scrambling By Field Editor Marilyn Scales

his is the time of year we at CMJ pause to examine how Canada’s mining companies performed during the previous year. We start by poring through year-end 2013 results from twice as many companies as will make the list in an effort not to miss a likely company. Their revenues, earnings or losses, and their assets are examined, then we use their gross revenues for the Top 40 ranking because it is obtainable from public records. That’s easy enough. By gross revenues, once again Agrium made the most money ($16.2 billion). Not surprisingly, Barrick Gold ($12.9 billion), Suncor’s oil sands operations ($12.3 billion), and Syncrude’s estimated oil sands revenue ($11.4 billion) were not far behind. What’s a billion or two among friends? Sad to say some familiar names disappeared from the Top 40. Inmet Mining was taken over by First Quantum ($3.7 billion) and Aurizon Mines was acquired by Hecla Mining Co., an American company. High River Gold was absorbed by a Russian gold miner, Nord Gold. Harry Winston became Dominion Diamond Corp. ($356 million) and consolidated the performance of the Ekati and Diavik mines.

August 2014 • Canadian Mining Journal |

| Canada’s Top 40 Miners

CANADA’S TOP 40 BY GROSS REVENUE (MILLIONS OF CANADIAN DOLLARS )

1| Agrium Inc

Agrium Inc. was founded as Cominco Fertilizers, Limited (short for Consolidated Mining and Smelting Company Limited) in 1931 and changed its name to Agrium, Incorporated in 1995. The company is headquartered in Calgary and is a retail supplier of agricultural products and services in North and South America as well as Australia. The company provides nitrogenbased fertilizers, sulphur, and phosphate-based fertilizers from potash mines in Saskatchewan and in Kapuskasing, Ontario, and in Conda, Idaho. Agrium heads this year’s list of Canada’s Top Performers with gross revenues of $16.2 billion.

2| Barrick Gold

Barrick Gold Corporation is based in Toronto and is the largest gold mining company in the world. The company evolved from a privately held North American oil and gas company. Its first acquisition was the Renabie mine near Wawa, Ontario which produced around 16,000 troy ounces (0.50 t) of gold in 1984. Today, Barrick Gold Corporation is an internationally recognized powerhouse in the world of mining and ranks second in this year’s Top 40 ranking with gross revenues of $12.9 billion.

3| Suncor Energy

Suncor Energy is a Canadian integrated energy company based in Calgary that specializes in the production of synthetic crude from oil sands. It was founded in 1919 in Montreal as Sun Company of Canada, a subsidiary of Sun Oil (now Sunoco). Suncor is the world’s largest producer of bitumen and owns and operates refineries in Alberta, Ontario and Quebec.

12 | Canadian Mining Journal • August 2014

CONTINUED FROM PAGE 11

Dominion Diamond was only one of the new names welcomed to the Top 40 list. Silver Wheaton ($728 million) and Franco-Nevada Corp. ($413 million) are included even though they are metals streaming businesses. Their incomes and interests lie solidly in the mining sector. Also new to the Top 40 this year are B2Gold ($561 million) whose output jumped 132% last year. Two other companies with large increases in gold production are also first-timers: Crocodile Gold ($310 million) and Rio Alto Mining ($294 million). We also welcome Aura Minerals ($341 million) and Golden Star Resources ($496 million). A look at the PwC publication, Mine: Realigning Expectations, reveals that Canadian companies are well represented on its list of top 40 global miners. Barrick is No.4, Cameco is No.6, First Quantum is No.11, Goldcorp is No.15, PotashCorp is No.28, Silver Wheaton is No.32, Teck is No.34, and Yamana Gold is No.38. We are proud that Canada is so well represented. As a point of interest, Glencore Xstrata was No.14 and Vale SA was 37. Russian enterprise and largest diamond producer in the world, Alrosa, topped PwC’s list. The list of the 10 largest gold producers compiled by Gold Investing News puts Barrick at the top (no surprise there). But it also includes Goldcorp at No.4 and Kinross at No.5. This ranking was made by the number of ounces produced. A review of the gold producers on our

Top 40 list shows that 2013 has been a terrible year for all of them. The 29% drop in the price of gold hit almost all of them squarely in the revenues, typically for a drop of 20%. There were two exceptions, Centerra and Crocodile Gold. Centerra doubled its output to 600,000 oz and registered a 42% gain in revenues. Crocodile Gold boosted output by 26% and revenues by 17.5%. As bad as the hit on the revenues of gold miners was, their earnings turned mostly to losses. Of the 25 gold focused companies on our list, less than half recorded positive numbers in the earnings column. Barrick, despite revenues of $12.9 billion recorded a net loss of $10.9 billion. Other large gold producers – Kinross, Goldcorp, Yamana, IamGold, Eldorado Gold, New Gold and Osisko – all posted negative results. The brightest light among gold miners is Agnico Eagle. That company posted net earnings of $418 million on revenues of $1.7 billion. Looked at differently, the company retained 24.8% of its revenues as earnings. Centerra, with its doubling production, also bucked the loosing trend. It had revenues of $973 million and net earnings of $162 million. That is a respectable 16.7% of gross sales turned into earnings. The revenue-turned-into-earnings picture has not been much better for base metals producers. Prices fell slightly or stagnated, leading to loses for half of the base metal miners in the Top 40. There were exceptions – First Quantum (earnings

Who is eligible for the Top 40?

Determining a list of Canada’s Top 40 mining companies takes time and research. We examine financial statements, annual reports and other public information for almost 100 separate companies We keep in mind that eligible companies must meet two of the following four criteria: • Companies that are traded on a Canadian stock exchange. • Companies that are domiciled in Canada. • Companies that own or have a significant equity interest in a producing mine in Canada. • Companies with a project in the advanced development stage may also be considered. For example, a company with its head office in Toronto and its stock trading on the TSX or TSX-V would meet the above criteria even if all its producing mines are offshore. Companies with foreign head offices, and that do not trade on a Canadian exchange, will not make the Top 40 list even if they have substantial mining assets in this country. For the 2013 calendar year, the Bank of Canada reported that the average Canadian:U.S. dollar exchange rate was C$1.03:US$1.00. Results reported in greenbacks have been converted to loonies at that rate. We make every effort to include all eligible companies. If you believe your enterprise should be listed among the Top 40, please write to the author at MScales@CanadianMiningJournal.com.

www.canadianminingjournal.com

CANADA’S TOP 40 BY GROSS REVENUE (C$ MILLIONS)

2013 Rank Last 2013 year

Company

Year End

Type

Revenue

Net Earnings (loss)

2012 Assets

Revenue

Net Earnings (loss)

Assets

Agrium Inc.

Dec 31

Potash/Fertilizer

16,198.8

1,094.9

16,456.3

1,542.9

16,279.2

Barrick Gold

Dec 31

Gold

12,886.3

(10,921.1)

38,571.4

14,825.8

(565.5)

48,902.3

Suncor (oil sands only)

Dec 31

Oil Sands

12,294.0

2,040.0

42,754.0

10,838

468.0

39,649.0

–

Syncrude (est)

Dec 31

Oil Sands

11,445.8

2,268.5

27,716.8

10,621.6

2,646.6

27,665.1

Teck Resources

Dec 31

Base Metals & Coal

9,382.0

1,010.0

36,183.0

10,343.0

1,140.0

35,065.0

Potash Corp. of Saskatchewan

Dec 31

Potash/Fertilizer

7,524.2

1,838.6

18,496.7

8,164.8

2,141.4

18,752.2

Canadian Oil Sands Ltd

Dec 31

Oil Sands

4,208.0

834.0

10,190.0

3,905.0

973.0

10,171.0

Kinross Gold

Dec 31

Gold

3,892.9

(3,103.0)

10,595.3

4,436.5

(2,622.6)

15,329.1

Goldcorp

Dec 31

Gold

3,797.6

(2,790.3)

30,450.9

4,799.8

1,801.5

31,908.4

First Quantum Minerals

Dec 31

Copper

3,659.5

545.6

15,935.3

3,038.9

1,926.0

7,762.5

Cameco Corporation

Dec 31

Uranium

2,438.7

317.7

8,039.3

1,890.7

251.8

7,431.1

–

Walter Energy

Dec 31

Coal

1,916.1

(6.2)

5,758.6

2,471.8

(17.5)

5,941.5

Yamana Gold

Dec 31

Gold

1,898.0

(488.4)

11,650.0

2,406.9

455.4

12,154.2

Agnico Eagle Mines

Dec 31

Gold

1,687.6

418.7

5,108.2

1,975.2

320.2

5,413.9

IamGold Corporation

Dec 31

Gold

1,181.5

(886.3)

4,316.1

1,497.0

382.3

5,295.6

Eldorado Gold

Dec 31

Gold

1,157.7

(669.1)

7,452.3

1,181.9

327.6

8,165.9

KGHM International

Dec 31

Copper

1,094.7

9.7

3,853.8

1,427.0

107.0

3,801.1

Centerra Gold

Dec 31

Gold

972.7

162.4

1,738.3

680.5

(148.0)

1,642.2

Pan American Silver

Dec 31

Silver

849.2

(459.2)

2,850.5

956.5

80.8

3,496.4

New Gold

Dec 31

Gold

803.1

(196.9)

4,325.0

815.0

205.0

4,412.2

Lundin Mining

Dec 31

Base Metals

749.6

140.8

4,565.0

742.7

126.9

4,110.2

–

Silver Wheaton Corp.

Dec 31

Silver

727.7

386.8

4,521.5

875.1

603.6

3,285.0

Osisko Mining Corp

Dec 31

Gold

675.6

(455.1)

2,222.0

665.4

90.8

2,687.9

–

B2Gold

Dec 31

Gold

560.6

69.3

2,379.0

266.9

53.5

696.8

Hudbay Minerals

Dec 31

Base Metals

516.8

(109.4)

3,844.0

702.6

(23.5)

3,476.5

–

Golden Star Resources

Dec 31

Gold

496.3

(307.5)

335.5

567.0

10.0

676.0

Endeavour Mining

Dec 31

Gold

456.6

(382.9)

1,312.2

376.3

(8.9)

1,779.9

Sherritt International

Dec 31

Nickel & Coal

448.5

(660.3)

6,457.8

475.3

33.7

6,587.8

Thompson Creek Metals

Dec 31

Base Metals

447.4

(221.5)

3,178.1

413.4

562.7

3,512.5

–

Franco-Nevada Corp

Dec 31

Gold

412.9

12.1

3,136.2

439.8

105.7

3,243.9

Uranium One

Dec 31

Uranium

398.0

(42.5)

2,576.1

364.0

(99.6)

2,807.0

Dundee Precious Metals

Dec 31

Gold & Base Metals

366.4

13.6

1,017.4

406.3

30.7

1,001.4

–

Dominion Diamond Corp

Jan 31

Diamonds

355.8

36.3

1,761.8

298.8

26.2

1,655.5

AuRico Gold

Dec 31

Gold

351.6

34.2

2,984.1

86.4

182.2

3,274.5

Capstone Mining

Dec 31

Copper-Gold

342.1

(9.7)

1,964.7

314.7

59.6

1,554.6

–

Aura Minerals

Dec 31

Copper & Gold-Silver

340.8

(76.4)

362.1

316.6

(53.1)

438.5

China Gold Int'l Resources

Dec 31

Gold

311.7

65.6

189.6

342.4

79.3

257.6

–

Crocodile Gold

Dec 31

Gold

309.8

95.6

241.8

263.6

(41.4)

493.0

Teranga Gold

Dec 31

Gold

306.8

58.3

643.1

361.0

111.4

581.4

–

Rio Alto Mining

Dec 31

Gold

293.7

31.7

369.4

326.0

103.4

364.1

August 2014 • Canadian Mining Journal |

| Canada’s Top 40 Miners

THE RUNNERS-UP (C$ MILLIONS) 2013 Rank Last 2013 year

Company

Year End

Type

Revenue

Uranium

292.5

2012

Net Earnings (loss)

Assets

Revenue

Net Earnings (loss)

Assets

–

Areva Resources

Dec 31

–

Alamos Gold

Dec 31

Gold

290.7

40.0

924.9

338.3

121.5

776.5

Taseko Mines

Dec 31

Base Metals

290.1

(34.8)

970.2

253.6

(9.1)

996.4

Endeavour Silver

Dec 31

Silver

285.1

(92.2)

377.9

214.3

43.4

491.8

–

First Majestic Silver

Dec 31

Silver

258.8

(39.3)

880.7

245.6

91.6

837.4

Semafo Inc.

Dec 31

Gold

233.6

86.5

584.5

295.8

(18.8)

712.5

Mercator Minerals

Dec 31

Base Metals

221.8

(157.4)

278.8

270.5

(130.5)

492.3

Primero Mining Corp.

Dec 31

Gold & Base Metals

206.3

(4.4)

806.4

198.7

51.1

690.6

–

Veris Gold

Dec 31

Gold

201.9

(68.7)

332.1

165.4

(20.6)

359.0

–

Atlatsa Resources

Dec 31

Platinum

195.6

100.0

773.6

117.6

(95.6)

814.1

–

Lake Shore Gold

Dec 31

Gold

192.6

(233.5)

597.9

133.0

(317.9)

823.0

–

Silvercorp Metals

Mar 31

Silver

187.0

43.3

593.5

245.1

104.2

592.6

–

Lucara Diamond Corp

Dec 31

Diamonds

185.9

67.2

254.6

43.1

(7.7)

242.5

–

Silver Standard Resources

Dec 31

Silver

179.9

(231.8)

1,226.9

248.3

57.0

1,357.3

Gran Colombia Gold

Dec 31

Gold

173.2

(37.0)

788.8

141.8

(37.8)

647.4

CONTINUED FROM PAGE 12

of $545.6 million on revenues of $3.66 billion), Lundin Mining ($140.8 million on revenues of $749.6 million), and Polish owner of three mines in the Sudbury Basin KGHM International. The latter earned $9.7 million on revenues of $1.09 billion. The best earnings in the base metal sector were generated by Teck Resources. This enterprise turned revenues of $9.38 billion into net earnings of $1.01 billion. But coal also plays a big part in Teck’s income. Its coal business earned revenues of $4.11 billion, or 43.8% of the total, generating profit before tax that totaled $927.0 million. The impact of commodity prices can also be felt when looking at the change in assets of our Top 40 companies. Suncor, whose oil sands assets stood at $42.75 billion in 2013, registered only a 7.8% increase despite rising oil prices. Companies that had significant gains in assets made major changes to their businesses. B2Gold started production at the Masbate mine, advanced the Otjikoto development project, and expanded resources at two other properties. The closer the new projects get to production, the more valuable they are, allowing B2Gold to increase the value of its asset base 241% to $2.38 billion. 14 | Canadian Mining Journal • August 2014

298.7

A popular way to grow an asset base is the takeover as practiced by First Quantum with the acquisition of Inmet Mining and its Cobre Panama development project. The deal gave the combined company a 105.4% boost in assets to $15.94 billion. Capstone Mining acquired the Pinto Valley copper mine in Arizona. That move played a part in its 26.4% asset growth to $1.96 billion. A slightly different business focus can also enlarge assets. Silver Wheaton, whose assets grew 37.6% to $4.51 billion, is no longer purely a silver streaming company. It has added gold to its portfolio, notably purchasing half the gold stream from Hudbay’s Costancia mine. And Hudbay Minerals added to its asset base by starting both the Lalor goldzinc and Reed copper mines. It reported an asset base of $3.84 billion, up 10.6% from 2012. There are many ways to look at the Top 40 Canadian mining companies – by revenue, assets, earnings, gains and losses. Readers are invited to examine the tables accompanying this article and note what stands out for them. By any measure, we at CMJ salute all Canadian miners, especially those that have prospered despite adversity last year. CMJ

4| Syncrude Canada

Syncrude Canada Ltd. is one of the world’s larger producers of synthetic crude oil from oil sands and the largest single source producer in Canada. It is located just outside Fort McMurray. Syncrude was formed as a research consortium in 1964 and construction at the Syncrude site started in 1973 and officially opened in 1978. Expansions and upgrades have been ongoing ever since.

5| Teck Resources

Teck Resources Limited is a Canadian metals and mining company that’s widely known as one of Canada’s largest diversified resources companies. The company began as Teck-Hughes Gold Mines Limited in 1913 to develop a gold discovery at Kirkland Lake, Ontario. In addition to its many historic mining achievements, the company is now also known for its many “best in class” environmental and social performance achievements.

6| PotashCorp

The Potash Corporation of Saskatchewan Inc., also referred to as PotashCorp, is a Canadian corporation based in Saskatoon. The company was created by the government of Saskatchewan www.canadianminingjournal.com

in 1975. In 1989 it became a publicly traded company as the government sold off some of its shares, selling the remaining shares in 1990. The Saskatchewan potash industry began in the 1950s and 1960s. During the 1990s PotashCorp expanded by buying up a number of American potash companies. Today it owns assets around the world.

TOP REVENUE GAINERS (C$ MILLIONS) Rank 34 24

7| Canadian Oil Sands

Canadian Oil Sands Limited of Calgary is a Canadian company that generates income from its oil sands’ investment in the Syncrude Joint Venture. PanCanadian Petroleum formed Canadian Oil Sands Trust in 1995 with a 10% interest in Syncrude. The company also holds some arctic natural gas interests.

8| Kinross Gold

Kinross Gold Corporation ranks among the world’s largest gold companies with mines and projects in the United States, Brazil, Chile, Russia, Ghana and Mauritania. The company was founded after a merger in 1993 of three companies, initially owning a mine in British Columbia. In addition expanding on the worldwide mining market, Kinross Gold has also been recognized in Canada as being among the country’s 50 most socially responsible corporations.

9| Goldcorp

Goldcorp is a gold producer headquartered in Vancouver. The company is engaged in gold mining and related activities including exploration, extraction, processing and reclamation. In addition to mining activities in Canada and around the world, the organization has also received international recognition for being a Socially Responsible Company by foreign governments.

10| First Quantum

First Quantum Minerals Ltd. is a Vancouverbased mining and metals company whose principal activities include mineral exploration, development and mining. Known for its mining activity around the world, the company recently received the best mining industry award at the Zambia International Trade Fair.

Company

AuRico Gold B2Gold Centerra Gold

Cameco Corporation

Endeavour Mining

Type

2013 Revenue

2012 Revenue

Revenue Change 2013/2012

Gold Gold Gold

351.6 560.6 972.7

86.4 266.9 680.5

+306.9% +110.0% +42.9%

Uranium

2,438.7

1,890.7

+29.0%

Gold

456.6

376.3

+21.3%

3,659.5

3,038.9

+20.4%

First Quantum Minerals

Copper

Dominion Diamond Corp

Diamonds

355.8

298.8

+19.1%

38 31

Crocodile Gold Suncor (oil sands only) Uranium One

Gold Oil Sands Uranium

309.8 12,294.0 398.0

263.6 10,838 364.0

+17.5% +13.4% +9.3% +8.7%

3 35

Capstone Mining

Copper-gold

342.1

314.7

Thompson Creek Metals

Base Metals

447.4

413.4

+8.2%

Syncrude (est)

Oil Sands

11,445.8

10,621.6

+7.8%

Canadian Oil Sands Ltd

4,208.0

3,905.0

+7.8%

Aura Minerals

340.8

316.6

+7.6% +1.5%

Osisko Mining Corp

Oil Sands Copper & Gold-Silver Gold

675.6

665.4

Lundin Mining

Base Metals

749.6

742.7

+0.9%

New Gold

Gold Potash/ Agrium Inc. Fertilizer Eldorado Gold Gold Sherritt International Nickel & Coal Franco-Nevada Corp Gold Potash Corp. of SaskatchPotash/ ewan Fertilizer China Gold Int'l Resources Gold Base Metals Teck Resources & Coal Gold & Base Dundee Precious Metals Metals Rio Alto Mining Gold Pan American Silver Silver Kinross Gold Gold Golden Star Resources Gold

803.1

815.0

-1.5%

16,198.8

16,456.3

-1.6%

1,157.7 448.5 412.9

1,181.9 475.3 439.8

-2.0% -5.6% -6.1%

7,524.2

8,164.8

-7.8%

311.7

342.4

-9.0%

9,382.0

10,343.0

-9.3%

366.4

406.3

-9.8%

293.7 849.2 3,892.9 496.3

326.0 956.5 4,436.5 567.0

-9.9% -11.2% -12.3% -12.5%

1 16 28 30 6 37 5 32 40 19 8 26 2

Barrick Gold

Gold

12,886.3

14,825.8

-13.1%

Agnico Eagle Mines

Gold

1,687.6

1,975.2

-14.6%

39 22

Teranga Gold

Gold

306.8

361.0

-15.0%

Silver Wheaton Corp.

Silver

727.7

875.1

-16.8%

Goldcorp

Gold

3,797.6

4,799.8

-20.9%

Gold Gold Coal Copper Base Metals

1,898.0 1,181.5 1,916.1 1,094.7 516.8

2,406.9 1,497.0 2,471.8 1,427.0 702.6

-21.1% -21.1% -22.5% -23.3% -26.4%

9 13 15 12 17 25

Yamana Gold IamGold Corporation Walter Energy KGHM International Hudbay Minerals

11| Cameco

Cameco Corporation is one of the world’s larger publicly traded uranium companies. Based in

Saskatoon, the company was the world’s third largest uranium producer in 2012, accounting for 14% of world production. “Cameco” (Canadian Mining and Energy Corporation) was formed in 1988 and now operates several uranium mines in North America. August 2014 • Canadian Mining Journal |

| Canada’s Top 40 Miners

12| Walter Energy

Walter Energy, Inc., of Vancouver is one of the world’s leading, publicly traded “pure play” metallurgical coal producers for the global steel industry. The company also produces steam coal and industrial coal, anthracite, metallurgical coke, and coal bed methane gas. Walter Energy’s Canadian and European operations consist of mines in British Columbia, and a project in Wales in the UK.

13| Yamana Gold

Yamana Gold Inc. is a Canadian-based gold producer that began operations in 2003 with gold production, gold development stage properties, exploration properties, and land positions around the world. Yamana has added several mining properties since its inception with the purchase of other gold companies in 2005, 2006 and 2007 and the company’s portfolio now includes seven operating gold mines and various other advanced and near-development stage projects and exploration properties.

14| Agnico Eagle

Agnico Eagle Mines Limited is a Canadian-based gold producer with operations in Canada, Finland, and Mexico and exploration and development activities extending to the United States. “Agnico” is derived from the periodic table of elements using the symbols for silver (Ag), nickel (Ni) and cobalt (Co). In 1963, visionary Paul Penna became the president of Agnico Mines, and he eventually oversaw the merger of Agnico Mines with Eagle Mines Ltd, a successful gold exploration company, enabling the development of Eagle’s Joutel mining complex. The newly formed company became Agnico Eagle Mines Limited.

15| Iamgold

Iamgold Corporation is a Toronto-based international gold producer. The company is engaged in the exploration, development, and production of mineral resource properties throughout the world.

16| Eldorado Gold

Eldorado Gold Corporation is a Canadianbased, intermediate gold mining company

16 | Canadian Mining Journal • August 2014

REVENUE AS % OF ASSETS (C$ MILLIONS) Rank

Company

Type

2013 Revenue

2013 Assets

Revenue as % of Assets

China Gold Int'l Resources

Gold

311.7

189.6

164.4%

Golden Star Resources

Gold

496.3

335.5

148.0%

Crocodile Gold

Gold

309.8

241.8

128.1%

Agrium Inc.

Potash/Fertilizer

16,198.8

16,456.3

98.4%

Aura Minerals Rio Alto Mining

Copper & Gold-Silver Gold

340.8 293.7

362.1 369.4

94.1% 79.5%

Centerra Gold

Gold

972.7

1,738.3

56.0%

Teranga Gold

Gold

306.8

643.1

47.7%

Syncrude (est)

Oil Sands

11,445.8

27,716.8

41.3%

Canadian Oil Sands Ltd

Oil Sands

4,208.0

10,190.0

41.3%

Potash/Fertilizer

7,524.2

18,496.7

40.7%

Gold

3,892.9

10,595.3

36.7%

18 39 4 7 6 8 32 27 2 12 14 23 11 19 3 17 15 5 24 10 33 20 35 21 13 22 16 31 29 25 30 9 34 28

Potash Corp. of Saskatchewan Kinross Gold Dundee Precious Metals

Gold & Base Metals

366.4

1,017.4

36.0%

Endeavour Mining

Gold

456.6

1,312.2

34.8%

Barrick Gold

Gold

12,886.3

38,571.4

33.4%

Walter Energy

Coal

1,916.1

5,758.6

33.3%

Agnico Eagle Mines

Gold

1,687.6

5,108.2

33.0%

Osisko Mining Corp

Gold

675.6

2,222.0

30.4%

Cameco Corporation

Uranium

2,438.7

8,039.3

30.3% 30.0%

Pan American Silver Suncor (oil sands only) KGHM International IamGold Corporation

Silver

849.2

2,850.5

Oil Sands

12,294.0

42,754.0

28.8%

Copper

1,094.7

3,853.8

28.4%

Gold

1,181.5

4,316.1

27.4%

Base Metals & Coal

9,382.0

36,183.0

25.9%

Gold

560.6

2,379.0

23.6%

First Quantum Minerals

Copper

3,659.5

15,935.3

23.0%

Dominion Diamond Corp

Diamonds

355.8

1,761.8

20.2%

Gold

803.1

4,325.0

18.6%

Capstone Mining

Copper-Gold

342.1

1,964.7

17.4%

Lundin Mining

Base Metals

749.6

4,565.0

16.4%

Yamana Gold

Gold

1,898.0

11,650.0

16.3%

Silver Wheaton Corp.

Silver

727.7

4,521.5

16.1%

Eldorado Gold

Gold

1,157.7

7,452.3

15.5%

Uranium One

Uranium

398.0

2,576.1

15.4%

Thompson Creek Metals

Base Metals

447.4

3,178.1

14.1%

Hudbay Minerals

Teck Resources B2Gold

New Gold

Base Metals

516.8

3,844.0

13.4%

Franco-Nevada Corp

Gold

412.9

3,136.2

13.2%

Goldcorp

Gold

3,797.6

30,450.9

12.5%

AuRico Gold

Gold

351.6

2,984.1

11.8%

Nickel & Coal

448.5

6,457.8

7.0%

Sherritt International

with projects around the world. Eldorado owns and operates a number of mines and is currently developing a number of other projects. The company has more than 20 years of international experience in safely building and operating mines. With headquarters in Vancou-

ver, Eldorado’s offices and operations employ thousands of people worldwide. The Company operates as a decentralized business unit with the majority of employees and management being nationals of the country where offices are located. www.canadianminingjournal.com

| Canadaâ&#x20AC;&#x2122;s Top 40 Miners

17|

18|

KGHM International

Centerra Gold

19| Pan American Silver

KGHM International is one of the larger producers of copper and silver in the world. The mining & metallurgy company is a subsidiary of KGHM Polska Mied of Poland.

Centerra Gold Inc. is a gold mining company based in Toronto. The company was formed and went public in 2004. Centerra owns and operates goldproducing mines and it also has interests in gold exploration properties.

TOP EARNERS (C$ MILLIONS) Rank

Company

Type

2013 Net Earnings (Loss)

2012 Net Earnings (Loss)

Earnings Change 2013/2012

Syncrude (est)

Oil Sands

2,268.5

2,646.6

-14.3%

Suncor (oil sands only)

Oil Sands

2,040.0

468.0

+335.9%

Potash Corp. of Saskatchewan

Potash/Fertilizer

1,838.6

2,141.4

-14.1%

Agrium Inc.

-29.0%

Teck Resources

Potash/Fertilizer

1,094.9

1,542.9

Base Metals & Coal

1,010.0

1,140.0

-11.4%

Canadian Oil Sands Ltd

Oil Sands

834.0

973.0

-14.3%

First Quantum Minerals

Copper

545.6

1,926.0

-71.7%

Agnico Eagle Mines

Gold

418.7

320.2

+30.8%

Silver Wheaton Corp.

Silver

386.8

603.6

-35.9%

Cameco Corporation

Uranium

317.7

251.8

+26.2%

Lundin Mining

Base Metals

140.8

126.9

+11.0%

B2Gold

Gold

69.3

53.5

+29.5%

China Gold Int'l Resources

Gold

65.6

79.3

-17.3%

Teranga Gold

Gold

58.3

111.4

-47.7%

Dominion Diamond Corp

36.3

26.2

+39.5

AuRico Gold

Gold

34.2

182.2

-81.2%

Rio Alto Mining

Gold

31.7

103.4

-69.4%

Dundee Precious Metals

Gold & Base Metals

13.6

30.7

-55.7%

Franco-Nevada Corp

Gold

12.1

105.7

-88.6%

KGHM International

Copper

9.7

107.0

-90.9%

18 | Canadian Mining Journal â&#x20AC;˘ August 2014

Pan American Silver Corporation is a Canadianbased mining company with mining interests here and around the world. Pan American Silver is the continuing corporation of Pan American Energy Corporation, which was incorporated under the Company Act (British Columbia) on March 7, 1979. The Company underwent two name changes: in September 1984 to Pan American Minerals Corp., and finally in April 1995 the Company was renamed Pan American Silver Corp.

20| New Gold

New Gold Inc. is a multinational mining company with gold, silver and copper- containing assets. It engages in exploration, development and polymetallic production activity around the world. The name New Gold Inc. goes back to 1980.

21| Lundin Mining

Lundin Mining, headquartered in Toronto, is a multinational minerals company with operations in Sweden, Ireland, Spain, Portugal, the Democratic Republic of Congo, and Russia. Lundin Mining was founded in 1994.

22| Silver Wheaton

Silver Wheaton Corp. is a pure play mining company and one of the larger in the business of silver streaming. The company was established in 2004.

www.canadianminingjournal.com

23| Osisko

Osisko is a Canadian precious-metals mining company headquartered in Montreal. It operates in Canada with a focus on gold mines. The company is named after Quebec’s Osisko Lake because of its historical significance. The lake, located within Quebec’s portion of the Abitibi gold belt in the region of Rouyn-Noranda is where in 1920 Noranda founder Edmond Horne made his first major mineral discovery, a deposit that became known as the Horne Mine.

TOP ASSET GAINERS (C$ MILLIONS) Rank

Company

Suncor (oil sands only)

Barrick Gold

Teck Resources

Goldcorp

Syncrude (est)

6 1 10

First Quantum Minerals

Yamana Gold

Kinross Gold

Canadian Oil Sands Ltd

Cameco Corporation

Eldorado Gold

Sherritt International

Walter Energy

25|

Agnico Eagle Mines

Lundin Mining

HudBay Minerals

24| B2Gold

B2Gold Corp. is a Vancouver-based gold producer with operating mines and a strong portfolio of development and exploration assets. The company’s corporate objective is to optimize production at existing mines and build further shareholder value through the exploration and development of existing projects and additional accretive acquisitions.

HudBay Minerals Inc. is a Canadian mining corporation. Founded as Hudson Bay Mining & Smelting Co., Limited (HBMS), it has been exploring and mining in Manitoba for more than 80 years. Much of its history has centred around Flin Flon. The first claim was registered in 1915. It took more than a dozen years to bring the mine into production.

26|

Type

2013 Assets

2012 Assets

Asset change 2013/2012

Oil Sands

42,754.0

39,649.0

+7.8%

Gold

38,571.4

48,902.3

-21.1%

Base Metals & Coal

36,183.0

35,065.0

+3.2%

Gold

30,450.9

31,908.4

-4.6%

Oil Sands

27,716.8

27,665.1

-0.1%

Potash Corp. of Saskatchewan

Potash/Fertilizer

18,496.7

18,752.2

+1.4%

Agrium Inc.

Potash/Fertilizer

16,456.3

16,279.2

+1.0%

Copper

15,935.3

7,762.5

+105.3%

Gold

11,650.0

12,154.2

-4.1%

Gold

10,595.3

15,329.1

-30.9%

Oil Sands

10,190.0

10,171.0

-0.1%

Uranium

8,039.3

7,431.1

+8.2%

Gold

7,452.3

8,165.9

-8.7%

Nickel & Coal

6,457.8

6,587.8

-2.0%

Coal

5,758.6

5,941.5

-3.1%

Gold

5,108.2

5,413.9

-5.6%

Base Metals

4,565.0

4,110.2

+11.1%

Silver Wheaton Corp.

Silver

4,521.5

3,285.0

+37.6%

New Gold

Gold

4,325.0

4,412.2

-2.0%

IamGold Corporation

Gold

4,316.1

5,295.6

-18.5%

KGHM International

Copper

3,853.8

3,801.1

+1.4%

Hudbay Minerals

Base Metals

3,844.0

3,476.5

+10.6%

Thompson Creek Metals

Base Metals

3,178.1

3,512.5

-9.5%

Franco-Nevada Corp

Gold

3,136.2

3,243.9

-3.3%

AuRico Gold

Gold

2,984.1

3,274.5

-8.9%

Pan American Silver

Uranium One

Silver

2,850.5

3,496.4

-18.5%

Uranium

2,576.1

2,807.0

-8.2%

B2Gold

Gold

2,379.0

696.8

+241%

Osisko Mining Corp

Gold

2,222.0

2,687.9

-17.3%

Capstone Mining

Copper-Gold

1,964.7

1,554.6

+26.4%

Dominion Diamond Corp

Diamonds

1,761.8

1,655.5

+6.5%

Centerra Gold

Gold

1,738.3

1,642.2

+5.9%

Endeavour Mining

Gold

1,312.2

1,779.9

-26.3%

Dundee Precious Metals

Gold & Base Metals

1,017.4

1,001.4

+1.6%

Endeavour Mining Corporation is a gold producer based in Vancouver with mines located around the world. The company is listed on the Toronto Stock Exchange as well as the Australian Securities Exchange.

Teranga Gold

Gold

643.1

581.4

+10.6%

Rio Alto Mining

Gold

369.4

364.1

+1.5%

Aura Minerals

Copper & Gold-Silver

362.1

438.5

-17.4%

Golden Star Resources

Gold

335.5

676.0

-50.4%

28|

Crocodile Gold

Gold

241.8

493.0

-52.0%

China Gold Int'l Resources

Gold

189.6

257.6

-26.4%

Golden Star

Golden Star Resources Ltd is a mid-tier Canadian gold mining company based in Toronto. The company was founded in 1983.

27| Endeavour Mining

Sherritt

Sherritt International is a Canadian resource company based in Toronto. The company’s business

interests include mining, thermal coal production, oil and gas exploration and production. Most of the company’s profit comes from mining opera-

tions. Sherritt licenses its proprietary technologies and provides metallurgical services to mining and refining operations worldwide. August 2014 • Canadian Mining Journal |

| Canada’s Top 40 Miners

29|

30|

Thompson Creek Metals

Franco-Nevada

31| Uranium One

Thompson Creek Metals Company is one of the world’s larger pure play base-metal mining companies. The company was founded in 1993 and is based in Toronto.

Franco-Nevada Corporation is a Toronto-based company involved with gold mining and other commodities and natural resources.

Uranium One is a Canadian-based uranium mining company with operations in Canada and around the world. The company was founded in 1997.

32| Dundee Precious

The Great Lakes St. Lawrence Seaway System

Dundee Precious Metals is a Canadian-based, international mining company engaged in the acquisition, exploration, development and mining and processing of precious metal properties. The company’s business objectives are to identify, acquire, finance, develop and operate low-cost, long-life mining properties.

33| Dominion Diamond

Dominion Diamond Corporation is a Torontobased diamond mining company.

Just add water

Shipping Bulk? Water way to go! Highway H2O - your gateway to the agricultural and industrial heartland of North America. With plenty of capacity, our System provides seamless flow of goods that saves you time and money. The Great Lakes St. Lawrence Seaway System represents 300 years of history and we think some traditions are worth keeping. Highway H2O - continues to play a valuable role in the growth and prosperity of the North American economy. Cost effective, safe and dependable delivery makes Highway H2O a competitive choice for your supply chain. A fresh approach to your transportation needs.

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34| AuRico Gold

AuRico Gold is a Halifax-based gold mining and exploration company. It was founded in 1986.

35| Capstone

Capstone Mining Corp. is a Canadian-based basemetal mining company, focused on copper. The company’s strategy is to continue to grow with mineral resource and reserve expansions and exploration, and through acquisitions in politically stable, mining-friendly regions.

36| Aura Minerals

Aura Minerals Inc. is a Canadian mid-tier gold and copper production company focused on the development and operation of gold and base metal projects in the Americas. The company’s producing assets include the copper, gold and silver.

37| China Gold

China Gold International Resources Corp. Ltd. is a mining and exploration company based in Vancouver. The Company operates two producing mines and its corporate objective is to expand its resource base and grow production both at its current mining operations and through an acquisition and development strategy targeting international projects.

20 | Canadian Mining Journal • August 2014

www.canadianminingjournal.com

EARNINGS AS % OF REVENUE (C$ MILLIONS)

38| Crocodile Gold

Crocodile Gold is a Canadian mining company operating in the Northern Territories and other parts of the world.

Rank

39|

38 30 14

Teranga

Teranga Gold Corp. is a Canadian-based gold company.

40|

6 37 4 7 39 21 18 3 10

Rio Alto

Rio Alto Mining is a Vancouver-based international gold producer. The company is engaged in the exploration, development and production of mineral resource properties.

Most Information for the company profiles provided by the Wikipedia Foundation.

11 24

5 40 33 34 1 32 17

Company

Type

Silver Wheaton Corp. Crocodile Gold Franco-Nevada Corp Agnico Eagle Mines Potash Corp. of Saskatchewan China Gold Int'l Resources Syncrude (est) Canadian Oil Sands Ltd Teranga Gold Lundin Mining Centerra Gold Suncor (oil sands only) First Quantum Minerals Cameco Corporation B2Gold Teck Resources Rio Alto Mining Dominion Diamond Corp AuRico Gold Agrium Inc. Dundee Precious Metals KGHM International

2013 Revenue

Silver 727.7 Gold 309.8 Gold 412.9 Gold 1,687.6 Potash/Fertilizer 7,524.2 Gold 311.7 Oil Sands 11,445.8 Oil Sands 4,208.0 Gold 306.8 Base Metals 749.6 Gold 972.7 Oil Sands 12,294.0 Copper 3,659.5 Uranium 2,438.7 Gold 560.6 Base Metals & Coal 9,382.0 Gold 293.7 Diamonds 355.8 Gold 351.6 Potash/Fertilizer 16,198.8 Gold & Base Metals 366.4 Copper 1,094.7

2013 Net Earnings (Loss)

Earnings as % of Revenue

386.8 95.6 12.1 418.7 1,838.6 65.6 2,268.5 834.0 58.3 140.8 162.4 2,040.0 545.6

53.2% 30.9% 29.3% 24.8% 24.4% 21.0% 19.8% 19.8% 19.0% 18.8% 16.7% 16.6% 14.9%

317.7

13.0%

69.3 1,010.0 31.7 36.3 34.2 1,094.9 13.6 9.7

12.4% 10.8% 10.8% 10.2% 9.7% 6.7% 3.7% 0.8%

We’re at work on top of your world all-weather roads & runways contract mining dams & frozen core dams dikes

earthworks & site development exploration support ice roads & runways Large diameter drilling

mine reclamation – care & maintenance remote infrastructure planning site services & crushing training – Heavy equipment – field & simulator

OperatiOns & Human resOurces Office: edmOntOn 1.877.499.9114 vancOuver Bc

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executive Office: vancOuver 1.888.734.5773 www.nunalogistics.com

tHunder BaY On

August 2014 • Canadian Mining Journal |

| Development

TerraX geologist Clinton Davis glasses a core sample. All photos by Bill Braden.

Waking the

GIANT Historic site still holds promise By Northern Correspondent Bill Braden

22 | Canadian Mining Journal â&#x20AC;˘ August 2014

www.canadianminingjournal.com

“

wo hands wide and it goes on forever!” is what prospector C.J. Johnny Baker is rumoured to have bragged of the gold-riddled quartz vein he and Herb Dixon found on the rocky north arm of Great Slave Lake in 1935. Twelve years later their find became the Giant Yellowknife gold mine, the largest of a string of historic producers that fostered a 60-year, 14 million-ounce legacy. Then, with Giant’s closing in 1998 and the neighbouring Con Mine’s in 2004, the prolific Yellowknife gold camp went into hibernation. Today, after a decade-long snooze, it may be waking up again. A spunky junior, TerraX Minerals Inc., is tickling the sleeping Archaen greenstone belt out of its slumber and could yet again prove up the old adage: your new mine is quite likely next to your old one. “We’re in the shadow of the headframe,” says TerraX President Joe Campbell, as his trio of exploration programs is within sight of the old, skeletal Giant headframe. “If you take any of the old gold camps in Canada - Timmins, Val d’Or, Red Lake - they’re [geologically] almost identical to the Yellowknife camp,” says Campbell. “All of those camps have a history of multiple discoveries along the strike length. Yellowknife has had much less exploration along the trend in comparison.” Campbell is chasing a serendipitous train of events, billed the Yellowknife City Gold Project, uncovered in a quest that began in earnest only a year and a half ago. Bankruptcy bid yields big return Campbell partnered with fellow geologist Thomas Setterfield in 2008 to form TerraX Minerals Inc., pooling over six decades of experience with companies including Noranda, Western Mining Corp., and Monster Copper Corp. TerraX’s first play was a joint venture with Kaminak Gold Corp’s Needle Lake property in Nunavut. However, it was the bankruptcy sale in early 2013 of Century Mining Corp. (after its failed efforts at the Lamaque gold mine in Quebec) that launched TerraX’s Yellowknife program. Among its portfolio was an idle claim bundle called Northbelt that included the long-abandoned Crestaurum mine just 15km north of Giant. “Northbelt was by far the best property in their portfolio so we put a bid on it,” says Campbell. They didn’t have much to go on; there was no public record of historical drilling results but their $211,000 gamble was driven by two certainties: it was right

The Giant Yellowknife Gold Mine yielded more than seven million ounces over a 50-year life (courtesy NWT Mining Heritage Society).

along the strike trend for both Con and Giant, and the region still had a lot of exploration potential. “Once we made the purchase we started our research. We got great help from the NWT Government’s Geoscience Office in Yellowknife, which was archiving all the Giant data as those offices were being prepared for teardown as part of the Giant clean-up,” he relates. “That information included Northbelt, and we were able to copy hundreds of drill holes and logs and dozens of reports.” The real treasure was rescuing 30 000m of historic core from some 200 Northbelt holes, all neatly stacked on the Giant property - and awaiting the bulldozer. “This is millions of dollars of exploration work that literally fell into our laps. We were vibrating for a few days,” says Campbell. “It was a very quick change from what we thought would be an initial grassroots exploration program to one that looked like we’d been exploring for five years.” Three Targets TerraX is looking at three prospects, all of which have historic drill data, over the 65,000 hectares it owns or options. The main target is the 36.5km Northbelt group which contains a shear, long recognized as an extension of the Yellowknife gold belt (in the 1940s, it was dubbed the “Barney Shear” after a local prospector’s dog). In 2013 the TerraX team located 250 historical drill hole collars and surveyed 156 of the holes associated with known deposits. “If you’re a betting man on where to find a new deposit, this

TerraX has logged and sampled some 30,000m of historic drill core, advancing its gold project by years and millions of dollars.

Joe Campbell, TerraX President, at a public consultation session in Yellowknife, 2013.

August 2014 • Canadian Mining Journal |

| Development Northtech driller John Paquin pulls core at TerraX’s Northbelt drill program in July, 2014.

is obviously an area that you’d want to work on. It’s wide open - we have 13 kilometres of strike length, and hundreds of metres of dip to explore. It’s our favourite place to look.” Last year, TerraX re-assayed historic core and released results ranging from 1.9 to 3.79 grams per tonne over intersections of up to 28m. A second target is the old Crestaurum mine, started and soon stopped in the 1940s. Now just a headframe and few crumbling buildings; the 130-m shaft and one crosscut have watered up and the shaft was used as a metal dump. But 187 old drill collars have been traced, and a former road links it to the Ingraham Trail. Its historic high grades and free-milling ore make it a strong potential; one outstanding drill core yielded 62.90 g/t over five metres, less than 50m from surface. A third prospect is Homer Lake. It’s an unexpected silver/base metal anomaly in the group, showing intriguing returns from 2013 surface sampling. Drilling in 2014 confirmed 3.42m of 3.41 g/t gold, 69.3 g/t silver, 3.67 per cent lead and 3.17 per cent zinc. For now, says Campbell, it remains in the background of TerraX’s plans. Top of mind for Yellowknifers is whether a new development would mean a repeat of Giant’s dark legacy -- tonnes of toxic arsenic trioxide (now under remediation by the federal government) the byproduct of the roasting process used to crack the refractory ore. Campbell says the Crestaurum ore is free-milling, but they have yet to determine the nature of the Barney geochemistry. “But even if we had Giant-type ore, we would never process it the way that Giant did,” he explains, as there are better methods of processing refractory gold, while free-milling is less expensive, gets better recoveries, and there are no toxic by-products. Infrastructure advantage “There’s not another project in the Northwest Territories that has the advantages this project has,” says Campbell. “The access to grid power, highways, the airport, and being next to a mine service centre - the City of Yellowknife - are huge advantages.” He cites the ease of running an airborne geophysics program last year from the nearby Yellowknife airport, and in winter being to drive a mere 15km to drill sites, as major cost and time savers. Despite the financing drought that’s plaguing all juniors, TerraX’s story has attracted $3.6 million since early 2013, enough OTHERS SEEK GOLD IN THE SHADOWS Other gold hunters are working the shadows of former producers in the rich gold belt arcing north of Great Slave Lake. “Absolutely, there is potential out there, in the north part of the belt that hasn’t been explored,” says geologist Edith Martel of the NWT Government’s Geoscience Office. “All of the same settings [as the Giant-Con trend] exist.” Tyhee Gold Corporation’s (V-TDC) Yellowknife Gold Project has bundled property around and including the historic Discovery Mine, 90km north of Yellowknife, a high-grade, one-million ounce producer from 1950 to 1969. Tyhee has been exploring and permitting the project for some two decades, projecting a 2016 startup for a 4,000 tpd free-milling mine over 15 years, on measured and indicated resources estimated at 1,715,000 ounces, plus

24 | Canadian Mining Journal • August 2014

www.canadianminingjournal.com

to finance this year’s 5,000-m drill program and stay in the black through the winter. Next year, if the results and the market stay with him, Campbell is projecting a $5-million program to triple that amount of drilling, plus more geotech and environment baseline work. Campbell and his team have made extensive efforts to open the project up to the community and First Nations, a standard condition of getting permits. It also helps set up good relations with recreational users of the TerraX claim block. One goodwill move was to provide funding for six user groups, including Scouts and snowmobilers, to clean up years of garbage along some of the trails. The City of Yellowknife helped too, waiving the tipping fees at the dump. Community response so far, says Campbell, has been very positive -- not unexpected in a town with decades of gold mining heritage. He also credits industry and the NWT Government with fostering a mining-friendly climate. “We’ve been the recipient of that hard work on their part and very appreciative of it.” But he’s also cautious that not everyone will be on side and he wants to keep communications open. “We’d be fools to believe that everybody wants to go down that path. All we can do is keep our door open, keep them informed and give them a place to help us do it right.” Campbell has a prudent eight- to 10-year work plan to balance a big vision for the future. “Things don’t happen tomorrow. Our vision is to carve a timeline of three to five years to do some relatively intensive exploration to prove up deposits. We feel that within that timeline we can accurately define something and get on to quantifying it.” He anticipates as many as five more years to develop, permit and finance a plan before production could start. Would Campbell and his TerraX team pour the first gold? Conventional thinking calls for juniors to advance deposits to attract a buyout or a major partner, but Campbell may not stop there. “There certainly is the expertise in TerraX to bring a project to development, but we would need a lot of multi-disciplinary help to do it. It would be a more challenging path, but not one we’d be afraid to go ahead and do.” CMJ

inferred resources of 487,000 ounces. Tyhee has also consolidated several properties close to the Giant property. It has joint-ventured with Williams Creek Gold Ltd. (V-WCX) on the Big Sky parcel, announcing encouraging results from geotech and sampling programs in 2012. Halfway between Yellowknife and Tyhee’s property, New Discovery Mines Ltd. is a private venture lead by Dave Webb (formerly President and CEO of Tyhee) focused on the Mon property. The very high-grade deposit has seen a diverse run of small scale, seasonal owners from the 1930s to the 1990s. New Discovery has recently secured permits that will enable it to launch a proposed $5-million exploration program on ground that Webb says has all the classic signatures of the region’s prolific gold geology.

August 2014 • Canadian Mining Journal |

| Development

TOP BELOW OF WHAT’S

MINER KEEPS CLOSE WATCH UNDERGROUND By Correspondent David Godkin

esium is another one of those elements that has found a multitude of uses since it was discovered in mineral water more than a 150 years ago in Durkheim, Germany. Among them, it increases the electrical conductivity of vacuum tubes, but it also helps us keep time because it’s used to help ensure the accuracy of the world’s atomic clocks. Plus, it’s used to regulate cell phone transmissions and the information flow on the Internet. But in a somewhat more unusual application, cesium formate brine is also used to lubricate drilling equipment on North Sea drilling rigs where prior to its use, an average of one accident occurred on almost every gas well built in the North Sea. Will Brits, Facility Manager for TANCO Mine’s cesium operation at

26 | Canadian Mining Journal • August 2014

Bernic Lake in Manitoba, said the problem was that conventional, solids-based drilling fluid affects well stability and control but: “Cesium formate brines are naturally very heavy and with no solids in the fluids so the risk of losing well stability and control is much reduced. As a result, there have been no well control safety incidents in over 150 deep gas well operations using cesium formate brines.” And Brits should know. His parent company Cabot Corporation owns and operates TANCO mine. According to TANCO’s mill metallurgist Claude Deveau, the mine shifted its attention to cesium when a “boom and bust market” reduced the demand for tantalum used in high quality electronic capacitors. Meantime, demand for lithium used to cast automobile engines also tanked along www.canadianminingjournal.com

with the auto industry in 2008/09. “That,” says Deveau, “really had an impact on the operations here.”

Production of Cesium at TANCO Mines Bernic Lake operation.

Making the most of what you’ve got… Today, cesium ores are routinely shipped to Russia for the generation of electricity employing electrically conducting fluids (magnetohydrodynamics). Getting to the ore required sinking a single shaft and two ventilation raises into the pegmatite 60m below Bernic Lake. Actual mining is carried out using the room and pillar method, and interestingly enough, says Deveau, actually benefits from the mine’s hard rock foundation. “This technique is best utilized in flat lying ore bodies in an environment where you don’t have a lot of stresses from the surrounding rock,” he explains. Deveau adds it’s because the ground is so competent that the rooms at TANCO are so large. Originally the rooms at TANCO were 16m square. Eventually rock mechanics studies indicated the room size could be increased to more than 22m square by shaving the pillars. Ore extraction itself is done in three phases: first the top level, followed by extraction at the lower level. Currently TANCO is mining the sill in between the two levels. In typical room-and-pillar mining, material is extracted across a flat plane, creating horizontal arrays of rooms and pillars. How much material can be mined depends on the nature of the material, height of the pillars and roof conditions. But the biggest factors, says Deveau, is safety. “You have to consider the width to height ratio of the pillars, back conditions and geological structures, stress and anticipated movement after mining. All this is critical to the stability of the mine.” The roof at TANCO averages 20m above the current working levels and in places reach 30m. Due to the nature of the ore and the R & P mining method, rock bolting is rarely required, but when it is, says Deveau, TANCO is careful to get it right. “Rock types like spodumene are very hard and very difficult to get supported as it has a very dominant cleavage zone. After blasting the bolters are sent to support the back when blasting haulages and drifts. It

is critical to ensure that the person doing the bolting has scaled the area properly.” The back of the mine is also carefully monitored using custom designed Giraffe aerial lifting devices; ventilation is downcast through the original Jack Nutt shaft and then upcast through the decline to produce a fresh air volumes exceeding 3,400 m3 per minute. In any R and P mining project, pillars of material are left to support the roof overburden while the open areas are extracted. The big question at TANCO: Could crews extract the pillars themselves? The answer depends upon the original selection of optimum pillar size. Generally, the size of the room and pillars should be about equal. Make them too small and the mine will collapse; make them too large and you end up leaving large quantities of valuable material behind. Over the years, “rock docs” have analyzed the stresses the pillars at TANCO would need to withstand in order to support the roof and allow partial pillar extraction. Their conclusion: pillar extraction could occur, but within limits. “This is not a caving method,” says Deveau. “You have the lake on top of the mine so essentially you have to ensure the integrity of those pillars and the back of the mine. Everything’s got to support itself.” Meeting the human challenge… TANCO crews rely on a single MacLean bolter to secure the integrity of the mine’s roof, says Deveau. Mining is carried out using two machines: an Atlas Copco hydraulic jumbo for drifting, and a single boom Atlas Copco Simba long-hole rock drill for benching. Standard features on the Atlas Copco include an articulated carrier with four-wheel drive powered by a Deutz diesel engine, front and rear mounted stingers and mechanized rod handling system. “We also use 30-tonne ore trucks to transport ore to the transfer raise. From the loading pocket it’s hoisted to surface with the use of a double skip system. Those two ore bins on surface have a storage capacity of 450 tonnes.” Where crushers have changed over the mine’s 60-year history, Deveau says the processing side of the operations remained August 2014 • Canadian Mining Journal |

| Development

pretty much the same: tantalum was processed through gravity concentration and spodumene primarily through flotation. By contrast, pollucite is ground down to 75 microns and then subjected to acid leaching and other chemical processing to produce cesium chemicals. Deveau says 80 people oversee the entire mining operation, from engineers to equipment operators to support staff. Fully equipped machine and diesel repair shops, and equipment repair bays, maintain the mining and processing equipment at peak efficiency, and a large inventory of spare parts is held in the company warehouse. Still, things haven’t always run smoothly for staff. The end of tantalum production at the mine last year forced TANCO to cut its $1.5 million payroll by laying off 28 unionized workers, including miners, hoistmen and mechanics. Meantime, environmental issues were also raised. A local wilderness committee complained to the Manitoba government that TANCO’s decision to reduce the pillar width at the mine from 15 m down to 7.5m significantly lowered their strength. This, they argued, risked collapse of the entire mine and significant environmental damage to the lake. So far the government’s Conservation 28 | Canadian Mining Journal • August 2014

and Water Stewardship branch has resisted calls to mitigate potential environmental problems by taking over the operations. For its part, TANCO applied for environmental permits to dam and drain the lake above the mine, in order to relieve pressure on the pillars so that mining could continue. More immediately, stress meters

installed at strategic pillars within the mine are updated hourly. “In the event of a catastrophic failure, changes in stress within the pillars will be noticed and the situation can be dealt with appropriately by evacuating the mine,” says Deveau. Extensometers installed at strategic places within the back of the mine measure microscopic movement within the bedrock. CMJ

So far very little has happened to disrupt the production of cesium. In a typical day TANCO produces 100 tonnes of cesium ore, which is transported to market as a liquid either in totes or in barrels by truck. The end of tantalum production last year has also simplified process controls at the mine. No longer concerned about providing density control in the heavy medium circuit, flow and density control in the tantalum cleaner circuit, attention is now focussed on the integrated control systems within the mill itself. As precise as the final products are – whether it’s drilling fluid to withstand gaswell pressures in the North Sea or atomic clocks in Bern, Switzerland or London, England, precision is equally critical back where it all begins at TANCO Mine in Manitoba. In particular, the highly complex and precise nature of cesium end-products requires careful analysis on the assay side, says Deveau. X-ray fluorescene, atomic absorption spectrophotometry and metallurgical balances computed on an IBM microcomputer system all play a role in the assessment of the ore body at TANCO. “You have to constantly monitor cesium values inside the pollucite mineral,” says Deveau. “That means you have to have your assay lab working at all times.”

www.canadianminingjournal.com

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| Development Lower Bowl Frame of secondary crusher in Kamloops BC awaiting to be transported to Copper Mountain Mine site.

IN FOR THE

LONG

HAUL

COPPER MOUNTAIN MINE SETS UP FOR THE FUTURE By Russell Noble

hen it comes to a name, “Copper Mountain” says it all. In fact, with more than five billion pounds of copper under foot, what else could the owners of the Copper Mountain Mine have possibly called their flagship property? That decision to name the mine “Copper Mountain” was made more than seven years ago when the property was acquired in 2006, which included an 18,000-acre land package located about 20km from Princeton. The mine has a strategic alliance with Mitsubishi Materials Corporation who own 25% of the project and provides the off-take agreement for 100% of the concentrate. Mitsubishi Materials also helped secure an attractive and favourable debt financing which was used to initiate construction. The $438 million development 30 | Canadian Mining Journal • August 2014

commenced production in the summer of 2011, on budget and on schedule. As Jim O’Rourke, Copper Mountain’s Chief Executive Officer, says, “Deciding on a name for the mine was easy… it’s what came afterwards that has made life on the mountain more interesting.” Like all mines, O’Rourke says there were, and still are many challenges to making things happen as planned so that at the end of the day, everyone goes home safe. “It’s every miner’s desire to work safely in a safe environment and that’s something we’ve strived for at Copper Mountain since day one. Because of the mine’s size and complexity however, it’s sometimes been a challenge to keep an eye on everything that’s going on around the site but our team has done an outstanding job at making safety a top priority. To date, the mine has gone 330 days and counting with no LTI’s, (loss time injuries) which is

a significant achievement” says O’Rourke. As O’Rourke just mentioned, the Copper Mountain project is a complex undertaking; not only because of the shear size of the property, but also because of the scope of work that called for creating a ‘super pit’ mine from three existing pits. Understandably, making the decision to create a massive pit required proof of continuity of mineralization and that’s why O’Rourke says the company spent so much time in the early stages studying and blending historic drill data from the exiting pits with new exploration. With such a massive resource at stake, the company helped confirm its future by employing a three-pronged exploration strategy involving initial targets, secondary targets, and finally deep porphyry targets. Drilling initially started at the site in January 2007 and focused primarily on providing additional verification of minwww.canadianminingjournal.com

3D schematic of secondary crusher.

eral continuity. At the end of the year, Copper Mountain Mining reported on the Titan 24 Deep Penetration Geological Survey on a 13km square area over the three existing pits, and concluded continuity of mineralization between the pits and at depth. The results showed that the deposit at the site is classified as an alkali porphyry copper deposit with a gold/silver admixture. As mentioned earlier, the site contains a massive resource and over a predicted 17-year mine life, it will produce 1.47 billion pounds of copper, 452,000 ounces of gold, and 4.5 million ounces of silver. The proven and probable mineral reserve aggregate is 217 million tonnes, averaging 0.27 per cent Cu containing 1.3 billion pounds of copper using a 0.12 per cent Cu cutoff. Measured and indicated resources total 442Mt grades at 0.26 per cent Cu while inferred resources have

Overview of new secondary crusher facility, new connecting conveyor systems, and new drive and transfer.

been estimated at 582Mt grading at 0.21 per cent Cu for the combined total of 5.3 billion pounds of copper. O’Rourke says that a total of about 106 000m of drilling was required to help determine that a new and merged ‘super

pit’ was viable. In addition, the mine continues to have significant exploration potential that will need to be explored over the next few years to fully appreciate the property’s full development potential. The deposit remains open laterally and at August 2014 • Canadian Mining Journal |

| Development The lower main frame being lifted into position using a specialized crane at the Copper Mountain Mine site.

depth and numerous exciting exploration targets have been identified in and around the property. From that point, O’Rourke said “it’s been onward, outward and downward” as the company has steadily been working to make its Copper Mountain Mine the talk and envy of mining companies around the world. With such steady advancement in construction and now production, O’Rourke credits much of the company’s success in these areas to the fleet of equipment it has and maintains on site. In addition to utilizing a conventional crushing, grinding, and flotation system to produce copper concentrate with gold and silver as a bonus, the company also has a mobile mining fleet worth over $100 million, consisting of two Komatsu PC 8000 hydraulic shovels, an Ex 5500 Hitachi hydraulic shovel, fifteen 240-ton Komatsu 830E haul trucks, six 260–ton Euclid haul trucks, one Komatsu WA 1200 loader, two PV271 Atlas Copco rotary drills, two PV351 Atlas Copco rotary drills, and a fleet of other support equipment. As can be expected, building a ‘super pit’ the size of the one at Copper Mountain takes its toll on equipment, but Jim O’Rourke credits the performance of his machines to the quality of the products in the first place, but also to his fleet operators and the attention to routine service and maintenance. “We’re moving a lot of material now 32 | Canadian Mining Journal • August 2014

The Lower Main frame is the largest component piece of the secondary crusher and weighs a little over 100 tonnes. Cranes were used to load the Lower Main Frame from the rail car to the specialized transportation truck, which then transported the piece to the mine site over a 5 day period at night to avoid traffic on the roads.

and as mining activities continue to shift around the pit, the machines are being required to move more and more material every day. Our mobile fleet maintains a mechanical availability of approximately 85% which is favourable for international mining standards,” says O’Rourke. During the second quarter of 2014, a total of 17.1 million tonnes of material was mined, including 4.6 million tonnes of ore and 11.5 million tonnes of waste. The projected life-of-mine strip ration is 2 to 1 but slightly higher in the earlier years. During the 2014 second quarter, the mine moved an average of approximately 188,250 tonnes of material per day, which has increased with the addition of two new haul trucks that were recently purchased and added to the fleet In keeping with the company’s goal to stay in touch with modern technology to maintain its high production expectations, Copper Mountain Mining has just completed the purchase and installation of a secondary crusher to help ensure that the mill would operate consistently at the designed throughput rate of 35,000 tonnes per day or greater. O’Rourke explained the secondary crusher will process all of the ore entering the mill to below 2.0 inches in size, thereby allowing ore to flow faster and more easily through the front end of the process plant which would result in more copper production. At a cost of $40 million, the FLSmidth

High Performance Raptor 2000 crusher is the largest cone crusher on the market and because of its size, it also called for the construction of a proper facility to house it. In fact, not just a pad for it to sit on but a separate 10-storey-high building located in front of the process plant, near the mine’s coarse ore stockpile. Naturally the building also features a very thick concrete foundation to support the 100-tonneplus crusher. Construction of the facility was a major undertaking but Jim O’Rourke says it was relatively easy when compared to the logistics of getting the crusher to the site. For starters, the unit was built in Bucarest, Romania, and had to be shipped from there to Princeton, a total of approximately 9200km. Shipping anything that distance, let alone something weighing more than 100 tonnes, is a monumental task and here’s what Jim O’Rourke says was involved. “Component pieces of the crushing unit are extremely large and heavy so they had to be scheduled to arrive on site separately for assembly. The component parts of the Raptor 2000 are so heavy that they had to be shipped from Bucarest to Italy, and to the Port of Halifax for offloading onto land and then transported via train to arrive in Kamloops, where they were then offloaded onto specialized “Over-sized load” trucks for transport to the mine.” “Even all of the bridges they crossed had to be reengineered to ensure that the www.canadianminingjournal.com

move was made safely and that the bridges could handle the weight.” The lower mainframe is the largest component piece of the secondary crusher and due to its weight, special permits and a specialized transport truck was required to move the piece of equipment. Cranes were used to lower the unit from a rail car to the truck, which then transported the component to the mine site over a four-day period at night to help avoid traffic on the roads. The highway was partially blocked off in sections during its travel to the mine site, so an extensive traffic-management plan was also required. Total distance by truck from Kamloops to the mine site was approximately 200km at 10km/hour for five hours each night. It was a slow and tedious journey but now that it’s in its new home, the lower bowl assembly and the upper mainframe of the crusher have been installed and the existing one-kilometre overland conveyor that transfers ore from the primary crusher to the mill feed stockpile has been modified to accommodate the tie-in to the new secondary crusher. The Raptor 2000 crusher is the largest cone crusher installed in Western Canada and thanks to its ability to crush six-inch rock from the primary crusher down to minus two inch in size, Copper Mountain Mining expects nothing but high productivity for years to come. Management is confident that the new secondary crusher will improve mill throughput to nearly 40,000 tpd, which will improve mine profitability and provide a better margin for the company. Speaking of production, copper production for the second quarter of 2014 totalled 19.9 million pounds of copper, a four per cent increase as compared to the first quarter of 2014, setting another new production record for the mine. The concentrate also included 5000 ounces of gold and 113,300 ounces of silver. The 2014 second quarter represents the seventh consecutive quarter of continued improved copper production at Copper Mountain Mine. Year-to-date production results indicate that the operation is on track to meet its annual production target of 80-90 million pounds of copper, which

represents a 25% growth from 2013 production levels. During the quarter, the mill achieved 90.2 per cent availability and averaged a total of 30,450 tpd throughput of which approximately 12,500 tpd of the mill feed was crushed to minus two inches and represents a four per cent increase from the first quarter. With continued operational improve-

ment like this, it’s no wonder miners around the world are keeping an envious eye on Copper Mountain. Looking to 2015, O’Rourke concludes that Copper Mountain’s management will be focused on strategic growth for its shareholders through organic growth on the property and accretive opportunities in politically stable jurisdictions. CMJ

August 2014 • Canadian Mining Journal |

| Development Shawn Ryan is a familiar face in Canadian exploration and development circles.

Flying

HIGH Aerial system offers solution to costly ground exploration By Gwen Preston*

ukon prospector and well-known adventurist Shawn Ryan could have retired. Ryan and his wife, Cathy Wood, are the Yukon prospecting team whose dedicated soil sampling led Underworld Resources to the million-ounce-plus White Gold deposit in 2009, a discovery that sparked a new Yukon gold rush. They also get credit for Kaminak Gold’s Coffee project, already at 3.2 million oz. and growing, and have at least another dozen soil anomalies on option to explorers across the White Gold district. After years of scraping by on government grants and prospecting contracts, Ryan and Wood made it to the big leagues when Kinross Gold acquired Underworld for $138 million. With that payday, plus a steady stream of option payments, the team could easily have stepped back from the grind and enjoyed their just rewards. Instead, Ryan and Wood spent the last 18 months figuring out how to make exploring for gold in the Yukon less expensive and more reliable. “I could see the crash coming and I could see there was so much money being wasted up here so we took a step back and thought, ‘If we’re going to keep this momentum alive, we need to add something new — we need to figure out

34 | Canadian Mining Journal • August 2014

www.canadianminingjournal.com

An Award-Winning Article | some simple new tools that will increase drilling confidence without costing millions,” said Ryan. And that is what he did. Ryan and Wood’s company, GroundTruth Exploration, now offers a suite of novel exploration technologies that can turn a soil anomaly into high-confidence drill targets (if the anomaly offers up the goods) in three weeks, and for $100,000. The process starts with GroundTruth’s unmanned drone. Bought from the Swiss military, the small, remote-controlled plane takes high-resolution orthophotos — geometrically corrected and scaled aerial photographs — of entire properties in short order. The time frame depends on the requested resolution. Taking pictures with 4cm resolution the drone can cover 10 sq. km in a 45-minute flight. Each photo comes with a black box file that identifies the plane’s location on all three axis, which lets a mapping program stitch them together to create a scaled image of the property. The accurate photographic overview helps geologists in many ways: in identifying structures that are impossible to see from the ground, in planning exploration programs, and in overlaying various mapped data. “For example, when we drape our induced-polarization (IP) sections on our orthophotos, they are pretty well bang on,” says Ryan. “Before we had to use topographic data from the government, which is out by 20 to 30 metres, so you were always draping in mid-air.” The next step in GroundTruth’s process is high-resolution IP. IP is a wellestablished exploration tool, but for Ryan it was problematic in two ways. First, conventional IP surveys offer perhaps 25-m resolution, but many gold-bearing structures in the White Gold region are much smaller than that. At the Coffee property, for example, many key structures are less than 10m wide, and get lost in conventional IP data. Second, conventional IP involves two electrodes connected by a long, heavy cable, a system that has to be dragged from point to point. That requires line cutting, which means slashing a few metre-wide swaths through the bush for each IP line. Ryan found that time-consuming,

GroundTruth’s geoprobe in action.

expensive and environmentally impactful so he figured out how to increase resolution and limit line cutting with a new kind of IP. Powered by a lightweight battery instead of a generator, GroundTruth’s IP system includes 84 electrodes placed every 5m along a line, connected by a light cable. When all electrodes are in place, the system is turned on and data is collected. Then the electrodes get pulled out, the cable gets rolled up and the system is carried to the next line. The result is an IP map with a resolution of 5m — tight enough to catch smaller geological structures that get lost in regular IP surveys — that requires minimal line cutting and takes much less time. GroundTruth and the client then assess the orthophotos and high-res IP data alongside the prospecting intelligence and soil geochemistry of a property. If areas of interest appear, it’s time to test some rocks. But that is easier said

than done. In the White Gold district, rocks are rare because the soil is usually several metres thick. To access bedrock requires trenching, often a complicated and costly endeavour given the area’s limited access, rugged bush and steep hills, so Ryan did away with trenching by developing Geoprobe, a modest, track-mounted hydraulic drill that can push through deep soils to take soil and rock-chip samples from the soilbedrock interface. Geoprobe is small; it comes apart into two pieces that can each be slung by an A-Star helicopter. Once reassembled, the Geoprobe can trample over most of the Yukon’s buckbrush to get where it needs to go. When it reaches a sampling location, its two arms fold out to create stability and the drill pops up to vertical and starts working. Within five minutes Geoprobe pulls bedrock samples from beneath several metres of soil. August 2014 • Canadian Mining Journal |

| Development The bedrock samples and the deepest metre of soil are immediately tested with an X-ray fluorescence (XRF) gun which provides rough assay information. If the XRF sees notable levels of gold or indicator elements, the company is notified and can adapt its exploration plans on the fly. And once it’s all done, Geoprobe leaves behind little more than some trampled bushes. The goal, Ryan says, is to take a soil sampling, IP and trenching program that would usually cost $750,000 and make it available for $100,000, while also cutting the time frame for the program back from at least a year to just three weeks. “In short, we’re trying to reinvent the wheel without costing a fortune,” said Ryan. Yukon explorers are beating a path to GroundTruth’s door. Ryan’s only Geoprobe — which was a back-of-the-napkin idea in the winter — is booked up until the snow flies. He will make more this winter, along with a rotary air-blast drill mounted on a

36 | Canadian Mining Journal • August 2014

similar track system that will add another step to his low-cost, low-impact prospecting package: the ability to punch shallow drill holes into the best Geoprobe targets to see what the first 30 m of bedrock contains, before bringing a full-sized drill rig to site. “I want to be able to tell companies: this is your drill target, and you will hit,” said Ryan. Cash-strapped explorers are keen to get their hands on that kind of certainty. “That’s exactly what we need nowadays,” said Julia Lane, senior project geologist at Atac Resources’ Rackla gold discovery. “We need higher confidence in our drill targets in the least expensive way.” Across the Yukon, geologists have said similar things. “When you do get to the drill stage you want to make absolutely sure that you’re putting your drill in the right place,” said Mark Fekete, a director of Taku Gold. “Drilling costs up here are enormously high and hard to control so the cost ben-

efit of using this system is enormous. And with the XRF, we get real-time numbers for all the key pathfinder elements. It’s just incredibly useful.” The reasons for mining sector cycles are complex and academic, but GroundTruth’s response is simple and practical. Yukon explorers are responding similarly, using this season to map, prospect, analyze and reassess after a few whirlwind years. Shawn Ryan is certain the excitement will return to the Yukon. He knows the White Gold district perhaps better than anyone else, having walked many of its ridges and spent countless nights poring over soils data to identify targets. “We just need a couple more discoveries,” he says. “And I’ve got a couple good ones in the bag.” CMJ * Gwen Preston is a Senior Writer with The Northern Miner, a sister publication to Canadian Mining Journal. As a further note of interest is that Gwen’s “Flying High” article was recently chosen as the “Best Industrial/Technical Article” in Canada by the Canadian Business Press.

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| Development Aerial view of Detour Gold’s expansive facilities near its open-pit gold mine in Northern Ontario.

STEPPING OUT IN A

BIG, BIG

WAY Steady hands whip Detour Lake into shape By Trish Saywell*

hen you look at the careers of Detour Gold’s Chief Operating Officer Pierre Beaudoin and President and CEO Paul Martin, it’s almost as if both men had been groomed for their task of bringing the company’s massive open-pit gold mine in northeastern Ontario to design capacity in under two years, all while hacking away at the company’s debt. Before joining Detour Gold in February 2010, Beaudoin spent 16 years at Barrick Gold helping improve plant productivity at the gold major’s operations

around the globe. His work ranged from the commissioning of the Tambo gold processing plant in Chile to directing prefeasibility and feasibility studies of the Cerro Casale open pit copper–gold project in Chile, delivering a feasibility study for the Donlin Creek open-pit project in Alaska and commissioning the Buzwagi gold mine in Tanzania. He also held senior management positions at the Doyon processing plant in Quebec, the Holt-McDermott plant in Ontario and the Kargoorlie Super Pit in Australia. Martin joined Detour as chief financial officer in September 2008 after pre-

viously holding the CFO spot at New Gold and Gabriel Resources. His background as a chartered accountant and his ability to negotiate project finance facilities made him a natural fit in the mining world. Between 2010 and 2011 under Martin’s stewardship as CFO, Detour raised about $2 billion in debt and equity to pay for construction, and he stepped into the top job as interim CEO after the sudden resignation of Gerald Panneton in November 2013. Less than three months later Martin was promoted permanently to the corner office. “I think I’ve been working my whole

38 | Canadian Mining Journal • August 2014 www.canadianminingjournal.com

Overall view of Detour Gold’s processing operation adjacent to open pit.

Truck and drill activity in the pit with main operations in background.

career in the industry to get ready for this position,” Martin said following a recent tour of the world-class Detour Lake mine attended by 30 analysts and investors earlier this summer. “I have the benefit of five years here and from a stability standpoint — internally and externally — to have an insider take on the position has some natural benefits to bringing in an external person.” One of those benefits is an intimate knowledge of the balance sheet and how best to manage debt payments over the next 24 months to take Detour’s US$110 million finance lease from Caterpillar

Stock pile dome is a dominant structure at the mine site.

August 2014 • Canadian Mining Journal |

| Development

A close look inside the process plant.

down to a more palatable level and a US$30 million revolving credit facility from a syndicate of five banks down to zero. Factor in US$500 million in convertible notes that come due in November 2017 and the company’s total debt stretches to US$640 million.

40 | Canadian Mining Journal • August 2014

“This company in the current gold environment has too much debt — that’s an obvious statement,” Martin offered during a series of presentations on the 185-km bus trip from the airport in Cochrane to the mine site. “We’re starting to get into a position of strength but we’re not there yet. If there’s one thing we’ve learned it’s that this is a big mine — it’s bigger than I think a few of us gave it credit for — and therefore we need to have a financial safety net there in case we have an unexpected situation.” While Martin is busy meeting his ambitious target this year of maintaining a cash balance on the books of US$100 million and pruning up to US$80 million in debt, Beaudoin also has his hands full completing the ramp up and dealing with some of the challenges that have dogged the operation since it entered commercial production ahead of schedule on Aug. 12, 2013. These included falling behind the mine schedule, which resulted in lower mined grade, higher mining dilution (when waste material gets intermingled with ore) in the first few quarters, accessing higher grade ore in the pit only at year-end, and poor availability in the mill. In 2013 Detour made three separate downward revisions to its production guidance. Martin says the company expects to be cash flow positive within the second half of the year provided the mill ramp up continues to improve and the gold price cooperates. Detour took a little of the pressure off in March with a $173 million equity www.canadianminingjournal.com

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| Development Haul trucks are constantly on the move within the pit.

financing, bringing cash and short-term investments at the end of the first quarter to US$145.2 million. The company also has a safety net in the form of a US$45 million undrawn credit facility with a bank syndicate (BMO, CIBC, CBA, RBC and TD) that is secured by the Detour Lake property. Detour is also making headway on

debt reduction. It paid down US$40 million of its credit facility in the first quarter and received a waiver from Caterpillar on its principal repayments in the first and second quarters of this year. If things work out, Martin says, and the gold price cooperates, meaning more cash in the treasury by the year-end, Detour can make those principal payments sooner than later.

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Martin emphasizes that Detour has a fair amount of flexibility (it can repay the CAT lease ahead of time without penalty) and remains on solid terms with all of its lenders. “I would say we have good relationships with our banks and we have an even better relationship with CAT finance,” he said. “It’s a very simple equation: We’ve purchased US$300 million worth of equipment and they want to deliver the next seventeen trucks to take us up to our maximum mining fleet. So we have a really, really good working relationship with them.” As for the US$500 million in convertible notes, Martin says management is currently discussing how best to tackle that debt. One option is to refinance up to US$300 million of the notes, which would allow the company to invest more money into the mine and continue to probe exciting exploration opportunities elsewhere on the property. “We think US$300 million is the right number looking at normalized debt to EBITDA in the current gold price environment so don’t be surprised if we would look to refinance up to US$300 million worth of those notes,” Martin says. “We find that a very manageable position. We know in our life of mine that in 2017–2018 we’re up close to 700,000 oz. gold per year. We would have a very strong balance sheet, we could garner a very attractive facility, and we’re quite prepared to do that.” Under a limited hedging program Detour kicked off in January, the company is permitted to hedge up to 50 per cent of its production in 2014 and Martin says a final decision on whether to continue the program in 2015 will be made before the end of the third quarter. So far the hedging program — overseen by Chief Financial Officer James Mavor, previously vice-president and treasurer at Barrick from 2007–2012 — has averaged US$1,250 per oz. to US$1,260 per oz. And despite its critics, Martin says, the program has been useful during the mine’s ramp-up stage. “Ninety-five percent of the people that we speak to are in favour of what we’ve done this year,” Martin says of the hedging www.canadianminingjournal.com

program. “They understand it is protection of the ramp-up year. Let’s see where we are at the end of the year and we’ll make a further evaluation.” Where management wants to be at the end of the year on the operations side is producing at a rate of 55,000 tonnes per day, which is beginning to look well within its grasp as the pit starts opening up, allowing more efficient use of the shovels and access to better grade areas in the south pit wall. Dilution is below budget and in-line with the life-of-mine plan and reconciliations (to the block model and between the mine and mill) are performing well. The mill continues to increase both availability and recoveries. “Last year we had a challenging ramp up combined with a 30 per cent reduction in the gold price,” Martin comments after the site visit. “Any one of those two would be significant for any corporation and added some grey hair to the management team. But they also make you stronger by weathering them and moving forward and that’s where we are now. We remember 2013 but we’re focused on 2014.” In the first quarter, the plant averaged throughput rates of 45,282 tonnes per day (3 per cent below plan) and due to a slower start-up following a shutdown in December 2013 (for repairs to the preleach thickener system and the replacement of the bottom section of the torque cage), mill availability was running at 80 per cent (2 per cent below plan) but reached 86 per cent in March. Mill recoveries surpassed the 91 per cent design rate over the last eighty days about 67 per cent of the time. At the mine, 19.2 million tonnes were mined in the first quarter versus the plan of 20.9 million tonnes — a shortfall of 1.7 million tonnes due to in-pit handling, advancing the south wall pushback in the open pit and tying up three shovels with the removal of overburden. Total cash costs per oz. sold in the first quarter fell to US$976 per oz. from US$1,174 per oz. in the fourth quarter of 2013, but the number of gold ounces sold also fell to 84,560 oz. versus 95,000 oz. in the previous quarter. The goal in the second quarter is to be mining waste and ore at a rate of 220,000

to 230,000 tonnes per day, up from 213,000 tonnes in the first quarter, and to boost the milling rate to more than 50,000 tonnes per day. Detour expects to complete the pushback of the south wall and the south ramp in the pit this summer, therein getting better exposure to higher grade ore for

mining in the second half of the year. It is also preparing to break through into the past-producing Campbell open pit, while staying focused on limiting internal and external dilution (which Detour says it can do as the pit opens up and the positioning of the shovels improve.) The game plan at the mill—a conven-

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| Development tional gravity, cyanidation and carbon-inpulp facility — is to improve fragmentation, optimize secondary crushers and liner profiles, improve crusher availability and better manage stockpiles. In the second half of the year, Detour will continue its debottlenecking exercise by improving the primary crusher con-

44 | Canadian Mining Journal • August 2014

veyor, installing an additional cyanide destruction tank (which will reduce downtime risk, trim opex [by reducing residence time], increase stability and allow higher tonnage) and a second oxygen plant (which will improve recoveries and use less cyanide). Meanwhile a stockpile continues to

grow in size — reaching 2.8 million tonnes at a grade of 0.78 gram gold per tonne at the end of the first quarter — up from 1.77 million tonnes averaging 0.72 gram gold per tonne at the start of commercial production. By the end of the mine life the company expects the low-grade stockpiled material will have swelled to about 107 million tonnes grading 0.45 gram gold per tonne for 1.5 million oz. gold, and is considering options to extract value from it. One option is heap leaching the material and the company has already started test work and expects to have results later this year. The other option is to recover just the fines. Under an updated life-of-mine plan unveiled in February, the open-pit mine and mill supports a 21.7-year operating life based on current reserves of 15.5 million oz. of gold, or 476 million tonnes grading 1.02 grams gold per tonne. Life-of-mine production will average 660,000 ounces of gold at total cash costs of C$723 per oz. sold, but during the next five years annual gold production will average 600,000 oz. at total cash costs of C$759 per oz. sold. For now Detour is sticking to its 2014 production guidance of 450,000 oz. gold to 500,000 oz. gold at cash costs of US$800-900 per oz. (It produced 107,000 oz. gold in the first quarter compared to 232,000 oz. in all of 2013.) Looking ahead, the company is considering removing the pebble circuit at the mill, which produces between 700 and 800 tonnes per hour of mainly barren pebbles. The pebbles don’t need to be recovered and if test work proves positive (that is, if the pebbles are confirmed barren), the circuit could be used instead to add 8,000 to 12,000 tonnes per day of additional milling capacity, which would translate into about 50,000 to 75,000 ounces of gold per year in additional production. On a final note, Pierre Beaudoin also touched on a prefeasibility study the company is working on for Block A; a deposit about 1km northwest of the Detour Lake open pit that contains a measured and indicated resource of 2 million oz. gold at an average grade of 1.15 grams gold per tonne. “We don’t think it’s a big challenge to bring this into reserve by the end of the www.canadianminingjournal.com

year,” Beaudoin says, adding that the core of Block A is covered in the company’s environmental baselines and the assumption is that it would be brought into production at the end of the Detour Lake mine life. “For better economics, however, the key to Block A is finding a place for it in the plant earlier,” he said. One of the more exciting aspects of Detour’s future, however, is the new highgrade discovery south of the current open pit along a major east-west structural break less than 6km south of the Sunday Lake deformation zone that hosts the Detour Lake mine and which Beaudoin describes as “one of the most important discoveries on the Detour Trend in forty years.” Earlier this summer Detour released assay results from its exploration program in the Lower Detour area with highlights from the 58N Zone including intercepts of 12.74 grams gold per tonne over 28 metres, 11.82 grams gold over 32.4 metres and 9.69 grams gold over 30.3 metres. Drilling in Zone 75, 20 to 50 metres south of the 58N Zone, returned assays of 4.31 grams gold over 7.3 metres, 10.82 grams gold over 7.0 metres and 7.41 grms gold over 5.1 metres. Beaudoin is encouraged by the results so far and says he hopes to find a lot more to potentially develop a higher grade feed source for the mine. “Within two seasons we’ve proven that we have high-grade material close to the mine, right on our doorstep,” he says. “We’re all excited about this and if we could spike grades it would be a screamer.” Of course with the recent take-out of Osisko Mining and its large Canadian Malartic gold mine, which shares attributes with Detour Lake such as a long mine life and an excellent geopolitical jurisdiction, talk often comes down to Detour as the next takeover target once the operation is optimized. But Paul Martin says he doesn’t dwell on that fact. “Our job is to execute and not worry about what external forces could bring to bear on you,” he says. “People who dwell on potential takeovers can take their eye off the ball and that’s certainly not something we are doing here.”

Having said that, he adds, the Osisko acquisition has brought attention to large, low-grade operations in safe jurisdictions, which has been an overall positive in the industry. “I’m aware of only one mine that is producing over 500,000 oz. a year, is located in a safe jurisdiction and is not con-

trolled by a major, which makes us a very unique situation and with the current gold price environment we won’t see a large pipeline of these types of deposits developed likely until the next gold cycle.” CMJ * Trish Saywell is a Senior Writer with The Northern Miner, a sister publication to Canadian Mining Journal.

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| Development

One of the more interesting projects in Nova Scotia is this open-pit operation near Port Hawkesbury where ore is mined at the top then gravity fed to loaders below.

WITHOUT

LIMITS Exploration and Mining Highlights in Nova Scotia By Diane Webber*

hen it comes to mineral resources, Nova Scotia offers tremendous opportunity. The province boasts competitive advantages over many jurisdictions, including diverse geology and a strategic location along the eastern seaboard of North America, with deep-water ice-free ports, well-established infrastructure, and an educated, skilled workforce. Its One Window regulatory process provides clarity and timely service to min46 | Canadian Mining Journal â&#x20AC;˘ August 2014

ing companies doing business in the province. This includes a streamlined environmental assessment process and success with Aboriginal consultation. The Government of Nova Scotia implemented a Mineral Incentive Program in 2012 to assist prospectors and exploration companies in the search for new discoveries and to advance projects closer to production. To further support exploration and the provinceâ&#x20AC;&#x2122;s commitment to the mineral industry, the Nova Scotia Department of Natural Resources has implemented an on-

line Mineral and Petroleum Rights Registry System. The modern registry provides global access to a secure, map-based system for acquiring mineral and petroleum rights in Nova Scotia. Prices for gold, base metals and rare earth minerals resulted in renewed interest by prospectors and exploration companies in Nova Scotia. Mineral claim staking levels at the start of 2014 were up six per cent compared to mid-2013 levels. Currently 7.7 per cent of Nova Scotiaâ&#x20AC;&#x2122;s land mass is held under mineral exploration license. www.canadianminingjournal.com

GOLD Nova Scotia hosts more than 60 historical gold districts. Healthy gold prices bode well for companies exploring in the provinceâ&#x20AC;&#x2122;s many gold camps. In Nova Scotia there are 10 advanced gold properties, nine of which have NI 43-101 compliant resources. The inventory of gold in Nova Scotia, from existing resource estimates, totals 1,808,200 ounces in the measured and indicated categories, and 2,496,900 ounces in the inferred category. Ressources Appalaches invested $10 million to re-open the former producing underground Dufferin Gold Mine. In 2013 the company started dewatering pre-existing underground workings in order to carry out detailed underground mapping and sampling. Phase II included surface and underground drilling, test mining, metallurgical testing and refurbishment of the existing mill facility. The company poured its first gold bar last month. Phase III will include completion of the NI 43-101 resource estimate, an economic analysis and estimate of mineral reserves. At full production capacity the company expects to process 300 tonnes per day and produce between 20,000 and 25,000 ounces of gold per year. Atlantic Gold NL continues to advance mining plans for its project at Moose River Gold Mines. The Touquoy deposit is a low-grade bulk-tonnage gold deposit with a National Instrument (NI) 43-101 compliant resource of 534,000 ounces of gold in the measured and indicated categories, and 122,000 ounces of gold in the inferred category. The company continues exploration to expand the resource at Touquoy, and to work on its Cochrane Hill deposit, which holds a resource of 200,000 ounces of gold (indicated) and 347,000 ounces of gold (inferred). The project is fully permitted and the company anticipates construction to start at the Touquoy project in 2014. Advancement of exploration programs on gold properties in Nova Scotia is continuing by exploration companies including NS Gold (Mooseland), Goldworx (Goldenville), Flex Mining (Tangier and Forest Hills), Orex Exploration (Goldboro), Stay Gold (Harrigan Cove),

Canuc Resources (Mill Village) and Acadian Mining (Fifteen Mile Stream and Beaver Dam). RARE EARTH ELEMENTS (REE) Nova Scotia has exploration potential for rare earth elements (REE) and rare metal deposits. The existence of anomalous occurrences of REE in DevonoCarboniferous, Th-rich, peralkaline granite intrusions, and in an overlying suite of felsic and mafic volcanic rocks, was first discovered in northern Nova Scotia in the 1970s. More recent exploration focused on these rocks has revealed numerous new REE occurrences. To date, exploration has returned promising results, including several surface exposures with REE concentrations >1 per cent total REE, and having enrichment of heavy REE. In addition, a current mapping project by the DNR has determined that the potential for REE deposits in this composite plutonic/volcanic sequence extends beyond the location of original discovery into other areas underlain by these rocks in the Cobequid Mountains. RARE METALS Deposits of rare metals (Li, Ta, Nb, Be, F, Rb, Cs), along with deposits of Sn, W, Zn, Cu, Ag and In, are associated with the Devono-Carboniferous peraluminous granitic rocks of southern and eastern mainland Nova Scotia. In addition to the 56Mt East Kemptville Sn-Zn-Cu-Ag deposit, which was mined by Rio Algom between 1985 and 1991, there are numerous other prospects and occurrences in the granites and contiguous metasedimentry rocks that have received varying degrees of exploration. Currently, the East Kemptville deposit and several sites along its contact zone are undergoing evaluation for rare metals by Avalon Rare Metals. Rare metals are also being sought in the Brazil Lake/Deerfield area of Yarmouth County. BASE METALS Golden Share Mining (recently merged with Silvore Fox Minerals Corp.) will continue to further evaluate the base- and precious-metal potential of Precambrian

volcanic rocks in the Coxheath Hills area of Cape Breton Island. Detailed mapping, airborne survey programs and drilling have confirmed a 600m-long volcanic belt enriched in copper-molybdenum, surrounded by a copper-gold zone, to a depth of 300m. The property has potential for a low-grade high-tonnage copper-gold deposit and a high-grade molybdenum porphyry deposit. Merrex Gold continues to pursue its 100 per cent-owned Jubilee lead-zincbarite deposit, also located in Cape Breton Island. Jubilee hosts an independent NI 43-101 compliant resource estimated at 3.1 million tonnes grading 4.71% zinc (inferred). The ScoZinc lead-zinc mine in Gays River has Environmental Assessment and Industrial` approvals for a mine expansion. ScoZinc has undertaken approximately $10 million of expenditures on the property between 2011 and 2013 including mine refurbishment, purchase of surface rights, permitting and engineering and exploration. Southeast Cape Breton Island is home to a cluster of granite-hosted Cu-Pb-ZnAg-Au deposits. These deposits are known as the French Road or Oceanview deposits; they have characteristics indicative of the intrusion-related gold deposit type, or more recently named, thermal aureole gold (TAG) deposits. There are examples of these interesting deposits in the Oceanview area that have only ever undergone sporadic exploration. Never has there been a systematic, modern exploration of this interesting terrain in Nova Scotia. IOCG DEPOSITS Several companies are working on joint ventures exploring the regional-scale Cobequid-Chedabucto Fault Zone for Iron Oxide-Copper-Gold (IOCG) deposits. Minotaur Exploration previously explored the area with an extensive ground-run gravity survey and verified that there is potential for this mineral deposit type in Nova Scotia. The company has delineated more than 10 drill-ready targets. In the fall of 2012, with funds from the Nova Scotia August 2014 â&#x20AC;˘ Canadian Mining Journal |

| Development Mineral Incentive Program, Minotaur completed a detailed IP survey and a deep drillhole on one of their high-priority targets and reported promising results. MINING The mineral industry in Nova Scotia is dominated by the production of industrial minerals and structural materials. The province produces gypsum, anhydrite, salt, coal, aggregate, limestone, silica sand, quartz, dimension stone (marble, slate, sandstone, granite) and peat. Production of commodities such as coal, salt, anhydrite, limestone and silica sand have remained relatively consistent in recent years. Construction aggregates produced from crushed rock and sand and gravel deposits represent one-third of the value of all minerals produced in the province, overtaking gypsum as the highest value commodity. There are 10 active mining operations in Nova Scotia. AGGREGATE Aggregates used in the construction industry are the leading mineral produced in Nova Scotia. Provincial aggregate operations produce approximately 9 million tonnes per year for domestic consumption and approximately 4 million tonnes per year for export. Building stone is produced from several locations in Nova Scotia.

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SALT Salt production is thriving in Nova Scotia. Salt is currently produced from an underground mine in Pugwash and a solution mining operation at Nappan. Production averages approximately 1.2 million tonnes per year of rock salt. Most of the salt is used for de-icing, but 175,000 tonnes are processed annually into food-grade products, including table salt.

have been used to generate electricity and make steel for more than 100 years. Coal production levels dropped significantly a decade ago following closure of the federally owned Devco mines. Coal generates approximately 60 per cent of Nova Scotia’s electricity and is expected to be the primary fuel source for electrical power generation in the province for the foreseeable future. There is continued interest in developing future underground resources in the province at Donkin, Cape Breton County. The Donkin coal project in Cape Breton received an environmental assessment by the federal and provincial regulators in 2013. Xstrata is actively seeking a buyer for their 75 per cent ownership in the project. Recent coal production has occurred at several surface ‘reclamation mining’ projects where previously mined deposits are being ‘re-mined’ and the impacted lands reclaimed to modern environmental standards. This accounts for more than 500,000 tonnes of current coal production in the province. Emerging clean-coal technologies, such as underground coal gasification, may provide future opportunities to generate electricity using Nova Scotia coal. CMJ

COAL Nova Scotia has deposits of coal, which

Diane Webber, P.Geo., is a Liaison Geologist with the Nova Scotia Department of Natural Resources

GYPSUM Gypsum mining was one of Nova Scotia’s most consistent industries for more than 100 years. The province produced approximately 80 per cent of the total Canadian gypsum production, and six per cent of world gypsum production. Nova Scotia is known for the quality and size of its gypsum deposits, as well as access to economical ocean cargo transport. The recent crisis in the U.S. housing market has had a direct impact on the Nova Scotia gypsum industry, since the majority of production is exported to the U.S. for wallboard manufacturing. Production levels have declined by 75 per cent compared to 2006 levels. Many of the gypsum mines in Nova Scotia have either shut down or been placed on care and maintenance indefinitely.

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www.jhfletcher.com - 304.525.7811 - sales@jhfletcher.com - www.facebook.com/JHFletcherMiningEquipment J.H. Fletcher & Co. cannot anticipate every mine hazard that may develop during use of these products. Follow your mine plan and/or roof control plan prior to use of the product. Proper use, maintenance and continued use of (OEM) original equipment parts will be essential for maximum operating results. 2014 J.H. Fletcher & Co. All Rights reserved.

| Development

Minerals sector reports widespread activity By Phil Saunders*

his year, Newfoundland and Labrador celebrates 150 years of modern mining, going back to the opening of the Tilt Cove copper mine in the historic, and still productive, Baie Verte mining district. Today, while facing the same challenges as other players in the minerals sector, NL companies are making significant progress on the mining, processing and exploration fronts and meanwhile, governments at both the provincial and federal levels are investing in infrastructure to support new and existing develop50 | Canadian Mining Journal â&#x20AC;˘ August 2014

ments, helping to make the industry more competitive and sustainable. Mining and Processing In late 2013, Vale Newfoundland and Labrador Limited (VNL) announced Phase I construction mechanical completion at its Long Harbour hydromet processing plant. This $4.6 billion project represents one of the larger recent investments in the Canadian minerals sector. Commissioning is expected to be completed this year, with first nickel production from the initial, low-impurity nickel matte feed expected in the third quarter.

VNL is completing the engineering design and will begin construction of Phase II that includes the remaining systems required to process Voiseyâ&#x20AC;&#x2122;s Bay concentrate into finished nickel, copper and cobalt. VNL has also committed to developing an underground mine at Voiseyâ&#x20AC;&#x2122;s Bay. The underground operation is projected to start producing ore in 2019. Tata Steel Minerals Canada Ltd. (TSMC) is a joint venture formed between Tata Steel of India and New Millennium Iron Corp. to produce high-grade, direct shipping iron ore (DSO) in the northern Labrador Trough. www.canadianminingjournal.com

Artist’s rendering of Vale’s Long Harbour project.

One of Newfoundland/Labrador’s more well-known projects is Vale’s $4.6-billion Long Harbour nickel, copper and cobalt facility. It also represents one of he larger recent investments in Canada’s minerals sector.

The first shipment of iron ore was made in late 2013 to Tata Steel plants in Europe, with production scheduled to ramp up to 4.2 million tonnes per annum by 2015. New Millennium and Tata Steel have also reported positive results of their Taconite Project Feasibility Study on their LabMag and KeMag projects in the Labrador Trough. The study will lead to an investment decision by Tata Steel. The LabMag Project in western Labrador has total Proven and Probable reserves of 3,410 million tonnes, with an estimated mine life of 39 years. Alderon Iron Ore Corp is ramping up its development of the Kami Project, located in the Labrador Trough iron min-

ing district. Kami is owned 75% by Alderon and 25% by Hebei Iron & Steel Group Co. Ltd., China’s largest steelmaker. The Kami Project was recently released from the environmental assessment process and Alderon has obtained surface and mining leases, allowing it to proceed with development at the project. Alderon has also signed a Benefits Agreement with the Province of Newfoundland and Labrador, outlining the long-term benefits of the project. The Kami deposits have 1,270 million tonnes of Measured & Indicated resources at 29.6% iron. To help encourage growth in the iron

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August 2014 • Canadian Mining Journal |

| Development

Aerial view of New Millenium operation.

ore district, the Province has directed Newfoundland and Labrador Hydro to proceed with construction of a third transmission line between Churchill Falls and Labrador West. This will help supply

power for new developments such as Kami, and improve reliability for all customers in the Labrador region. Meanwhile the Federal Government, in partnership with the port authority and

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the private sector, are investing in expansion at the Port of Sept Iles. In February 2014, Cliffs announced that mining and concentrating activities at Wabush Mines, in western Labrador would be idled and the mine would be considered for sale or closure. Rambler Metals & Mining plc and Anaconda Mining Inc. are both in full production at their respective Ming (copper-gold-silver) and Pine Cove (gold) mines, on the Baie Verte Peninsula. Both companies are paying down debt, while aggressively pursuing opportunities to expand their resources beyond their property boundaries through property acquisitions and investments. Anaconda has reported encouraging results down dip of the Pine Cove deposit, and plans to conduct substantial additional drilling there, and on newly acquired properties in the region. Teck Resources Limited recently completed a feasibility study on the Lower Duck deposit at their Duck Pond Operations in central Newfoundland, and announced that it will be uneconomic to mine. Current reserves will be exhausted by the first half of 2015, after which time the mine will be permanently closed. Exploration Encouraging results at several advanced gold exploration projects in central Newfoundland illustrate the substantial, albeit little-recognized potential of this region. Marathon Gold Corp. announced the discovery of new, high-grade, gold-bearing veins near its main Leprechaun Deposit at the Valentine Lake Project. Maritime Resources Corp. has reported excellent recoveries in metallurgical test work on core samples from the Orion gold deposit, on the Springdale Peninsula, and is seeking a partner to help bring the property to production. Benton Resources Inc. has also completed metallurgical testing, with favourable results, on samples from the 51 Zone on its Cape Ray Property, in southwest Newfoundland. An expanded exploration program, including drilling, is in progress. Coastal Gold Corp. has published an updated resource estimate for the Hope www.canadianminingjournal.com

Brook gold deposit on the south coast of Newfoundland, and is focusing its attention on the higher-grade underground portion of the mineralized zone. Base metals (copper, zinc, lead) with precious metal credits have been the mainstay of the mining sector in central Newfoundland for over a century. Recent consolidation of ownership has brought new interest and new investment in this historic district. Canadian Zinc has reported highgrade drill intersections from its Lemarchant Deposit south of Duck Pond, and announced plans for additional drilling there, and at other massive sulphide deposits obtained in recent acquisitions. Meanwhile, Minco plc is evaluating properties in the historic Buchans camp, including the large, near-surface Lundberg resource, which it is advancing toward the prefeasibility stage. Elsewhere, Thundermin Resources Inc., with new partner Rambler Metals, continues to expand its resource at the

Little Deer copper project through a renewed drilling campaign with encouraging results. In Labrador, Century Iron Mines Corporation has announced an updated resource for the Joyce Lake DSO deposit, part of their Attikamagen Project. The deposit contains 24.3 million tonnes of Measured and Indicated mineral resources at an average grade of 58.55% iron. Aurora Energy Ltd. has completed infill drilling at the Michelin Deposit in central Labrador and plans to update its resource, which currently stands at 103 million pounds of U3O8. This project represents one of the world’s largest undeveloped uranium resources. In an interesting new development, Altius Minerals Corporation has partnered with Anglo American to explore for nickel and platinum group metals in southern Labrador. The Provincial Government is in discussions with a group of companies interested in developing the Julienne Lake iron

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ore deposit in western Labrador. Following a comprehensive evaluation of proposals, the government selected the Julienne Lake Alliance, a consortium led by Newfoundland and Labrador-based Altius Minerals in partnership with two major Chinese integrated iron ore mining and steel producing companies. The property contains total Measured and Indicated resources of 867 million tonnes at 33.7% iron. The project could operate for 25 years and produce up to 22 million tonnes of iron ore concentrate per year. Amongst new investments in the sector, Petmin has increased its stake in North Atlantic Iron’s pig iron project near Goose Bay, Labrador and Golden Gate Capital completed the acquisition of Canada Fluorspar Inc, which is developing fluorspar projects at St Lawrence, in southern Newfoundland. CMJ *Phil Saunders P.Geo. is a Mineral Exploration Consultant, Department of Natural Resources, Government of Newfoundland and Labrador.

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| Development

BUSY SEASON PROSPECTORS HIT THE GROUND RUNNING By David McLelland*

Photograph by Milada Pardovicova, winner of the 2013 AME BC photo contest.

AME BC CHAIRMAN SAYS:

ecent announcements have seen some major B.C. mineral producers scale back their workforces but at the same time, however, the demand for coal is expected to increase 50 per cent globally over the coming 15 to 20 years. This is, to me, analogous of our times, and very Dickensian: “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness . . .” 54 | Canadian Mining Journal • August 2014

These famous lines open Charles Dickens’s A Tale of Two Cities and make me think of both the current opportunities and challenges we face in the mineral exploration sector. We look forward from a place of rich natural endowment with optimism, anticipating growing markets and global demands, while dealing with resistance from environmental non-government organizations, public opinion and governments.

We must address the challenges facing our sector as they are serious and require action. We may not like resistance, but, in all cases, resistance creates energy. While the anti-extractionists and other pressures push against us, they have not succeeded in slowing the ultimate miner – global consumption. They have only restricted the development of supply. This resistance galvanizes our industry and raises the value of our members’ work and products. This is our opportunity to www.canadianminingjournal.com

AME BC PRESIDENT SAYS: By Gavin C. Dirom* Traditionally, summer is the most active exploration time; whether it involves drilling targets at advanced projects, taking rock samples, or flying airborne geophysics. Since AME BC’s Mineral Exploration Roundup in January, we have witnessed an emerging sense of cautious optimism at many industry events this spring, particularly at the PDAC convention in Toronto and the Kamloops Exploration Group conference. However, as has been true for our association’s 102-year history, we must remain alert to both the opportunities and challenges in the globally active B.C.-based mineral exploration and development sector. Sluggish coal prices have resulted in challenging times for many developing coal mines. Overall, however, in the first half of the year, Canadian mining equities showed modest signs of improvement, underpinned by improved commodity prices and continued cost management. According to many analysts, market activity shows majors remain focused on rigorous cost-control measures and disciplined merger and acquisition activity, while junior companies continue to pursue fundraising opportunities. And depressed share and asset prices are creating opportunities for companies to acquire assets at lower prices. For many members, access to capital is an omnipresent challenge. Juniors continue to be creative in their approach to raising money, and those with good-quality assets, advanced projects, and strong management teams are best positioned. Uncertainty over metal prices persists and will continue to drive some members to opt for hedging their future production. In terms of recent and ongoing advocacy efforts, we continued to work on issues such as exploration tax credits for aboriginal engagement, proposed permit application fees, land access and use, and health and safety. We pursued the latter in part through our annual exploration safety workshops, which attracted more than 80 participants in addition to 17 volunteer presenters and facilitators. AME BC will continue as advocates for mineral exploration and development through the summer so that our members can focus on raising financing and exploring on the ground – ultimately making discoveries that can lead to the development of new mines in B.C. or elsewhere. *Gavin C. Dirom is president and chief executive officer, Association for Mineral Exploration British Columbia (AME BC).

implement our strategic objectives, to help us stay the course and to influence positive change. Recently, the provincial government proposed fees for issuing Mines Act permits, an issue that affects many companies. It also has the potential to derail our slow but steady progress in encouraging prospecting and exploring for new deposits in B.C. In an efficient and organized manner, an ad-hoc committee solicited members’

views on and reactions to the proposed changes. These proposed changes have united our industry in their opposition, with prospectors and explorers, metal and coal producers, suppliers, placer miners and their respective associations expressing their common concern. As a result of the engagement of volunteers, board members and staff, AME BC responded to the government’s proposal with its own recommendations, which are available for viewing on the

AME BC website. This was a valuable opportunity to educate our membership, industry and the public about the policy relating to permitting and its impact on exploration in B.C. AME BC has been given clear objectives contained in our Strategic Plan, and these are being implemented. CMJ * David McLelland is chair of the AME BC board of directors and operates Auracle Geospatial Science Inc.

August 2014 • Canadian Mining Journal |

| CMJ on Tour

SITES SITE OF ALL

By Eastern Correspondent D’Arcy Jenish

ormer Toronto Maple Leaf AllStar Borje Salming made the trip from his hometown of Kiruna (pronounced ki-RU-na), Sweden, to Toronto many times during his career but for me, travelling the same route recently to where he was born was a first and it made me appreciate just how far he was from home. In fact, Toronto to Kiruna is about a quarter of the way around the world and after too many hours on a plane to visit Kiruna, also site of the world’s largest underground iron ore mine, I can understand why Salming eventually took up permanent residency in Toronto. In any event, it’s a long haul from Toronto to Sweden and the mine I recently toured in Kiruna. It began with an 56 | Canadian Mining Journal • August 2014

overnight flight to Copenhagen, followed by a sprint through the terminal to make the connection to Stockholm, and finally two hours aboard a packed and cramped commuter aircraft bound for town of Kiruna, population 18,000, located 145km beyond the Arctic Circle at the northern tip of Sweden. Aside from Salming’s reputation, the sole reason the town is still on the map is because of the state-owned Luossavaara Kirunavaara Aktiebolag (LKAB) mine, which has been turning out high-grade, magnetite iron ore since 1898, and is expected to continue producing for another 50 years or more. A century and a half is a long life for any mine and the foundation of the Kiruna mine’s longevity is a deposit which

is 80m thick, 4.5km-wide and extends to a depth of at least 2000m. According to company officials, that makes it the largest continuous iron ore deposit in the world and at grades of 65 to 70 iron, it is surely one of the richest. Like I said, I had the privilege of touring the LKAB mine recently, including a stop at the visitor’s centre 540m below the surface followed by a descent to 1000m to witness mining operations. The tour came at the start of a week-long trip organized by the Swedish Trade and Investment Council (recently re-named Business Sweden) to promote the Scandinavian nation as a mining destination. And I travelled in good company. Our delegation included three representatives of the South African coal gasification comwww.canadianminingjournal.com

The state-owned LKAB iron-ore mine is located adjacent to Kiruna, Sweden, home of former Toronto Maple Leaf hockey player Borje Salming

pany Sasol Mining (Pty) Ltd., three representatives of Minmetals Mining Holdings Ltd., a division of a Beijing-based, stateowned conglomerate, and a dozen or so Australians from a variety of government agencies and mine service companies. As it happened, I was the lone Canadian and Canadian Mining Journal the only Canadian publication, though the Swedish embassy in Ottawa extended invitations to a number of other companies and news organizations. Our group attended a trade show called Euro Mine Expo that occupied all three pads of an arena complex in the city of Skalleftia, which is located on the Gulf of Bothnia in central Sweden. We visited the Boliden Group’s 85-year-old Ronnskar smelter in Skalleftia, which refines low

grade copper, lead, zinc clinker, gold and silver and manages to do it profitably because it one of most efficient smelting operations in the world. We made two stops in the City of Lulea, north of Skalleftia on the shores of the Gulf of Bothnia, first at the Lulea University of Technology, an institution of 19,000 students and the self-described mining university of Europe, and then it was on to Swerea MEFOS, one of five Swedish research institutes jointly funded by government and private industry. Our hosts impressed us throughout with the level of sophistication, automation and efficiency of the Swedish mining industry, as well as the industry’s commitment to improved performance in all areas. At the LKAB mine, we watched a miner operating a boring machine remotely while seated in front of a computer terminal in an ATCO-style trailer 1000m below surface. The operator was drilling 10 holes, each 53m in length, into the ceiling of a gallery to form a fan-shaped pattern. Once complete, the holes were packed with three tonnes of dynamite and blasted to free hundreds of tonnes of ore that would be transported to surface. Ore from the mine is processed into pellets approximately three-quarters of an inch in diameter and each day 15 trains hauling 68 wagons laden with pellets leave Kiruna for the port of Narvik in northern Norway and from there they are shipped to steelmakers elsewhere in Europe. Pertti Lamberg, a professor of geometallurgy in the mining and metals department at the Lulea University of Technology, walked us through a joint government and industry initiative called Vision 2030 SMIFU, short for Sustainable Mining and Innovation for the Future. One goal is to ensure that by 2030 there is no human presence in production areas and that all work processes are automated and controlled remotely. Apart from that, the industry is striving for 30 per cent reductions in losses of ore, energy consumption, deposited waste, carbon dioxide emissions and lost time accidents per tonne of ore mined. Swerea MEFOS serves the ferrous and nonferrous industries. Its 59 scientists and 27 engineers and technicians perform

contract research for Swedish companies and for clients in dozens of other countries around the world, including Canada. Among other things, they conduct metallurgical pilot tests in the world’s only, full-scale research blast furnace which stands 14m high, has a hearth that is 1.2m in diameter and can produce 36 tonnes of metal a day. Sweden may be famous for its exports of cars (think Volvo), retailers such as IKEA, hockey players (too numerous to name), and modern mining technology (see sidebar), but it is also a major European mining nation. For example, Sweden is the continent’s top producer of iron and lead, it is number two in gold, zinc and silver and it is fourth in copper. It also has a rich mining tradition. The Falu copper mine operated, though not continuously, from the seventh century until 1993 and the country’s first underground mines were developed in the 11th or 12th century. Today there are 16 producing mines in Sweden, but the country has ambitions to grow that number to as many as 47 by 2030 and it welcomes, indeed encourages, foreign investment in its mineral sector. Representatives of several government agencies pointed out the advantages of investing in their country during a series of presentations at the head offices of Business Sweden in downtown Stockholm. The country has a corporate tax rate of 22 per cent, which is competitive with other developed jurisdictions, there are no royalties on minerals, no regional or local corporate taxes, and interest payments are fully deductible for tax purposes. The Geological Survey of Sweden maintains a publicly accessible National Drill Core Archive of approximately 3000km of cores, however, only a portion of them have been analyzed and then only for certain minerals, meaning that there may be untapped deposits awaiting discovery at the Survey’s Mineral Resources Information office in Malå, about 120km west of Skellefteå. Finally, Sweden ranked number one out of 112 jurisdictions in the Fraser Institute’s 2013 survey of mining company executives. August 2014 • Canadian Mining Journal |

| CMJ on Tour A series of photos show the extent of mining in Sweden.

Sweden’s advantages have attracted a number of Canadian companies in recent years. In 2004, Toronto-based Lundin Mining Corp. acquired the Zinkgruvan zinc and copper mine from Rio Tinto. It is located 250km southwest of Stockholm and has produced since 1857, making it the longest continuously operated mine in the country. Several junior companies have also invested in Sweden, including Vancouver-based Tasman Metals Ltd., which is developing two rare earth element properties, and Flinders Resources of Vancouver, which acquired an open pit graphite mine that was in production between 1997 and 2001 before being mothballed when prices fell sharply.

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President and Chief Executive Officer Blair Way said his company has invested just under $5 million to rehabilitate the processing plant and put the mine back into operation and production was set to begin this summer. “The big attraction with Sweden is you’re doing business in a developed country,” says Way, who has also worked in a number of less developed nations. “There’s no crazy back door stuff. The environmental regulations are very clear and easy to understand. There’s lots of skilled labour. There are very few issues with language. English and Swedish are used interchangeably. It’s very similar to doing a project in Canada.” CMJ

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A COUNTRY FULL OF WORLD-CLASS EQUIPMENT MAKERS

Sweden has long been better known for its mining equipment than its mining industry and its leading, world-scale manufacturers are poised to make a major impact on the future of global mineral extraction. They envision increased automation, less manpower and, at some point not far off, perhaps even unmanned mines. Representatives of a number of those manufacturers, including Atlas Copco, Volvo, Scania, SKF AB and ABB AB, shared their visions of the future with visiting Chinese, South African, Australian and Canadian delegates at the end of a week-long tour of Swedish mines and mine-related projects in early June. Several factors are forcing mining companies to invest in automated production and processing, according to Peter Bray, a product manager in Atlas Copco’s underground rock excavation division. Bray pointed out that existing mines are becoming deeper and deeper, shallow, easy to mine ore bodies are becoming increasingly rare, labour costs have risen and skilled labour is becoming scarce in highly urbanized countries around the world. Software-based communication systems and wireless local area networks will form “the central nervous system” of unmanned mining operations, Bray said, and will allow the transfer of data and commands from control rooms located on the surface. Repetitive tasks from fixed locations, or work that occurs on fixed paths can be fully automated and have been at some Swedish mines. For example, LKAB has operated long-hole drilling machines from central control rooms at its Kiruna and Malmberget mines since the mid-1990s. In 2012, Atlas Copco partnered with Codelco--the National Copper Corporation of Chile--on a proof of concept trial at Codelco’s giant Andina mine, 50km north east of Santiago. They demonstrated that operators with no mining experience, sitting in a control room in the town of Los Andes, 80km from the mine, could control the loading and tipping of scoop trams. Bray concluded his presentation with a question: “Is the unmanned mine achievable?” Not yet, he told an attentive audience of visiting delegates, but he made it clear that that day is coming.

Mining in Sweden, like many parts of the world, involves impressive underground workings of massive proportions.

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In My Mine(d)

Small and mid-cap companies are prime targets By Shane Troyer, Principal, Grant Thornton LLP

By Shane Troyer,

ribery and corruption have continued to be in the headlines, and recent research has shown that more than 1 in 4 people have paid a bribe in the last 12 months when interacting with key public institutions and services. To curb such practices, the last five years have seen sweeping regulatory changes implemented in virtually every industry as countries and agencies around the world look to stabilize the global economy. As one of the most geographically and operationally diverse of all industries, mining has been particularly affected. With so much activity taking place in developing regions, many countries, including the United States and United Kingdom, have instituted potent legislation to stem bribery and corruption. As anticipated, Canada has caught up by issuing its own strengthened legislation, and all Canadian mining companies with foreign operations are affected. Not only have amendments to Canada’s Corruption of Foreign Public Officials Act (CFPOA) provided regulators with additional enforcement options, but the frequency and severity of enforcement activities are on the rise. This is a red flag for Canadian mining companies of all sizes. While it’s clear that demonstrating proper due diligence over corruption risk has never been more important, small- to mid-cap mining companies have never found it more challenging to fund compliance initiatives. Limited liquidity, immature governance processes and scarce internal staff resources can all be barriers. Combined with the increased risk now posed by foreign operations, this makes small- to mid-cap miners prime candidates for a range of regulatory headaches. In this environment, mining compa60 | Canadian Mining Journal • August 2014

nies must carefully balance the need to conserve financial resources against the need to invest in anti-corruption programs and controls—all while weighing the potential damage corruption and compliance negligence can do to both corporate and individual reputations. Regulatory changes demand prompt action on specific issues—the regulatory amendments to the CFPOA were indeed significant and wide-ranging and include a new “books and records” offence, the phasing-out of the current exception relating to routine payments to foreign officials (facilitation payments), expanded jurisdiction covering individuals or companies outside of Canada, and the increase of maximum jail time from five to 14 years (with no limit on fines). Mitigation requires a pragmatic and preventative approach. More than ever, regulators are interested in understanding how companies are working to prevent bribery. Companies must document their approach to corruption risk management, and where resources are limited, management must clearly outline their resource deployment decisions. For companies wanting to protect themselves, the first step should be the development of two key documents: a Code of Conduct and Ethics and an Anticorruption Policy. These document the ethical standards to which directors are accountable and set expectations for the conduct of employees, contractors and agents. The introduction of strong policies can also support a cultural change within the organization. A risk assessment should also be the basis of a strong anti-corruption program. It provides a roadmap of the various corruption-related risks facing the organiza-

tion, their overall significance as determined by management, and the basis for risk-specific resource allocation decisions. Many organizations find that conducting the risk assessment process in conjunction with anti-corruption awareness training achieves two objectives at one time and maximizes project efficiencies. Once corruption awareness is embedded in corporate culture and employees have been trained on understanding and identifying corruption risks, it’s critical that appropriate reporting channels be identified and communicated to staff. Many organizations have protocols for reporting suspected ethical breaches, including varying degrees of escalation depending on the incident’s severity and the suspected perpetrator’s identity. Most Canadian publicly listed companies are required to have an appropriate reporting mechanism such as a whistleblower hotline in place to address serious allegations. When combined with strong employee awareness, clear guidance and well-communicated policies, a properly designed whistle-blower program can be very effective. In fact, studies conducted by the Association of Certified Fraud Examiners estimate that more than 40% of ethics violations are identified through whistleblower programs. Canadian anti-corruption regulations have never been more stringently designed or enforced, and junior mining companies have never been more vulnerable to anticorruption compliance risk. With a consistent, well-designed approach, small- and mid-cap mining companies can stay ahead of the regulatory curve, address corruption and compliance risks, and implement programs and policies tailored to company needs and resources. CMJ www.canadianminingjournal.com

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August 2014 • Canadian Mining Journal |

Unearthing Trends

Resource nationalism with a Canadian context Tom Stack is a Senior Advisor in EY’s Tax Services practice. He is based in Saskatoon.

By Tom Stack

esource Nationalism is a key business risk for the mining sector and was the number two risk in the 2013 Business risks in mining and metals report. While much of the focus on changes in tax rates and royalties is focused on emerging countries, Canada is not without its own changes and challenges to the sector. Effective January 1, 2013, sales of uranium from Saskatchewan mines will be subject to a new royalty regime which is based on both revenue and net income. With the increasing number of new uranium exploration companies in the province, these rules cannot be overlooked and may have considerable implications for new projects in the province. Old rules Prior to January 1, 2013 sales of uranium from Saskatchewan mines were subject to a basic royalty equal to 5% of sales, less a 1% resource credit, as well as a multi-tiered royalty which was also based on sales. The tiered royalty was based on the average price per kilogram of U3O8 sold and varied from a low of 0% to a high of 15% of the average price. For purposes of calculating the tiered royalty sales were reduced by the capital recovery bank deduction which was an allowance for having increased annual capacity in respect of mill construction and expansion as well as mine development. These rules were generally unchanged for years and provided consistency for the primary producers in the province. New rules The new rules continue with the 5% basic royalty less the resource credit although, effective April 1, 2013, the resource credit was reduced from 1% to 0.75%. The tiered royalty on gross revenue has been replaced with a royalty system based on profit which has two rate brackets depending on the net profit per kilogram of U3O8 sold. The first $22.00 of net profit per kilogram of U3O8 sold is taxed at a rate of 10% and any profit in excess of $22.00 per kilogram is taxed at a rate of 15%. Net profit is calculated in section 22 by subtracting from gross revenue from sales of uranium the following deductions of the royalty payer: • PRODUCTION COST. Production cost is defined in section

26(1)(a) to include all costs and expenses incurred in

62 | Canadian Mining Journal • August 2014

Saskatchewan where production occurs that are operating costs . In addition certain other costs are enumerated which are deductible and there are a number of other costs which are specifically identified as not deductible. Specifically included as deductible expenses are; storage and transportation costs; certain taxes including property taxes but excluding mineral rights taxes and income or capital taxes; mine research and development costs; marketing costs; donations to Saskatchewan charities; and a 10 year carry forward for losses incurred in the 2013 and subsequent taxation years. Specifically excluded from production cost are items such as interest and financing costs; taxes on profits, income or capital; royalties; costs to purchase mineral rights; as well as other miscellaneous exclusions. • CAPITAL BANK. The royalty payer may deduct up to 100% of

the capital bank which is an accumulation of capital costs incurred in the 2013 and subsequent years. Only 50% of capital costs incurred in the 2013, 2014, and 2015 years are added to the capital bank with the other 50% being added in the 2016 year. In other words while a royalty payer may deduct up to 100% of their capital bank in any given year, they may only deduct a maximum of 50% of their capital additions for the first three years of the new regime.

• EXPLORATION BANK. The royalty payer may deduct explora-

tion expenses incurred in the year and, in certain circumstances, exploration expenses incurred in the previous 15-year period. Exploration expenses are defined to be costs incurred to determine existence, grade, and quantity etc. of a mineral deposit. Costs of purchasing mineral rights are excluded.

The Saskatchewan Ministry of Energy and Resources have stated that new information circulars will be released which will outline the various administrative interpretations of these new regulations on the new royalties on uranium. CMJ The new rules are contained in The Crown Mineral Royalty Regulations to The Crown Minerals Act (Saskatchewan). All sectional references are to The Crown Mineral Regulations unless otherwise noted. The Mineral Disposition Regulations, 1986, which contained the old rules, were repealed. www.canadianminingjournal.com

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