Canadian Mining Journal January 2015

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January 2015

AMAZING

JOURNEY CANADIAN ORE SHIPPED THROUGH NORTHWEST PASSAGE TO CHINA

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Departments 4 Editorial

This month Editor Russell Noble talks about Corporate Social Responsibility and why he thinks many mining companies question the value of CSR and the Federal government’s office designed to assist the extractive sector.

6 First Nations

A new monthly column by Stan Beardy, Ontario Regional Chief for Chiefs of Ontario, representing 133 First Nations in the province.

8 CSR and Mining

A new regular column by Michael Torrance, a lawyer in Norton Rose Fulbright’s Toronto office, on Corporate Social Responsibility

32 New Products

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

34 Unearthing Trends

A regular column by Ernst & Young LLP, Vancouver.

CANADIAN Mining Journal CONTENTS

COAST-TO-COAST-TO-COAST

10

Canadian nickel shipped to China

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Fednav’s MV Nunavik made history by carrying 24,000 tons of nickel concentrate through the Northwest Passage from Canada to China.

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14 Diamonds make renewed headlines Veteran diamond hunters bring new tools to NWT’s diamond resurgence.

18 Coal miners overcome decades of challenges

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A look at Teck’s long history of coal mining in Western Canada.

22 Industry outlook from East coast

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Mineral industry takes a long-term approach in Eastern Canada.

26 Industry outlook from West coast

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Innovative techniques help mineral exploration in Western Canada.

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January 2015

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AMAZING

JOURNEY CANADIAN ORE SHIPPED THROUGH NORTHWEST PASSAGE TO CHINA

ABOUT THE COVER The high-Arctic adventure of making the first commercial delivery of ore through the Northwest Passage to China was made recently by MV Nunavik, a ship owned by Montrealbased Fednav.

Canada Post Canadian Publications Mail Sales Product Agreement No. 40069240

Next Issue

Canadian Mining Journal’s popular February/March issue focuses on “Mining in Ontario.”

30 Major Canadian mine continues to grow

30

Canadian Zinc zeros in on its Prairie Creek project in NWT.

For More Information

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

www.canadianminingjournal.com

January 2015 • Canadian Mining Journal |

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CANADIAN Mining Journal January 2015 Vol. 136 — No. 1 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

Production Manager Steve Hofmann

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

President Vice-president

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

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

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

Subscriptions — Canada: $47.95 per year; $76.95 for two years. USA: US$60.95 per year. Foreign: US$72.95 per year. Single copies: Canada $10; USA and foreign: US$10. Canadian subscribers must add GST and Provincial tax where necessary.GST registration # 809744071RT001.

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Publications Mail Agreement #40069240. PAP Registration No. 11000. We acknowledge the financial support of the Government of Canada through the Publication Assistance Program towards our mailing costs. Return undeliverable Canadian addresses to: Circulation Dept., Canadian Mining Journal, 80 Valleybrook Dr., Toronto, ON, M3B 2S9. E-mail: bigcirculation@bizinfogroup.ca Canada Post: Publications Mail Agreement PM40069240. Please forward Forms 29B and 67B to 80,Valleybrook, Toronto, ON M3B 2S9.

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4 | Canadian Mining Journal • January 2015

When is CSR not worth the effort?

By Russell Noble

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ater in this issue you’ll see and hopefully read a new column by Michael Torrance, a lawyer with Norton Rose Fulbright of Toronto, who specializes in Corporate Social Responsibility, or CSR as we all call it.

In his inaugural column, Michael talks about the Government of Canada’s new strategy for the “Extractive Sector,” (that’s us, the mining industry…. “Extractors”) and the consequences mining companies will face if they don’t follow the rules as set out in the government’s new CSR Best Practice Strategy.

Without taking away from Michael’s column, I won’t go into detail about the new Strategy or how the government plans to slap the wrists of those who don’t follow the rules, but I would like to comment on CSR in general and perhaps why some companies have found it frustrating to spend money on CSR and why they’re reluctant to participate.

As we all know, mining takes a lot of promotion and salesmanship when it comes to convincing communities and their inhabitants to accept that the landscape in their backyards is going to change drastically once a mining company moves in.

In fact, it’s safe to say that in most cases, it will be scarred for life because no matter how you look at it, the definition of extract (in part) is to: “Take out by force” and as “Extractors,” that’s what miners do.

They take minerals out of the ground by forcing their way into the earth and as a result, the makeup of the landscape gets altered thanks to the huge machines and crews of miners that invade the site where the ore is buried.

It’s the nature of the business and try as hard as many mining companies do, there’s no getting around the fact that

mining is a powerful industry that impacts communities where, and whenever it is permitted to set up shop.

And, as far as CSR is concerned and why I think some mining companies are reluctant to follow the government’s best practice strategies, is based on the Fed’s previous failure to provide guidance after it created an office called: “The Government of Canada’s Extractive Sector CSR Counsel,” complete with a CSR Counsellor as a Special Advisor to the Minister of International Trade.

At first this all sounded well and good because it looked like the mining industry finally had someone in Ottawa to talk with when it came to getting guidance with matters involving Canadian miners working abroad and what they should know about foreign policies and procedures when going after work in foreign countries.

But, like I just mentioned about this CSR office, it’s no wonder it failed because the CSR Counsellor’s job description also contained the words: “The Counsellor has no policy-making role and does not represent Government of Canada policy positions.”

With those restrictions, it’s no wonder the mining industry didn’t bother using the government’s CSR office and why it’s now closed after being in operation for about four years.

Liberal Foreign Affairs Critic John McKay said recently the CSR office was created to mediate conflicts but after opening six cases in four years and not resolving any, it was: “Completely and utterly ineffective and a waste of taxpayers’ money.”

That being said, it gets me back to my earlier point about many mining companies finding it frustrating to spend money on CSR. As we all know, many communities www.canadianminingjournal.com

Editorial

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Mining and Mineral Processing News Since 1882

where mining companies start drilling are in remote areas, particularly in foreign countries where the there’s little or no infrastructure and the local inhabitants have limited personal resources.

In fact, many of these people need almost everything and they often look upon mining companies as ‘saviours’ who bring wealth and a better way of living because they’re often obligated to provide jobs, build houses, schools, and even hospitals as part of a right to mine their land.

It’s a huge expense but as I mentioned

earlier, it’s a frustrating one too because of the cost of seeing money being spent on training and facilities for locals only to see them abused or not understood.

A case in point I heard recently involved a mining company coming in and supplying the local community with seeds for planting and a herd of goats but when the seeds were eaten, not planted, and the goats sold, not raised, the company was approached for more.

I know this is an extreme, but you gotta wonder….is CSR worth the effort? CMJ

Canadian Mining Journal serves the operations segment of the Canadian mining industry.

It provides readers with updates on the industry along with new legal, financial, safety and CSR obligations. CMJ also highlights new products, methods and technologies used to increase the financial, social and environmental returns from mining and mineral processing.

From new CSR standards to new big-bucket loaders, CMJ keeps you up to date with developments in Canadian mining.

To subscribe, contact Bona Lao: 416-442-5600 ext. 3552 or blao@bizinfogroup.ca.

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January 2015 • Canadian Mining Journal |

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NEW! First Nations

The Laws and Social License to Operate Stan Beardy is Ontario Regional Chief for Chiefs of Ontario representing 133 First Nations in the Province and a member of the Assembly of First Nations Executive Committee. Follow him on Twitter #ChiefStanBeardy.

By Stan Beardy

T

he United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) states: “Indigenous peoples have suffered from historic injustices as a result of, inter alia, their colonization and dispossession of lands, territories and resources, thus preventing them from exercising, in particular, their right to their lands, territories and resources.”

This statement is the crux of the relationship between the mining industry and First Nations who are the first, and sometimes only, ones impacted by development. Industry response becomes the litmus test for deciding if projects will proceed. It is also part of certainty and the social license to operate.

Canada adopted the UNDRIP in 2010 after initially opposing it in 2007. At the time, they said that they were: “concerned with provisions on free, prior and informed consent when used as a veto.”

This has been where the First Nations and mining worlds have collided ever since and has been the inherited flashpoint of ongoing contention. The concept of veto has cast a dark shadow because essentially, Canada said that First Nations do not have a constitutional right to reject a decision or proposal made by them. This was contradictory to their support.

Canada stated that “an appropriate balance between the rights and obligations of Indigenous peoples, member States and third parties needs to be achieved.”

While the Supreme Court of Canada (SCC) has provided some guidance in decisions over the past 125 years, starting with the ruling on St. Catherine’s Milling, First Nations have historically disagreed with how Treaties are interpreted.

Often, decisions are based on the erroneous principle that rights have been “granted” by Canadian law versus the First Nations’ principle that rights are rooted in pre-existing sovereignty. The United Nations has looked at the nature of Treaties in Canada and has confirmed that to be considered legal, only Nations can enter into Treaties. Thus, the very fact that Treaties exist affirms pre-existing jurisdiction and sovereignty.

Moreover, from the First Nations’ perspective, rights and obligations as contained in Indigenous laws need to be appropriately considered. They need to be understood as laws that pre-exist the Canadian legal framework that has never been relinquished. As a result, the SCC could never have the authority to rule on them. This is why the social license to 6 | Canadian Mining Journal • January 2015

operate is outside of the auspices of the SCC and that it is irresponsible from the business perspective to think they represent the panacea.

Pre-dating the Treaties, Indigenous laws have existed since time immemorial and are an extension of First Nations’ preexisting jurisdiction. They contain strong responsibilities to future generations, ancestral homelands and natural resources.

Some, like the Manitou Aki Inakonigaawin (The Great Earth Law) in Treaty #3, have been partially recorded.

In June 2014, 133 First Nations in Ontario adopted the First Nations in Ontario Assertion of Sovereignty - Notice of Assertion, an Indigenous law that is part of exercising their right to their lands, territories and resources.

Similar notices have been issued by the Assembly of First Nations of Quebec and Labrador, amongst others in Canada.

The mining industry has a lot to weigh as it sits in the position of being in the middle of the First Nation decolonization process that is taking place in Canada and throughout the world. All the while, corporations must also consider how relationships with Indigenous peoples make a material impact on profits, share prices and ultimately, the bottom line.

Recently, First Peoples Worldwide released their Indigenous Rights Risk Report analyzing 370 extractive sites operated by 52 companies in the United States on, or near Indigenous lands and assessed the risk they posed to investors and shareholders.

Their finding that 92% of those sites posed a medium-tohigh risk to shareholders and investors should be eye-opening.

The world of achieving balance between all interests is evolving and the debate on who is in the “driver’s seat” continues.

Government policies and laws have not been entirely helpful in making the critical path forward an easy one. Companies will continue to be ill-prepared to engage with Indigenous peoples until these change and effective consideration of preexisting laws becomes the norm.

The mining industry needs to take the opportunity to be a part of re-setting the relationship to one that is meaningful.

Indigenous peoples are clear on where the road needs to lead in order for all to benefit and so that we can catch up to the same standard of living enjoyed by the rest of Canada. Continuing status-quo will not result in mutual benefits. It is time to start honouring Indigenous laws.

CMJ www.canadianminingjournal.com

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NEW!

CSR and Mining

Renewed CSR strategy brings new consequences Michael Torrance is a lawyer in Norton Rose Fulbright’s Toronto office.

By Michael Torrance

A

renewed Corporate Social Responsibility (CSR) strategy for the Canadian mining sector was announced by the Government of Canada on November 14, 2014 that will create consequences for companies who refuse to adhere to endorsed CSR best practices and dispute resolution processes.

This development coincides with several other related developments in the area of CSR that show a clear direction towards enforcement of CSR performance that is of note to Canada’s international mining sector.

The announcement followed a review of the Government of Canada’s original Corporate Social Responsibility (CSR) strategy for the Extractive Sector, originally released in 2009. That strategy included the creation of the Office of the Extractive Sector CSR Counsellor (“CSR Counsellor”), a non-judicial grievance mechanism with a primary mandate to intermediate international disputes between local communities and Canadian extractives companies.

The CSR Counsellor’s Office received much criticism for not being effective. The new CSR Strategy builds on the old strategy, with the CSR Counsellor role remaining in place.

As part of the renewed CSR strategy, Canadian mining companies will face withdrawal of Trade Commissioner Services and other Government of Canada advocacy support abroad if they do not meet the endorsed CSR standards and participate in dialogue facilitation processes of Canada’s CSR Counsellor and OECD National Contact Point. This includes withdrawal of Government of Canada services, including the issuance of letters of support, advocacy efforts in foreign mar8 | Canadian Mining Journal • January 2015

kets, and participation in Government of Canada trade missions. Such matters will also be taken into account in the CSRrelated evaluation and due diligence conducted by the Government of Canada’s export financing body, Export Development Canada (EDC), in its considering financing or other support.

The primary goal of the CSR Strategy remains the promotion and adoption of CSR “best practice” standards throughout the mining sector. In particular, the international best practice standards that have been endorsed by the Canadian Government: • the 2012 International Finance Corporation Performance Standards on Environmental & Social Sustainability (“IFC Performance Standards”) • the United Nations Guiding Principles on Business and Human Rights (the “UNGP”) • the OECD Guidelines for Multinational Enterprises (“OECD Guidelines”) • OECD Due Diligence Guidance on Responsible Supply Chains of Minerals from Conflict-Affected and HighRisk Areas • Voluntary Principles on Security and Human Rights (the “VP”) and; Global Reporting Initiative (the “GRI”).

Adoption of the 2012 IFC Performance Standards is noteworthy because of the Free Prior and Informed Consent (FPIC) principle that it includes. The CSR strategy is also the first formal endorsement of the UNGP by the Canadian Government since its adoption by the United Nations Commission on Human Rights in 2012.

The UNGP is now widely recognized

globally as a leading international standard for business and human rights, with action plans being developed by the U.K. and U.S. governments.

The release of the CSR strategy is part of a broader trend towards “enforced selfregulation” of the environmental and social performance of the Canadian mining industry. “Enforcement” has often been through the marketplace rather than by government. For some time, dozens of global financial institutions including Canada’s five big banks (and EDC) have required mining companies they finance to adhere to the IFC Performance Standards and the UNGP in their international operations. This process has created a financial impetus encouraging adoption of some of the very same standards recently endorsed by the Government of Canada in the CSR strategy.

Courts have also begun to test the waters. In a recent ruling considering potential liability of a Canadian parent company for human rights violations of foreign subsidiaries occurring outside of Canada, international standards like those endorsed in the CSR Strategy were viewed as a possible policy basis for corporate liability.

In legal argument, these standards were referred to as evidence that Canadian mining companies are aware of international human rights risks and thus should be held liable when such standards are not met and human rights harms occur. While these cases are pending, such avenues for legal argument highlight the legal risks tied up with CSR best practices and emphasizes the need to treat such issues as part of legal due diligence, rather than simply as a public relations exercise. CMJ www.canadianminingjournal.com

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| Coast-to-Coast-to-Coast

High-Arctic

Adventure Canadian ore carrier makes historic journey to China via Northwest Passage

By Richard Desgagnes* and Andrew Godfrey*

10 | Canadian Mining Journal • January 2015

www.canadianminingjournal.com

Law Fednav’s MV Nunavik made history by carrying 24,000 tons of nickel concentrate through the Northwest Passage from Canada to China.

January 2015 • Canadian Mining Journal |

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| Coast-to-Coast-to-Coast

Nunavik’s historic journey through the Northwest Passage from Canada to China reduced the shipping time by about 18 days (or about 5,800 miles) had it taken the Panama Canal route.

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hipping history was recently made in Canada when Fednav’s MV Nunavik sailed from Deception Bay, Quebec to Bayuquan, China via Canada’s Northwest Passage.

The ship carried 24,000 tons of nickel concentrate and became the first commercial vessel to transit the Northwest Passage westward, unescorted, with an Arctic cargo and with Canadian expertise. In doing so the transit time was reduced by about 18 days (or about 5,800 miles) than had it been routed through the Panama Canal.

This and other developments are opening new frontiers of coastal mining transportation in Canada. Wherever a mining project is located, however, there are some key issues that have to be addressed when looking at maritime transportation.

FLAG CONSIDERATION; If the transportation needs are purely domestic (from one point in Canada to another), due to coasting trade restrictions, the vessel must be Canadian flagged and manned by Canadian seafarers. As such, manning costs are much higher compared to some other foreign flag operations.

For carriage to a destination outside of Canada however, there is no restriction on the nationality of the vessel or the crew used on-board. All vessels are regulated by the standards of the IMO (International Maritime Organization).

HIGH DEGREE OF EXPERTISE REQUIRED: No matter what flag the vessel is flying, it is of the utmost importance that the ship

12 | Canadian Mining Journal • January 2015

operator has the required degree of expertise to operate in the waters where the project is located. Experience is the key. Take for instance the Arctic. As the number of new opportunities grow in the region, so too does the interest among ship operators. Not all ship operators have the same degree of experience, however. Even in the best circumstances, the Arctic will remain one of the most challenging environments to operate a vessel in. Thus, choosing a ship operator with a proven track record is very important.

ASSUMPTION OF RISKS: Even with experienced operators, a given voyage may provide its fair share of events that will contribute to delay or increased costs. Who assumes the consequences of these events will depend on the contractual form used by the parties. Some contracts provide for the payment for the daily use of the vessel (the hire). In this case, delay will usually be assumed by the shipper. Other contracts provide for a rate per ton carried (the freight), in which the risks associated with the delay will usually be assumed by the carrier.

There are a number of standard forms of contract that have been in use for decades and are regularly updated. However, the specifics of a project may require a change or a compromise on the otherwise well-established apportionment of risks set out in these standard forms. For example, risks due to ice is typically assumed by the shipper, but if the ship is specifically designed to operate in ice-infested waters, the expectation of a shipper may differ. www.canadianminingjournal.com

Law

WHAT A

JOURNEY

By David Perri*

SECURING THE SUITABLE TONNAGE: For ordinary trades, there are hundreds of ships able to move a cargo, and finding the right tonnage should be relatively easy and the costs similarly low. But the more specific the needs of a shipper are—and this can certainly be the case for mining projects in remote areas—the more difficult and expensive it will be to find a suitable ship.

If a project requires that one or more dedicated vessels be built, the shipper will likely need to hire the ship operator on a long-term basis in order for the ship operator to justify the large capital expenditure required for new buildings. Even then, the costs of building vessels with unique features might be such that the shipper may be obliged to partner with the ship-owner to facilitate the financing. Couple this with the necessity for the shipper to control the access of “tailor-made” vessels at all times might further lead a shipper to consider becoming a ship-owner in its own right. In this case, the ship operator would only be concerned with operations.

Finally, ensuring the timely delivery of the newly built vessel(s) may prove crucial to the shipper. In this respect, ship financing has seen an important number of players exiting the market in recent years and shipyards’ work orders are currently quite busy. Accordingly, a mining project developer would be well advised to address the shipping solution at an early stage.

Richard Desgagnes is a Senior Partner and Andrew Godfrey is an Associate with Norton Rose Fulbright.

On Sept. 19, 2014, the MV Nunavik embarked on a historic 29-day journey from Deception Bay in Quebec’s far north to deliver nickel concentrate to Bayuquan in China’s Liaoning province.

According to the Montreal-based shipping firm of Fednav, which owns the 31,700-tonne vessel, reaching China via the Northwest Passage as compared to using the Panama Canal, offered a 40 per cent reduction in time and distance, with time being a major factor.

“September and the beginning of October is the only time that a conventional vessel can use the Northwest Passage,” says Marc Gagnon, Fednav’s Director of Government Affairs and Regulatory Compliance.

Even during this shipping window, he says, the lack of coast guards and the difficulty of navigating the passage make it extra risky. In Gagnon’s estimation, the arctic route won’t see more traffic in the short or even medium term.

“This won’t happen every year. We don’t expect it to happen often.”

Gagnon said it was an extraordinary coincidence that arctic cargo was sold to China at the right time of year. He added that the past winter’s severity had made the waters especially difficult, which meant there would be more icebergs.

Because of the extreme conditions, “We didn’t use a regular ship to go through the Northwest Passage this year; it would be too dangerous.

With the icebreaker MV Nunavik, however, we were going to be okay,” said Gagnon.

As a “Polar Class 4” icebreaker, the MV Nunavik is capable of breaking through thick sea ice as it does routinely as part of it regular job of keeping Deception Bay clear for navigation year-round, said Gagnon.

It took four days for the ship to travel the 1,700 km Northwest Passage from Lancaster Sound to the Beaufort Sea. During its voyage, it was aided from shore by Fednav’s ice-navigation support team, as well as cutting-edge technology on-board, including real-time satellite imagery.

From a regulatory standpoint, Gagnon says traversing the Northwest Passage is relatively painless and inexpensive. There are no fees and few restrictions, but an Arctic Pollution Prevention Certificate was required from Transport Canada before embarking.

This journey is only the second commercial cargo ship to travel through the entire Northwest Passage; the first was an escorted voyage last year, but Gagnon estimates there have been 200 non-commercial trips through the route, completed by coast guard icebreakers and research vessels.

Fednav operates 75 ships worldwide, three of which are employed full-time in the Arctic, moving 2 million tonnes of material per year from four mines: Vale’s Voisey’s Bay nickel-cobalt-copper mine in northern Labrador; Teck Resources’ Red Dog zinc mine in northwest Alaska; Glencore’s Raglan nickel-copper mine in Quebec’s Ungava region; and Jilin Jien Nickel Industry’s Nunavik nickel-copper mine, also in Ungava, which yielded the nickel that went through the Northwest Passage.

China-based Jilin Jien acquired 75 per cent of the Nunavik project via the hostile takeover of Canadian Royalties in 2009. It bought the remaining 25 per cent by snapping up Goldbrook Ventures with a friendly offer in 2012.

The Shanghai-listed firm has invested $1 billion to develop the Nunavik mine and appointed Toronto-based Forbes & Manhattan to manage the operation through to production, according to its Canadian subsidiary’s last press release in November 2013. That same press release announced the company’s first copper-concentrate shipment from the mine.

Fednav says the miner expects to produce 20,000 tonnes per year of nickel and copper in concentrate. *David Perri is an Editor with The Northern Miner, a sister publication to Canadian Mining Journal.

January 2015 • Canadian Mining Journal |

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| Coast-to-Coast-to-Coast

STRIKE UP THE BAND Veteran diamond hunters bring new tools to NWT diamond resurgence

“ We just decided to put the band back together...”

Randy Turner, Canterra Minerals

By Northern Correspondent Bill Braden

I

t’s been more than a decade since Canada has seen a new diamond discovery but the gem hunters are back and more determined than ever.

Bolstered by steadily rising demand, a vastly improved exploration tool kit and an impressive bank of diamond expertise, diamond explorers have reignited the search for fresh stones to increase Canada’s share of a world diamond market that hit a record $79 billion last year.

Junior players led by the likes of Kennady Diamonds, Canterra Minerals and North Arrow Minerals have also resparked investor interest: between $40 and $50 million has been ploughed into prospecting the Arctic’s ancient cratons in the past couple of years.

“There hasn’t been a major discovery for 15 years... and the timing to us, looked like it couldn’t be better. We just decided last November to put the band back togeth-

14 | Canadian Mining Journal • January 2015

er and try out our luck,” says Randy Turner, President and CEO of Canterra Minerals Corp, whose Winspear Diamond Corp. found the Snap Lake deposit in 1997.

“The land is open for exploration, there are untested targets and ideas that we never carried out back in the early 2000s or late 1990s.”

Veterans return Turner isn’t alone in his thinking or his passion for that which is forever. Indeed, many of the veterans of the original diamond rush of 1990 have returned to the race for new “ice.” All that original talent has, in turn, lured investors.

“Their return speaks to the potential that’s here,” says Pam Strand, Director of the NWT Government’s Mineral Resources Division, of $1.6 billion in value generated by mining in 2013. She cites the aggressive consolidation at Dominion

Diamonds, led by Bob Gannicott, and impressive early results at Patrick Evan’s Kennady Lake prospect, as evidence that diamonds have very good friends.

Greg Klein, a reporter with the webbased exploration bulletin Resourceclips. com, echoes that trust plays big in this high risk game.

“These people have proven successes, the expertise, there’s gotta be something that’s driving them back, and that (storehouse of experience) might be one thing an investor would consider,” says Klein.

A May, 2014 paper by Dundee Capital Markets reinforces the value of experience. It reported on two diamond developers and three advanced explorers, noting that those with market caps of $30 million or more beat out precious metals equities in 2013.

“The companies that we have identified in this report have well-regarded and www.canadianminingjournal.com

The winter road to the Gahcho Kue diamond project, 280 kilometres northeast of Yellowknife, could get a lot busier as exploration ramps up on neighbouring kimberlites. billbradenphoto, courtesy De Beers Canada and Mountain Province Diamonds.

experienced management teams and the resources required to reach key milestones and deliver positive results providing significant upside potential,” said the report.

“The more mature players are back in the game who understand diamond exploration,” says Turner. “We still have some of the top diamond experts with us that still have a passion, that’s where we are.”

Clusters and Closeology Miners and oil drillers have long known that a new discovery could likely be next door to an old producer. Geologists and investors call it “closeology” and it couldn’t be truer than in diamond geology.

“The strategy of closeology is stronger for kimberlites than it is for gold deposits or even uranium,” says Klein. It’s amply demonstrated in the NWT’s so-called Corridor of Hope, the ground that hosts the Ekati and Diavik Mines. The two are

very close neighbours; on a clear day they can see each other’s mine works.

Dominion Diamond, which owns 90 per cent and 40 per cent respectively of the Ekati and Diavik mines, has its own cluster of nearby kimberlites pipes and is assessing whether to open several more.

Gren Thomas’s North Arrow Minerals is working with Dominion on a neighbouring Lac de Gras project, probing an unsourced mineral indicator train, and Archon Minerals, led by Stu Blusson (one of Ekati’s co-discoverers) has interest in three different Lac de Gras projects.

Closeology kicks in again, not far to the south and east, where De Beers’ 100 per cent owned Snap Lake Mine and its Gahcho Kue project (owned 49 per cent Mountain Province Diamonds, expected to begin production in 2016) are only 90 kilometres apart.

This is the new Ground Zero for dia-

mond hunters. Just a few kilometres from Gahcho Kue, Kennady Diamonds Inc.’s Faraday and Kelvin kimberlites have yielded remarkable results. Kennady’s President and CEO Patrick Evans, is also the man behind Mountain Province Diamonds, and expects to bring news of a maiden resource for Kennady Lake to the market early in 2015.

Kennady’s results spurred a mini-rush in 2013 that captured much of the ground within a 30-kilometre radius of Gahcho Kue. Turner’s Canterra Minerals is there, along with Margaret Lake Diamonds and Arctic Star Diamonds (both of which have Buddy Doyle, who led the Diavik discovery team, as Vice President of Exploration).

Newcomer Prima Diamonds Corp. has two choice targets, while Canada’s first Aboriginal-owned miner, Denendeh Exploration and Mining Company (DEMCO) of January 2015 • Canadian Mining Journal |

15

| Coast-to-Coast-to-Coast Ontario. Players include Prima Diamonds, and Metalex Ventures, led by Chuck Fipke, the guy who co-discovered the Ekati mine in 1990.

Patrick Evans, President of Mountain Province Diamonds, and Kennady Diamonds, at Kennady’s Bob Camp exploration base (aerial, following page) near the Gahcho Kue project. billbradenphotos, courtesy Kennady Diamonds.

Yellowknife has claims that include seven known kimberlite pipes.

Much of this action is due also to the volume of original claims that have lapsed in recent years, as the recession and rising gold prices bled exploration dollars away from other commodities. Largely untested, that ground is now being restaked.

At its peak in 2007 there were 5.9 million hectares under claim in the NWT, says the GNWT’s Strand. “Now we’re at a third of that (1.6 million hectares) which means there’s all that open ground,” she says, adding that 305 claim applications have been logged in the first half of 2014 almost double the 163 filed for all of 2013.

The NWT is not alone in the excitement. Stakers have been busy around Stornoway Diamond’s newly launched Renard mine in northern Quebec, and at De Beers’ Victor mine in northern 16 | Canadian Mining Journal • January 2015

Supply Dwindling for Diamonds The world’s demand for gems and jewellery will grow four per cent a year for some time to come, led by China and India, says the De Beers Group in its Insight Report released in October.

Demand is also recovering in the United States, which commands 40 per cent of global jewellery sales.

Confounding that rosy future, though, is the diminishing supply chain. World production of rough peaked at 176 million carats in 2005, and then dropped considerably before recovering. It was up seven per cent in 2013 to 146 million carats and will rise as more mines come on stream, says De Beers, but it worries that unless major discoveries are made soon, production will again start to slide after 2020.

This supply/demand imbalance is a fundamental key in the resurgence of new exploration.

But finding viable deposits is a frustrating and expensive quest, fraught with failure: more than 8,000 kimberlite and lamproite deposits have been found worldwide, yet only 15 per cent are dia-

Canterra Minerals’ Marlin claim block (in blue) is just one of several staked out around the Gahcho Kue project. Map courtesy Canterra Minerals. www.canadianminingjournal.com

Surface preparation for open pit mining began in 2013 at De Beers’ Gahcho Kue project. It will be the company’s third producer in Canada. billbradenphoto, courtesy De Beers Canada

mondiferous. Of these only 67 have become mines, and only seven of these yield 63 per cent of total supply.

De Beers says since 2000, an astonishing $7 billion has been invested in exploration, with “meagre” results and only one major find - the Bunder in India - to show.

“Existing supplies will be depleted as mature mines deplete,” says Greg Klein.

“Canadian diamonds (15 per cent of supply by value) are internationally respected, ethically mined and they’re also valued for their quality.”

Diamond Hunting Goes High-Tech Today’s Arctic explorers have a considerably better and bigger tool kit at their disposal, says Canterra’s Turner. The evolution of airborne gravity surveying, pioneered by BHP of Australia, has been a huge gain, he says, along with understanding KIMs - kimberlite indicator minerals such a garnets - the relatively abundant, telltale mineral grains that can lead geologists to a potential diamond source.

“Back in the 1990s, if we found a G10 garnet, we thought we had ourselves a diamond mine. It doesn’t work that way. It’s a lot more complicated than that,” says Turner. “There’s a lot of things we didn’t understand then, that we understand now...

and things we still don’t understand.”

Arctic Star Exploration Ltd.’s Buddy Doyle, one of world’s top diamond geologists, said in a 2013 interview in Mining. com that experience and technique have evolved dramatically from the day when his Kennecott team found the Diavik mine in 1994.

“Whereas these past discoveries were largely reliant on using one particular exploration tool or another, we’re now using all the tools in the tool kit.”

That kit, after some 25 years of evolution, also includes a wealth of exploration data that explorers can tap, says Strand,

including the world’s largest collection of kimberlite core at the NWT Geoscience Office in Yellowknife.

This year, on a recommendation in the NWT Government’s 2013 Mineral Development Strategy, it created a $400,000 exploration incentive fund and awarded grants to a diverse group of diamond hunters, most of them NWT-based. It’s the first year of the program, says Pam Strand, as the government and industry work to make NWT mining more attractive.

While Canterra’s application was not among the lucky ones, Turner applauds the NWT’s program as a step in the right direction that he hopes will increase.

(Yukon just this year upped its incentive pot to $1.4 million).

“I think the NWT government has to offer a lot more incentives to get people to come back in... if you want southern capital to partake in exploration in the North.”

What do the years ahead have in store?

“We will advance 10 to 15 years from now... there will be other discoveries,” Turner predicts. “The easy ones have been found, let’s make no bones about that. But there are still some hidden monsters out there somewhere.”

CMJ January 2015 • Canadian Mining Journal |

17

| Coast-to-Coast-to-Coast

SLUGGING “ It ain’t about how hard you hit, it’s about how hard you can get hit and keep moving forward.”

- Rocky Balboa

By Western Correspondent David Godkin

A massive shovel overshadows a track dozer at one of Teck’s many coal operations in British Columbia.

B

C’s coal mining industry has always had more heroes than villains over its tumultuous 150-year history.

From George Dawson who first mapped the coal formations in southeastern B.C., to William Fernie who started the area’s first mine at Coal Creek, to J. Edgar Kaiser who undertook a massive upscale in open pit strip mining in the Elk Valley in the mid-sixties.

In the midst of high costs, poor production and low revenues, bankruptcy and broken markets, someone has always emerged to pick up the pieces.

But to truly understand what it takes to make a hero in the coal industry, you have to first understand that it’s an industry almost always in flux. How it handles the ups and downs depends on both the tenacity and skills of its managers and employees on the ground.

TO KNOW WHERE YOU’RE GOING, KNOW WHERE YOU CAME FROM… Back when George Dawson was mapping southeast B.C., even he could hardly have comprehended the amount of coal to be found in the East Kootenays: three massive coal 18 | Canadian Mining Journal • January 2015

fields with seams 100 to 700 metres deep beneath the Mist Mountain Formation. Between them, the Crowsnest, Flathead and Elk Valley coalfields, they have delivered more than 500 million tonnes of mainly metallurgical coal since 1898.

“But it was Kaiser, who in 1968 first realized that the coal in the Elk Valley was a good coking coal and consequently could be exported,” says Dr. Barry Ryan, a former geologist with the B.C.

Teck’s Line Creek operation. www.canadianminingjournal.com

Elk Valley operations.

government. CP soon realized it too. Granted land and mineral rights as encouragement to build rail lines, it set out to building a line that would eventually carry 100 unit coal trains from Fernie to the Pacific coast so that from about 1970 onward “exports from southeast B.C. took off,” says Ryan.

By 1972, a new player broke ground in the Elk Valley – Fording Coal Ltd., a joint partnership of Canadian Pacific Investments and Cominco that finished expansion of its Fording River operation and began shipping coal to Japan. Even the Japanese were heroes of a sort over this period. It was their seemingly unquenchable appetite for metallurgical coal for its steel making and manufacturing sectors that drove up coal production in Elk Valley and elsewhere.

But it was a subsequent decision in 2003 by Fording that would ultimately change the face of coal mining in eastern B.C. As John Kinnear, a third-generation miner and coal mining historian describes it, Sherritt Gordon acting on behalf of the powerful Ontario Teachers Pension Fund “made a charge into western Canada” with a plan to acquire most of the thermal coal market. “It got into some takeover attempts but in the end an agreement was drawn up with Fording giving up some of its thermal mines.” Under that agreement known as Elk Valley Coal Partnership Ford, Teck Cominco Limited, Luscar Ltd and others would be beneficiaries of the newly formed Fording Canadian Coal Trust.

“So we had this conglomerate that was 35 per cent Teck running Elkview Mine and 65 per cent Fording running the other mines.”

“Fording saw a white knight in Teck,” says Don Mills, who began as a geology technician back in the 70s and who today is a senior geologist working at Teck. Teck had a controlling interest in the trust and over the next five years Sherritt and company sold off their shares leaving Teck and its remaining partners in the trust firmly in charge - employing 2,600 workers by 2005 and producing 25mt of coal annually at its Coal Mountain Fording River, Green Hills, Line Creek and Elkview mines. Things were looking good.

Two years later, the trust went looking for someone to buy it out. Hobbled by infrequent and unreliable rail ship

ments, falling plant production, higher costs, aging trucks and shovels, and expected volatility in coal prices for 2008, the trust was out of options. With a 20 per cent stake in the trust, questions now emerged as to whether Teck Cominco would pick up the remaining shares.

YOU STILL CAN’T KNOW WHAT YOU DON’T KNOW… It wouldn’t have been the first time that Teck had stepped up to the plate when trouble was brewing. Back in 1991 after Westar (formerly Kaiser Resources) went belly up, it was Teck that acquired and restarted the Westar Balmer Mine at Sparwood, renaming it Elkview Coal Corp. A year later Fording Coal Ltd. bought and re-opened the Westar Greenhills Mine. But now the Fording River operations.

January 2015 • Canadian Mining Journal |

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| Coast-to-Coast-to-Coast

Two shovels

trust that bore its name was waiting to hear from Teck, which already owned 40 per cent of the operations in the Elk Valley whether it was hungry for more.

Then, on July 29, 2008 Teck Cominco announced an agreement with the trust to buy 100 per cent of the assets in Elk Valley Coal Partnership. Purchase price: $14-billion USD. Elk Valley Coal Corporation was renamed Teck Coal Limited, underpinned by a resulting debt at Teck of $9.8-billion USD. Good timing? Sure, when you consider the amount of coal still left in the ground. But bad timing, too, says Kinnear. “Teck decided to take the whole works over in 2008 right before everything crashed. They took themselves right to the wire.”

Before long it was Teck - by its own estimation, the secondlargest producer of seaborne hard-coking coal used by steelmakers - looking for options. Dividends suspended, spending slashed

20 | Canadian Mining Journal • January 2015

and international asset sales “to keep from going under.” Teck, on January 9, 2009, announced a 13 per cent cut of its total workforce, or 1,400 jobs, to save the company $85 million. In the midst of declining global demand for steel sapped by the global financial crisis Teck also lowered its coal production by a staggering 20%.

“Oh my gosh, we thought we were done,” says Mills. The deal done in the summer was “consummated on Halloween” at almost the rock-bottom time” to making deals like this. Teck’s problem: finding someone to finance operations “because all the money was just being sucked out of capital in North America.”

At some pains to explain its approval of the deal, the Competition Bureau of Canada could only state the obvious: “The international coal market changed dramatically after the transaction in a way that the Bureau could not have been expected to anticipate at the time of the transaction.”

Many heroes emerged at this time. First and foremost was Teck’s current President and CEO Don Lindsay who Mills gives full credit for having steered Teck through a difficult time.

“Through his banking experience he managed to keep us going.”

And then Mills and his colleagues jumped in to lend a hand as well. With considerable assets on the ground their employer still seemed like a good bet.

“So a number of employees from the predecessor companies thought well we might as well buy some stock because the stock

www.canadianminingjournal.com

prices were going down, down and we ended up in the end making out quite well.”

Since then the number of people working in Teck’s coal business unit has mushroomed to 4,300. Teck has gone onto become the number one producer of steelmaking coal in North America and number two in the world.

Eighty-five per cent of Canada’s entire coal production emanates from Teck’s coal operations. But any real doubt about Teck’s ability to rebound from tough blows on the ground is removed when looking at its fleet, including CAT 776 wheel dozers, 100 tonne Cat 777 dump trucks and advanced versions of Komatsu’s 930E haul truck.

“When I started the trucks were a quarter of the size they are now, basically 120 and 170 tonnes,” says Mills. “Today they’re closing in on the 400-tonne mark for rock hauling and 270 tonne for coal hauling. We were all proud of the 25-yard shovel. Well, now they’re like 60 yards.”

Not that there haven’t been other issues Teck has had to grapple with. In March 2013, B.C.’s environment minister announced no new mines would be approved in the Elk Valley until Teck came up with a plan to manage the cumulative effects of silenium, an earth element which in concentrated forms in food can lead to deformities in newly born waterfowl. At that time, Teck was seeking approval of its continued operation in the valley of its Line Creek operations.

So time was of the essence. Not only the Line Creek mine, but three applications for mine expansions and a fourth for a new mine were on the line. Aware of the selenium problem, Teck had already set out to develop a wide-ranging mitigation plan. A biological tratent facility followed as did efforts to divert water from waste rock sites. All this as part of a $600-million commitment over five years to address silenium contamination once and for all.

The hardest people to convince that you’re making your best efforts in situations like this are, of course, the environmental groups. How have they responded? “Very well,” says Kinnear. A ‘water management agreeement’ was worked out recently between “a very strong environmental group,” Teck and government, “that everyone seems to be pretty happy with these days.”

“Teck as never shrunk from challenges like this.”

CMJ

Heavy hauler at Fording River operation.

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January 2015 • Canadian Mining Journal |

21

| Coast-to-Coast-to-Coast

FROM THE:

Mineral industry takes long-term approach

By Phil Saunders*

22 | Canadian Mining Journal • January 2015

www.canadianminingjournal.com

T

he minerals industry in Newfoundland and Labrador is confronting the challenging conditions in the broader commodities market with innovative deals and productivity upgrades in both the mining and exploration sectors. Recent developments in plant and infrastructure have improved the mining outlook long-term, and impressive grades of gold and base metals in recent drill intersections provide a positive counterpoint to a moribund investment climate.

Mining and Processing The Iron Ore Company of Canada (IOC) has been producing iron ore in Labrador West since the 1960s. In 2014, IOC commissioned the final approved phase of IOC’s concentrate expansion project, and turned it over to operations. Nameplate capacity at IOC is now 23.3 million tonnes of concentrate. Concentrate shipments for 2014 are expected to be about 15.5 million tonnes compared to 14.8 million tonnes for 2013.

Tata Steel Minerals Canada Limited (TSMC), a joint venture between Tata Steel of India and New Millennium Iron Corp. is developing/operating a highgrade iron ore (DSO) project in the Menihek area of northwestern Labrador.

Ore is currently beneficiated using a portable dry crushing and screening process that was expected to produce about 800,000 tonnes in 2014. A new wet pro-

Tata Steel Minerals Canada processing plant, DSO operation.

cessing plant was 80% complete as of November 2014 and is expected to be operational in the second quarter of 2015. This should increase total capacity to nearly 3 million tonnes for 2015 and up to 6 million tonnes thereafter. In November, TSMC announced the commencement of rail haulage on the newly commissioned KéRail spur line that services the DSO Project.

In February 2014, Cliffs Natural Resources Inc. notified the Province of its intent to close its mining and processing operations at the Scully iron ore mine in western Labrador. Formal notification of closure was received in October 2014.

Vale Newfoundland and Labrador Limited (VNL) operates the Voisey’s Bay Mine in Labrador and a hydromet pro-

cessing plant at Long Harbour, in southern Newfoundland. The mine opened in 2005 and produces both nickel and copper concentrates. VNL has committed to underground development at the site, and initial production from this phase is projected for 2019. During the first six months of 2014, VNL reported production of 26,500 tonnes of nickel, 14,100 tonnes of copper and 636 tonnes of cobalt.

Once the hydromet processing plant is fully operational, it will process Voisey’s Bay concentrates into finished nickel, copper, and cobalt metal products. In November 2014, VNL formally announced a major milestone at the hydromet plant with the production of first nickel.

Anaconda Mining Inc. is producing gold and generating positive cash flow

Thickeners area inside Tata Steel Minerals Canada processing plant.

January 2015 • Canadian Mining Journal |

23

| Coast-to-Coast-to-Coast Pine Cove Gold Mine, Anaconda Mining Inc.

from its Pine Cove Mine on the Baie Verte Peninsula. In the fiscal year ending May 31, 2014, the Company produced about 15,000 ounces of gold, and expects to increase this in FY 2015. Anaconda is expanding its tailings facility, and exploring for additional gold resources within trucking distance of the mine. Anaconda is also looking to increase their resource base through exploration on nearby properties. The company reported encouraging drill results from the Stog’er Tight Project, and intends to upgrade current historical resources on this project to NI

43-101-compliant standards.

Rambler Metals & Mining plc continues to ship high-grade copper-gold concentrate from its Ming Mine, also on the Baie Verte Peninsula. For the year ending July 31, 2014, Rambler produced 6,968 tonnes of accountable copper metal, 6,043 ounces of gold and 28,887 ounces of silver.

Rambler is evaluating cost-saving methods of mining and processing the much larger but lower-grade Lower Footwall Zone through a process of pre-concentration and dense media separation. The study is being supported by Research &

Rambler Metals & Mining, concentrate storage facility.

24 | Canadian Mining Journal • January 2015

Development Corporation of Newfoundland and Labrador. Rambler recently published an updated resource estimate for the mine. The Mineral Reserve remains unchanged from the previous estimate published January 27, 2014; however, the updated Mineral Resource represents a 38% increase in copper metal content for the entire Ming Mine, based largely on the Lower Footwall Zone.

Atlantic Minerals Limited mines limestone and dolomite on the Port au Port Peninsula in western Newfoundland. The operation produces chemical-grade, highcalcium limestone, chemical-grade dolomite, and construction aggregates, and has year-round ship-loading facilities.

Total shipments from Lower Cove were forecast to increase from 2.6 million tonnes in 2013 to 3.1 million tonnes in 2014. The Company has undertaken capital projects and productivity improvements that will increase capacity from approximately 3 million tonnes per year (Mtpy) to 4 Mtpy. In January 2014, Atlantic Minerals made its first shipment of limestone to a European market.

Barite Mud Services Inc. plans to reprocess tailings from ASARCO’s historic base metal mine in Buchans to recover barite. The project has been released from environmental assessment, and is expected to yield about 10,000 tonnes of barite annually.

Exploration Gold and base metals remain the targets of choice for exploration companies in central Newfoundland. In spite of challenging market conditions, companies are finding ways to raise funds and advance their more promising projects.

On the gold front, Marathon Gold Corp. continued exploring its Valentine Lake Property throughout 2014, with very positive results. Drilling has expanded the recently discovered Sprite Zone, where Marathon plans to develop a new open-pit resource to add to their existing gold resources at the Leprechaun and Victory zones. The company also announced the discovery of a new prospect, the Marathon Zone, in 2014. Both prospects are characterized by broad intervals with substantial gold mineralization, including narrow www.canadianminingjournal.com

high-grade intervals. Marathon recently announced positive results from metallurgical testing that indicate very high gold recoveries from the Leprechaun Zone.

Benton Resources Corp. has signed a letter of intent with Nordmin Engineering Ltd. covering four of the six gold deposits with known resources at Benton’s Cape Ray Project in southwest Newfoundland.

Benton has reported encouraging results from recent drilling which suggest the possibility of continuity between the 04 and 41 Zones on the property.

Maritime Resources Corp. has reached agreement with Rambler Metals and Mining to evaluate the economic potential of the past-producing Hammerdown gold mine in the Green Bay area. If the project is feasible, this arrangement could allow Hammerdown ore to be toll-treated in Rambler’s Nugget Pond milling facility.

Coastal Gold Corp. is re-evaluating the resource model for its Hope Brook gold project in southern Newfoundland, to focus on the potential higher-grade underground mineral resource. The work is expected to result in a modest increase in the high-grade resource and identify potential extensions.

In base metal highlights, Minco plc reported an intersection of very highgrade (Zn-Pb-Cu-Au-Ag) massive sulphides during exploratory drilling in the historic Buchans mining camp in central Newfoundland. The massive sulphides occur in a less-explored horizon adjacent to Minco’s Lundberg resource, and suggest potential for an additional high-grade deposit of the type previously mined at Buchans.

Canadian Zinc Corporation also reported new intersections of very highgrade, zinc-rich massive sulphides from its Long Lake Project in central Newfoundland. The drilling is part of a larger, ongoing program to explore several such deposits recently acquired by the company in Newfoundland’s Central Volcanic Belt.

In Labrador, Century Iron Mines Corporation is conducting bankable feasibility and environmental studies related to development of its Joyce Lake Direct Shipping iron ore project in western Labrador. The company reports a sub

Atlantic Minerals Ltd. quarry, Lower Cove operation.

stantial cash reserve and is actively seeking new projects, including investments outside of the iron ore sector.

Paladin Energy Ltd. announced a revised Measured and Indicated mineral resource estimate of 84.1Mlb U3O8 for the Michelin Deposit, which represents a 25% increase in tonnage, and a 36% increase in the grade of recoverable, openpit resources. Paladin is continuing to explore the Michelin Property for additional resources.

Search Minerals Inc. has extracted a 40-tonne bulk sample of high-grade mate-

rial from its Foxtrot rare earth prospect in southeastern Labrador. The sample will be used for larger-scale pilot plant testing of the company’s proprietary metallurgical process.

In a notable event on the grass roots exploration front, Callinan Royalties Corporation staked approximately 5,000 claims in the Labrador Trough of western Labrador. The company is evaluating the base metals potential of this prolific belt. CMJ * Phil Saunders P.Geo. is a Mineral Exploration Consultant, Department of Natural Resources, Government of Newfoundland and Labrador .

Data review, Canadian Zinc core facility.

January 2015 • Canadian Mining Journal |

25

| Coast-to-Coast-to-Coast Photo Contest Winner: Intermediate Exploration Category.

FROM THE:

AME BC’s Annual Photo Contest

• A look at this year’s winners • Every year, the Association for Mineral Exploration British Columbia (AME BC) holds a photo contest to gather spectacular photographs related to mineral exploration in British Columbia and beyond.

• For 2014, AME BC had entrants focus on the mineral exploration life cycle: ranging from prospecting and early exploration through reclamation of disturbed land.

• The results are stunning as you can see from this year’s winners. To view all entries in the photo contest, view AME BC’s photo galleries on Facebook at facebook.com/ Association.for.Mineral.Exploration.BC. To obtain copies of AME BC’s Mineral Exploration Life Cycle community outreach brochure, on which the photo contest is based, send an email to jbuchanan@ amebc.ca.

26 | Canadian Mining Journal • January 2015

Innovation helps mineral exploration

By David McLelland*

T

he Association for Mineral Exploration British Columbia’s (AME BC) members in the B.C. mineral exploration community are leaders in project discovery, capitalization and development. This has always required a steady, positive resolve and a roll-up-thesleeves-and-go willingness to work.

Experienced explorers have the foresight to see beyond the cycles, persevering toward their goals in spite of resistance.

This last year, mineral exploration has

presented a new type of challenge resulting from changes to typical capitalization models. The venture capital bridge is damaged and traffic is being redirected. The Prospectors and Developers Association of Canada acknowledges the capital crisis.

TMX Group, which owns and operates the TSX and TSX-V stock exchanges, recently released a white paper that stated, “Decisive action is required to meet industry challenges and preserve the efficiency and integrity of our markets,” further noting that “Canadian www.canadianminingjournal.com

Photo Contest Winner: Early Exploration Category.

AME BC Announces 2014 Award Recipients

Leaders in Mineral Exploration and Mine Development to be Recognized at Gala

• The Association for Mineral Exploration British Columbia (AME BC) is pleased to announce the 2014 recipients of its annual awards presented to individuals or teams for significant contributions to the mineral exploration and development industry. The AME BC Awards Celebration of Excellence Gala will be held at 7:30 p.m., Tuesday, January 27, 2015 during Mineral Exploration Roundup in Ballroom C/D at the Vancouver Convention Centre West.

Tickets are available through registration at www.amebc.ca/roundup.

This year’s recipients are as follows:

order flow is migrating to the United States,” that “technology-driven markets are not optimized to serve all” and that “market complexity is on the rise.”

While the effects of the venture capital crisis are evident, they are also driving our industry to new concepts and methodologies of both finance and the work itself.

New and innovative methods of direct financing are emerging and may prove valuable models for mineral exploration and development – and these areas deserve our attention. Technological innovations that can improve exploration efficiency while reducing environmental, social and economic costs are

being developed and implemented.

Explorers don’t constrain themselves to innovating in the areas of geoscience, but are developing new collaborative management and financial systems as well.

As an association, AME BC continues to advocate for a safe, strong and responsible mineral exploration and development sector. We know that mineral exploration and development provides the economic benefit that B.C. needs for growing health, education and infrastructure demands. As British Columbians, we share a rich mineral endowment that represents real opportunities for real highpaying jobs and real economic growth.

Photo Contest Winner: Mineral Exploration Category.

• Peter Ogryzlo is the recipient of the H. H. “Spud” Huestis Award for excellence in prospecting and mineral exploration. He is recognized especially for his contributions to the discovery of two additional ore zones at the Huckleberry Copper Mine, 85 kilometres southwest of Houston in westcentral British Columbia. These newly-defined resources have led to major open pit and plant expansions to extend the mine life – first from 2007 through 2012, and then from 2012 through 2021.

• Bob Gallagher and Jim Currie are recipients of the E. A. Scholz Award for excellence in mine development. They are being acknowledged for their key roles in the early stages of resource and economic evaluation, mine design and construction of the New Afton copper-gold mine near Kamloops, BC. Their cooperative spirit and enthusiasm led to the successful development of the largest underground panel block caving operation in Canada.

• David Elliott is the recipient of the Murray Pezim Award for perseverance and success in financing mineral exploration. He has made a significant contribution over his 40-plus year career by financing many mineral exploration companies, particularly at the early stages. Over his career, he has provided seed capital and follow-on financing for hundreds of mineral exploration and development companies, both public and private.

• Jim Excell, Dan Johnson, Jeff Stibbard and Mike Rylatt are the recipients of the Hugo Dummett Diamond Award. They are acknowledged for their key roles in advancing the Ekati Diamond Mine in the Northwest Territories from concept to reality, on budget, without any major injuries and with an exemplary record of northern and community involvement. Ekati, which opened in October 1998, was Canada’s first diamond producer.

• Duane and Morgan Poliquin are the recipients of the Colin Spence Award for excellence in global mineral exploration.

This father and son team is being recogJanuary 2015 • Canadian Mining Journal |

27

| Coast-to-Coast-to-Coast nized particularly for its roles in the recent discovery and advancement of the Ixtaca gold-silver deposit for Almaden Minerals Ltd. at its Tuligtic property in eastern Mexico. This is one of the most significant greenfield discoveries of recent times, following several years of diligent research and exploration efforts focused on an underexplored area.

• The Aboriginal Mentoring & Training Association is recognized with the Robert R. Hedley Award for excellence in social and environmental responsibility. From 2009 through 2014, AMTA achieved its mission “to be the best team in Canada empowering First Nations to create economic health for themselves and their communities through skills training, education and career opportunities” as more than 1,000 of its candidates gained employment with more than 350 employers.

• Geotech Drilling Services Ltd. is the recipient of the David Barr Award for leadership and innovation in mineral exploration health and safety. Geotech Drilling has emerged as a leader in developing and nurturing a safety culture within its crews that has been transferred from client to client. In 2013, Geotech Drilling recorded 308,848 hours without a lost workday incident and is also being awarded the Safe Day Everyday Gold Award by AME BC and the Prospectors & Developers Asssociation of Canada.

• John Thompson and the late Bob Cathro are recipients of Special Tributes for their contributions to the Vancouver mineral exploration and mining community. John Thompson has been an energetic supporter of the exploration and mining community since arriving at Vancouver in 1991. He has advanced economic geology research, mentored students who are now active in the industry, supported volunteer professional activities at local, provincial, national and international levels, and has

Photo Contest Winner: Advanced Exploration Category.

We have further built our working relationship with government through participating in a B.C. delegation to the recent Alaska Miners Association 75th anniversary convention in Anchorage, and through regular meetings with our members and with government officials.

We will continue to build these relationships at AME BC’s Mineral Exploration Roundup 2015 conference to be held under the sails at Canada Place.

Three types of government activity are important to growing the B.C. mineral industry and economy: an efficient, transparent and competitive regulatory environment; tax incentives for innovation and exploration; and geoscience infrastructure.

Photo Contest Winner: Site Reclamation Category.

28 | Canadian Mining Journal • January 2015

AME BC continues to consult with government in response to proposed Mines Act permit application fees, maintaining that non-revenue-generating activities such as prospecting and exploration should not be charged permit application fees.

Government has suggested that some activities within this proposed framework will be exempt. We advocate for the continuance of the tax incentives such as the B.C. Mineral Exploration Tax Credit (BC METC), which helps to keep B.C. a competitive jurisdiction for investment.

Government geoscience infrastructure must rise to meet the demands of an increasingly technical society. This type of information forms the base for sound provincial, regional and project-scale environmental, social and industrial decision-making.

Often viewed as a tool for industry, this is the same information required to assess potential hazards, model our roadways and transport corridors, plan municipal land use and more.

Public, high-resolution geoscience data is the essential base layer of modern public mapping and it requires increased support. Budgets for public geoscience in B.C. have fallen and need to be not only restored, but increased, to meet current societal and economic requirements.

We are hopeful that the provincial government will implement these recommendations in the new year through www.canadianminingjournal.com

Photo Contest Winner: Site Reclamation Category.

both policy as well as the budget when it is announced in February 2015.

AME BC will continue to work with our members and government to ensure the industry is poised for success once market conditions brighten, as well as

ensure that B.C. is a favoured destination for the capital that does exist.

CMJ * David McLelland is the Chair of the AME BC Board of Directors and operates Auracle Geospatial Science Inc.

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played pivotal roles in the creation of Geoscience BC and the Canada Mining Innovation Council. The late Bob Cathro (19352014) was a pioneering western Canadian mineral exploration geologist and industry leader through his co-founding of Archer, Cathro & Associates Ltd., contributions to geological publications and service to AME BC (formerly the BC & Yukon Chamber of Mines).

• Dan Jepsen is the recipient of the Gold Pan Award for his service to the mineral exploration community through his work with the association as past Executive Director from 2002 to 2006 and President and CEO from 2006 to 2008. Bogart Cross is the recipient of the Frank Woodside Past Presidents’ Award for his service to the industry through supporting the Vancouver Mining Exploration Group, AME BC, MineralsEd and other industry initiatives.

• Finally, AME BC has awarded Outreach Education Funding to MineralsEd for coordinating Kids & Rocks hands-on classroom workshops for children and students in Kindergarten through Grade 3 in Vancouver area schools, and to the Britannia Mine Museum toward supporting education programs for 12,500 Kindergarten to Grade 12 students and for the development of new exhibits.

No matter how large or complex your mine’s power needs are, Valard has the resources to deliver a successful outcome. From engineering and procurement to construction and maintenance – get in touch with us for a simple, cost-effective solution.

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Canada’s Largest Power Line Workforce Extensive Bonding Capacity Competitive Project Financing

January 2015 • Canadian Mining Journal |

29

| Coast-to-Coast-to-Coast

FINE

TUNING Canadian Zinc zeros in on its Prairie Creek project

By Matthew Keevil*

I

t’s a tough market for juniors with development-stage assets, and that’s especially true for Canadian Zinc of Vancouver and its Prairie Creek polymetallic project, 500km west of Yellowknife in the Northwest Territories.

Prairie Creek boasts a large zinc-leadcopper-silver resource and offers a quick path to production, but its isolated locale creates unique challenges.

A rise in zinc prices would certainly help, though the industrial metal hasn’t really come to life over the past year despite positive buzz amongst industry analysts. So Canadian Zinc is approaching Prairie Creek from an optimization angle, which it hopes will boost the economics set out in a prefeasibility study filed in June 2012.

Vice-president of Exploration and Chief Operating Officer Alan Taylor says

30 | Canadian Mining Journal • January 2015

there’s plenty of room for improvement at Prairie Creek, which already features strong projected economic returns. The current mine plan envisions a 1,000-tonneper-day mill that would produce zinc and lead concentrates without using cyanide.

An average 92% of the silver values in the plant feed would also be recovered.

Prairie Creek would produce 60,000 tonnes zinc and 60,000 tonnes lead annually over an 11-year life based on 5.2 million proven and probable tonnes grading 9.4% zinc, 10.2% lead and 167 grams silver per tonne. Measured and indicated resources add 5.4 million tonnes of 10.8% zinc, 10.2% lead, 160 grams silver and 0.28% copper, while inferred resources tack on 6.2 million tonnes of 14.5% zinc, 11.5% lead, 229 grams silver and 0.57% copper.

“There’s a lot of optimization of under-

ground mine methods,” Taylor explains during an interview, noting that Canadian Zinc suspects that long-hole stoping could prove a better alternative to the cut-andfill mining methods assumed in the original prefeasibility study.

“We’re definitely still looking at a copper-silver concentrate and seeing how that might add value. We’ve been doing some marketing with the current concentrate specifics and they’ve been getting some serious consideration. On the opposite side we’re looking at near-site tertiary treatment to lower potential penalties.

There’s also a lot of potential to improve the lead and zinc recoveries because we have both oxide and sulphide in our concentrates, so we’re trying to determine what mix would work best in that regard,” he adds.

Improved metallurgical recovery and www.canadianminingjournal.com

A closer look at the administration facilities at the Prairie Creek site.

Aerial of Canadian Zinc’s Prairie Creek zinc mine in Northwest Territories.

mining methods could add value at Prairie Creek, but due to logistical challenges the company may have to counter-balance any changes with capital increases. Under the prefeasibility study the project would cost US$193 million to develop and carry a US$253-million pre-tax net present value at an 8% discount rate, along with a 40.4% internal rate of return and threeyear payback.

Canadian Zinc might alleviate working capital concerns by building an all-season road to Prairie Creek. Current studies assume a 184 km winter road with two transfer facilities that provide temporary surface access to the site for at least two months a year. The company has initiated an environmental application for a yearround road, with a decision expected on the permit review within the next year.

With Prairie Creek’s optimization

study results expected by year-end, Canadian Zinc is proceeding with the drilling and rehabilitation needed to get the project into production. In July the company closed a $15.8-million boughtdeal offering wherein it issued 28.6 million units at 35¢ apiece, with each unit comprised of a share and half a share purchase warrant exercisable at 50¢. The placement included 15-million flowthrough shares priced at 38¢ each.

A good part of the capital raise is earmarked for an underground development and drill program at Prairie Creek. The first stage would reopen and access the underground by dewatering and reinstalling electricity and ventilation to a 650-metre-long decline tunnel from 2006.

The company intends to complete a 6,000-metre drill program from underground stations at the end of the decline tunnel, in order to upgrade part of the inferred resources to the indicated category.

“We’re just in the process of mobilizing the underground drill. We recently awarded the contract, and we’ve got the supplies on the road to Fort Simpson,” Taylor says.

“We currently have the three surface rigs, but we’ll need the underground equipment to complete the program. We’re basically finishing off what we started back in 2006–07, when we completed the tunnel parallel to the footwall. We’ve established three other underground stations we haven’t even drilled from yet.”

Although the dewatering process should only take “a week or so,” Taylor says that once the equipment is running it will be one of the program’s most important aspects. Canadian Zinc will perform hydrological studies to fine-tune its pumping requirements at the mine by monitoring the down-swelling of the

groundwater curve. The company needs this process so that it can meet its water licence conditions.

Canadian Zinc shares have traded between 19¢ to 54¢ in the past year, and closed down 10% at 19¢ at press time. The company has 218 million shares outstanding for a $41-million market cap.

“The market is still soft right now, but the outlook for zinc seems to be positive,” Taylor says. “We’re one of the few junior resource companies that is actually spending money and moving ahead with both exploration and development, and the optimization study will give us a good handle on what sort of capital we need to raise to go into production. It hasn’t been easy, but we think things will get better and at that point we’ll be on the uptick, which is a nice place to be.”

CMJ *Matthew Keevil is a Staff Writer with The Northern Miner, a sister publication to Canadian Mining Journal.

Heavy machinery in action at the mine.

January 2015 • Canadian Mining Journal |

31

| New Products Extreme Traction-Drive Tire

Wheel loader

The new Cat 994K wheel loader is the manufacturer’s largest wheel loader designed to handle greater payload compared to its predecessor, the 994H. The result is fewer passes required to load large mining trucks, higher productivity and lower cost per unit of material moved. The standard 994K carries 45 tons (40.8 tonnes) per pass, and the high lift version moves 42 tons (38.1 tonnes) per pass— 18 percent and 20 percent more, respectively, than the previous model.The 994K loads mining trucks in the 250, 200 and 150 short ton classes in one less pass than the previous model. The high lift configuration is a six-pass match with the popular Cat 793 mining truck, and the high lift as well as the standard configuration loads the Cat 789 in five passes. The standard configuration loads the Cat 785 in four passes. More engine power, increased hydraulic flow, greater breakout force and rimpull, and improved lateral stability contribute to high productivity.

Belt cleaning system

Flexco recently introduced the HV2 Precleaner with V-Tips to its complete line of cleaners. Designed to be positioned on the head pulley and to remove the bulk of carryback from the belt, the HV2 is an enhanced version of the proven H-Type Precleaner. The six-inch tungsten carbide V-tips work independently and conform to the belt as each wears, allowing for maximum cleaning efficiency on vulcanized belts. The new torsion element cushion design and adjustable mounting method ensures the tips maintain optimal blade to belt contact, requiring no shimming of the blades. Available in sizes to fit belt widths of 18” to 72” (450 to 1800mm), the HV2 Precleaner is made from heavy-duty steel with a corrosion-resistant powder coating.

The Goodyear Tire & Rubber Company has broadened its line of premium mixed-service truck tires with the addition of a new size for its G741 MSD extreme traction drive tire. Following the recent introduction of its G731 MSA and G751 MSA mixed-service tires, Goodyear has added the 11R22.5 size (Load Range H) to the G741 MSD – a tire for severe-service fleets that need traction, toughness and versatility.

Features of the G741 MSD include: A deep 33/32-inch tread with a wide footprint that helps provide high mileage and traction; a self-cleaning tread design to help resist mud build-up for extra off-road traction; an innovative sidewall design that allows chains to be placed above tread blocks for enhanced performance; a cut- and chip-resistant tread compound for long-lasting performance on tough terrain; and tread designed for enhanced traction in wet, snow and icy conditions, while maintaining optimal dry traction.

Instrumentation for drillers

Boart Longyear introduces its TruCor integrated core-orientation system that enables drillers to increase productivity and decrease spend on consumables. Compared to other systems, additional extensions are not needed when the integrated TruCore housing is combined with Boart Longyear’s outer tubes, reducing the number of joints and high wear on outer tube extension barrels. TruCore’s unique core marking technology allows one tool to always be in the hole. The design uses optical communication to send measurements to a handheld control device allowing the drill string to stay assembled.

The pocket-sized controller simultaneously controls the two core orientation instruments increasing productivity by validating measurements while minimizing errors.

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32 | Canadian Mining Journal • January 2015

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January 2015 • Canadian Mining Journal |

33

Unearthing Trends

Tapping into diversity: women on boards Fiona Macfarlane, EY’s Chief Inclusiveness Leader and British Columbia Managing Partner.

By Fiona Macfarlane

C

ommodity price fluctuations, productivity challenges and a lack of access to capital are just a few of the risks increasing the pressure on executive teams in the mining and metals sector. New challenges and new dilemmas need new solutions. Executive teams can benefit from directors who bring new and challenging perspectives and ideas gleaned from their own experiences. If done well, this can create a real strategic advantage.

We all know it’s not enough to continue with the status quo. And we also all know, changing is far easier said than done. But it must be done and it needs to start now.

While to access diversity of thought requires one to access difference that goes beyond just gender, the inclusion of women is the equivalent of the canary in the coal mine. If we cannot get it right for 50% of the population, we probably won’t get it right for other aspects of diversity.

Studies show that boardroom diversity ignites innovative thinking, improves problem-solving and, often times, enhances competitive advantage. Yet, despite the advantages of diversity, representation of women on boards shows little improvement in Canada. In 2013, the Ontario Securities Commission (OSC) surveyed 1,000 TSX issuers. The results revealed that the level of representation of women on boards and in executive officer positions is extremely low: 57% of respondents had no women directors, only 28% had one woman director and just 3% had a woman chair of the board. That puts Canada behind the US, UK and Australia when it comes to diversity in the boardroom.

Research also shows diversity in the boardroom is particularly low in the mining and metals industry. According to Global Mining Standards and Guidelines Group, the industry has fewer women on boards than any other major industry,

34 | Canadian Mining Journal • January 2015

including oil and gas. The usual argument is that women are not well represented in the engineering and geology fields. While this may be true, management can benefit from a board which includes industry experience, but also has directors with experience outside the industry.

Investing in the sector’s future demands a proactive approach to diversity at the boardroom level and in the C-suite.

Creating a culture where diverse talent thrives is not about quotas, but it still requires a disciplined and thoughtful process to drive change. It’s also no longer voluntary — the OSC has enacted “comply or explain” regulations (taking effect on 31 December 2014) that require companies to set goals for the percentage of women on the board and in the executive.

Canadian mining and metals executives should consider the following five key elements in a successful strategy for driving real change: Leaders act: make an authentic and visible commitment.

•T one from the top means the chairperson or nominating committee chair must advocate for better female representation and take action if the plan is not working.

Leaders track progress: set measurable goals to move the needle • Goals must be clear and specific to each individual board, depending on where they start and what is relevant to their shareholders.

• Check progress at regular intervals and analyze why a tactic has or hasn’t worked.

Leaders challenge assumptions (their own and others): understand barriers/biases and address them through an action plan

• Build transparent nomination criteria and selection process (including a skills/ experience matrix and competency gap assessment).

• Develop a policy with goals, principles and timeframe and create a robust board succession plan.

• Assess criteria for board positions and reconsider any strict policies that require CEO experience.

• Whether the search is managed internally or by a search firm, ensure it is extended beyond the traditional to consider those with operational, public sector and not-for-profit or other leadership experience.

• Actively encourage women to apply.

Leaders celebrate: recognize and reward positive behaviours • Identify ways to acknowledge progress in a manner that works for the board.

For example, communicate progress to management or externally Leaders ensure sustainability beyond themselves: embed inclusiveness practices into critical board processes • Ensure leading practices are written into the board’s process, charter, mission statement etc. to help embed inclusiveness into the culture itself.

Moving forward Mining and metals companies can no longer ride the commodity price wave.

Addressing today’s business challenges requires meaningful change. That includes embracing diversity at the boardroom level. There are a number of tactics mining and metals boards can take to harness the power of diversity at the boardroom level and set their organization on the path to success. The time to start is now.

CMJ www.canadianminingjournal.com