Canadian Mining Journal June/July 2014

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June/July 2014

FAT

Slim Site Nets

RETURNS MANITOBA COPPER MINE SQUEEZED IN BETWEEN HIGHWAY AND LAKE

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CANADIAN Mining Journal

Departments 5 Editorial

This month Editor Russell Noble talks about the recent mine disaster in Turkey and how some mines around the world are still being allowed to operate under dangerous conditions.

6 Investing

Ned Goodman’s regular ‘Investing’ column looks at 2014 so far and why he’s still bearish about the current state of ‘almost’ all capital markets.

8 Law

Norton Rose Fullbright Canada’s Laurence Farmer addresses ‘offtake financing’ and how it’s providing an alternative to the traditional sources of capital available to junior mining companies.

40 Risk Management

Mark Frey and Scott Smith of Cambridge Mercantile Group talk about risk being dispersed around the globe and why companies need to stay one step ahead when it comes to finances.

44 Technology

An in-depth look at pumps by Mike Blundell, President of KSB Canada.

48 Innovation

Inventor George Rodger, Rodger Mineral Services, Coquitlam, and Tony Mariutti, President of TM Engineering Ltd, Burnaby, present their Dry Gravity Concentrator designed for mineral processing where water is not available.

50 Products

A look at what’s new in products and services for the Canadian mining industry.

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June/July 2014

FAT

Slim Site Nets

RETURNS MANITOBA COPPER MINE SQUEEZED IN BETWEEN HIGHWAY AND LAKE

ABOUT THE COVER Aerial view of the Reed Copper project in northern Manitoba clearly shows the narrow site located in a provincial park and situated between a lake and a highway.

CONTENTS

THE PRAIRIES

10

Potash Prevails Saskatchewan welcomes potash miners as expansion continues.

10

14 Diamond Discovery Veteran diamond hunter Gren Thomas sets sights on ‘Canada’s newest diamond district.’

14

18 New Copper

The Reed Copper project in northern Manitoba goes from construction to production in just two years.

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SPECIAL SECTION 21-36 E quipment Maintenance & Repair Canadian Mining Journal is pleased to introduce EM&R, a Special 16-page Section containing articles written by industry specialists representing companies that specialize in building, maintaining and repairing equipment used in the mining industry.

EQUIPMENT MAINT E N A N C E & R E PA I R

MAINTENANCE &REPA IR

For More Information New in August

Canadian Mining Journal’s popular Top 40 Mining Companies in Canada Report, plus a look at some of Canada’s top development projects.

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

www.canadianminingjournal.com June/July 2014 • Canadian Mining Journal |

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Editorial

CANADIAN Mining Journal June/July 2014 Vol. 134 — No. 5 80 Valleybrook Drive, Toronto, Ontario M3B 2S9 Tel. (416) 442-5600 Fax (416) 510-5138 www.canadianminingjournal.com Editor Russell B. Noble 416 510-6742 rnoble@canadianminingjournal.com Field Editor Marilyn Scales 613-270-0213 mscales@canadianminingjournal.com Art Director Mark Ryan

By Russell Noble

roduction Manager Print Production Manager P Steve Hofmann 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 416-510-5245 jglasroth@canadianminingjournal.com

Toll Free Canada: 1-800-268-7742 ext 6891 or 5245 Toll Free USA: 1-800-387-0273 ext 6891 or 5245 President

Bruce Creighton

Canaries and Coffins

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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.

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C

anaries and coffins were once commonly listed as “supplies” at many mines because as we all know, in the earlier days of underground mining, particularly coal mining, the working conditions weren’t all that great and safety certainly wasn’t a consideration.

In fact, they were deplorable based on some historical photos I’ve seen that show workers subjecting themselves to environments unimaginable by today’s standards. Mind you, particularly during the aftermath of the recent Soma disaster in Turkey, are the mines of the world really all that much better today?

One would hope so but increasingly we’re hearing of, and seeing more examples that demonstrate they’re not!

There’s no argument that the mines in North America and many others around the world for that matter that are owned and operated from here are safer by comparison, but it’s the others that are run in a haphazard manner by sketchy owners and governments with no respect nor compassion for the well-being of their miners that broad brush the mining industry as being heartless and negligent.

What just happened in Turkey, and routinely happens in China I suspect, just shows how little value too many governments place on their own people. Those of us fortunate enough to live and work here can only look on with amazement at the lack of compassion many mine operators have for their miners.

Working in some of those mines must be like punching your own time clock on life. It’s kind of like pushing the release button on a hangman’s noose or the guillotine’s blade. You know what you’re facing is grim but you hope something happens to postpone the inevitable and you live to see another day.

Regardless, people should not be forced (and many are) to accept ‘death’ as being part of their job’s description. I know that firefighters and police are aware of the ‘possibilities’ but no other profession that I know of other than third-world mining is it a likelihood.

Reading stories about the Soma disaster and the subsequent protests against the mine owner and the local government makes me sympathize for the people and their situation in Turkey, but it also reminds me of Waylon Jennings’ song: “Momma, don’t let your babies grow up to be a cowboy.”

After some of the news coverage we saw showing burnt and mangled bodies being removed from the depths of the Soma mine, I can just imagine how many mothers around the world looked over at their kids and thought: “Don’t let your babies grow up to be a miner.”

Being a parent and grandparent now, I naturally worry about my kids’ safety and well being all the time and after seeing the images of those victims from the mine disaster, it makes me grateful that all is well on the Noble front.

But from the mining industry’s perspective, news coverage of mining accidents, regardless of whether they’re on the magnitude of Turkey’s, or on a smaller yet equally terrible case like Lorna Weafer’s (the 36-year-old Suncor employee who was mauled to death by a bear recently at an oil sands’ site in northern Alberta), the truth of the matter is that events like those cast lasting impressions in people’s minds.

The word “mining” gets associated with death and disaster but like I said earlier, ‘most’ mines and mining operations are ‘safe’ and North American mothers need not worry (too much) about letting their babies grow up to be miners. CMJ

Canadian Business Press Indexed by Canadian Business Periodicals Index

June/July 2014 • Canadian Mining Journal |

5

Investing

Still bearish about ‘almost’ all markets Ned Goodman is President and Chief Executive Officer of Dundee Corporation

By Ned Goodman

S

o it’s early May and I am informed that I am due to write another column for the Canadian Mining Journal by mid month. Based on this schedule, is it time to say: “Sell in May and go away?” Let me start with the first draft of the opening paragraph of my yetto-be-printed Annual Report to my shareholders.

“As we enter 2014 I am bearish about the current state of almost all capital markets. This does not mean that I am necessarily bearish on the price performance of the stock market for the entire coming year because I think we will end up having an interim and long-term important opportunity that will allow us to take advantage of the bearishness.”

At the same time, on May 1, I read that Mohamed A. El-Erian, Bill Gross’s managing partner at PIMCO, has left his job and is quoted as saying that, “The ongoing U.S. recovery might lull some into forgetting about the risks its lack of

6 | Canadian Mining Journal • June/July 2014

momentum presents: The longer the economy just muddles along short of escape velocity, the greater its vulnerability to external shocks.”

And like clockwork, the old investment story of “Sell in May and go away” has been re-emerging. It has been my view that while most investing clichés should always be ignored, you can see from my opening remarks that I do buy into the “Sell in May and go away” cliché.

The facts are, without any longer term or deeper thinking there does exist some unusual set of calendar-based returns.

That six-month spread between May and October has historically been a weak period for the stock market dating back for about 25 years.

On average, according to some strategists, the U.S. stock market has gained 1.3% compared to a better than 7% gain from November to April. There are some reasons that seem to change quite often, but although the U.S. stock market has

been in uptrend since the 2007-2008 financial crisis, there has been weakness seen in the May to July periods.

From my perspective – “Sell in May and go away” looks like a good idea today.

On the other hand, those of us who are bullish on gold have not been too happy in recent weeks and yet it is also my view that as this review is being written on May 6, 2014, gold prices are rising and we are likely close to seeing much higher gold prices as the U.S. dollar gets trampled on by China and the rest of the so-called emerging markets losing their affection for the U.S. dollar and the U.S. advantage of being able to print paper currency at will, while increasing their debt and deficits like drunken sailors on leave.

So, sell in May and go away; but if you have it, hold on to your gold position. If you do not have it, you should be aware that the next rally in the gold price is currently underway but has a long way to go, at least it does in my opinion. CMJ

www.canadianminingjournal.com

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Law

Offtake agreements and financing mine projects Laurence Farmer is an associate with Norton Rose Fulbright in Montreal.

By Laurence Farmer

T

raditionally, offtake deals are concluded between fully operational mining companies looking to secure the sale of their mine output and buyers who are interested is satisfying their demand for a particular commodity, such as refiners, smelters or importers.

However, over the past couple of years offtake deals have been concluded with increasing frequency between development stage mining companies and financing parties looking to invest in the project (offtake investors and miners).

Because these arrangements only work if the mine is put into production, it is common for the offtake investor to also enter into a loan agreement with the miner to help ensure that the mine reaches production.

The result is a mutually advantageous relationship where the miner secures difficult-to-find upfront capital to help build their project and the offtake investor gets optionality on (the choice to store or sell) the mine’s future output with pricing that carries the potential for an attractive return. Below are some unique features of these transactions for Canadian mining companies and investors to consider.

Loan Component In today’s financial climate it is difficult for junior miners to secure loans on commercial terms. In offtake financing transactions, because the loan and offtake are commonly packaged together, the offtake investor is oftentimes able to provide the loan at lower-than-market rates to the miner in consideration for the potential higher of return on the offtake component of the transaction. This is attractive to mining companies who would otherwise be unable to secure such a low cost of capital at their development stage.

8 | Canadian Mining Journal • June/July 2014

Offtake Component To accurately price the concentrate being purchased, the offtake agreement must account for the costs associated with upgrading the material to a product suitable to end users. Unlike streaming agreements which contemplate the sale and purchase of precious metals, offtake deals are typically used in connection with base metals, which have a more complex and lengthy supply chain involving bulk transport and refining.

The concentrate supply chain has multiple steps, each with its associated costs.

Land transport methods from mine to port can vary from truck or rail haulage to slurry pipeline. Once at port, additional handling fees are charged based on the physical properties of the material and ocean freight charges are added based on the specified destination port, moisture content of the material and insurance. If the concentrate requires smelting and refining then treatment charges and refining costs are tacked on.

The various costs associated with the concentrate supply chain provide an opportunity for offtake parties to negotiate pricing. Among the most commonly negotiated clauses are those which deal with: • when, and at whose discretion, the commodity is priced; • the selection of destination port; and • the settlement of treatment and refining costs.

It is imperative that the parties have acute knowledge of the nature of and interplay between these provisions of the offtake agreement and, therefore, the concentrate supply chain generally.

Security Depending on the maturity of the project, it is not uncommon for financing

parties to take security on the project’s assets to protect their investment. It appears that first ranking security interests are being sought more regularly than in the past by offtake investors in these types of transactions. Such security allows the offtake agreement to stay attached to the project upon default under the loan, and, is an important component to mitigating investment risk assumed by the offtake investor.

When security is taken by an offtake investor at an early stage, the ability of the miner to procure additional project financing may be compromised by a disagreement between the offtake investor and future lenders over intercreditor terms. Therefore, to avoid potential intercreditor conflicts and promote additional project financing, it is advisable that the miner and the offtake investor negotiate and agree to bankable intercreditor principles as part of the offtake financing transaction. This should include rights to terminate the offtake investment in the event that the offtake investor fails to agree to sign an intercreditor agreement based on these principles.

Conclusion Offtake financing deals are providing an alternative to the traditional sources of capital available to junior mining companies looking to fund development. A successful and mutually advantageous transaction of this type will, in part, depend upon the parties’: • understanding and appreciation of the interplay between the loan and offtake components of the transaction; • the knowledge of the concentrate supply chain; and • ability to negotiate workable intercreditor terms.

CMJ www.canadianminingjournal.com

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| Mining in the Prairies

POTASH PREVAILS LOCALS ARE THRILLED

BY NEW POTASH MINERS COMING TO TOWN

By Eastern Correspondent D’Arcy Jenish

T

he German-based mining conglomerate K+S Aktiengesellschaft of Kassel is the world’s largest salt producer and a very large potash producer too.

In fact, the company proudly traces its corporate roots back to discovering potash-bearing salts in 1856 and the establishment thereafter of the world’s first potash mine.

In the century plus since, K+S, or its predecessor companies, have been mining potash in Germany, but never beyond.

That is about to change. A subsidiary company--K+S Potash Canada--is currently developing the first new potash mine in Saskatchewan in 40 years and at a cost of $4.1 billion. K+S announced the 10 | Canadian Mining Journal • June/July 2014

project in November, 2011 and is on schedule to produce its first tonne from the operation, located some 60km north of Moose Jaw, in mid-2016.

“We looked at deposits around the world,” says Dr. Ulrich Lamp, president and chief executive officer of K+S Potash Canada. “Our choice was Saskatchewan.

We acquired a really rich deposit, it’s a politically stable jurisdiction and our investments are secure.”

K+S’s Legacy Project, as it is known, is just one of several major potash projects underway in the province. In fact, it is no exaggeration to say that Saskatchewan’s potash industry is booming at the moment.

Australia’s BHP Billiton and Brazil’s

Vale have major new mines in the works and the three big, established players-Potash Corp, The Mosaic Company and Agrium Inc.--are investing $14 billion in mine expansions.

As well, says Tim McMillan, the province’s minister of energy and resources, lands held under exploration permits or development leases have grown to four million hectares from a mere 400,000 ten years ago.

“We have worked very hard to create a mining-friendly economy and to make sure that people around the world know that their investments are safe in Saskatchewan,” says McMillan. “We understand the mining business and we want it in our province.” www.canadianminingjournal.com

A picturesque view of Vale’s Kronau Project, one of a handful of potash projects in Saskatchewan that have many communities throughout the province talking positively about the economic benefits that will follow thanks to the arrival of the miners.

Furthermore, Saskatchewan is rich in natural resources, especially potash. The potash belt is vast, stretching east to west from border to border and roughly from south of Regina to Saskatoon in the north. Even with all the new production slated to come on stream over the next decade, the province’s potash resource will last several hundred years, according to estimates prepared by the department of energy and resources.

One other factor is driving the boom.

World demand for the product--a key component in fertilizer--is growing three to five per cent annually and is expected to continue at the same rate.

“People in developing countries like India and China want to have higher

quality diets and that means those countries have to increase their agricultural output,” says McMillan.

Small wonder then that major multinational mining companies have been beating a path to Saskatchewan in recent years with plans to develop new potash mines.

BHP Billiton decided to build rather than buy its way into the business after the federal government quashed its $38.6-billion hostile bid to take over Saskatoon-based Potash Corp in 2010.

BHP subsequently acquired property about 140km southeast of Saskatoon and is in the midst of conducting a feasibility study on what is expected to be the world’s largest potash mine.

The underground workings--at a depth of 1050 feet--will eventually span an area stretching 38km by 26km. To date, the BHP board has approved a capital investment of $2.6 billion to excavate and line both production and service shafts and the mine will be capable of producing up to 10 million tonnes annually when fully developed, though that won’t happen until sometime into the next decade.

Brazil’s Vale, the world’s second largest mining company, acquired a property spanning 51,840 hectares near the hamlet of Kronau, 30km southeast of Regina, and began exploration drilling in 2009.

The deposit, which is 55m thick, is located at depths of 1,600 to 1,700 feet-June/July 2014 • Canadian Mining Journal |

11

| Mining in the Prairies

In addition to bringing wealth to local communities, new potash projects throughout the province will also provide employment opportunities for workers in Saskatchewan and across the country.

too deep for an underground mine.

Therefore, the company envisions a solution mine in which water is injected into the deposit to dissolve the potash and the potash-rich solution is drawn back to the surface.

Vale is currently seeking a joint venture partner before proceeding with a feasibility study, says Matthew Wood, Reginabased manager of the company’s Kronau project. The company cleared a major regulatory hurdle last fall when it received final environmental approval from the province. The provincial permit includes

Process Plant Flow Process Plant Flow

12 | Canadian Mining Journal • June/July 2014

permission to draw water from Buffalo Pound Lake, some 90km northwest of Kronau, and the mine will consume a lot of water--250 cubic metres an hour.

“We need a constant stream of water,” says Wood. “That’s one of the disadvantages of solution mining, but it has a lot of other advantages environmentally. It’s far less disruptive on the surface and farmers can continue farming on lands right above the mine.”

K+S is also developing a solution mine and will be drawing water from Buffalo Pound, although its Legacy Project is a

mere three kilometres from the lake.

The company’s deposit is 1500m below the surface whereas the limit for underground potash mining is generally around 1000m. The mine will eventually employ about 300 permanent workers. Production will begin in the second half of 2016, will ramp up to two million tonnes per year in 2017, and by 2023 will reach full capacity of 2.86 million tonnes per year.

The company currently has some 1,800 workers at the site and about 1,500 of them are housed and fed in a huge construction camp, which one recent visitor describes as a “sea of ATCO trailers.”

Those employees are drilling injection wells, building the surface infrastructure, including a processing plant and a tank farm for storing water, and they are creating vast caverns in the salt formation beneath the deposit--a critical first step.

Solution mining occurs from the bottom up rather than top down. Dr. Ulrich explains that water is injected to dissolve the salt and create caverns measuring 250m across by 60m deep.

The company will complete 18 caverns by year end, 36 by the time the mine goes into production in 2016 and the number could grow to 70 with future expansion.

Once the mine is operating, water is injected into the potash formation to dissolve the mineral. The solution falls into a cavern below, flows through a channel to an adjoining cavern and is drawn back to the surface through another well.

Processing occurs in three stages: evaporation to eliminate water and some of the salt, clarification to remove remaining salt and any other impurities, and crystallization in which the potash is dried completely and reduced to a marketable commodity.

Moose Jaw is the closest large urban centre and the impact of the K+S Legacy Project is already being felt, says the city’s Economic Development Officer Deb Thorne.

“It’s the biggest thing to hit our city in a long time,” Thorne says. “We’ve seen a lot of activity related to it. New people are moving to the city. There’s new rental units being built, new hotels, new restaurants. Last year, our building permits hit an all-time record.”

CMJ www.canadianminingjournal.com

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SARSocksK | Mining in the Prairies

Veteran gem hunters get rewarded at remote North Arrow’s Pikoo Project Saskatchewan’s Craton proven as Canada’s newest diamond district

By Northern Correspondent Bill Braden

Remote but potentially rewarding is the way geologists view the diamond prospects for northern Saskatchewan.

14 | Canadian Mining Journal • June/July 2014

www.canadianminingjournal.com

T

he discovery of Canada’s newest diamond district bubbled up in the foam of one of those ‘beery’ sessions geologists are prone to now and then.

“The concept (of a new diamond region) developed over some beers, but it took years to bring it to fruition,” recalls Robin Hopkins, now the Vicepresident of Exploration for Stornoway Diamonds Inc. And typical of the way things work in the junior exploration arena, it also needed a complex string of corporate swaps and deals to prove it real.

Around 2006, three experienced diamond hands from the Aber/Kennecott camps of the early 1990s, including Hopkins, Mike Stubley and John Armstrong, were recruited by Stornoway, the junior explorer then lead by Eira Thomas, to comb the country for prospective new ground in the hunt for diamonds. The Shield country of central Saskatchewan came up on the radar; with the characteristics of other ancient cratons, it could be likely country for a new gem discovery.

Fueled by recent geology reports filed

by Government of Saskatchewan and university researchers and their own diamond-hunting savvy, the veteran team realized that the province’s eastern flank fit the bill. It assembled a 33,000 ha parcel near Pikoo Lake.

Stornoway, founded by Thomas in 2003, was at the time focused on developing its flagship Renard diamond project in Quebec. However, through the latter 2000s it continued to invest in the Saskatchewan project, 140km east of La Ronge, building the geological case for a new gem field and seeking targets to drill.

By 2011, Eira had left Stornoway. The company was putting everything it had into Renard and couldn’t advance on Pikoo. Early in 2013 it optioned the ground, along with properties in Nunavut and Ontario, to Eira, who in turn optioned them to her father Gren Thomas and his junior, North Arrow Minerals Inc, to advance the project in exchange for an interest.

It was a decisive move. With Pikoo, the father-daughter team, already fabled for their co-discovery of the Diavik mine in

1994, could be on the cusp of yet another Canadian diamond giant.

Pikoo Heralds New Diamond District Following Stornoway’s geological sleuthing, North Arrow in July 2013 pulled a small 210kg drill sample from the PK150 kimberlite. It yielded a surprising 745 diamonds, including an impressive 23 stones larger than 0.85mm in size, a generally accepted minimum for evaluating commercial potential.

North Arrow’s November announcement set a new bar for such remarkable early drill results. The so-called Sask Craton was hailed as Canada’s newest diamond district and set off a flurry of staking that so far has captured at least 10 times North Arrow’s own 33,000 ha parcel.

“It’s created a play that has an audience,” says North Arrow’s President and CEO, Ken Armstrong. “The Sask Craton tectonically has some real similarities to the Slave Craton,” which already hosts the three producing mines in the NWT. The province already has a diamond heritage. Shore Gold Inc.’s Star project east of Prince Albert has been under exploration since 1995. The company is moving forward on permitting and financing for what could be a 34 million carat, 20 yearplus producer.

North Arrow is currently studying Pikoo’s geochemistry and evaluating the best methods to further define the project. “Many priority targets remain on the property,” said North Arrow’s announcement, noting the find lies only 10km from existing highway and power lines.

Transformative Potential in Nunavut For all Pikoo’s potential, North Arrow’s lead prospect is the Qilalugaq Project, about 900km west of Iqaluit and just 10km from the central Nunavut Hamlet of Repulse Bay. Discovered in 2003 and explored by BHP and Stornoway, Qilalugaq hosts eight kimberlites including the 12.5 ha Q 1-4 pipe complex — the largest known kimberlite in the eastern Canadian Arctic.

Early signs are that Qilalugaq could rival Canada’s known producers. In a June/July 2014 • Canadian Mining Journal |

15

| Mining in the Prairies Aerial clearly shows the rustic beauty of the barren lands of northern Saskatchewan and ‘Canada’s newest diamond district.’

technical report filed in May, 2013, North Arrow confirmed an inferred resource at Q1-4 of 26.1 million carats in 48.8 million tonnes averaging 53.6 carats per hundred tonnes. The grade is about half of what the Ekati mine comes in at, but its near-surface tonnage and proximity to tidewater is what makes it interesting.

Even more intriguing is that early sampling of Q 1-4’s diamonds shows tantalizing signs of saturated yellow stones. If the deposit proves to have a consistent population of yellow-coloured rough; it would be the North’s first such discovery. It could also be a stunning game-changer for North Arrow, as high-end fancies can be worth $5,500 a carat, 10 to 50 times the value of clear stones.

North Arrow is planning for a $3.7 million, 1,500 tonne bulk sample this

summer. The goal is to recover at least 500 carats and get a preliminary market value on the diamonds.

“It could be transformative for the company,” says Armstrong. “A positive valuation could immediately see this becoming a development-track project,” adding that its location, a mere nine km from tidewater, gives it a huge infrastructure advantage compared to many other high Arctic potentials.

Back ‘home’ in the Lac de Gras region, North Arrow will invest $1 million this season on its Redemption Project which neighbours both the Ekati and Diavik mines. Under an option agreement with Arctic Star, North Arrow could spend up to $5 million by 2017 to earn an 80 per cent interest.

It plans an intensive ground geophysi-

North Arrow’s Pikoo camp.

16 | Canadian Mining Journal • June/July 2014

cal survey of some 40 targets identified by earlier surface and airborne exploration.

Despite its location in the well-combed ground around two of the world’s premier producers, Armstrong is bullish on the potential.

“It’s what we think is the last unsourced, well-defined KIM (kimberlite indicator mineral) train in the Lac de Gras region,” he says.

A Clear Exploration Strategy The vision that guides the Thomas dynasty has evolved considerably since the heady days of the NWT Diamond Rush in the 1990s. Gren Thomas created new juniors including Navigator Exploration Corp., Strongbow Exploration Inc., and in 2007, North Arrow. He credits the financial backing of Lucara Diamond principal Lucas Lundin (Eira is on the board of directors of Lucara) as a pivotal step in enabling North Arrow’s progress.

Its early corporate concept was simple and crisp, outlined by Armstrong in a media interview at this year’s PDAC conference.

“The concept was to identify a number of projects that had seen significant past exploration and look at pulling them together under one umbrella,” said Armstrong.

“With a management group that had significant positive and successful experiwww.canadianminingjournal.com

ence in the diamond space in North America and Africa, we were very successful in 2013,” he said, adding that three separate financings put $13.4 million in the treasury.

“We can move projects forward appropriately and smartly and with intelligent proper exploration,” says Armstrong of the seven diamond properties currently in North Arrow’s portfolio.

“Diamonds have really attracted new investors,” says the company’s Investor and Community Relations Manager Nick Thomas. “For the first time since Lac de Gras, investors are making money.”

Lessons Learned All North Arrow’s projects are centred on a key strategic rule: look only at prospects with an established history of upside exploration results and permitting potential. It’s a lesson learned from a struggle North Arrow encountered in 2007 while exploring a small greenfield lithium project at Aylmer Lake, about 200km northeast of Yellowknife.

In a complicated and expensive series of events, it was ordered to stop the program when the Akaitcho First Nation filed a court injunction. It asserted that the Federal government had not properly consulted with them about North Arrow’s program, a duty the Crown had under its own land-use regulations.

North Arrow objected but the court upheld the Akaitcho injunction. The ruling embarrassed the Crown and chilled an already cool environment for exploration in a region that has yet to achieve a landclaim settlement. It also cost North Arrow its $1 million investment.

“I’m not going back until things change, and that probably won’t be in my lifetime,” said Thomas of areas where aboriginal claims are not clearly defined and where there isn’t some precedent of permitting success.

“This is an area I’ve worked in for over 50 years,” he said. “If we had been prevented from going there (25 years ago) there wouldn’t be any diamond mines today.”

North Arrow CEO Ken Armstrong points to the North’s vast infrastructure gaps as a key challenge for any explorer

Plenty of pipe is ready for punching the Pikoo site.

hoping to find a deposit, let alone make it a mine.

“We’re going into a wild, remote, seasonal environment. These are things we can’t change. But, on the plus side, its elephant country with huge potential,” he adds.

At over 70 years of age, why does Gren Thomas keep at it?

“I like finding stuff, I like canoes and bush planes,” says Thomas in the soft Welsh brogue that’s stayed with him since graduating from Cardiff University as a mining engineer. He came to Canada in 1964 for Falconbridge at Sudbury and later the Giant Mine in Yellowknife.

When he struck out on his own with Highwood Resources in 1975, he tasted early success with finding the Thor Lake deposit of exotic minerals southeast of

Yellowknife. It is today’s Nechalacho Rare Earth Elements Project under Avalon Rare Metals, one of the world’s most advanced heavy rare-earth projects.

In 1980 he created Aber Resources and a decade later was looking for base metals when the diamond rush hit. In 1991, with partners Chris Jennings, the late Earl Curry and Bob Gannicott (now President and CEO of Dominion Diamonds) he moved fast to stake claims near what is today’s Ekati mine. That ground became the Diavik mine.

“I’m not really a mining guy, in the sense of building mines,” says Thomas, honoured as Canada’s Prospector of the Year by his peers in 1999.

“I’m basically a prospector. I do miss being out there, especially in the Yellowknife region.”

CMJ Sampling at the Qilalugaq project.

June/July 2014 • Canadian Mining Journal |

17

| Mining in the Prairies

TIGHT SITE HIGHWAY AND LAKE CHALLENGE MINERS AT NEW COPPER PROJECT

Aerial tells the story about the tight working conditions miners faced when building the Reed Copper Mine midway between Flin Flon and Snow Lake. The distance between the lake and the highway below is only 325 metres.

Special Report*

T

he Reed copper project, located in northern Manitoba midway between Flin Flon and Snow Lake, is within the Grass River Provincial Park and adjacent to provincial Highway 39.

In fact, the mine is within a home-run ball from the highway on one side and one of the Park’s larger lakes on the other and because of its proximity to those sensitive neighbours, great care had to be taken when designing the elongated site.

With only 325m of land separating the highway from the lake, designers were challenged to squeeze a number of elements into the property including the 18 | Canadian Mining Journal • June/July 2014

mine’s portal, a polishing pond, a waste rock storage pad, cold storage, plus the essential infrastructure of power and water for administration and construction camp facilities.

And what makes this project even more remarkable is the timeframe involved.

Construction started on March 14, 2012, and after encountering several challenges along the way such as environmental scrutiny due to its location in a provincial park, ground water and poor ground conditions, the first ore was brought to surface in July 2013 and the project advanced to mine status after achieving commercial production on March 31, 2014.

Understandably, both Hudbay and VMS Ventures are proud of their achievements in such a short and accident-free period of time and as Neil Richardson, VMS Ventures’ COO says: “We are very pleased to see the Reed copper project advance to mine status and achieve commercial production. The mine continues to advance towards full production and has operated without any lost time accidents.”

Richardson says the focus will always remain on safety and continued ramp development while establishing lateral infrastructure headings and ore development.

John Roozendaal, President and www.canadianminingjournal.com

Core.

Director, VMS Ventures, talks further about his company’s involvement in Manitoba and says: “At VMS Ventures we’re focused primarily on acquiring, exploring and developing copper-zincgold-silver massive sulphide deposits in the Flin Flon-Snow Lake Belt of Manitoba and mining-friendly jurisdictions elsewhere in the world.

“Our project property portfolio consists of the Reed Copper Project, McClarty Lake Project (45km west-southwest of Snow Lake), Sails Lake Project (30km east of Snow Lake), Puella Bay Project (30km southeast of Snow Lake) and Morton Lake Project (25km west of Snow Lake).”

Outside of the Snow Lake camp, Roozendaal says VMS also holds sulphide prospective properties near the past-producing Fox Lake and Ruttan copper-zinc mines, located near the communities of Lynn Lake and Leaf Rapids in northern Manitoba. It has also optioned the Black Creek property in the Sudbury mining camp.

VMS Ventures also owns approximately 23.9% of North American Nickel Inc. (NAN), another resource development company that has 100%-owned properties in Maniitsoq, Greenland, Sudbury, Ontario and in Thompson in Manitoba’s nickel belt.

HISTORY OF REED COPPER VMS Ventures discovered the Reed Copper deposit in 2007. Most present and pastproducing mines in the region are situated in the exposed part of the belt. Much less exploration has been done in the buried portion of the belt, and it is here that VMS saw a potential opportunity.

In October 2007, the company announced the discovery of a near-surface zone of high-grade copper mineralization at the Reed Lake property in the Flin Flon-Snow Lake greenstone belt in central Manitoba.

The copper-rich intersection was achieved in the second drill hole testing a coincident airborne (VTEM) EM and magnetic anomaly. The drill hole recorded 10.50 metres of 11.19% copper within 43.05 metres of 4.38% copper. Drill programs since that time have delineated 2.55 million tonnes of 4.52% copper in the indicated category.

In July 2010, VMS signed a Joint Venture Agreement with Hudbay Minerals covering the copper-rich Reed Lake Discovery Zone. The discovery of the Reed Copper deposit has been based on the exploration of a conceptual idea that highly productive volcanic rocks of the Flin Flon-Snow Lake greenstone belt are present beneath younger dolomite and sandstone cover rocks. The concept was proven correct with the discovery at Reed.

As a result, Reed Copper attracted worldwide attention due to its impressive copper grade which was more than twice the average for the belt.

June/July 2014 • Canadian Mining Journal |

19

| Mining in the Prairies THE ROLE OF TECHNOLOGY To aid in the early discoveries, modern airborne and ground geophysical technologies were used along with geochemical testing to explore rock packages that are often covered by a veneer of Paleozoic carbonates, sandstones and glacial till.

Although most of the area of the greenstone belt is exposed, the area on the south side is completely buried beneath much younger sedimentary rocks which are completely unrelated to the rocks hosting the ore bodies. Thus, new technology for Reed Copper was used in the form of helicopter time domain electromagnetics (TEM) to “see through” the younger rocks and explore the Flin Flon greenstone rocks beneath.

Geotech Ltd.’s Versatile Time Domain Electromagnetic (VTEM) system was selected for this crucial part of the job.

VTEM is able to cover large amounts of ground quickly, and in most cases, the electromagnetic (EM) anomalies identified by the system may be drilled immediately.

In the past, Roozendaal says EM anomalies detected from the air needed to be precisely located on the ground before being drilled. This required expensive and time-consuming surface geophysical surveys. VMS was one of the first companies in the Flin Flon belt to drill directly from airborne data, which allowed it to fly, drill and discover all in the same year.

The use of airborne electromagnetic

20 | Canadian Mining Journal • June/July 2014

and magnetic geophysical surveys, coupled with Mobile Metal Ions soil geochemistry, has proven to be a rapid and cost-effective method of assessing VMS properties in the belt. The definition and drill testing of a coincident EM-magnetic anomaly on the Reed property led to the discovery of the Reed Copper deposit, says Roozendaal.

SOME INTERESTING FACTS AND FIGURES

LOCAL IMPACT The discovery of Reed Copper was positive news for the local communities because the last remaining mine at nearby Snow Lake and a large mine in Flin Flon were declining in production in 2007 – the same time the Reed Copper discovery was made.

The two mines were enormous contributors to the Manitoban economy, so Reed Copper was a welcome announcement and will help contribute to the future of Northern Manitoba.

• Averaging 60% of full production tonnage (1,300 tonnes per day), having operated at 792 tonnes per day in the first quarter of 2014.

THE FUTURE The life of the mine is predicted to peak at approximately six years; however, underground exploration will continue with the potential to add new tonnes throughout the mine’s life.

Typically, the deposits of this belt can grow in size as a result of exploration, averaging two to three times their original tonnage. As a result, the size of this deposit may grow as well, thereby extending the life of mine.

CMJ

The $72- million capex project is a joint venture between Hudbay Minerals (70% - operator) and VMS Ventures (30%) • The Reed mine will be a ramp access mine to three steeply dipping ore zones with a reserve of 2.16 million tonnes at 3.83% copper.

• During the first quarter Reed mined 71,236 tonnes of ore at a copper grade of 1.92% and a zinc grade of 2.14% from a combination of ore development and longhole stope mining.

• The project has invested $66 million to the end of Q1, 2014 and approximately $4 million of project capital will be spent as sustaining capital over the life of the mine.

• Sale of copper and zinc concentrates will start to pay back the Company’s project loan and advance VMS towards cash flow.

• During the month of March, development advanced 288 metres or 9.3 metres per day, for a total of 3,215 metres project to date.

• 27,407 tonnes of ore were mined in March. *Information for the Special Report provided by John Roozendaal, President and Director, VMS Ventures.

www.canadianminingjournal.com

E Q U I P M E N T M A I N T E N A N C E & R E PA I R

MAINTENANCE & REPAIR

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VULTREX grease delivers uncompromising reliability for large, heavy duty, open and enclosed gear drives, as well as bearings and exposed sliding surfaces. Its wide operating temperature range enables year-round use.

That can mean increased profitability and reduced downtime. Just some of the reasons to choose VULTREX grease for mining’s toughest conditions.

Prove it to yourself. Call 1-866-335-3369 or visit lubricants.petro-canada.ca/mining Petro-Canada is a Suncor Energy business Trademark of Suncor Energy Inc. Used under licence.

LUB 2132 (2010.07)

TM

CONTENTS Feature

Supplement of

E Q U I P M E N T M A I N T E N A N C E & R E PA I R

27

CANADIAN Mining Journal June/July

PUBLISHED BY

24...

27...

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Canadian Mining Journal 80 Valleybrook Dr., North York, ON M3B 2S9 Tel. (416) 442-5600 Fax (416) 510-5138 www.canadianminingjournal.com

24 LUBRICATION

EDITOR

Augusto Fernandes, a Product Applications Specialist, Mining Americas, Shell, looks at the service teams that are available to help miners keep their machines operating.

DIESEL ENGINES

Raman Autar, an Ontario-based diesel engine maintenance and diagnostic expert, compares older diesel engines with today’s models and the efficiencies that Tier 4 Standards have imposed.

Russell Noble 416-510-6742 rnoble@CanadianMiningJournal.com

ART DIRECTOR Mark Ryan

28

PRODUCTION MANAGER Steven Hofmann

PRINT PRODUCTION MANAGER Phyllis Wright

CIRCULATION MANAGER Cindi Holder 416-442-5600, ext. 3544 cholder@bizinfogroup.ca

REBUILDS

PR Engineering of Oshawa is one company that specializes in refurbishing and completely rebuilding heavy components used in mineral processing.

31

SALES

FILTERS

Western Canada, Western U.S.A. & Quebec

A look at filters and how they can extend the life of hydraulic and lubrication components by reducing ferrous metal microns in the systems.

AVOIDING DOWNTIME

All equipment requires routine maintenance and this article talks about why it’s important to service top-quality equipment regularly in order to achieve productivity and earn profits.

Joelle Glasroth 416-510-5245 jglasroth@canadianminingjournal.com

32

Printed in Canada All rights reserved

ABOUT THE COVER

LUBES & GREASE

Suncor’s Martin Keenan talks about Petro-Canada Lubricants, a division of Suncor Energy, and how its technicians have developed a new lubricant for use in the oil sands.

PUBLISHER

Robert Seagraves 416 510-6891 rseagraves@CanadianMiningJournal.com

34

Keeping the gears of mining machines well oiled and lubricated are key factors to helping ensure the longevity of expensive equip-

E Q U I P M E N T M A I N T E N A N C E & R E PA I R

MAINTENANCE & REPAIR

ment.

EM&R June/July 2014

» 23

Feature ÂťEquipment Maintenance and Repair

Essential

SERVICES A look at the importance of routine service inspection and maintenance in mining equipment

By Augusto Fernandes 24 ÂťEM&R

June/July 2014

www.canadianminingjournal.com

Equipment Maintenance and Repair» Feature

I

n the coming decades, population growth and improvements in living standards in emerging countries will considerably increase the demands for energy, material goods and food, highlighting the importance of the mining sector in the world´s economy. This leading role will demand significant growth from global mining companies, increasing the complexity of the challenges already known in this sector.

Amongst the key challenges, the greatest pressure in the sector comes from cost reductions. In order to overcome this high-cost scenario, the maintenance assets based in a structured process of routine inspections and planned interventions will be key.

In this scenario, Shell, with its global experience in this sector, has been offering a structured solution called Shell LubeExpert. Shell LubeExperts’ main aim is to reduce the overall total cost of ownership in mining sites, delivering significant potential cost savings through routine preventative maintenance and inspections.

By 2050, the global population will jump from the current 7 billion to over 9 billion people. It is expected that emerging countries’ living standards will increase and their consumption of material goods, energy and food will grow proportionally. The energy demand is expected to double by 2050.

On this scenario, mining will continue to be one of the vital sectors to the world´s economy. On the other hand, this need for growth will also increase the complexity of the known challenges of this sector, such as:

• The volatility of commodity prices; • Reduced productivity; • Increasing operational costs; • R etention and recruitment of skilled workforce; •C omplexity of obtaining operating licenses (legislation, community and environment); • Mineral resources nationalism.

These challenges have been reducing the financial health of the mining companies, forcing them to significantly

A LubeExpert technician checks one of many fluid levels on a large piece of mining equipment.

reduce their costs in the short-term and rethink how to manage their business in the long term.

Maintenance has a major role in this scenario, by maximizing the availability and productivity of assets, with reliability and safety, as well as by the implementation of a continuous improvement process with focus on significant cost reductions in a sustainable way.

However, for maintenance to reach its cost reduction goals, routine inspections and scheduled interventions are fundamental. Through structured planning, it is possible to maximize component life, identify premature failures, reduce/eliminate unscheduled downtime, reduce the MTTR (Mean Time to Repair) and increase the MTBS (Mean Time Between Shutdowns).

The largest challenge is to implement these routines in an environment facing a shortage of skilled labour and an increasing pressure for immediate productivity results, which very frequently can jeopardize asset reliability and employee safety.

Recognizing the challenges faced in the mining sector, Shell developed the Shell LubeExpert services offer, which is a proactive approach to early detection of failure modes of components and equipment.

The Shell LubeExpert service consists of a team of experts with deep knowledge in mining equipment, wide expertise in lubrication and great ability in identifying opportunities to reduce total cost of ownership, with focus in critical assets such as mills, kilns, draglines, shovels, excavators, haul trucks, long walls, crushers, stackers, reclaimers, etc.

Using specialized techniques, Shell LubeExpert staff can identify the signs of potentially disastrous failures in critical

mining equipment. Staff work in partnership with customers to implement improvements and develop programs of preventive/predictive maintenance. These programs can reduce millions of dollars in asset downtime and component costs, beyond the significant increase in productivity and reliability.

Through trends analysis and reduction of wear rates, the service also helps forecast equipment failures and through the deep knowledge of its experts, can establish performance benchmarks of equipment, components and lubricants.

The service covers all levels of the maintenance process: from managerial to operational levels, also touching support levels and is tailored to specific customer needs by agreement.

Many mining customers around the world have benefited from implementing the service – following are four examples that exemplify the success that has been delivered in the mining sector.

MANAGEMENT OPERATIONAL • Lubrication audits • Setting performance standards • Training plan • Dedicated on-site support • Inspections, adjustments and design of Lubrication System • Modification and calibration of injector & distribution blocks • Open and closed Gear Inspections • Vibration analysis • Temperature tagging • Thermal Imaging / Video stream • Quality Inspection reports • Troubleshooting • Failure Diagnostics • Training EM&R June/July 2014

» 25

Feature »Equipment Maintenance and Repair

the life of the final drives from 5,000 hours to 20,000 hours (expressive values not accounted in this case).

»

CASE 02: Savings of over US$600,000.00

Shell LubeExperts (here and below) take their jobs seriously as they ‘get dirty’ helping customers maintain their equipment to OEM specifications.

»

delivering productivity increase and increased life of pins and bushes in 5 Hitachi EX 3600-5 excavators, maintained

by Chaneme (Hitachi Dealer in Colombia) in coal mine of Prodeco (Glencore Xstrata) in Calenturitas, Colombia. By identifying the causes of failures, implementation of a routine inspection process of the lubrication system and critical components, together with the application of high performance grease (Shell Gadus S2 OG 85) the pins and bushes life increased from 4,000 hours to 16,000 hours.

»

CASE 01: Savings of over US$160,000.00/ year with productivity increases and life extension of the lubricant in the final drives of 75 Caterpillar 797F haul trucks at Albian Sands Energy in Fort McMurray – Canada. Aiming to increase the life and reliability of the final drives, Shell made a detailed analysis of the application and proposed the use of a high-performance lubricant for final drives (Shell Spirax S5 CFD M 50). Together with the change of lubricant, a systematic monitoring of the final drives, a process of contamination control and training of all staff involved was implemented. All these actions delivered a life extension of the lubricant from 2000 hours to 4000 hours, and increased

CASE 03: Savings of over US$1,800,000.00/ year with increased productivity and saddle block liners life extension in 10 Bucyrus 495 HF shovels (current Caterpillar 7495 HF) at Albian Sands Energy in Fort McMurray – Canada. By the implementation of a routine inspection process of the lubrication system and of all critical components of the shovels, together with the application of high performance grease (Shell Gadus S4 OGK / OGKX) the saddle block liners life achieved over 32,000 hours against a estimated life of 10,000 hours.

»

CASE 04: Savings of over US$2,000,000.00/ year with increased productivity and bearing life of the bucket wheel of a ThyssenKrupp 5PA5A reclaimer in a iron ore mine in Brazil. By identifying the causes of failures, implementation of a routine inspection process of the lubrication system, resizing of bearings sealing and application of a high performance grease (Shell Gadus S3 V220C 2), the bearing life increased from 4,000 hours to over 8,600 hours, significantly reducing the reclaimer downtime and therefore increased its productivity.

Currently the Shell LubeExpert program is available in Canada, Australia, South Africa, Brazil, Colombia, U.S., Russia, Indonesia, India and China.

Augusto Fernandes CLS, CLGS – Product Application Specialist – Mining Americas, Shell.

26 »EM&R

June/July 2014

www.canadianminingjournal.com

Equipment Maintenance and Repair» Feature

DIESEL WORLD

By Raman Autar*

I

n order to respond to the stipulations of the Tier 4 Diesel Engine Standards, engine manufacturers have been called upon to dramatically change diesel engine technologies over the years.

Since the 1930s, diesel engines weigh half as much, produce nine times the power, and produce twenty-eight times the fuel injection pressures. Technology, which enables modern diesel engines to perform to stipulated requirements including those to meet regulatory standards for emissions, has resulted in creating a complex interaction between the diesel fuel and the diesel engine components, such as on-board computers and electronics, aftertreatment systems, fuel injection systems, and air management components.

The implication is that these systems and components, which operate at levels of higher precision and higher tolerances than ever before, must absolutely be maintained in pristine condition and the diesel driven equipment appropriately operated to enable them to perform as designed to achieve desired results.

Therefore, in the post Tier 4 mandated world, the mining industry will need to “up-notch” its operational and maintenance management practices for equipment which is diesel driven to ensure that these pieces of equipment keep meeting the regulatory and licence-to-operate requirements.

It is also prudent that the mining industry gear-up to ensure precision maintenance of diesel engines as this will lead to optimization of maintenance and thus minimization of operational cost. A diesel engine management program will help ensure that the requirements of the Tier 4 standards will be met and sustained through the life cycle of diesel driven equipment.

Tier 4 diesel engines essentially rely upon emissions technology such as EGR (Exhaust Gas Recirculation) and DPM (Diesel Particulate Matter) filters, for

example, to further reduce emissions from the Tier 3 levels.

In order to achieve the end result, these engines are required to use ULSD (Ultralow Sulphur Diesel) fuel with less than 15ppm sulphur content and specific lubricating oils. Further, the much finer tolerances in the common direct fuel injection systems used on these newer engines require ultra-clean diesel fuel to ISO 4406/99 Cleanliness Levels of 12/9/7 to ensure that precision, high-tech components perform satisfactorily over their service life.

Without the basic requirements of fuel, lubrication and intake air quality, sophisticated technological devices installed in these engines are bound to fail very quickly, thus neither meeting their service lives nor being able to provide functionality of reducing emissions.

So it is crucial that these primary requirements of engine operation are fulfilled as the starting point. This has little to do with the traditional “maintenance” but is an “operations” function.

It is crucial that a culture of reliability is driven within the organization to deliver the best operational performance and to achieve this it is recommended to adopt a Reliability Centred Maintenance (RCM) approach which takes a broader view of “maintenance” and includes those tasks and activities undertaken by operators.

It will be a fundamental requirement for mining companies to undertake RCM analyses for their Tier 4 engines with particular emphasis placed upon air-intake, lubrications, fuel systems as well as equipment operating practices to establish tasks and activities directly affecting emission control devices.

A good starting point for Tier 4 engine management is to have in place a solid asset management program which deals with the whole-of-life criteria for these engines. Firstly, the correct engine needs to be procured for the application, sec-

ondly they need to be operated well, thirdly they need to be maintained well and lastly, they need to be retired appropriately when they can no longer sustainably provide the function and meet the regulatory requirements for emissions Here’s a recommended summary of activities that should be followed for Tier 4 engines:

• Establishing an organization policy for procurement, operations & maintenance and retirement of diesel engines • Providing standards and procedures to sites to enable them to meet the policy requirements • Establishing emissions-based servicing and maintenance of diesel engines • Providing operator and maintainer training with particular focus on “know-why” training • Providing awareness training across the organization on the effects of diesel emissions • Establishing collaboration with air-quality organizations and emission experts to continuously improve diesel emissions • Establishing a clean diesel fuel and lubrications program on sites • Using advanced condition monitoring activities to identify and remedy incipient faults before they impact emissions Mining companies must establish operations and maintenance practices to lower emissions from these engines and it is suggested that engine suppliers and consultants in industry be approached to provide solutions to either retrofit emission control devices on these engines and/or assist in establishing operational and maintenance practices that will lower emissions.

Raman Autar is a diesel engine maintenance and diagnostics expert based in Ontario. raman.autar@mintrex.net.au

EM&R June/July 2014

» 27

Feature »Equipment Maintenance and Repair

Photo shows a Main Frame Rebuild in progress while below is a close up of an Adjustment Ring Rebuild.

Making Good

BETTER Repairs can often result in machines exceeding OEM specs

By Russell Noble

“B

etter Than New” are words that are sometimes used when talking about how one feels or looks, but in the world of heavy mining equipment, they often refer to a repaired or refurbished machine and how it performs.

In fact, because of the cost of new machinery, more and more miners are spending money on keeping their older machines longer than ever before and thankfully, the companies responsible for

28 »EM&R

June/July 2014

extending the lives of those machines are doing a ‘better than ever’ job too.

During the more profitable times of past years when it was not uncommon for many mining companies to change out their fleets with relatively few hours on them, today’s economy has forced many companies to make things last longer, sometimes into the thousands of hours range.

Most older machines were designed www.canadianminingjournal.com

Equipment Maintenance and Repair» Feature

Rebabbitted Pitman Cap.

Bowl rebuild

and manufactured to last, often times outlasting the mine itself but in today’s economic climate it can be a challenge to convince customers that in many cases the older parts are superior to the newer foreign equipment that is available.

Gary Robinson, General Manager of PR Engineering Limited of Oshawa, Ontario says, “Working in our favour is the fact that we can re-build a piece of equipment in a fraction of the time it takes to get the foreign-made parts.”

In business since 1965, PR Engineering specializes in new manufacturing, total rebuilds and parts refurbishing. Robinson says, “It’s when rebuilt parts are introduced into foreign-made machines that compatibility comes into play and can become an issue.”

The standard of work that applies in PR Engineering’s shop is that everything is done to OEM drawing specifications whereas many of the smaller spare parts that customers try to install in a rebuilt frame won’t fit possibly because many are reverse engineered rather than being manufactured from the original drawings.

“It’s kind of like installing a high-powered engine into a car without changing the drive train to handle the increased horsepower and torque. Everything must work in sync, otherwise the new components can blow the others apart,” said Robinson.

That’s an extreme scenario but Robinson says it paints a picture of what

PR Engineering’s designers and technicians face with every job they tackle.

From its 45,000 square foot manufacturing facility in Oshawa, PR Engineering is well equipped to handle most of the bigger jobs.

“We specialize in the repairs that most companies would not tackle and because of that, our motto is ‘Bigger is Better,” says Robinson.

Because of the size of its shop, PR Engineering has the space to go beyond traditional repair work by providing in-

house fabrication and welding and as a CWB Division 2 certified company since 1980, it has developed many pre-qualified welding procedures using certified processes.

The company is one of the few around capable of manufacturing any type of new steel or stainless steel fabrication and in addition to these steel fabrication processes, it is also qualified and equipped for most cast iron and manganese repairs.

At the heavier end of repairs, the company also has a Blansko CNC SK50 verti-

Rebabbitted Pitman Cap.

EM&R June/July 2014

» 29

Feature »Equipment Maintenance and Repair

Finish machining of a rebuilt Bowl.

cal boring mill with a 206” swing by 168-inch-high that is equipped with two machining heads, one manual head with tracing and threading attachment and one Siemens CNC control head.

The machine can handle up to 60 ton parts.

For horizontal boring work, there are four CNC mills ranging from 276” x 240” x 144” to 100” x 90” x 96” in the shop.

One of the unique services that sets PR Engineering apart is babbitting. With more than 45 years of experience in this area, the company offers babbitting for all new and used bearings with bores sizes that range from 4” to 115” using any type of babbitt.

Re-assembly of a rebuilt Hydraulic Toggle.

Gary Robinson says that because the company pours in excess of 100,000 pounds of babbitt each year, it is capable of providing faster service and all bearings poured at the factory are finished machined and grooved to exacting standards.

Ultrasonic testing of bearings is also available, says Robinson.

Perhaps one of the more impressive services provided by the company comes in its assembly capabilities. In addition to all new and re-manufactured jaw crushers being assembled to verify alignment and clearances, other repairs and machining work requires assembly too and because of their expertise, PR Engineering is a

Metso authorized repair facility where all assembly done on cone and gyratory parts is done to OEM specifications.

Endorsements like that from Metso is very encouraging for the well-being of the company but what worries President Linda Grieco more about the future of her business is the skill shortage and finding capable people to replace any of her 45 employees who may be retiring in the future.

“The industry needs an infusion of new blood and sadly, our schools aren’t doing enough to bring awareness of the opportunities that are out there for them in the manufacturing sector,” says Grieco.

The Rebabbitting process.

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June/July 2014

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Equipment Maintenance and RepairÂť Feature

FINE FILTERS

Special Report*

T

he most damaging and constant contaminant in hydraulic and lubrication systems that causes the majority of premature wear and equipment failure is ferrous metal under 10 microns in size.

The sources of this metal contamination is the component manufacturing process and suspended in the new hydraulic fluid and lubrication oils. This is the main cause of premature wear of pumps, motors, seals and valves.

Contamination is responsible for up to 80% of equipment failure. Maintenance and downtime is very costly and can range anywhere from 20-50% of the cost of production, and unplanned downtime costs three times as much as scheduled downtime. Preventive maintenance and hydrocarbon management using efficient and effective filtration is the key to increased uptime and profitability allowing for growth and a stronger market position.

Proactive preventative maintenance programs are key to reducing unscheduled downtime. This will extend component life and reduce maintenance costs. By reducing these costs and downtime, mining companies can improve profitability.

One Eye Industries (OEI) designs and manufactures industrial filtration with its core technology, patented rare earth radial field magnetic filters that remove contamination (ferrous & non-ferrous) to sub-micron levels with minimal flow restriction.

This technology has been proven internationally in the mining industry for all manner of rotating equipment over the past 14 years. These filters are employed on hydraulic fluid, gear lube, engine oil, coolant and fuels.

Case Study In February 2014, a Canadian mining company was having problems with dirty hydraulic fluid (ISO 25/24/16). Traditional filtration was unable to meet a minimum ISO standard of 18/16/13 with a limited kidney loop filtration interval of three

An industrial filter designed to capture ferrous metal under 10 microns in size.

hours so the company challenged its filtration suppliers to design and install a kidney loop with the guarantee that they would achieve this minimum ISO standard on their hydraulic systems.

Commissioning of an OEI High Flow Mobile Kidney Loop was performed on a 5500 Komatsu shovel operating with a 4500 PSI hydraulic system. On its trial run, fluid samples were taken before and after the unit and sent to three independent labs. Common results showed that not only had OEI met the anticipated standards but exceeded them by retaining a cleanliness level of 17/14/10.The analyzed contamination on the magnetic filter rods identified ferrous (88%) and nonferrous (12% mainly consisting of carbon & calcium) contaminants ranging from 100+ microns to sub-micron in size.

The mining company was pleased with the results and has ordered another kidney loop filtration system as well as a wide variety of OEI mobile equipment filters for its haul trucks, shovels and drill rigs.

Magnetic filtration technology for both underground and on-surface applications is an effective ways to address contamination problems. Hydraulic system components and bearings operate at tolerances from 3 microns and below and by installing OEI’s rare earth magnetic filtration systems, the anticipated life on equipment can be significantly increased, decreasing maintenance costs and increasing equipment availability for production.

Information for this article provided by One Eye Industries Inc., Australia

EM&R June/July 2014

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Feature »Equipment Maintenance and Repair

Tips to keeping your

WORKHORSES WORKING Special Report*

U

nscheduled downtime are two words that send chills down the backs of mine owners. In an industry where minutes equate to thousands of dollars, and machines work with harsh, abrasive materials, unscheduled maintenance or unplanned downtime is unacceptable.

One of the keys to avoiding them is building a fleet of equipment with impeccable quality, cutting-edge technology and the durability to last ton after ton, year after year.

And this doesn’t just involve one or two pieces of equipment.

From loaders to conveyors, trucks to washing systems and crushers to vibrating screens, equipment in the mining industry takes a beating. It takes a robust piece of equipment – or certain technical features – to stand up to some of the worst environments and working conditions imaginable.

Comparing apples to apples when looking at heavy equipment can be a challenge. Sometimes it comes down to what seem like insignificant, feature-based differences that, in fact, can seriously impact costs, production and long-term profitability.

HAULING It all starts with the payload, so let’s begin by evaluating the hauling equipment.

Truck bodies are highly customizable. Specially manufactured bodies can increase loading safety and reduce the potential for loading damage by ensuring width is correctly paired with the loading tool. Keep in mind that a low loading height allows the shovel to get closer to the floor of the truck body, which minimizes the potential for damage to the sides. A wider body also allows for even, well-balanced weight distribution 32 »EM&R

June/July 2014

across the bed floor of the truck body. This helps extend tire life because there isn’t more weight wearing on specific areas.

The right lifting system can also contribute to greater efficiency.

After the trucks haul to a processing site, there are several more pieces of equipment to consider – mainly the crushers and screening equipment on site.

PRIMARY CRUSHING Getting material to a manageable size – usually around six inches – eases the rest of the sizing and screening process. A primary crusher, usually a jaw or impact unit, works best.

Sean Donaghy, IROCK Crushers national sales manager, says horizontal impact crushers can tackle high-reduction ratios. He says a crusher’s discharge chute is a key element to consider when selecting a crusher.

“This area of the machine is under a lot of stress for the majority of the machine’s run time,” he said. “To minimize maintenance and eliminate extra costs, look for a machine that incorporates wear resistant features.”

SCREENING Many operations struggle with screening. From blinding and pegging to high-wear and high-impact areas, there is no shortage of problems that can surface. For operators looking to reduce those issues and amp up the life of their screens, it’s best to evaluate each screen, its location on the screen deck and, finally, its performance.

W.S. Tyler, a systems provider and specialist in the screening industry, helps its customers tackle these challenges first-hand.

Steve Fair, applications specialist at W.S. Tyler, says “We evaluwww.canadianminingjournal.com

Equipment Maintenance and Repair» Feature

From screening, to crushing, to heavy hauling, all equipment on the mine site requires routine care and maintenance.

ate customers’ applications, their production rates and final output quality. From there we determine whether altering screen media combinations would increase their efficiency. It’s all about making modifications for a better ROI.” Fair says the technician also identifies key components that may require repair or replacement. It is a step-by-step process.

When a customer implements the technician’s recommendations for new screen media or media combinations on a portion of the deck, the specialist measures and documents the results and repeats the process on the next section.

FINISHED PRODUCT Following the screening phase, some operations run material through a second round of crushing for further sizing. Secondary crushing, used to create a uniform, precisely sized product, is generally required to refine materials six inches minus.

Many operators use a vertical shaft impact (VSI) crusher, expecting greater productivity, reduced maintenance and higher profits.

Neil Hise, president of CEMCO, Inc., says it’s important to understand the difference between a closed rotor and an openshoe table when choosing a VSI crusher. By choosing the right one for the application and specific needs, an operation can save on both short- and long-term costs.

An open-shoe table works best for processing soft materials, such as slate or limestone. These materials are somewhere around a 26 to 32 on the abrasion spectrum, so the shoes might last 30 hours or more depending on shoe size.

On the other hand, Hise says, if an operation uses an open-

shoe table with the extremely abrasive materials found in the mining industry – 17 or lower on the scale – shoes may only last six to nine hours before they require replacement.

For those materials, closed rotor crushers are ideal. They incorporate a series of tungsten carbide pins that trap material and build up their own internal “shoe” systems that reduce abrasion and, therefore, maintenance.

“Since there are no shoes to replace, these machines don’t need as much maintenance. Reduced maintenance equates to more up time, and fewer costs long term,” says Hise.

“Mine operators need to consider long-term value and sitespecific factors when making purchase decisions,” he said. “Each design has a proper application, every site has different material and geology that can be poles apart, and these factors will greatly impact the amount of wear and maintenance required.”

A PURPOSE-DRIVEN DESIGN For heavy mining equipment, custom design can increase productivity rates. Remember, these are the workhorses of the mine, so superior construction can decrease maintenance downtime.

Impeccable quality, cutting-edge technology and durability can nearly eliminate maintenance with just a few key features that make a better product and thus provide more profit.

And keep in mind, some of these may appear as minor differences. It’s the biggest reason to delve into the details. You’re sure to come across minute but significant, feature-based differences that will play a major roll in keeping long-term profitability elevated. * Information for this article provided by Philippi-Hagenbuch (PHIL), Peoria, Ill.

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» 33

Feature »Equipment Maintenance and Repair

LUBES& GREASES

By Martin Keenan*

M

ining in Canada’s oil sands presents unique challenges when it comes to lubrication.

With intense working conditions, severe temperatures, unpredictable weather and unfavourable terrain, there is a constant need for the industry to go beyond today’s standards to protect the equipment that keeps operations alive.

Lubricants, perhaps more than any other item listed in the manufacturer’s maintenance manual, is often mentioned as the key

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June/July 2014

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Equipment Maintenance and Repair» Feature

ingredient to helping owners keep their machines performing and productive.

Petro-Canada Lubricants, a division of Suncor Energy, is one company devoted to providing answers to tough maintenance questions and thanks to its research and development teams, it has provided solutions to a number of challenging problems.

In early 2010 for example, the company was made aware of a mechanical issue involving the hoist gear and pinions on electric-powered mining shovels operating in western Canada.

The owner of the machines said the gearing on the shovels was wearing out prematurely, requiring the early replacement of expensive hoist-bull gears. This resulted in the costly replacement parts and downtown.

By this point, replacement was the only solution but fortunately during the repair, the team of technicians and consultants from the gear manufacturer learned of a new high viscosity/ high-performance lubricant was just being introduced by PetroCanada that would help solve any future problems.

The grease development team at the company’s Research and Development facility in Mississauga, Ontario, had just developed a partially synthetic, high-viscosity base fluid designed to meet the requirements of AGMA 9005-E02, calling for a minimum viscosity of 6120 centistrokes at 40 C and 219 centistrokes at 100 C. This base fluid was combined with a suitable grease thickener and fortified with a new combination of specialized additives to

achieve the desired level of performance. In light of the issues found in the field, special emphasis was placed on improving extreme pressure and anti-wear properties.

Various formulations were produced and tested in the Mississauga lab to confirm that the necessary level of performance was attained.

After development was completed and the new lubricant had been manufactured for the first time, the R&D group worked with technical teams in the field to oversee the initial trial of the new product (Petro-Canada VULTREX OGL Heavy 6200) with the mining customer in the oil sands.

Modifications were made to the shovel’s grease delivery system and the new product was applied. Subsequent results from the initial trial were as expected and the hoist gear and pinions are performing without failure. The machine in question showed improved adhesion to the gear face, resulting in less lubricant fling off the gear and pinions. This resulted in a thicker plated lubricant film across the entire loaded side of the hoist gear.

Another benefit according to Petro-Canada’s R&D specialists was that the conversion greatly reduced lubricant consumption at the oil sands site at they also found that the new product is also suitable for use as an open-gear lubricant for all requirements on mining shovels in warmer climates too. *Martin Keenan is a Category Specialist at Suncor.

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» 35

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| A Case Study

TAILINGS’ TREASURES Finding ways to recover gold from tailings Special Report*

ecovering gold from tailings has been a challenge for mining companies for decades and it’s still an on-going problem that frustrates engineers and scientists alike.

Knowing that fortunes remain buried in tailings is cause for great concern and to date, few success stories have been told about technology coming to the rescue.

In recent years, owners of process plants and tailings facilities have explored the potential of recovering gold from tailings through initial metallurgical test work involving regrinding the tailings, followed by re-roasting and a conventional carbon-inleach (CIL) circuit.

CIL recovery of gold using this conventional approach amounted to less than 10% of gold in tailings, but here’s a look at the efforts that were made in one case.

Ore treated in this case was refractory (sulphides), where it was roasted prior to being treated in a conventional CIL circuit.

As evidenced by the amount of gold left in the tailings, the process was not terribly efficient at recovering gold from the ore.

Petrographic work was conducted on samples collected from the tailings. While the focus was on the type of sulphide mineralization present in the tailings, it was observed that there was a significant amount of silica contained within them and consequently, it was inferred that much of the gold was locked within the silica matrix of the tailings material.

Moving forward, additional mineralogical studies were conducted to determine the location of the gold in the samples. The conclusions of the test work indicated that there was very little visible gold; there was some sulphides, however, there was a significant amount of silica in the samples.

Again, given the absence of visible gold, it was inferred that much of the gold was locked within the silica matrix and sulphides.

Collaborating with industry partners, our company has explored the use of a proprietary mixed leach in treating the silica-refractory tailings material with a proprietary nanotechnology-based solvent extraction process to recover the gold.

Only preliminary bench scale testwork was conducted on the tailings; optimizing bench-scale tests, and ultimately the completion of pilot scale test work will be required to determine the ultimate technical and economic benefits of using this process.

Technically the proprietary mixed leach creates a “super acid” thus increasing the reactivity of the solution. Samples of roasted tailings as well as unroasted arsenic bearing tailings were treated with this leach process.

The initial tests were conducted at atmospheric pressure and at 95 ⁰C for four hours. From the results of the test work, it was clear that gold recovery to solution was much higher for roasted tailings (83.6%) than the unroasted arsenic tailings (43.6%).

In subsequent tests, the unroasted arsenic-bearing tailings were subject to roasting for four hours at 675⁰C prior to treatment with the mixed leach.

Recovery of gold into solution was significantly higher post roast, achieving a maximum of 96.1% gold in solution. The roasted tailings sample was subject to additional test work, including regrinding, concentrations and pulp density. From this initial pass of test work, it appears that pulp density has the greatest influence on gold recovery to solution. Solvent extraction testing was also completed on the gold pregnant solutions using proprietary suite of organic compounds.

June/July 2014 • Canadian Mining Journal |

37

| A Case Study recovery into solution and solvent extraction prior to entering a pilot phase of tests.

Testwork also needs to be conducted on stripping gold from the loaded organic extractants using non-conventional and cyanide-free compounds and/or solid media (nano-polymers).

Furthermore, the primary reagents used in the mixed leach and solvent extraction phases will be recycled; piloting of these recovery phases will be required in addition to the development of the continuous leach and solvent extraction process.

Experts at NanoStruck Technologies Inc. are well equipped to provide miners with help in finding ways to recover gold from tailings.

The pregnant solution was put in contact with the organics at room temperature and agitated for three minutes prior to collecting samples. On a single pass, the organic extractant used was able to extract 71% of the gold in the leach solution, while limiting the amount of iron recovered from solution to 2.1%.

The ability to selectively target gold ahead of iron is a significant achievement in solvent extraction.

Early results from the mixed leach and solvent extraction test work has been encouraging. As stated earlier, test work is still in the preliminary stage and further test work will be required to determine the optimal operating parameters to maximize gold

38 | Canadian Mining Journal • June/July 2014

About the Company *Information for this Special Report provided by NanoStruck Technologies Inc, a Canadian company with a host of technologies designed to remove molecular-sized particles using patented absorptive organic polymers. These versatile biomaterials are derived from crustacean shells or plant fibers, depending on requirements of their usage. Acting as molecular sponges, the nanometer-sized polymers are custom programmed to absorb specific particles for remediation or retrieval purposes. The company’s technology can be used to recover precious and base metals from mine tailings, which are the residual material from earlier mining activities. By retrieving valuable metals from old tailing dumps, the company’s NanoMet solutions are said to boost the value of existing mining assets and help reduce the need for new and costly exploration and mining.

CMJ

www.canadianminingjournal.com

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| Risk Management

GLOBAL RISK With risk now dispersed around the globe, companies need to stay one step ahead

D

By Mark Frey* and Scott Smith*

40 | Canadian Mining Journal • June/July 2014

ealing with liquidity drainage from the financial system, the global market place has seen risks become more regionalized, which has brought new complexity to the game for participants in the commodity and FX markets.

Near the end of Q1 2014, some of the bleeding by emerging markets had abated, but it is clear that we are well situated in a global economic environment that differs substantially from the landscape witnessed in 2013.

The excess liquidity made increasingly

abundant by a host of central banks in their efforts to navigate their respective economies through the global recession is being slowly scaled back as developed markets, like the United States and United Kingdom, begin to see economic activity advance in a constructive manner.

Emerging market economies that, up until recently, have enjoyed strong capital inflows as traders and investors parked their money in these regions in chase of higher-yields, are now seeing those same flows reverse.

As a result, developing nations have

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been subject to funding cost increases and in turn have had their current account balances collapse.

For the precious metal market, it would be an understatement to say that it’s been a rough couple of years and with the Federal Reserve’s commitment to ending their balance sheet expansion by the end of 2014, as inflation remains well anchored around the globe, new challenges are likely ahead for the commodity sector as a whole in the near-term.

The gradual unwind of Quantitative Easing will most likely keep a lid on precious metal prices, but the FOMC’s guidance towards an interest rate rise as early as mid-2015 isn’t all bad news for Canadian-based mining companies.

The combination of a slightly more hawkish Federal Reserve and increased concerns in regards to domestic growth from the Bank of Canada have led to a sharp decline in the value of the Loonie, allowing domestic businesses that sell commodities denominated in USD to enjoy a welcome bump in their purchasing power when repatriating those funds.

What’s more, the trend of a weakening

Loonie is set to continue in the few months ahead, with the gradual normalization of interest rates on the long-end of the curve in the U.S. attracting investment flows south of the 49th parallel.

Although there may be further shortterm pain in the cards for the Canadian dollar, stronger economic growth from Canada’s main trading partner should start to pay dividends towards the latter portion of 2014 and into 2015, with the spill-over effects of firmer demand in the U.S. helping to remove some of the extra slack from the Canadian economy.

A rebound in Canada’s export sector as the recovery in the U.S. gains traction will help the Loonie claw back some of its losses in the early part of next year, pushing it up to $0.90 against its American counterpart.

With the stage set for a bumpy ride in the U.S.-Canadian dollar exchange rate over the course of this year, we’re seeing proactive FX risk management become a greater focus for mining firms.

Non-traditional option-based methods of hedging are now more commonly used as part of the overall diversification strategy. The increased flexibility inherent with

an option-based hedging strategy when used in conjunction with more traditional vanilla forward contracts and spot market execution, helps smooth volatility and dispels the rigid cash management requirements that distinguish vanilla offerings.

Canada’s mining companies operating in emerging markets face impending hurdles that are not typically as easy to navigate.

While the Federal Reserve eases off on its stimulus program, the turmoil in developing economies has become widespread and countries running large current account deficits have been particularly hard hit.

As capital flows out of these troubled areas, their depreciating currencies have acted as a benefit to companies that pay operating expenses in domestic cash; however, if a corporation is faced with using USD as its operating currency due to liquidity constraints in certain areas, they will be confronted by a rising U.S.Canadian dollar exchange rate, which will have increased operating costs by 10% over the last year.

That being said, the widespread contaJune/July 2014 • Canadian Mining Journal |

41

| Risk Management

gion effects that have painted all emerging markets with the same brush are likely to subside in the coming months, as quality and strong fiscal balance sheets garner investor premiums.

Furthermore, exchange rate considerations are only a portion of the overall risk

spectrum when dealing in emerging markets due to the variety of qualitative aspects developing as a result of less established market structures.

South Africa, for example, a country highly reliant on U.S. bond yields, lost 24% of its currency’s value by the end of

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2013. However, besides the uncertainty for the Rand, the ongoing, highly publicized strikes across various sectors in the region, predominantly within mining, have had substantial repercussions felt by the entire industry.

Looking towards South America to Argentina, in January the government was forced to liberalize their exchange regime and ease capital controls in the face of dwindling foreign exchange reserves as a result of propping up their beleaguered peso. This caused a sharp devaluation in the ARS where the domestic currency lost over 20% of its value.

One of the most prominent downstream effects will be the surge in inflation as the value of imported goods increases, giving way potentially to major unrest in the labour market as workers lobby for the pay increases required to keep up with costs.

Therefore, even if a mining company can benefit from a falling Argentinian peso in terms of its operating expenses, the broader economic issues of a country experiencing capital flight and decreased investor confidence presents a greater threat than the foreign exchange implications on their own.

So what does this mean for international producers in their navigation of foreign markets in the years ahead?

The evolution towards a more decentralized global economic landscape, and the increasing volatility inherent with this progression, has demanded that more companies engage in robust risk management programs.

While the outlook for precious metals is not especially bright, a change from the previously witnessed “risk-on/risk-off ” atmosphere we’ve seen in the past can provide opportunities for renewed competitiveness for those that pursue a more proactively managed FX hedging strategy.

Treasurers and financial executives for mining multinationals should consider that a vanilla approach will likely be outperformed by a more dynamic approach.

Mark Frey is Senior Vice-president and Chief Market Strategist and Scott Smith is Senior Market Analyst, Cambridge Mercantile Group.

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| Technology

PRIMED & Ready PUMPS FOR THE MINING AND PROCESSING INDUSTRIES

By Mike Blundell

I

don’t have to tell you that the mining industry is an extremely important part of the Canadian economy.

National Resources Canada reports that in 2012, mining contributed approximately $63 billion to the Gross Domestic Product (GDP), representing 3.9% of the Canadian economy.

In that year, mineral exports accounted for 20.2% of Canada’s total exports.

Canada is also a giant in the global mining economy: Canadian exploration, mining and allied industries operate in over

44 | Canadian Mining Journal • June/July 2014

100 countries, with cumulative assets worth $147 billion outside Canada.

Managing water resources efficiently is an increasingly critical part of mining operations, especially when mines are located in dry and/or environmentally sensitive regions.

Mark Sidon, mining specialist and regional manager for the Canadian arm of pump-maker KSB Canada points out that “awareness has increased among mining companies about the importance of conservation, reclamation and preserwww.canadianminingjournal.com

Slurry pumps, such as KSB’s GIW MDX pump shown here, are designed and built to provide reliable service in mill, grinding and flotation circuits.

vation of water in a mine – and that calls for more sophisticated pumping solutions and pump systems”.

Reclaimed Water Increasingly stringent environmental protection requirements mean more emphasis on water processing – especially for reclaimed water that is being returned to ponds or lakes.

Tailings water treatment for mining and mineral processing operation often involves the handling of water with sig

nificant amounts of abrasive suspended solids. Pumps for dry-well installations are available with highly wear-resistant hydraulic components that help ensure longer service lives and reduce maintenance requirements under arduous operating conditions.

Water Transport Mining operations can require the transfer of large volumes of service water over significant distances. There are a variety of high-capacity pumps available with

proven success in mining water transport applications.

The key selection criteria are reliability, longevity and the overall energy efficiency of the installation. Since these pumps typically run continuously for long periods, energy costs become a significant element of the total cost of ownership.

Increasing capital expenditure for a more efficient system can significantly reduce operating costs, resulting in a lower total cost of ownership for the entire system.

To optimize a system’s efficiency, it is June/July 2014 • Canadian Mining Journal |

45

| Technology In light of the growing importance of conservation, reclamation and the preservation of water in mines, pumps from KSB are called upon to deliver sophisticated pumping solutions.

important to look not only at pump and motor efficiency, but also ensure a close match between the required duty point of the installation and the best efficiency point (BEP) of the pump set.

Oilsands The SAGD (Steam-Assisted Gravitational Drainage) process has emerged as an important technology for the extraction of bitumen from underground oilsands deposits.

This in-situ extraction technique enables access to deep deposits while reducing the environmental impact of large-scale open-pit excavations. Here, super-heated water is pumped through pipes into the heart of the oilsands deposits.

The hot water flashes to steam and heats the bitumen, making it sufficiently fluid to be pumped back to the surface through extraction pipes that run parallel to the steam-injection pipes. Special highpressure, high-capacity pumps are required to provide large volumes of the high-pressure, high-temperature water needed by this process.

Slurry pumps The processing of ores also requires transport of large quantities of water, frequently in the form of slurries. Pumped slurries are an efficient method for transporting mineral particles from mine to processing plant and through the ore separation processes.

Slurry mixtures are also encountered in mineral processing facilities and in refining processes such as the separation of bitumen from sand and gravel in the oilsands.

Water/mineral slurries are extremely abrasive, wearing on pumps and associated equipment. Specialized slurry pumps are designed and built to provide reliable service in mill circuits, grinding circuits and the flotation circuits.

Slurry pumps differ from solution pumps in a number of important ways: Since the solid particles in slurries are highly abrasive, wear of internal pump components is a concern. Pump components are typically made from highly abrasive-resistant materials such as extrahard white iron or martensitic steel alloys.

For some applications, pump linings made from natural rubber or other poly-

46 | Canadian Mining Journal • June/July 2014

www.canadianminingjournal.com

mer materials are used to reduce wear.

Wear from abrasive suspended solids tends to be more severe when flow velocities are high. Therefore, slurry pumps are often designed to run at lower speeds than water pumps. Consequently, slurry pumps often require gearboxes between the pump and motor and are often considerably larger than water pumps with equivalent capacity and head ratings.

Slurry pumps are designed with easily accessible casings to simplify replacement of high wear components such as suction plates and impellers.

Reducing mine down time with quick and efficient pump maintenance directly affects the profitability of any mine.

The impellers used in slurry pumps are designed for wear-resistance and to provide generous free passage for large solid objects.

Properly configured slurry pump systems can be a cost and energy-efficient way to transport ore to and through processing facilities. Water used for mineral

A ready supply of KSB pumps is always available for shipment almost anywhere in the world.

slurries can be almost completely recovered and reused in this cycle.

Service and Support The pumps used in mines and mineral processing facilities face harsh conditions.

To help ensure reliable operation and long

service life under these conditions, it is important to select the right pump for the job, install and commission it correctly, and then implement suitable preventative maintenance procedures.

CMJ Mike Blundell is President of KSB Canada

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June/July 2014 • Canadian Mining Journal |

47

| Innovative

WATERLESS

WONDER Innovative device offers solution to growing problem POROUS MEDIA

VARIBLE INCLINE

LOW PRESSURE AIR SUPPLY

By George Rodger and Tony Mariutti*

A

Dry Gravity Concentrator has been developed for mineral deposits where water is not available, where there are competing interests for a limited water supply or, for jurisdictions where the use of cyanide is prohibited.

In the current global environment, precious metal mining companies are also struggling with high capital and operating costs and because of this, new and innovative ways to help make mining more profitable are always welcome.

Because of this, we feel that it’s a good time to take a look at dry gravity concentration.

Of all of the unit operations in mineral processing, gravity concentration has the lowest capital and operating costs and in the words of Pennsylvania State University Mineral Processing Professor Frank Aplan; “Gravity Concentration, for economic reasons, is applicable where the situation dictates the least expenditure of money.”

LOW PRESSURE AIR CHAMBER

GENERALIZED AIR-SLIDE DRAWING

A Hydraulics Systems Approach To come up with a novel dry concentrator, a different approach was to consider the dry gravity process in terms of a hydraulic system, with two flow regions.

THE FLOW REGIONS ARE DESCRIBED AS FOLLOWS: • Turbulent (10,000 to 1,000 micron particle size range), • Intermediate (1,000 to 100 micron particle size range), and

With a hydraulics approach and employing “Air Sizing and Dust Collection” formulas, the Terminal Velocity of particles for these three flow regions can be defined by formulas that provide the main variables required for dry gravity separations.

THESE ARE: • A constant for particle shapes, • Specific gravity, and • Particle size.

• Only in the Streamline Region, does the viscosity of air become a variable.

DRY GRAVITY ADVANTAGES

IN ADDITION TO LOW CAPITAL AND OPERATING COSTS, A DRY GRAVITY CONCENTRATION PROCESS HAS A NUMBER OF INHERENT ADVANTAGES, SUCH AS: WATER – Only requires 70 to 90 kg of water per ton of ore for dust suppression. Wet processes generally require two to three tons of water per ton of ore.

Air is a compressible fluid that can replace water.

POWER – A dry system will take 833 times less energy to move an equivalent volume of air than it would take for water. [1.2 kg/cubic metres for air compared to 1,000 kg/ cubic metres for water].

VISCOSITY OF AIR - Depending on the temperature, the viscosity of air is 28 to 90 times lower than it is for water. That effectively eliminates surface tension and viscosity agglomeration effects in the dry concentration of minerals.

• Reagents are not required.

• Vibration is not required when air is the fluid medium.

• All of the process support equipment is current technology.

48 | Canadian Mining Journal • June/July 2014

In the Intermediate Flow Region, most fine dry solids can be aerated with low pressure air. Once aerated they will flow like a fluid.

In pneumatic conveying, fines aeration is the basis upon which commercially available air-activated gravity conveyors, (commonly referred to as “air-slides”) operate. They are employed in dry industrial mineral plants to empty rail cars, storage bins, and to convey materials between dry process operations. They are available in sizes that vary between four and 24 inches wide, require 2 to 6 degree slopes, if the elevation is available, lengths can be up to one mile, and they can convey a variety of low and high bulk density materials.

Generally, the higher bulk density materials can only be conveyed in the finer particle sizes. Since most precious metal ores are in the 1,400 to 1900 kg/cubic meter range with liberation sizes finer than 100 mesh; air-slide conveyors can be readily adapted as dry gravity concentrators.

Air-Slide Conveyors Since the 1880s, many variations of the air-slide, dry gravity concentrator concept have been patented in the United States.

Very few (two) of these patents has made it to a commercial production stage. This may be because the variables required to achieve commercialization were not properly defined.

Those patent descriptions show material fed to conveyed by and discharged to a separation device. What was missing were the front-end material preparation and the separation steps. www.canadianminingjournal.com

Gravity systems require constant-flow streams to produce optimum results.

In a dry gravity system, this is best achieved with steady head feed bins.

Then, within the separation device, first the material must be segregated, then concentrated and finally separated.

To accomplish these tasks the design variables for concentrator geometry, slopes, lengths, air pressures, porous medium types and an effective mineral recovery device must be determined.

The Terminal Velocity formulas show that dry gravity separations are based primarily on particle size and specific gravity.

Perfect separations would be achieved when both the gangue and heavy particles have the same particle size. Dry gravity separations can be made more efficient by separately processing groups of smaller particle size ranges.

When the price of gold increased from $300 to $1,500 per ounce, the average grades of gold ores mined and processed dropped from 5 grams per ton down to the 1 gram per ton range.

To process these lower grade ores, a dry processing system will be required to treat several particle size intervals separately. This will be necessary to achieve high separation recoveries and low cost unit operations.

Particle Size Interval - Treatment Examples In the 1970s, a dry process pilot plant was designed to develop a gold deposit in a desert, where water was a scarce commodity.

The ground feed was separated into five different plus 200 mesh particle size groups and achieved 90% gold recovery, from a 5 gram per tonne feed. Air tables (aerated deck Wilfley-type tables) were the concentration device used.

A feasibility study determined that air table capacity limitations with their attendant vibrations would not provide a viable process. However, the use of several particle size ranges and the air table concentrators demonstrated there were possibilities for developing viable dry gravity separation methods.

An additional example with the efficiency of processing multiple particle size intervals was experienced in April, 1997.

Process development work was being con

ducted on metallurgical samples from a large lode gold property, which provided higher than normal gravity gold recoveries.

However, no gold values were found in the bulk autogenous grinding samples.

This raised questions. A variation of the multiple particle size intervals was used to concentrate and recover the gold particles in metallurgical sub-samples. They were determined to be salted placer gold particles, which allowed that gold mining company to exit the bidding process.

For the past four years, a modified airslide conveyor has been developed to function as a dry gravity concentrator. It was selected to operate on materials where the 80% liberation size is between minus 300 microns (50 mesh) and 45 microns (325 mesh).

The particle size range was limited in the coarse size by the pneumatic carrying capacity of solids, and in the fine particle size, to eliminate dust problems generally associated with dry systems. Eliminating the minus 45 micron fraction also increases the separation efficiency because it reduces the particle size range being processed.

The development program was conducted on Barite, Magnetite and with Tungsten-Carbide. The design variables were determined or calculated and incrementally improved through four prototype generations.

In the final stages, it was decided to focus on the precious metal industry.

For the precious metal development work, an artificial binary standard was made up of silica sand (SG=2.6) and tungsten-carbide (SG=14.6), which is magnetic.

For each test run, a magnetic separator was used to recover tungsten-carbide in the individual time-weight samples. In this way, the binary standard facilitated the development work required to establish the design variables.

After 110 test runs, carbide metal recoveries in the 80 to 90% range have been obtained from a 0.5% tungsten-carbide grade standard.

The basic concept is simple; but difficult to copy. This novel concept now requires real-world samples containing middlings to prove the concept and determine what can be realistically accomplished.

CMJ

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* George Rodger, Inventor, Rodger Mineral Services, Coquitlam, BC and Tony Mariutti, President of TM Engineering Ltd., Burnaby, BC. June/July 2014 • Canadian Mining Journal |

49

| Products MOBILE BORING RIG

Atlas Copco has just launched a mobile rig for raiseboring, boxhole boring and downreaming. Named “Easer,” the rig can boxhole bore and downream to 750mm in diameter, as well as perform conventional raiseboring to 1200mm in diameter. The Easer provides a more efficient and much faster way to drill up to 60m in length using standard 200-mm boring rods with a 228-mm pilot drill bit.

All the necessary operating equipment is part of the carrier, with the exception of the rods. The setup procedure does not require any site preparation.

TRUCK UPGRADES

Caterpillar now offers Certified Rebuild Upgrade services for older 785 and 789 mining trucks. The rebuild program for the original series and the B Series models of these trucks incorporates the technological advancements introduced with the C Series to improve operation and performance and reduce engine emissions. The service provides a full rebuild and certified rebuild warranty along with a Cat upgrade retrofit cab and chassis updates. The results are improved fuel economy, performance and productivity as well as a modernized cab for operator comfort and improved engine emissions equivalent to US EPA Tier 1 standards for sustainable operation.

TRAINING SIMULATION

With the demand for training simulation growing in the mining industry, the need to simulate equipment is becoming more and more crucial.

For example, over the last year and a half, global training simulator provider ThoroughTec Simulation introduced more than 20 new highfidelity CYBERMINE simulator cab types. This included simulators for underground machines, rope shovels, articulated and haul trucks.

50 | Canadian Mining Journal • June/July 2014

www.canadianminingjournal.com

LIFT TRUCKS

Vallée Inc., a Canadian company specialized in the design and manufacturing of lift trucks and industrial equipment, has just unveiled two new lift trucks. The first one is an addition to its Compact Rigid Chassis Series while the second complements its Heavy Series. The new 2CR18C two-wheel drive rigid-chassis lift truck is a compact material handler while the 4DA50C articulated four-wheel drive lift truck is one of the stronger in the market in the large capacity material handling vehicle category. With a capacity of 22,500kg, this lift truck is ideal for handling heavy loads on uneven surfaces or in tight spaces. It has hydraulic power steering, full-view cab with overhead window, integrated monitoring system covering the vehicle’s 16 most important functions and a high-visibility mast. It is also offered in the 4DA55C higher capacity model.

SAFETY LIGHTS

Recent developments in warning-device technology now includes strobe or flashing warning lights. Lite Tracker by Grace Industries and distributed by Heritage Safety is one of those devices. These lights are intrinsically safe and MSHA approved for use in all areas of the mine. The lights are designed to alert machine operators of another’s presence in the work area.

ARTICULATED HAULERS

Articulated haulers from Volvo Equipment are designed for a wide variety of applications in quarries, mining and earthmoving. Equipped with turbocharged six-cylinder Volvo engines, the machines have been redesigned to adhere to stringent Tier 4 Final emissions regulations. The Volvo drivetrain and a unique inline dropbox designed for high ground clearance are purpose-built to ensure perfect harmony and optimized performance. The drivetrain’s unique design delivers high rimpull, lowers fuel consumption and provides reliability in heavy-duty applications. Oil-cooled wet multiple disc brakes help reduce maintenance costs and increase uptime, even on rocky or dusty jobsites.

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June/July 2014 • Canadian Mining Journal |

51

In My Mine(d)

Right partners help with risk management Mike Marino is Assistant Vice-President, Energy, Mining and Chemical Risks Practice, RSA Canada, a global insurer with operations in more than 150 countries.

By Mike Marino

T

hose who work in the mining industry are not unfamiliar with risk. In fact, there are a number of challenges – beyond the obvious concern for worker safety – that businesses in this sector must consider to ensure successful operations.

Ongoing regulation changes, access to raw materials and unreliable technology can become regular obstacles, however an effective risk management plan can help make the difference between soaring over these hurdles and stumbling through them.

At the end of the day, risk is part of every business, but it is an especially significant consideration for miners. As such, it is imperative to put an effective risk management strategy in place to help ensure operational success. Mining companies that want to stay ahead of the game actively seek professional advice, as effective collaboration with risk management experts is the key to understanding all aspects of a program before making any commitments.

When faced with a new project or opportunity, the following five boxes should always be checked before getting started: • Consider how you will manage the transition process: Is it clear to you how your risk program will need to change as a mining project shifts from one stage of development to the next?

As your project unfolds, the risk management plan and insurance for the first stage of development will not necessarily be adequate for the following stage.

A knowledgeable broker can guide you through the process and advise as to what type of insurance program you 52 | Canadian Mining Journal • June/July 2014

will need to have in place to ensure seamless coverage throughout the development stages. Having a good relationship with an experienced broker means you’ll essentially have access to an informed business partner who can ensure you’re well covered throughout the life of the project and beyond.

• Understand your supply chain: How familiar are you with the potential risks associated with your supply chain?

Suppliers for mining projects can face a number of potential issues including poor access to replacement equipment in remote areas, transportation barriers and difficulty accessing qualified labourers. An understanding of the critical links in your supply chain – and the mitigation measures you will take in the event of a disruption – is vital to your business continuity. A close review is essential in order to properly monitor profitability, as remote mining sites and shifts in supply and service partnerships have changed traditional risks. One of the benefits of working with a broker is that he or she will be able to provide you with a thorough understanding of the entire supply chain by pointing out what risks you face, and will review how they might impact your business.

• Be familiar with the political landscape: Are you aware of the possible political issues in the jurisdiction and potential insurance implications of these? Though it might be possible to evaluate political risk in a certain region, a policy that includes confiscation as a primary cover-

age may have disparities elsewhere, and so it is your insurance broker’s responsibility to loop you in on whether or not the casualty products an insurance company offers addresses the full spectrum of your needs. Miners are strongly encouraged to be well versed on the political landscape before beginning any operations, as it is possible for related problems to halt an operation at any stage.

• Know your options: Do you know what coverage is available to you and what specific needs it will or will not meet in terms of your risk management plans? If not, make sure you have the conversation with your broker so that you walk away with a clear understanding of your options. The products you purchase should be tailored to your needs, and a knowledgeable broker will help you keep in mind the big picture that extends beyond the basic technical risks.

• Invest in expertise and nurture the relationship: Insurers and brokers bring an in-depth understanding of how the industry has progressed, which enables them to recognize potential risk scenarios. Consider them as essential allies as you map out your risk management plan. As mining projects often span several decades, it is crucial to work with an insurance company with a strong track record and a broker with solid mining experience. A tripartite, consultative relationship is ideal, whereby you can benefit from ideas on best practices.

If you invest in this partnership, the payoff will be great indeed.

CMJ www.canadianminingjournal.com

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PBN NUNA / MILESTONE JOINT VENTURE A partnership of expertise servicing the Saskatchewan Research Council with the Lorado uranium mill site remediation

June/July 2014 • Canadian Mining Journal |

53

Unearthing Trends

Growth on horizon despite Q1 decline Bruce Sprague is a partner at EY and the firm’s National Mining and Metals Practice Leader. He is based in Vancouver. For more information on EY’s Capital Confidence Barometer and for access to additional mining and metals insights, visit us at ey.com/ ca/mining and follow us on twitter @EYCanada.

By Bruce Sprague

C

anada’s mining and metals industry showed signs of optimism in the first quarter of the year, giving the sector a much-needed boost. That renewed confidence is putting growth back on the boardroom agenda and setting the stage for what could be an exciting year of transactions.

The numbers don’t tell the whole story.

Deal value and volume fell by 51% and 13%, respectively, in Canada. That’s compared to 67% and 31% globally. But the picture isn’t all bad.

These low first-quarter numbers mask the growing confidence that we’re really seeing. When we step back and compare these results against transaction activity in Q3 2013, it’s clear we’re headed towards a break in the clouds. Survey results tell the same story. Our recent Capital Confidence Barometer confirms over a third of global mining and metals companies consider growth their primary focus in the year ahead.

It’s no surprise — in light of strengthening commodity prices and growing investor confidence — to see a strong pipeline of deals in the hopper. Fifty-three percent of global mining and metals companies surveyed have a pipeline of two to three deals ready in waiting for the next 12 months.

The growth-for-growth’s-sake mentality is far from returning to the sector, however.

Cash remains king and companies are still taking careful strides to balance cost management with strategic dealmaking. Only 54 | Canadian Mining Journal • June/July 2014

24% of global mining and metals companies have short-term plans to undertake transformational M&A. The rest are looking for lower-risk deals that strengthen their positions in existing markets.

The current depressed state of share and asset prices is also driving transaction activity. Many are looking to acquire assets at lower prices. Executing these deals continues to be a key challenge for many, in large part due to the seemingly unbridgeable buyer/seller valuation gap throughout the sector. The good news is that 45% of respondents believe this gap is less than 10% now, up from 21% six months ago, and 80% expect it to remain at this level or decrease in the next six months.

We know what kind of deals will likely be making headlines — but who’s behind the steering wheel? Expect to see buyers from outside the sector, including financial buyers looking to take advantage of the current window of opportunity, getting in the game. These players were active in the first quarter, accounting for 26% of transactions by volume, and the trend is set to continue in the next six months.

Now, when it comes to investment destinations of choice, Canada was once again the preferred investment destination in the first quarter of the year, followed by Australia and the US. Canada claimed 48% of total global transactions.

The majority of acquirers by volume in Q1 also hailed from Canada.

Although all signs point to a stronger

year for transaction activity, cost management is still top of mind. Thirty-six percent of survey respondents still consider productivity and cost reduction their primary focus.

Mining and metals companies — particularly juniors — recognize that their ability to control costs and maximize efficiencies is essential to preserving capital throughout this period of lower commodity prices and weaker investor confidence.

Robust portfolio management continues to be a primary focus to identify and release capital from non-core assets to better align long-term business strategies.

Investing capital into new transaction opportunities in the months ahead will come down to whether companies can find the right opportunity. Striking a balance between risk and reward has become extremely difficult in today’s uncertain economy — particularly in the mining and metals sector, where one wrong step can cause hefty damage. Executives are navigating these challenges by balancing cost management, including optimizing cost structures to improve margins, with measured dealmaking.

Over the next few months, deal volumes are expected to build slowly and gain momentum into 2015. Portfolio optimization among larger miners, financial buyers, and consolidation among juniors and mid-tier companies will drive deals across the sector as confidence continues to grow.

CMJ www.canadianminingjournal.com

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