Canadian Mining Journal December 2014

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December 2014

ROADS TO

RICHES Capstone Mining works three mines in three countries

Departments 04 Editorial

This month Editor Russell Noble stays clear of any predictions for 2015 because he asks: “What makes you think I know what’s going to happen next year?”

CANADIAN Mining Journal CONTENTS

05 Law

Norton Rose Fulbright Canada’s Jean Piette takes an in-depth look at the impact reclamation rules will have on new projects in Quebec.

8

Working Offshore Capstone Mining of Vancouver works three mines in three countries under three very distinct environmental conditions.

06 Investing

Columnist Ned Goodman reflects on his years in the business in his final “Investing” column for the magazine.

28 Company Profile

Breaker Technology is the subject of this month’s Company Profile.

18 H udBay Minerals of Flin Flon, Manitoba,

30 Unearthing Trends

takes control of Arizona copper project and immediately starts major drilling program.

A regular column by Ernst & Young LLP, Vancouver.

14 Golder Associates of Toronto has grown

from a four-man mining engineering company into an internationally recognized leader with 180 offices and 8,000 employees around the world.

22 Vancouver-based Flinders Resources takes

shuttered graphite mine in Sweden into one of the country’s major suppliers.

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December 2014

www.canadianminingjournal.com

ROADS TO

RICHES Canada Post Canadian Publications Mail Sales Product Agreement No. 40069240

Capstone Mining works three mines in three countries

ABOUT THE COVER This month’s cover shows a fleet of offhighway haulers working at Capstone Minerals’ open-pit Pinto Valley Mine near Phoenix, Arizona.

Coming in January

Canadian Mining Journal’s popular Coast-To-Coast-To-Coast issue will feature mining projects in the farthest reaches of the country.

26 Toronto’s Largo Resources moves forward with Vanadium project in Brazil.

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 December 2014 • Canadian Mining Journal |

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Editorial

CANADIAN Mining Journal

What makes you think that I know what 2015 looks like?

December 2014 Vol. 135 — No. 10 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

By Russell Noble

I

’m often asked around this time of year: “How’s mining look for next year?”

It’s a predictable question that is usually answered with superlatives ranging from “dismal” to “bloody awful,” but thanks for asking.

Rarely do the words “outstanding” or “fantastic” come out of my mouth because like most of the people asking me the question, I don’t have a clue about next year and only give an answer based on what I usually hear or read from the socalled experts.

In fact, there are so many opinions out there that it’s hard to believe any of them because as we all know, things can happen almost overnight to change even the most optimistic and supposedly knowledgeable predictions.

Take this year’s failure at Imperial Metals Mount Polley mine for example.

A year ago I’m willing to bet that the owners of the mine were saying that 2014 was going to be a “great” year because of what it was doing and what it had planned for future development in the province.

Today, however, their world (and ours to a degree) has been turned upside down because of the disaster that occurred on Monday, August 4, 2014.

Predicting what the mining industry will do is dangerous territory because like I just said, there are too many uncertainties and for me to print that mining in Canada is in for an “outstanding” or “fanastic” year in this issue, by the time the next issue comes off the press a month later and the bottom has fallen out, then I’d look as misinformed as the ‘experts’ I referred to earlier.

Sure I’d love to have assurances that gold will top $2,000 an ounce and that Ontario’s “Ring of Fire” and Quebec’s “Plan Nord” will be churning out mega tonnes of ore before the end of the decade, but I have reservations that any of those 4 | Canadian Mining Journal • December 2014

things will happen to any great extent within the next five years.

I hope I’m wrong but history has shown that projects on the scale of the ones I just mentioned tend to get crosschecked from behind and put flat on their faces by unseen forces.

Governments change, investors lose faith, governments change again, and so on and so on.

Unless I see drills in the ground or rocks being blasted in all directions, I rarely listen too closely to ‘plans’ because all too often, that’s all they are.

I know that ‘plans’ are where most things start but sometimes I wish more projects were based on the “Shoot first, answer questions later” approach because at least something would be happening.

Rightly or wrongly is the risk we’d take, but at least things would get past the ‘planning’ stage and while I admit there would probably be more messes to clean up than shreds of rock, at least there would be something tangible in front of us.

Bruce Sprague, a partner and Canadian Mining and Metals Leader for Ernst Young, is a regular contributor to the magazine and later in this issue (on page 30) he talks about next year too but unlike me, he gets specific about 2015 by spelling out the top risks companies will face next year.

“Business risks facing mining and metals 2014-2015” is what Bruce basis his comments but the one word that comes up throughout his column that we have in common is “risk.”

It’s a word that has described mining since Day One and regardless of whether companies follow Bruce Sprague’s message in his column entitled: “Preparing for the New Year with robust risk management” or foolheartedly follow my “Shoot first, answer questions later” approach, the bottom line is that 2015 will be 12 good months for some and probably 12 bad months for most.

CMJ

Art Director Mark Ryan

Production Manager Steve Hofmann

Print Production Manager Phyllis Wright Circulation Manager Cindi Holder 416 442-5600, ext. 3544 cholder@bizinfogroup.ca Publisher & Sales Robert Seagraves 416 510-6891 rseagraves@canadianminingjournal.com Sales Western Canada, Western U.S.A. and Quebec Joelle Glasroth 416-510-5104 jglasroth@canadianminingjournal.com Toll Free Canada: 1-800-268-7742 ext 6891 or 5104 Toll Free USA: 1-800-387-0273 ext 6891 or 5104 Group Publisher Anthony Vaccaro

President Vice-president

Bruce Creighton Alex Papanou Established 1882 Canadian Mining Journal provides articles and information of practical use to those who work in the technical, administrative and supervisory aspects of exploration, mining and processing in the Canadian mineral exploration and mining industry. Canadian Mining Journal (ISSN 0008-4492) is published 10 times a year by Business Information Group L.P. BIG is located at 80 Valleybrook Dr., Toronto, ON, M3B 2S9. Phone (416) 442-5600.

Legal deposit: National Library, Ottawa. Printed in Canada. All rights reserved.

The contents of this magazine are protected by copyright and may be used only for your personal non-commercial purposes. All other rights are reserved and commercial use is prohibited. To make use of any of this material you must first obtain the permission of the owner of the copyright. For further information please contact Russell Noble at 416-510-6742.

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Law

Impact of Quebec’s reclamation rules

By Jean Piette is a Senior Partner, Norton Rose Fulbright Canada.

By Jean Piette

A

s the outlook brightens for the mining sector in Quebec, mining operators will have to be diligent in factoring in enhanced reclamation rules for new projects. It’s been one year since the new rules were enacted. They were not a surprise and have provided clarity to the mining industry on what is required of them. But the rules have a financial implication on projects, as companies have to get the financings and guarantees in place before extraction and getting revenues, or before the capital expenditures have been repaid.

While reclamation plans have been mandatory in Québec since 1995, the December 2013 rules established tighter control over the reclamation of mining sites. They have to be implemented in conjunction with environmental rehabilitation rules under the jurisdiction of Quebec’s Minister of Sustainable Development, Environment and Climate Change (MDDELCC) and are designed to ensure that mining sites will be adequately rehabilitated after the permanent shutdown of a mine.

The biggest changes brought in by the 2013 mine reclamation rules are: • Now, a mining lease may not be granted before the reclamation plan is approved by the Minister of Natural Resources and Energy (MNRE).

• A reclamation plan must contain a “detailed” estimate of the expected recla

mation costs and, in the case of an open pit mine, must include a backfill feasibility study.

• A reclamation plan must include a guarantee covering 100% of the anticipated reclamation costs (compared with 70% previously). This must comprise very clearly the costs associated with the rehabilitation and restoration.

• The MDDELCC now has a veto power over the reclamation plan. Previously, the Minister was only to be “consulted” by the MRNE. • Work to implement the reclamation plan must begin within three years after operations cease. In some cases, the Minister may exceptionally require that reclamation begin within a shorter time frame or authorize one or more time extensions.

• The MRNE may release a mine operator from his reclamation obligations only if satisfied that the condition of the land affected by the mining operations no longer poses a risk for the environment or for human health and safety and does not pose any risk of acid mine damage.

The MDDELCC has a right of veto over the release to be granted by the MRNE. • Inspectors of MRNE now have officially the power to inspect mining sites in relation to preventive measures or reclamation work.

• A new section of the Mining Act— which is not yet in force—will provide that a reclamation plan must be made accessible to the public at least 30 days

before any public consultation begins, for mines with a production capacity of less than 2,000 metric tons per day.

Larger mines are subject to a full public consultation within the framework of Quebec’s environmental assessment and review process.

• An individual who fails to file and get the approval of a reclamation plan may now face penal charges with the risk of a fine of up to $500,000. The fine is $3,000,000 in the case of a corporation or a partnership. The previous maximum fines were $3,500 in the case of an individual and $6,975 in the case of a corporation.

Looking ahead Mining companies planning to open a new mine in Quebec in the context of the recently revived and enhanced Plan Nord, or planning to carry out specified mining activities in the province, have to factor these new rules in their financial and technical planning.

Recent new mines have already begun to operate under these new rules which are more stringent than the previous rules. They have the advantage however of long-term stability as major political parties have stated that these rules will not be changed in any foreseeable future.

They are the result of three years of efforts and often heated parliamentary debate to update and tighten up the rules that govern the reclamation of new mining sites.

CMJ December 2014 • Canadian Mining Journal |

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Investing

The Stock Market has a long memory

By Ned Goodman

T

his is my final submission of providing my views of the resource and financial world for this great Canadian Mining Journal. My corporate merchant banking activities for the resource industry has been eating up a lot of my free time. My relationship with the Journal’s editorial staff has been very professional and enjoyable but unfortunately, I will only now have time to read the entire magazine as written by others, and I will.

But for today, let me go back to June 1960 when with my entire family we were at the McGill University Annual Convocation event where I received, after four years of hard work, a Bachelor of Science degree with a Geology Major. My mother, father and family were there to celebrate the event, and my mother, who at that time was about 52 years old, and with my father, had supported me through school, asked me what work I was going to do now that I was a University graduate. I told her that I intended to get married, go back to school, and study business and investment management. My mother responded with shock, not about getting married, or remaining in school, but about the investment management choice. Her words to me were—“Do you know what happened in 1929?

Why don’t you become a doctor?” And that is when I first learned that the stock market has a very long memory.

In 1929, my mother was a 21- year- old high school graduate who owned and ran a very small lending library as her only source of income. But what did happen in those years after 1929 is what was called the “Great Depression.”

The “Great Depression” transformed Canada and the United States, as well as a good part of the rest of the world, about the way that people thought of themselves and their employment and of their government and especially of investments. Yes, no two people had the same understanding of the Great Depression, but like my mother at age 21, they knew that there was a serious financial problem and that they could no longer think about trying to get rich.

By 1932, three years into the first days of the so-called “Crash,” there were 30 million Americans and countless Canadians and others in the world without a job, many of 6 | Canadian Mining Journal • December 2014

them the breadwinners of a family that had to live on their own savings because there were no jobs.

The “Great Depression” of the 1930s changed the way that the U.S. government had to react. It meant that they had to be concerned and do something about many people’s daily lives.

People in general had to generate a new and different household style as well as life practice, while watching unnatural events such as the actual complete closure of banks where they had deposited their savings, as well as learning that chequing accounts were no longer acceptable, cash was required not cheques.

The world of family relationships got closer even though the conditions of work, when available, even with massive unemployment, as well as the long line ups of people waiting to get some soup in place of a meal. It was not a good time, and my mother’s remembrance was correct in asking the question.

By the time I finished graduating from two Universities with a BSc., an MBA and a CFA, I did know too well what happened in 1929 and hopefully those terrible depths of the lack of security and money is not totally likely today.

We are, however, unfortunately looking ahead towards some serious economic negativity from a deflationary and as a result, even inflationary days, all of which could be blamed on the global currency wars that are very likely to soon take place and perhaps my mother’s Great Depression memory will happen again.

But today, unlike my mother, we can protect ourselves by owning gold, real estate, agricultural land and other hard assets which must be fully paid for. And just to make my day while writing these final words for the Canadian Mining Journal, I learned that the Swiss, bless them, are going to force their Central Bank to begin to accumulate massive amounts of gold, just like the Chinese and the Russians have been recently doing on a regular basis.

The Swiss call their major change—“Save our Swiss Gold Referendum” and with a little study, I have made out that the Swiss central bank today has about 30 million ounces of gold and it intends that over the next five years to increase that to www.canadianminingjournal.com

Investing

Ned Goodman is Chairman of Dundee Corporation.

130 million ounces of gold and as such, it will have to buy at least 100 million ounces of gold over the next five years.

The Swiss referendum is expected to pass, but from the son of a now deceased mother who asked about 1929 and who wanted a doctor, I can tell you my study of investments and my knowledge of the gold market means that we all should have some gold bullion, which I am buying today for the only gold fund that I currently oversee—The Goodman Gold Trust. And thanks to Concordia University which I never attended as a student, I am now a Doctor of Laws, and my mother would be proud and she would also own some gold.

My mother died at 97 years of age in 2005, just days and months away from the start of the most recent U.S. Great Depression of 2007 and 2008, and which is still upsetting the economy of the United States. Mom must have remembered what happened in 1929 just before she left us, only this time she did not warn me about what happened in 1929 and I wish she had, because there may be another Great Depression waiting for us.

Gold, too, has a memory and the gold bull market is not over. Notwithstanding, it has been out of favour for the last several years, but the bull market for gold is not yet over.

But the United States has many economic problems. The U.S. faces an inept trade policy that no longer holds a dominant position in the global economy as it did at the end of the Great Depression and World War II and the Obama administration is facing unprecedented constraints in the creation of a good future. while the personal economic struggles facing many American citizens along with the ISIS problem is forcing a severe surge of insecurity and skepticism about the U.S. global economic prowess. The U.S. may be facing a new version of the Great Depression of 1929 to 1944.

As interest rates in the U.S. interest and the Federal Reserve agrees that they will, the net interest rate payments, or the current size of the US debt will triple in the next 10 years and as such, inflation is the only way the U.S. can get out of the mess that it currently finds itself in.

Easy money from the Federal Reserve has kept gold out of favour and other than U.S. Central banks has caused investors

of countries outside of the U.S. to look towards the stock market rather than the historic safety of precious metals, notwithstanding the global printing of currencies.

In the next 10 years, the United States will have had a deficit for almost every year for the last 50 years. There is only so much the government can spend before the public says no more, and it is coming soon.

Yes, gold is out of favour today, but almost nothing else has changed in terms of how well the U.S. is going to perform over the next 10 years. The U.S. has no way out of its problem of too-much debt but to create inflation as a cure for the likely deflation that lies ahead.

Debasing the currency creates inflation and is a possible cure for the possible deflationary environment the populace will have to accept. And if a central bank wishes to debase its currency, it can always find a way to do so, even at the end of all attempts they have to monetize the existing federal debt of the 20 plus trillion dollars.

The most recent Economist Magazine of October 2014 said in an article entitled “The Pendulum Swings to the Pit” that the politicians and central bankers are not producing the inflation it needs; some economies face damaging deflation instead. And then the article goes on with “It is a pernicious threat, all the more so because at its onset it seems benign.”

And as inflation drops, slipping into deflation becomes even easier. It is in that dangerous position that the world now stands—the low inflation of being consistently below an already-low target is back in itself; the deflation it could lead to is even worse.

To continue with the unnamed Economist writer (it may be my mother) “Debt aggravates the cycle as prices and incomes fall, the real value of debts rise, forcing borrowers to cut spending to pay down their debts which ends up making matters worse.” “This pathology did great harm during America’s Great Depression which was when economist Irving Fisher (also now deceased) disguised it under the name of debt deflation.” Read the Economist article on page 25 and remember what my mother told me about what happened in 1929.

CMJ December 2014 • Canadian Mining Journal |

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| Working Offshore

TRIPLE THREE MINES THREE COUNTRIES THREE SUCCESSES CAPSTONE’S COPPER MINES PRODUCE AT AN IMPRESSIVE PACE

By Russell Noble hen you talk about a contrast in temperatures, Capstone Mining of Vancouver knows all about it thanks to its projects in Yukon, Arizona, and Mexico. Those locations provide the company, but more accu-

Pinto Valley open pit mine in Arizona, U.S.

8 | Canadian Mining Journal • December 2014

rately its employees, with three very distinct climates and working conditions.

From its Minto Mine located about 250km northwest of Whitehorse in Yukon, where temperatures often reach -30 C, to its Pinto Valley Mine 130km east of Phoenix, Arizona, where it’s much warm-

er but extremely desirable most of the year, to Cozamin, located close to Zacatecas, a world heritage site about 200km northwest of Mexico City, where the weather is very mild and pleasant year round, Capstone’s three main projects provide a varied contrast in both geographic locations and temperatures.

Minto, Pinto Valley and Cozamin are as unique in their own rights as the countries in which they’re situated but for Capstone Mining, they’re also three successful projects that serve to demonstrate why the company has been one of Canada’s leading miners when it comes to overcoming challenges.

Since it was founded in 2003, Capstone Mining has focused primarily on copper and through its work at the aforementioned mines, plus further exploration and development in Chile and British Columbia, the company has become recognized as one of Canada’s leaders when it comes to taking on large and challenging projects.

Minto, for example, went into producwww.canadianminingjournal.com

Ariel photo of the Minto Mine in Yukon, Canada

tion in October 2007 and is still one of its prouder achievements in that it is Yukon’s only hard-rock mine but also the Territory’s most prolific mine.

With reserves at 9.5 million tonnes grading 1.65% copper, with measured and indicated resources of 49.3 million tonnes grading 1.1% copper, and inferred resources of 16.2 million tonnes of 0.92% copper, the Minto Mine is also one of the more productive copper-mining operations in Canada.

It’s anticipated that the Minto Mine will produce approximately 18,500 tonnes of copper in concentrate in 2014.

Company President and CEO Darren Pylot said recently that he expects “no material difference” in Minto’s 2015 production.

Capstone Mining has been producing copper for more than eight years now and while its Minto Mine is just up the street, so to speak, or 1728km from its head office in Vancouver, the company’s Pinto Valley Mine in Arizona is actually only 906km farther away, or 2634km by road

from Vancouver.

Its Cozamin Mine in Mexico is considerably farther at 4936km from Vancouver, but all three mines are located on a similar longitudinal parallel on the west coast to help make the day-to-day operations more in sync with head office.

As mentioned at the outset, Capstone Mining runs three very distinct operations in terms of their geographic locations and its Pinto Valley Mine in Arizona is perhaps the most envied of the three for its weather and proximity to a major urban centre.

Cozamin Mine in Zacatecas, Mexico.

Acquired in 2004, the Cozamin property went on to become Capstone Mining’s first mine.

December 2014 • Canadian Mining Journal |

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| Working Offshore A convoy of trucks haul copper concentrate from the Cozamin mine.

Just 130km east of Phoenix and located in the Globe-Miami historical mining district known for being one of the world’s more favourable jurisdictions for tax, regulation and labour regions, the mine is Capstone’s “new kid on the block” and has only been in production for the company since October 2013.

With measured and indicated mineral resources at 1,563 million tonnes grading 0.30% copper, the open-pit mine has an estimated mine life to 2026 and a planned operating throughput of 50-52 thousand tonnes per day.

To handle these volumes of ore, Capstone will be investing almost $188 million over the next 12 years into a mine plan that includes upgrading its mining fleet to include 19 haul trucks, two hydrauA close look at the flotation circuit separating copper at the Cozamin mill.

10 | Canadian Mining Journal • December 2014

lic shovels, one loader, four track dozers, three water trucks, three graders, one tire dozer, three rotary blast hole drills and one air track drill.

In terms of production facilities, prior to Capstone acquiring the operation from BHP Billiton in 2013, new and upgraded components were installed during the 2012 restart, including a new mining fleet, upgraded electrical and controls and upgrades to the primary, secondary and tertiary crushers, six ball mills, plus copper concentrate and molybdenum flotation circuits.

A minor investment has also been made in upgrading the mine’s low-grade dump leach field, its pumping extraction network and the electrowinning and raffinate distribution system.

Like most miners, Capstone has spent a great deal of time and money on tailing management and its Mine Plan reflects that through its plans for new tailings pipelines, booster station upgrades and its focus on an environmental program to provide an increased awareness of environmental issues to employees and neighbouring communities alike.

Farther south at its underground Cozamin Mine in Mexico, the company continues to produce copper with a Mine Plan that currently runs until 2020.

By then, Capstone will have been working the mine for almost 14 years since starting commercial production at the site in September 2006.

Cozamin has been a good mine for the company and last year it produced 20,600 tonnes of copper in concentrate. www.canadianminingjournal.com

Long-hole drilling at Cozamin.

Installing ground support in the Cozamin underground.

The mine has a current operating throughput of 3,300 tonnes per day with 258.7 million pounds of contained copper in reserve.

The mining method at Cozamin is long-hole stoping with the mined ore being brought to the surface either by shaft or up the two production ramps. Ore is trucked to a crusher and processed through a three-stage crushing plant ahead of grinding.

Once reduced in size, ore is sent to flotation then through a circuit where copper-silver, zinc and lead-silver concentrates are recovered and eventually shipped to customers around the world for treatment in off-site smelters.

Similar to the Pinto Valley Mine Plan, Capstone has invested in equipment purchases and upgrades to keep its Cozamin

Mine producing efficiently and it’s thanks to its extensive fleet of machines that it has been able to meet it production schedules on time and at a profit.

The fleet consists in part of four haul trucks, eight loaders, two jumbo drills, two jumbo bolters, two long-hole jumbos, one stope mate, one long-hole cubex, two December 2014 • Canadian Mining Journal |

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| Working Offshore

Two views (top and middle) showing blast hole drilling in the Pinto Valley open pit.

Again, like Pinto Valley, Capstone has also spent a great deal of time and money on its tailings storage and has engineered two more stages to serve the mine for at least the next six years.

Regardless of where Capstone is mining or exploring and developing new properties, the company has demonstrated that it fully understands what it takes to work in different parts of the world, under

14 m3 highway trucks, one scissor lift, two telehandlers, two utility trucks for diesel fuel and finally, a passenger bus to transport miners to and from the site.

It’s an extensive fleet that also compliments and feeds the mine’s sophisticated production facilities that includes a crushing circuit with primary, secondary and tertiary crushers, a grinding circuit featuring two primary ball mills and one regrind ball mill, and flotation/thickening/filtration circuits for copper and silver concentrates, plus fully equipped assay and met labs.

12 | Canadian Mining Journal • December 2014

severe conditions, and its Minto, Pinto Valley and Cozamin mines are a true testament that Canadian mining technology is second to none.

And, with approximately 1,700 direct and contract workers, including a development project and exploration staff in Chile, Capstone Mining is also a major employer in four countries with a reputation for being a fair and responsible company. CMJ

Haul truck at the maintenance shop at the Pinto Valley Mine. www.canadianminingjournal.com

2015 EDITORIAL CALENDAR JANUARY

Coast to Coast to Coast

Pacific, Arctic, Atlantic - our annual look at mining projects in Canada’s coastal provinces and territories.

Bonus distribution at the Mineral Exploration Roundup in Vancouver, plus the SME Annual Meeting in Denver

Advertising closes December 3. Material due December 10.

FEBRUARY/MARCH PDAC Convention Issue - Mining in Ont. Ontario, Canada’s most prolific mining jurisdiction, continues to take centre-stage for our PDAC Convention issue.

Bonus distribution: PDAC Convention in Toronto, and to the Ontario Mining Association.

Advertising closes January 14. Material due January 21.

APRIL Mine Safety Our third annual look at advances in safety measures at the mine-site, mill and plant.

Plus a special 16-page feature section on “Transportation and Logistics.”

Bonus distribution at the CIM Annual Meeting in Montreal and the KEG Kamloops Conference.

Advertising closes March 3. Material due March 10.

MAY

CIM Annual Meeting Edition - Coal & Oil Sands

Two of the mainstays of Canadian mining will be featured as CMJ reviews a number of projects of merit across Canada. There will also be a feature section on “Crushers & Conveyors”.

Bonus distribution at the CIM Annual Meeting in Montreal.

Advertising closes April 7. Material due April 14.

JUNE/JULY

Mining in the Prairie Provinces

Our annual update on mining projects in Saskatchewan and Manitoba.

Equipment Maintenance & Repairs supplement.

Advertising closes May 5. Material due May 12.

AUGUST

Top 40 Miners in Canada

One of our most popular issues, CMJ will rank Canada’s Top 40 producers in terms of revenue. Detailed charts will make it easy for readers to see how companies have done year-by-year in terms of percentage changes and where they stand when it comes to total assets. We will also include our look at the top development projects in Canada, the next “mines-to be.”

Advertising closes July 1. Material due July 8.

SUMMER: New Mining Technology (published in August) New Mining Technology Magazine (NMT) is a technology showcase where manufacturers and suppliers can highlight their technological advances in a one-page or double-page spread format.

Advertising closes March 1. Material due March 7 (poly-bagged with August edition).

SEPTEMBER

Gold in Canada

OVER 133 YEARS OF MINING AND MINERAL PROCESSING NEWS!

Canadian Mining Journal reports on the operations segment of Canada’s mining industry. It provides its readers with pertinent information on the latest mine openings and the equipment, products, methods and technologies used in mining and mineral processing. With its AAM audited circulation, and multi-media delivery, CMJ guarantees advertisers exposure to the buying influences at the mine site, mill and head office.

CMJ is Canada’s oldest mining publication, established in 1882. We are also Canada’s only AAM Audited mining publication, which means our monthly circulation of 10,562 (AAM Audit June 2014) is fully requested and up-to-date. We also have a full service website, www.canadianminingjournal.com, where all of our issues are available in digital format, and a Daily News email that we send our four times a week to our subscribers.

CMJ is free to subscribe to for those who work in the Canadian mining industry. Please contact Cindi Holder at 1-800-268-7742 ext. 3544 or 416-510-3544. Email is cholder@bizinfogroup.ca. Or you can subscribe online via this link: www.canadianminingjournal.com/subscribe

FOR ADVERTISING, PLEASE CONTACT: Robert Seagraves

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Toll Free Canada: 1-800-268-7742 extension 6891 or 5104 U.S. Toll Free: 1-800-387-0273 extension 6891 or 5104 Visit www.canadianminingjournal.com/mediakit

OCTOBER

Mining in Quebec

Our annual update on mining activity in Quebec.

Equipment Maintenance & Repairs supplement Bonus Distribution at the Québec Mining Exploration Convention, Montreal.

Advertising closes Sept. 2. Material due Sept. 9.

NOVEMBER Buyers Guide CMJ’s Buyers Guide provides a comprehensive list of Products & Services specifically geared to the mining industry. It includes a list of the Suppliers & Manufacturers equipped to provide answers to any questions regarding equipment, parts or other services. With more than 560 product categories, from “abrasives” to “x-ray analysis” this is a must-keep reference guide for buyers in the mining industry.

Bonus distribution at the NWMA Annual Meeting in Spokane, Mineral Exploration Roundup in Vancouver, and the PDAC Convention in Toronto.

Advertising closes October 1. Material due October 8.

DECEMBER

Canada/North America Mining

Gold continues to be one of the more sought-after metals in Canada and this issue will report on new advances made in Canada’s gold mining industry.

This issue also includes a feature section on what’s new in the world of “Pumps” Bonus distribution at North American Mines Expo, Sudbury.

A look at Canadian mining companies and suppliers doing business in the United States & Mexico and some of the issues that must be managed to ensure their success.

Bonus distribution at the Mineral Exploration Roundup in Vancouver and the SME Annual Meeting in Phoenix.

Advertising closes August 1. Material due August 8.

Advertising closes Nov. 3. Material due Nov. 10.

The EI Valle-Boinas mine site in northwestern Spain demonstrates the test of working within limited space to come up with an innovative solution. In this case, the re-use of previously decommissioned areas.

Production at the mining site, within the Rio Narcea Gold belt, had largely been done by open pit methods prior to switching to underground in 2004. The original tailings storage facility (TSF) had been closed.

Mining Solutions? Just ask Golder.” pretty much says it all.

From Africa to Australia, throughout Europe and Asia, to North and South America, the company has expanded from its grass-roots rock and groundengineering services to everything ranging from integrated design, consulting and construction solutions to the social, environmental, and regulatory processes mining companies are facing on an

increasingly important and frequent basis.

Because of the company’s early focus on soil mechanics and ground engineering, the move to rock mechanics and groundwater was a natural transition and the broader field of hydrogeology became an important part of the company’s services, particularly in contaminated soil and groundwater.

Hydrology and hydraulic engineering, bio-sciences plus Geographic Information

Systems (GIS), are also a part of what Golder Associates does but it’s still its full range of ‘mining’ services that have made the company so popular around the world.

Kevin Beauchamp, Canadian Mining Leader, Golder Associates, says: “Golder has a long history of consulting to operating mines. Along with our international assignments, we have ongoing projects at most mines in Canada. Combining operational consulting with a focus on front-end mining studies is a key for us.”

Globally, front-end studies have included trekking through the jungles in Brazil, Costa Rica, Columbia, up to the foot of the Himalayas in Tibet to obtain geochemistry and geotechnical samples. Also, not to mention work in the high Andes, Pampas of South America and the outback of Australia to design and develop some of the largest tailings storage facilities in the world, and to contribute to pre-feasibility and feasibility with geotechnical, environmental and social support.

Beauchamp added: “Unlike most consulting firms, Golder uses an integrated approach that results in better project outcomes. Early inclusion of environmental, social and permitting aspects results in better concepts and trade off studies.

“Operational consulting typically involves key technical expertise that helps mining companies realize efficiency through operating improvements or by allowing the mining company to maintain a streamlined workforce and contract out support from Golder in specific technical areas.”

As mining companies become more streamlined, they in-turn expect more in the solutions provided by companies like Golder Associates. “In response, Golder has evolved into a global design and construction service provider for mining clients.”

Brian Daniels, Construction Contracts Manager for Golder Associates in Mississauga, says: “Golder continues to provide integrated design and construction services to our clients in all aspects of the mine life-cycle. It is our goal to be a long-term partner with our clients from the first background study to final closure.”

Backed by more than 50 years of December 2014 • Canadian Mining Journal |

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| Working Offshore As one of the largest copper-zinc-molybdenum mines in the world, the Antamina mine, located 4,200 metres above sea level in the Andes Mountains, is an important source of employment, government revenue and export earnings for Peru.

experience, Golder has completed largescale design and construction operations all over the globe.

One of the company’s projects includes the on-going construction of the Antamina tailings dam in Peru. This is one of the largest tailings dam in the world and Golder has been involved in initial evaluation, design, construction and on-going site operational management since 1998. To this day Golder

continues to monitor and direct construction activities. Additional projects include paste backfill plants in Tanzania and Portugal and pipeline design and construction in Nevada.

When asked about remediating or closing former mine sites, Daniels says: “Yes we can.” In particular, he mentioned the Ontario Ministry of the Environment’s abandoned Deloro Mine, one of his proudest recent works.

Golder conducts investigations and develops geology models to understand the rock mass nearly 1,500 metres below an existing mine surface.

Daniels explained that operating as a former gold mine, the Deloro site was closed in 1961 after nearly 47 years of operation. Cobalt and uranium ore were also refined at the site. The mine and arsenic treatment plant were situated on an 8-ha property west of the Moira River near Peterborough, Ontario.

Refining slag, mine tailings, calcium arsenate, and arsenical pesticides were present on the site along with approximately 90,000 tonnes of ferric hydroxide (red mud) that was pumped as waste slurry from the hydrometallurgical plant from 1914 to 1961 to a tailings area east of the river.

To remediate the property, Daniels said that Golder Associates, working as the General Contractor, completed two major phases of the cleanup operations, including the engineered clay caps and groundwater collection systems in the tailings area.

Deloro Project Engineer Robert Putzlocher of the Ontario Ministry of the Environment and Climate Change says “Golder worked collaboratively with the Ministry to find efficiencies and add value while at the same time completing their projects on time and within budget.”

More than 29,000 man-hours of work without a lost-time incident were completed at the Deloro Mine project and Daniels was proud to say that this type of performance is typical of Golder projects

With more than 10 years’ experience at Batu Hijau, Golder was selected to find the best way to reclaim a 350-metre-high mining waste rock dump holding 1.5 billion tonnes of rock and covering a footprint of 5.7 square kilometres.

Photo by Matt Kapust/Sanford Laboratory

16 | Canadian Mining Journal • December 2014

www.canadianminingjournal.com

As General Contractor, Golder Associates worked at remediating impact material along the Moira River at the Ontario Ministry of the Environment’s Deloro Project near Peterborough.

of this nature around the world. “The Health and Safety of our people and all site personnel during these intricate operations is our first priority and something we take very seriously.”

Golder also serves clients by working in some of the most politically and socially troubled areas of the world, including Russia, India, Middle Asia and Central Africa. As part of Golder’s commitment to sustainable development, Golder Associates’ employees formed the Golder Trust for Orphans in 2003 (www.goldertrust.org) to provide support to children and families in Africa who have been orphaned or displaced by the AIDS pandemic.

The Trust, which to date has received over (U.S.) $3 million in donations from Golder staff and operating companies, provides one-time donations and investment funding for capital projects to organizations based in, and working with, local communities to address specific needs.

“It is heartbreaking at times travelling to these locations, and this is one of the actions that makes Golder not just a great place for our clients, but a great place to work,” says Ken DeVos, a geochemist and seasoned world traveler who has been with the company for more than 20 years.

From exploration of new mining opportunities in distant places like Africa and Vietnam, to remediating closed mines in North America, Golder

Associates has come a long way from those early days on Bloor Street in the 1960s and by all indications, will continue to be a global leader in mining. CMJ

All site personnel are committed to health and safety as shown in this photo taken during pipe installation work at the Deloro Project.

December 2014 • Canadian Mining Journal |

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| Working Offshore

DESERT

DREAM LONG-AWAITED ARIZONA PROJECT MOVES CLOSER TO REALITY THANKS TO HUDBAY MINERALS Rosemont Copper property starts to show signs that developers mean business

By Russell Noble

W

“

hat you see is what you get” isn’t always true.

In fact, if you ask HudBay Minerals of Flin Flon, Manitoba, what it saw when it bought the Rosemont Copper property near Tucson, Arizona, for (Cdn) $516 million recently, you’d probably be told: “more than you can imagine.”

For starters, the 3,690-hectare property, located about 50km southeast of Tucson and immediately adjacent to Highway 83, (a State-designated “Scenic Route), has been the subject of much public debate regarding various proposals to build a copper mine on the site.

For decades, in fact, many developers have expressed interest in building an open-pit mine along the east side of the Santa Rita Mountains’ ridge to extract and process the estimated 7.2 billion pounds of copper on the Rosemont Copper property.

And, for nearly as long, environmental and other naturalist groups have been opposed to developing the property, particularly because the site is in clear view of ‘scenic’ Highway 83 and its many lookout points and, that a mine would permanently alter the landscape.

But more specifically, objections were expressed concerning the impact a mine would have on the quality and quantity of water in the area.

18 | Canadian Mining Journal • December 2014

One of seven drill sites on the Rosemont Copper property.

www.canadianminingjournal.com

Panoramic view of Rosemont Copper property showing Santa Rita Mountains in the background where HudBay’s new copper mine will be located.

Photo Report by Russell Noble

December 2014 • Canadian Mining Journal |

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| Working Offshore Some of the project’s 85,000 linear feet of core being documented and carefully stored on site.

A team of core cutters are kept busy during the extensive drilling program at the Rosemont project.

Like all mines, the proposed Rosemont hundreds of studies required to support Project will require water to operate and not only this process but the other permits while there is an ample supply of it in and necessary for operation.

“It’s been an exhausting exercise to say around the site, demands for aquifer proOne of seven drillleast but we’re confident that no stone tection and guarantees have resulted in the sites onhas the been left unturned, so to speak (and delay-upon-delays to the project.

Rosemont Copper sorry for the pun), on this property and “In fact,” says Kathy Arnold, HudBay’sproperty.

Director of Environment, “there have that every precaution has been taken into been more than 500 studies and technical account for going forward with a benefireports written on this project over the cial project for the entire community.”

Arnold, also an Arizona resident and a past eight years; enough to take up more than 30 feet of shelf space. The reports former employee of the previous owners, range from the detailed Mine Plan of Augusta Resource Corporation, Rosemont Operations (MPO) submitted to the Copper Company, of Tucson, points out United States Forest Service in 2007 initi- that a mine of this scale and magnitude ating the Environmental Impact Statement has the potential to provide 400 direct and (EIS) process under the National 1,700 indirect jobs to the community and Environmental Policy Act (NEPA), to the an estimated $3 billion in increased perAir quality is controlled by routinely watering the new roads that crisscross the Rosemont property.

20 | Canadian Mining Journal • December 2014

sonal income over the expected 20-year life of a mine.

Given that two-thirds of copper produced in the United States comes from Arizona and that mining has been a vital industry to the State for more than a Century, finding an undeveloped, commercially viable deposit is a rare occurrence.

And that’s one of the main reasons HudBay Minerals recently bought Augusta Resource Corporation for the rights to the Rosemont Property.

The deal was completed in September 2014 and by later that same month, HudBay had committed almost $8 million to a drilling program that would employ approximately 70 consultants and contractors.

A driller removes one of many lengths of core taken from the site during the aggressive 24/7 program.

www.canadianminingjournal.com

A four-month program was put in place almost immediately whereby seven diamond drilling rigs were engaged to operate 24-hours a day, seven days a week, with a goal of reaching approximately 85,000 linear feet by the end of this month (December).

In support of the drilling and other activities at the designated Rosemont Project pit area, HudBay has set up a command centre at the nearby Hidden Valley Ranch.

In addition to her environmental responsibilities at the proposed mine site, Kathy Arnold also provides oversight to the ranch manager for the working ranch where the company also raises cattle for sale at market and for grazing to keep the vegetation adjacent to the mine area groomed and fertilized.

“Ranching dates back to around 1900 and while it has since declined, it still plays a part in HudBay’s master plan for the Rosemont project,” says Arnold.

“We have second and third-generation families still living and working at the Hidden Valley Ranch and a couple of them are now doing double duty by working at the proposed mine site gathering data from the various air and water monitoring stations located around the property.”

In addition, the ranch site and its buildings are used to share project information with the public on regularly scheduled tours. And, because of its picturesque setting and sprawling facilities, including a kitchen and outdoor BBQ, washrooms, high-speed internet services and meeting rooms, plus covered verandas and courtyards, the ranch is also used for on-site staff meetings It was also used recently for a wedding reception for one of the company’s employees.

As mentioned earlier, the Rosemont Project is still in its relative infancy but mine safety and health administration requirements are paramount. Arnold says HudBay has made worker safety a priority.

“I know there’s not a lot of traffic or equipment on the site yet, nor are there many people, but the ground rules have been set and from the moment anyone is cleared to enter at the front gate to the moment they leave, they are in constant

radio contact with “Security One,” says Arnold.

Contractors and employees alike maintain radio contact with site security and like mining itself, every person is accounted for at the end of the day before the lights are turned off and the front gate is locked.

“Nothing is left to chance here at Rosemont, especially when it comes to safety. It may look like a safe place with little more than a few roads criss-crossing some gently rolling hills but as every miner knows, those new roads can prove treacherous if speed and caution are not taken.

“Even older, well-compacted mine roads can be dangerous and because the drill access roads and routes are so new we have to be more careful,” says Arnold.

Like all new mining sites, the Rosemont Copper project is breaking new ground and as mentioned earlier, it’s making a fresh mark on the landscape and there too, Arnold says “being careful” is also a priority when it comes to biology.

“Biological studies looked at the existing biota and assessed the potential impact mining operations may have on identified desert plant species and wildlife. Particular emphasis was placed on native species in the Mine Plan area and we’ve now identified plants that will be protected or moved,” says Arnold.

“Plants can be salvaged for sale and monies raised from prior salvage activities have already been given back to the community.”

Core is carefully placed in wax-coated cardboard boxes ready for shipping to the core shack located elsewhere on the property.

The Rosemont Copper Project has been under the microscope for many years, by many people, for many reasons, but regardless of what’s happened in the past, the project has the makings for a world-class open-pit mine that should serve as a good example of what can be achieved when answers are given before questions are asked.

CMJ

Kathy Arnold, HudBay’s Director of Environment, is hands-on at the project’s drill sites as well as providing oversight to the ranch manager at the working cattle ranch on the property.

December 2014 • Canadian Mining Journal |

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| Working Offshore

MOTHBALLS TO

MILLIONS CANADIAN GRAPHITE MINE GOES FROM SHUTTERED TO MAJOR SUPPLIER IN SWEDEN

By Eastern Correspondent D’Arcy Jenish

B Flotation inside the Woxna plant.

lair Way became President and Chief Executive Officer of Vancouver-based Flinders Resources Ltd in the Fall of 2013 and the Board of Directors gave him a clear and simple mandate.

His job was to put the company’s mothballed Woxna graphite mine in central Sweden into production and he had to do it with a budget of $5 million.

“I took a look at this asset in June 2013 and said you’ve got to get this thing started,” recalls the Nova Scotia native who has worked as an engineering consultant on mining projects around the world.

22 | Canadian Mining Journal • December 2014 www.canadianminingjournal.com

Aerial view of the Woxna site.

Workers keep a close eye on equipment inside the plant.

“I told the Board that if I can’t do it for under $5 million, I’m not doing my job. They said if you think you can, go ahead. So I did.”

Way got the job done for just under $4 million, as it happened. Production resumed in July of this year and the company held the official opening of the Woxna mine on Sept. 22.

Then, on October 14, Flinders announced that it had signed a Letter of Intent with ThyssenKrupp Metallurgical Products, a huge German multinational company that has operations in 80 countries and employs more than 160,000 people. ThyssenKrupp uses graphite in its own operations and also markets the com

modity to other users. It has agreed to purchase 20,000 to 50,000 tonnes of Woxna graphite over a 10-year period.

“That’s a huge step for us,” says Way. “We’ve been working on it in the background for some time. It gets us into the market with a very reputable multinational. We’re happy to have the documents signed.”

Graphite is an industrial mineral used mainly in the refractory bricks that line the steel walls of crucibles and other equipment used in smelting metals. It is an excellent conductor of heat, as well as electricity, and enhances the capacity of the bricks to absorb the heat of the molten metal. But the brick linDecember 2014 • Canadian Mining Journal |

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| Working Offshore Heavy equipment is used to load material into the processing system.

A crew gathers to discuss operations within the plant.

24 | Canadian Mining Journal • December 2014

ers must be replaced periodically, which ensures that there is steady demand for the graphite used in them.

The Woxna mine operated from 1996 until 2001 when China used its dominance to the disadvantage of competitors.

China has traditionally produced about 85 per cent of the world’s graphite and it flooded the market. Prices dropped abruptly and the previous owners of the Woxna mine were forced to suspend operations. Since then, however, Chinese production has decreased while demand has grown and prices have recovered.

Flinders acquired the Woxna mine in 2011 and spent the next two years working with Swedish regulators to acquire the approvals and permits necessary to resume production. Way then joined the company and became responsible for refurbishing the processing plant and re-starting the mine.

“We purchased used equipment which in most cases was new and slated for other projects but had never been used,” he says. “We were buying at $.20 to $.25 on the dollar.”

The Woxna mine is, for the moment at least, a small-scale, open pit operation. The pit covers an area several hundred metres square and is only 100 to 150 metres deep. Reserves are currently estimated at 2.81 million tonnes, with an average grade of 11 per cent graphite, which is enough to keep the mine in operation for 20 years. However, the company is convinced it is sitting on much larger reserves, but it has to yet to do the exploration required to determine the size of the deposit.

Currently, the plant operates three or four days a week and the workforce ranges from 10 to 15 employees, depending on the level www.canadianminingjournal.com

of production. “We’re not running the plant 24/7 because our sales don’t warrant it,” says Way. “We run production to match sales, which is unlike most precious metal or base metal mines. Once they have a plant, they run it full out to get production.”

Having put the mine into production, Flinders can now begin to market Woxna graphite and as the company signs new customers it will be able to increase output and add to the workforce. In fact, Way points out that most consumers of graphite will not enter purchase agreements with producers until they have their mine up and running.

Meantime, Flinders is in the process of acquiring another mothballed graphite mine from Big North Graphite Corp., a Vancouver-based junior exploration company. The El Tijon Flake Graphite Mine is located in the Mexican state of Oaxaca and was built by the federal government of Mexico in 1980.

Private investors acquired the mine and its mill in 1989 and operated it until 2002 when falling prices forced them to shutter the operation.

Way says Flinders expects to complete the transaction early in the new year and will spend six to 12 months refurbishing the plant and putting the mine into operation. Then it will begin to market the product. “We’ve talked to customers and they’re ready to make a deal as soon as get it up and running,” he adds. “We’ll do the same as we did at Woxna.”

Graphite has long been an obscure industrial mineral, but

new markets are emerging that could have a significant impact on demand. The large-scale batteries used to store electricity generated by solar farms and windmill installations require graphite and the emergence of electric cars will also boost demand since every such vehicle will contain between $100 and $150 worth of the material.

For the foreseeable future, however, most of the world’s graphite will be used in refractory bricks. China will also remain the largest producer, but Flinders’ entry into the market with its Woxna mine is a significant development, regardless of the size of the operation.

Currently, there are only three other graphite mines in Europe. One is in Norway and privately owned and there are two small operations in Germany, but all three deliver to a small group of consumers and do not trade into the broader market. That has left big European consumers of graphite overly reliant on China.

“As a European company, ThyssenKrupp is very happy to have a European source so they don’t have to get it all from China,” says Way. Furthermore, Flinders can move its product to European customers quickly and cost effectively. It can deliver to Western Europe in containers hauled by trucks and, should it develop markets in eastern Europe, the company could rely on marine transport.

CMJ

December 2014 • Canadian Mining Journal |

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| Working Offshore

RISKS &

Panoramic view of Maracas Vanadium processing plant.

REWARDS Taking a chance on an‘unknown’ metal pays off Staff Report

M

ining and gambling are almost synonymous when it comes to developing a new property, but when the site is located in a foreign land and the company president admits he’s never even heard of the metal they’re after, the word ‘gamble’ could almost be replaced with ‘risky” or even worse, “foolish.”

In fact, when Largo Resources of Toronto decided to purchase the Maracas Vanadium Project in Bahia, Brazil, in 2006, Company President and CEO Mark Brennan said: “I was brought into Largo Resources in 2005 to help turn the company around. At the time, it had a coppergold project in Ecuador known as the Macuchi Project. The asset had a reasonably sized resource, and looked interest-

ing, but it just didn’t have the scope it would need to be economical.

“When I joined, we decided to launch one final drill program to see if we could “hit the mother-load,” so to speak, and following that, the company would make a decision on which direction to move forward – either continue with Macuchi, or find another asset. Needless to say, we shortly set out to look for a new asset to bring into Largo.

“We never set out looking for a vanadium project – in fact, back then, I had never even heard of vanadium before! But, our strategy in looking for projects was very firm: to look only at “best of breed” projects – or in other words, assets that were the top of their asset class. This required us to be completely agnostic to commodity, and

Processed vanadium bagged and ready for shipping.

26 | Canadian Mining Journal • December 2014

looking only at projects where we could get the greatest return on capital.”

And now, more than eight years after making that decision, Brennan is convinced that Largo Resources is in an extremely unique position within the commodity itself, thanks to its Maracas Vanadium Project, located approximately 250km from Salvador.

“Hands-down,” says Brennan, “it’s one of the highest grade and quality vanadium deposits in the world. Our mineral reserve, which is averaging a grade of 1.3%, is two-times higher than any other deposit out there.”

We believe this makes the Maracas Vanadium Project a globally significant asset for vanadium.

Production of vanadium is currently dominated by three major regions: China, South Africa and Russia and in its history it has been plagued by supply disruptions which have caused its price to be extremely volatile when compared with other commodities. With a currently projected 29-year mine life, Brennan believes that the Maracas Vanadium Project will eventually become the key vanadium producer globally for its ability to provide consistent and high quality vanadium for a very long time. www.canadianminingjournal.com

Two views of resized vanadium.

But what exactly is vanadium?

Vanadium is a strategic metal primarily used as a strengthening alloy to steel.

The vanadium argument is simple: small amounts of vanadium, added to steel, make it stronger, tougher and lighter. To give you an example, adding approximately 1kg of vanadium to one tonne of steel, can increase its strength up to 100% and reduce weight by 35%.

Vanadium-enhanced steels go into an extremely large range of products that we encounter or use every day. The list is long, and growing, but some of the most significant examples are: Rebar used in the construction of

buildings and infrastructure like bridges and tunnels. Vanadium not only imparts on rebar tensile strength, but also resistance to seismic events – it is a mandatory input in rebars in all developed economies like North America, Europe, Japan and is increasingly being used in rebar in emerging, or developing regions of the world. Particularly earthquake prone countries like China.

Likewise, vanadium also has anticorrosive properties which make it ideal for steel products which see a lot of wear-and-tear, and are exposed to environmental effects like; railway lines, railway cars, power-pylons for energy,

oil and gas platforms and refineries as well as pipelines.

Its strength-to-weight ratio (strongest strength to weight ratio of any engineering material) makes it the consummate alloy in steels for automobiles and aerospace applications.

Once again, Brennan believes that Largo’s Maracas Project, an area of 28,587 hectares hosting many deposits of vanadium-rich titaniferus magnetite mineralization, is well positioned to answer to the world’s demand for accessible and long-term access to vanadium thanks to its average annual production estimated at 11,400 tonnes.

CMJ

Open-pit technique is used to mine vanadium.

December 2014 • Canadian Mining Journal |

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| Company Profile

BREAKING THROUGH CANADIAN COMPANY CONTINUES TO ADVANCE IN CHINESE MARKET

By Russell Noble

“

T

aking the show on the road’ for most Canadian equipment manufacturers usually means displaying their products at a local conference and annual trade show or somewhere in the United States every two or four years at much larger venues.

In either case, the logistics behind getting a full-size piece of mining equipment, or even smaller components to a product show for that matter, are more detailed than most people understand or appreciate.

In fact, months, and sometimes years of preparation go into arranging for a product to be displayed at a trade show.

Aside from selecting the right product, there’s also the initial cost of booking the display space, there’s the task of designing that space to show off the product’s best features and first and foremost, there are the details behind helping ensure that the product arrives on time and intact.

28 | Canadian Mining Journal • December 2014

As every exhibitor will agree, there’s nothing more embarrassing than receiving a broken product, or no product at all, when participating in a trade show, especially one that is in a foreign land, thousands of miles away from head office.

Product shows and conferences held in foreign lands are a challenge and can be disastrous, both financially and from a reputation’s point of view, but for companies like Breaker Technology of Thornbury, Ontario, they’re an important part of doing business; ; a part that has been in its business plan for almost a quarter of a century.

Long before offshore trade shows and foreign missions became popular and accepted by many countries, Breaker Technology, an Astec Industries Company, has been attending shows around the world and was, in fact, one of the first North American companies to exhibit its products in China.

Claude St. Jean, BTI’s Director of Sales for China and Europe, has been travelling to China since 1998 and has been responsible for helping establish one of the first North American equipment dealership networks in the country.

St. Jean opened an office in Beijing in 2002 to promote and support BTI’s interests in China. He lived there for five years.

“Gaining trust and acceptance was difficult at first because back then, the Chinese were very cautious of foreigners entering their country and even more skeptical of the products we were trying to sell them,” says St. Jean.

Breaker Technology was founded in 1958 and since its inception; it has provided products and services to the mining, construction, demolition and aggregate industries.

Understandably, BTI’s various lines of mining and other rock-breaking tools were of interest to the Chinese but as www.canadianminingjournal.com

A series of photos clearly shows the variety and versatility of BTI machines. From the shop floor (immediately above) to a severe underground application (far left), the mining machines and attachments have been working in China since 1996.

already mentioned, they were skeptical (yet curious) about how these North American-built tools could help their nation move forward and into a modern world of technology.

Similar to all relations with the Chinese in the later part of the 20th Century, a great deal of time was spent by BTI with government officials who wanted to know everything there was about the products entering their country.

“Chinese have an appetite for high technology and on many occasions we replace locally built machinery in favour of our superior quality and technically advanced machines,” says St. Jean.

“Some earlier products were purchased for the sole purpose of the Chinese carefully examining, almost dissecting them, to learn how they were built and to determine whether they could be built domestically without importing them from the West.

“Fortunately, China didn’t have neither the industrial technology nor materials at the time to copy and produce tools and equipment to withstand the rigors of mining equal to what we were making.”

As mentioned earlier, BTI has spent more than 25 years in China and today, the company is proud of its presence in the country and in particular, its longstanding relationship with its dealer network Airfeng Inc of Beijing.

Since entering the country in 1996 with its TM Series of mobile rockbreakers, BTI has now become the Number One provider of these machines with more than 100 in operation throughout the country.

St. Jean credits the company’s success to good products and a clear understanding of what Chinese customers expect in terms of technology and respect for their culture and expectations.

“One customer needed machines that

could be operated from surface 5km from the rockbreaker. We delivered on this and allowed for a single employee to monitor and operate multiple grizzly stations from his office desk on surface, said St. Jean.

“This was later attempted by a local manufacturer but their units were later replaced by ours. A new order for two more was received recently at the China Mining Congress held in Tianjin. This customer will have 13 of our systems once these units are received early in 2015.

“That,” says St. Jean, “is further proof of the relationship BTI has with its customers in China and in their faith in our equipment.

“And there’s good reason for that faith.

The original TM series mobile rockbreaker sold in 1993 was retired last year with over 40,000 hrs on it. The second unit sold is still operating with the same customer with over 39,000 hrs on it. That’s pretty impressive!”

CMJ December 2014 • Canadian Mining Journal |

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Unearthing Trends

Preparing for the New Year with robust risk management Bruce Sprague is a Partner and EY’s Canadian Mining & Metals Leader. He is based in Vancouver.

By Bruce Sprague

O

ver the last year we’ve been talking about a variety of business issues facing the mining and metals sector in Canada and abroad. As we prepare to ring in another New Year we’re taking a closer look at some of the top risks facing companies. Productivity, capital decisions and social license to operate earned the top three spots on EY’s Business risks facing mining and metals 2014-2015 top 10 list.

Productivity is continuing its downward decline in the sector and executives must act quickly to regain efficiencies lost in the last super cycle. That means developing a broad business transformation program that creates enhanced shareholder value, improved margins, improved competitive positioning and increases companies’ ability to pursue strategic investments.

Capital decisions fell from the top spot on last year’s risks list to the second spot this year, reflecting progress made by companies to address this challenge.

Majors have improved their focus on capital management and optimization following a spate of asset write-downs in 2013. And that capital discipline is expected to continue.

Social license climbed the risk list as more companies witness the ability of community to stop, slow and even end projects — no matter how exemplary the company’s track record with social engagement. The number of projects experiencing delays or stops due to activists continues to rise and organizations cannot assume that acceptance by any stakeholders will be long lasting. Social license to operate isn’t a one-off. It’s con30 | Canadian Mining Journal • December 2014

tinuous and ongoing engagement with community.

Resource nationalism, capital projects, price and currency volatility, infrastructure access, sharing the benefits and balancing talent needs populate the midsection of our top 10 risks list and show minor movement from last year’s ranking.

Our tenth risk, however, is a new entrant this year.

Access to water and energy is the only new entrant to this risk list. Sufficient water and energy is an essential part of mining and metals operations but is becoming more difficult to source.

Burgeoning energy costs and competing water demands in many regions, particularly Chile, Peru, South Africa and Mongolia are starting to have a bigger impact on costs and companies’ ability to operate. Mining companies spent US$11.9 billion on water infrastructure globally

last year alone — a 250% increase over 2009. And global energy prices have leapt 260% since 2000.

Managing costs around water and energy sustainably is growing in importance — especially as mining and metals companies increase their reliance on renewable energy sources. Companies must assess their dependence on water and future supplies, and develop robust plans to cope with increased prices and possible shortages.

Risks in the mining and metals sector continue to shift in ranking but they all remain key priorities. Understanding these risks and their impact is crucial to remaining competitive. Only then can companies develop strategies for proactively addressing them. And when risk management is done right, confidence increases and growth returns to the boardroom agenda.

CMJ www.canadianminingjournal.com

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