Canadian Mining Journal August 2017

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August 2017

NEW MINING TECHNOLOGY

our annual ranking of producers

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CANADIAN Mining Journal

AUGUST 2017 VOL. 138, NO. 06

www.canadianminingjournal.com

23 Our annual ranking of Canada’s Top 40 miners.

32 How the Top 40 have changed over the years.

FEATURES 18 Forward-thinking organizations are starting to apply virtual reality and augmented reality to mining.

39 A look at 10 promising development projects across Canada.

44 Strategies for acquiring make-or-break cost data.

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47 Why “economic profit” is a better way to measure mining sector performance.

NEW MINING TECHNOLOGY 54 Maestro Digital Mine unveils a communication network for ‘the last mile’ in underground mines.

56 How Minrail’s shallow-angle mining system reduces dilution and improves productivity.

REMOTE SITE STRUCTURES

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65 Installing a truck maintenance shop at a mine in the Chilean Andes.

67 Why fabric buildings make sense at mine sites. .

DEPARTMENTS 5 EDITORIAL | A tempered celebration of the Top 40.

6 COMMENTARY | David Herle, a founder of the Gandalf Group, has advice for the industry on how to advance projects at a time when public opinion is “hostile” to mining.

8 IN MY MINE(D) | Rick Howes, CEO of Dundee Precious Metals and Terrative Digital Solutions, argues that miners need to slow down and strategize before charging into the digital future.

10 FIRST NATIONS | AFN Ontario Chief Isadore Day explains why Canada 150 is no cause for celebration.

11 LAW | John Olynyk, a partner at Lawson Lundell, reviews changes coming to federal environmental legislation.

12 UNEARTHING TRENDS | Theophile Yameogo, EY’s Mining & Metals Advisory leader, discusses the complexities of labour and productivity issues in mining.

14 FAST NEWS | Updates from across the mining ecosystem.

70 CSR & MINING | Lawyer Michael Torrance explains how extractive companies measure up under the Corporate Human Rights Benchmark.

AUGUST 2017

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67 ABOUT THE COVER

This month’s cover provided by SMS Equipment.

Coming in September Canadian Mining Journal looks at new gold mines across the country.

Plus special reports on heavy equipment and drone technology.

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

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CANADIAN Mining Journal

FROM THE EDITOR

August 2017 Vol. 138 – No. 6

38 Lesmill Rd. Unit 2, Toronto, Ontario M3B 2T5 Tel. (416) 510-6789 Fax (416) 510-5138 www.canadianminingjournal.com Editor-in-chief Alisha Hiyate 416-510-6742 ahiyate@canadianminingjournal.com Twitter: @Cdn_Mining_Jrnl News Editor Marilyn Scales mscales@canadianminingjournal.com Production Manager Jessica Jubb jjubb@glacierbizinfo.com Manager of Product Distribution Jackie Dupuis 403-209-3507 jdupuis@jwnenergy.com Publisher & Sales Robert Seagraves 416-510-6891 rseagraves@canadianminingjournal.com Toll Free Canada & U.S.A.: 1-888-502-3456 ext 2 or 43734 Group Publisher Anthony Vaccaro 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 BIG L.P. Mining. BIG is located at 38 Lesmill Rd., Unit 2. Toronto, ON, M3B 2T5. Phone (416) 510-6891.

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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 Robert Seagraves at 416-510-6891.

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We acknowledge the financial support of the Government of Canada.

AUGUST 2017

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A tempered celebration of the Top 40 Alisha Hiyate

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hen putting together our list of development projects to watch for in this issue (Page 39), I was struck by just how many ways there are for a potential mine to get waylaid.

Looking back at our August 2015 Top 40 issue, we published a similar list in a coastto-coast roundup of 24 promising projects. Today, only four of the projects that were on that list – De Beers and Mountain Province Diamonds’ Gahcho Kué mine in the Northwest Territories, Stornoway Diamond’s Renard mine in Quebec, Trevali’s Caribou zinc mine in New Brunswick, and Baffinland Iron Mines’ Mary River iron ore project on Baffin Island, have been developed and are now operating mines.

Whether it’s commodity prices, market conditions in general, permitting woes, or First Nations opposition, it’s pretty much a miracle when a developer actually gets to celebrate a mine opening. (I’ve been to several and can attest to the euphoria.)

That’s more true now than it’s ever been – with permitting becoming more stringent and time consuming, environmental regulations becoming stricter, the growing pull and power of First Nations, and a general population that harbours negative views of mining.

None of this is news to most CMJ readers. But our Top 40 issue presents a great annual opportunity to take stock and celebrate the successes of Canadian mining companies.

The list, which has been compiled by CMJ’s news editor Marilyn Scales every year (except one) since 1989, is a useful marker of both the health of the industry and changes to it over time.

With inclusion determined by gross revenue, none of the Top 40 companies got on the list by accident. Many of them are established companies that have survived multiple market cycles – in one form or another – and found ways to grow.

Now, while it is indeed an accomplishment to make the list, it must be said that being big isn’t enough.

Although 25 of the 40 turned a profit this year, Marilyn points out that only four of the top 40 earned a profit in both 2015 and 2016. (The four were all precious metals companies, but definitely not the biggest miners. Read Marilyn’s story on Page 23 to find out who they were.)

Of our top 10 companies, only three turned a profit last year.

Mining is a tough business, with the balance between productivity and profitability, being socially and environmentally responsible, and achieving growth tricky to achieve.

But we’re confident that through innovation, Canadian companies of all sizes will begin to find the magic formula that works.

Incidentally, please check out David Herle’s commentary on the next page, which deals with the social side of the equation. I saw David, a pollster and principal with the Gandalf Group, speak at the Ontario Natural Resources Forum earlier this year and he graciously agreed to turn his speaking notes into a column for CMJ. David uses his understanding of the trends behind public opinion to break down the challenges miners face in achieving social licence and offers solutions. I believe it’s essential reading. CMJ

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COMMENTARY

How public opinion is shaping the new reality for mining

By David Herle

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Regulatory lawyers and experts can only get you so far. If you are seeking to develop resources, you are now involved in politics.

tics. Public communications and stakeholder management is as important as convincing the regulator and is essential to convincing the government.

Every project will require a different strategy and set of tactics but there are some basic rules to follow.

First, take environmental mitigation seriously. Do not be dismissive or appear dismissive of concerns. Minimizing public concerns about the environment will undermine confidence, not build it. Acknowledge that there is potential environmental damage and demonstrate a rigorous plan to prevent in the first instance and mitigate and repair in the worst case. Strong support from local first responders will be essential. A critical part of environmental confidence is to communicate publicly about the developers and not just the development. In order for people to feel that the environmental risks are acceptable, they have to have trust in the people that are managing the environmental risk. Tell them about your values, and your commitment to environmental protection.

Second, ensure that there is local benefit, including for any

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he new reality for resource projects is the necessity of what is commonly called “social licence.” What this really means is that the final word on new resource extraction projects does not come from a quiet regulatory process, but rather through the loud and messy world of public opinion. The challenge is that most Canadians have a default position of neutrality to antipathy about resource development. Few people see much upside, and most are acutely aware of potential downsides.

These attitudes are driven by some fundamental trends. The first is urbanization. As Canadians have congregated in large cities, they have become very removed – physically, economically, and emotionally – from the resource industry. There is very little awareness of the role resources play in economic growth, job creation or tax revenues. As a consequence, most city residents think that resource development is done in the interests of somebody other than them.

The second trend is the growing priority attached to environmental protection. Most people attach a great deal of importance to environmental issues – not just climate change but even more importantly, the protection of fresh water and wilderness areas.

Appeals by critics of a project based on its potential damage to fresh water will find very receptive ears. While most Canadians remain unprepared to contribute financially to better environmental outcomes, they are more than willing to impose costs on business.

The combination of those two trends makes generating support very difficult. Environmental concern will be elevated, and cannot be offset by economic upside. Economic upside will be seen as minimal by urban residents and Canadians are increasingly loath to make explicit trade offs between economic growth and environmental protection.

The third trend impacting on public opinion regarding resources is a changed narrative about the Canadian economy.

People aspire to an economy driven by technology and value added, brainy, activities. The role of technology, skilled workers and modern practices in resource extraction are not understood.

Resource development is seen as an anachronistic part of Canada’s past, not its future. The phrase “hewers of wood and drawers of water” is now used in a decidedly pejorative way.

In this hostile environment, how does one create a public opinion environment where a project can be approved and built?

The first thing for a company to understand is that its team of regulatory lawyers and experts can only get it so far. If you are seeking to develop resources, you are now involved in poli-

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indigenous communities involved. This is important because, on the assumption that governments will be getting pressure not to approve from the environmental activists, it is important to have offsetting political pressure to approve from the local community.

Also, First Nations have never been more powerful politically. If they don’t see both strong environmental protection and clear economic benefit to them, they will oppose the project. If they oppose the project it will be very difficult to get approval. Like it or not, they are developing a de facto veto and you must accept that and work with it.

Third, make public communications a priority. If you are involved in politics, then use the appropriate tactics. Use opinion research to determine who it is you need to be talking to and what you need to be saying to them. Importantly, if you can keep this issue out of view in Toronto that will almost certainly be helpful.

Be open to the likelihood that the things you consider to be relevant and important may be very different than what the broader populace thinks is important or relevant. Be prepared to invest in paid media – both mass advertising and social media. Mass media is how you deliver an unfiltered message. Social media is where the debate about your project will be occurring. Earned media news coverage can almost certainly be counted on to be, on balance, negative to a development. To overcome this will

First Nations have never been more powerful politically.

require investment in messaging that circumvents news coverage. Remember that, outside of the development area, you do not need support. You need acceptance, disinterest or acquiescence.

Lastly, understand that in building public confidence the perception that you are strongly regulated is your friend. Don’t be embarrassed that you need to be regulated or appear to resent the regulator. No matter how much people trust the developer, they will always want strong oversight. Embracing that makes the development seem more worthy of support, not less.

The acquisition of social licence is not a legal or technical exercise. It is a political exercise the success of which is determined by whether political actors feel they can support your project without damaging themselves. This requires developers to come out into the open and win the argument for their project. That’s a campaign.

CMJ DAVID HERLE is a principal partner and founder of the Gandalf Group, a leading polling and research firm based in Toronto.

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IN MY MINE(D)

Digitization without vision is little more than blind ambition

By Rick Howes

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f you looked hard enough, you might find an industry where digitization is not part of an ongoing conversation, but it’s doubtful. As revolutions have done and will continue to do, they quickly separate the visionaries from the laggards, and the digital revolution is no exception. It is reaching deep into the far corners of industries and forcing change, including the mining industry.

Be current or you’ll be history is a compelling argument and many companies are boldly charging ahead to digitize the business, the operations, and the outcomes. But charging ahead is where most companies, despite best intentions, will falter and be left behind for one reason: The absence of a digitization vision.

Let me share why that’s the case and offer a few instances of proof.

At a recent mining industry convention in Montreal, there was a good amount of discourse on digitization, and rightfully so, too.

Last year, the World Economic Forum published a paper citing digital’s specific potential to the industry, its stakeholders and interests, including: w $425 billion of value for the industry, customers, society and the environment; w $320 billion of industry value; w reduction in 610 million tonnes of CO2 emissions; and w 1,000 lives saved and 44,000 injuries prevented.

At some point, those convention conversations referenced wireless communications as the early building blocks of digitization.

And while that is correct, what was missing was this simple and essential message: Wireless must be the early building blocks of a digitization vision driven by the company’s uppermost leadership.

For the many teams that know they need to digitize their operations, wireless affords quick forward leaps that are alluring for those accountable to bottom lines, efficiency, and production.

At the most rudimentary levels, wireless gives coverage in key areas allowing for data collection, the connectivity needed to facilitate VoIP communications with the above-ground team, and a certain amount of mobile freedom. The list goes on.

Resist the temptation of the quick wireless win without a sound digitization vision that has commitment and discipline at its core. This is not to advocate for standing down on moving forward until all the pieces are in place. Rather this is a call for ambition behind a strong vision.

In a February 2016 column published in the Globe & Mail, I built a case for disruption in the mining industry, particularly a shift for mines to become knowledge-based companies that make strategic use of the data collected. At Dundee Precious Metals, we coined the term “taking the lid off” the mine, and a vision that embraces that kind of tectonic shift in your business 8|

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and our industry begins with the end in mind.

Dundee’s Chelopech mine in Bulgaria was the testing ground for what today is the technology and services behind Terrative Digital Solutions to help operators and leaders develop their digital strategy and take the lid off their own mine. The aforementioned article explains what wireless technologies eventually allowed us to do, but those capabilities started with our leadership team’s vision.

Before we made any kind of significant leaps forward, we invested the time to examine not only the pain points of our operations (an easy place to start – with the problems), but where we wanted to go with the business. For instance, it wasn’t enough for our team to know about delays in production that would impact our outcomes, we wanted to have a much broader and holistic view of the operations and to see the interconnections in the mine. We didn’t just want to manage production delays, we wanted to understand and predict them. We didn’t just want to fix inefficiencies, we wanted to find them.

Our vehicle fleet is a perfect example. With wireless communications, proactive data collection revealed they were wholly underutilized at only 25%. By examining the data, pulling information from other parts of the solution – there’s the broader, holistic view I mentioned – we could reassign and schedule vehicles so they would eventually double their utilization. And we took it a step further and applied predictive analytics to the fleet’s history which allowed us to determine the vehicles that would need servicing, not only minimizing downtime, but freeing up the individual whose job it was to manually track, record, and report on the fleet’s health. The result? An optimized fleet without a single new vehicle expenditure.

That was the kind of vision we had for Chelopech. Our digitization journey started with wireless technologies, and the driver was a unified leadership team possessing an aligned vision, commitment and discipline.

KPMG, in their 2016 discussion, The paradox of digital disruption, cited lack of strategic vision as the single biggest barrier to digitization, followed by legacy systems and cultural resistance.

“Real, lasting change” they offer “is unattainable without an organization-wide plan.”

Inasmuch as digitization will carve off the laggards, it is also an opportunity for leadership to build a long-term and widespread revolutionary vision for the company.

Be current so you can make history instead of becoming it. CMJ RICK HOWES is CEO of Dundee Precious Metals and president of Terrative Digital Solutions.

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FIRST NATIONS

Canada 150 is not a cause for celebration

By Isadore Day

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n July 1st, 2017, Canadians gathered across the country to celebrate the 150th anniversary of Confederation, the formation of both Canada and the Province of Ontario. This call for celebration presents First Nations with a poignant moment.

First Nations were the First Peoples to govern this land, now known as Canada, and were present for thousands of years prior to Confederation as self-determining Nations with distinct cultures, languages, laws, traditions, and a unique understanding of the land and environment; While we acknowledge the formation of Canada and Ontario 150 years past, our true and shared history goes much further, to a time when we First Nations were the economic driving force and held the balance of power prior to the creation of what is now known as Canada.

For First Nations in Ontario the 150th anniversary of Confederation is little cause for celebration, as it represents 150 years of assimilation, genocide, neglect and marginalization.

Ultimately this makes it very difficult for us to come out and celebrate and embrace these last 150 years of colonization.

We share a history that is painful and is filled with raw memories, which remain in our communities from our elders through to our youth that must never be forgotten, downplayed or misrepresented.

And despite platitudes about reconciliation since the tabling of the 94 Calls to Action of the Truth and Reconciliation Commission, we are being asked to celebrate Canada 150 instead of participating in a national effort to encourage reconciliation. As a result the Ontario Chiefs in Assembly resolved by way of resolution 37/17, to take a stand against Canada 150, and to strongly encourage all First Nations, affiliated organizations, and members to boycott Canada 150 celebrations both on-reserve and in urban centres.

By recognizing this painful past and embracing a renewed sense of determination to move forward in a nation-to-nation relationship, the next 150 years need not be a repeat of this terrible past. We must move forward in the spirit of the reconciliation, as partners and advance the renewal of our founding relationships and the recognition of our Inherent rights and

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Regional Ontario Chief Day speaks to media on Parliament Hill about why First Nations are not celebrating Canada 150. CREDIT: BRYAN HENDRY

sovereignty over our own affairs.

Upon deep personal reflection this does not need to be only a lamentation, but rather I see this occasion as a reminder that when working in true partnership progress can be made. After all, 150 years ago, a political accord between the Ontario government and First Nations in Ontario would have been inconceivable.

It is my responsibility as Regional Chief, to express who we are as First Nations, promote the understanding that First Nations are the original peoples of Canada, and that the cultures, customs and languages of First Nations comprise a fundamental characteristic of Canadian heritage and identity.

I know that as Regional Chief, in order to succeed we must lead, that is why everyday I am fuelled by the eagerness, passion and hope in our young people for a brighter future, together and in strength we will create this future.

Canadians and First Nations must work together to ensure the next 150 years are worth celebrating together.

CMJ ISADORE DAY, Wiindawtegowinini, is Assembly of First Nations Ontario Regional Chief.

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LAW

Changes coming to federal environmental and regulatory reviews

By John Olynyk

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n 2016, the government of Canada began reviews of federal environmental legislation and the National Energy Board (NEB). At the same time, Parliamentary standing committees undertook reviews of changes to federal fisheries and navigable waters laws. Reports from those four processes were released earlier in 2017.

The government released a discussion paper in June that outlines the legislative changes Canada is contemplating in response to the reports. This article highlights key changes in the four areas of potential significance for project proponents.

The discussion paper states that the changes under consideration will be guided by five principles: w Fair, predictable and transparent environmental assessment and regulatory processes that build on what works; w Enhanced participation of Indigenous peoples to advance Canada’s commitment to the United Nations Declaration on the Rights of Indigenous Peoples; w Inclusive and meaningful public engagement; w Timely and evidence-based decision-making; and w One project – one assessment, with the scale of assessment aligned with the scale of the project and its potential impacts.

Environmental Assessment

Key changes under consideration in this area include: w Establishing a single agency for federal environmental assessments, but providing for single, integrated assessments for major energy projects subject to separate regulatory authority; w Enhanced consideration of cumulative effects of development, through mechanisms like strategic and regional environmental assessments as well as development of national environmental frameworks; w Maintaining the current project list approach, but providing for processes to review and amend the project list; w Maintaining legislated assessment timelines, but with flexibility for exceptional circumstances; w Requiring assessment of impacts on Indigenous peoples, and providing for greater Indigenous participation on assessment boards and review panels; w Broadening the scope of environmental assessments to consider economic, social and health impacts; w Implementing a new early engagement and planning stage that would be led by proponents under direction from Canada; w Direct engagement between Canada and Indigenous peoples; w Eliminating the standing test that the NEB has used for decades to determine who can participate in assessments; AUGUST 2017

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w Improving participant funding; and w Allowing for substitution arrangements with provinces, territories and Indigenous governments.

National Energy Board

The report on modernization of the National Energy Board proposed sweeping changes to the NEB. The discussion paper indicates that Canada is considering adopting a structure for the NEB similar to the Alberta Energy Regulator, with a corporate-style board to direct the NEB, and separate hearing commissioners to review projects and make regulatory decisions. The NEB’s legislation would provide for Indigenous representation on the board and among hearing commissioners, and provide for an expanded role for Indigenous peoples in monitoring of pipelines and other energy infrastructure.

The discussion paper proposes expanding the authority to cover renewable energy projects and NEB’s infrastructure in offshore areas under federal jurisdiction. Unlike the modernization report, it does not propose moving NEB headquarters to Ottawa.

Navigable Waters

The discussion paper does not propose to undo the 2012 changes implemented by the Navigation Protection Act, principally the introduction of a list of waterways subject to the Act’s requirements. However, the discussion paper does indicate that a process will be added to provide for clear criteria and a transparent process for adding other navigable waters to the schedule.

Fisheries

The discussion paper proposes a return to prohibition of the harmful alteration, disruption or destruction (HADD) of fish habitat without approval. It also proposes clarification of when Fisheries Act authorizations are needed for projects and when they are not, identification of measures to avoid and mitigate harm to habitat through development and enforcement of standards and codes of practice. The paper also indicates that project proponents will be subject to increased reporting requirements in relation to activities affecting fish and fish habitat.

The government is seeking comment on the proposed changes prior to Aug. 28, with the introduction of proposed legislative changes expected in fall 2017.

CMJ JOHN OLYNYK is partner at Lawson Lundell LLP and a member of the firm’s Aboriginal law, Environmental, and Project Development practice groups. He can be reached at jolynyk@lawsonlundell.com.

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UNEARTHING TRENDS

The war for critical talent is morphing

By Theophile Yameogo

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t’s no secret the mining industry continues to suffer from the impacts of low productivity. EY has done extensive research on the issue over the past five years, looking specifically at the challenges and opportunities of labour. While assets, capital and energy productivity focus on getting higher output out of the input, the challenge of labour productivity can be summed up in one question: how do we get the most out of our talent?

A 2014 EY report, Productivity in labor: it is only a ceasefire – the war for talent will continue, discussed key strategies to enable a competitive advantage in talent acquisition, retention and management. The report was focused on dealing with the exit of critical skills, as well as a predicted upswing in commodity prices and sector growth. Not surprisingly, the underlying assumptions and analyses remain relevant today.

The Fourth Industrial Revolution workforce

The aging of the workforce at all levels is one of the main concerns of mining leaders, along with expected generational gaps, an outdated image of mining in many developed societies, low diversity, and lack of interest by younger people to enter the mining sector.

Consolidations and global markets have expanded the mining footprint around the world. But past human-resource models in culturally diverse environments turn previous theories on career and success drivers on their heads, and bring into question corporate identity and belonging.

Although still at the beginning stages in mining and metals, the Fourth Industrial Revolution is expected to bring its own set of challenges.

First of all, as identified in our latest report on digital mining, The digital disconnect: problem or pathway? the lack of digital education and understanding may result in resistance to change or a panicked rush to implement digital fads. As a result, the productive workforce in mining will require some digital education to be better equipped.

Second, the expected digital disruptions will affect models inside and outside the value chain. The lenses through which we hire, manage and reward our workforce, will need to adapt to a new reality. As one mining executive mentioned recently, operating in real-time 3-D and virtual reality and swapping spreadsheets for advanced analytics, could become part of the basic skills required from mining employers.

Third, artificial intelligence and other robotics and autonomous systems will challenge the traditional mining workforce.

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As we continue to challenge our sector by adopting digital and lean mining, a forwardlooking workforce will be a different breed of operators, engineers, accountants and leaders.

Gatekeepers and digital disrupters

Mining companies need to have clear strategies in place to cover their bases while getting ready to embrace digital.

On one hand, the industry needs experienced and senior talent to stay through the downturn. At the height of the unusually extreme cost cutting measures, headcount reductions indiscriminately swept away talent from many departments in corporate offices, engineering companies and mine sites.

The industry witnessed early retirements as part of “right sizing.” Businesses that benefited from the sudden availability of critical talent now need to ensure retention strategies are robust enough to keep valuable employees.

On the other hand, talent that will drive growth in the coming years and decades has barely entered the industry. As we continue to challenge our sector by adopting digital and lean mining, a forward-looking workforce will be a different breed of operators, engineers, accountants and leaders. They most likely have minimal to no mining experience.

But their digital experience and ability to operate seamlessly in the Fourth Industrial Revolution will be critical for the sector’s renaissance. The sector simply must start investing in those newcomers.

In terms of gender, cultural and intellectual varieties, mining has a lot of opportunities to rethink operating models and harness diversity in the workforce. To be successful in enriching ourselves with new talent, we need to be creative in our hiring and retention strategies.

Disruptions to mining will be major, and proper change management will be critical. That leaves one thing for certain: organizations will need to develop clear strategies for addressing their CMJ evolving human-resource needs.

THEOPHILE YAMEOGO is EY Canada’s Mining & Metals Advisory Leader.

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2017-07-26 12:41 PM

FAST NEWS

Updates from across the mining ecosytem At Goldcorp’s Peñasquito mine in Mexico.

CREDIT: GOLDCORP

• Tailings |

FLSmidth and Goldcorp partner on EcoTails

F

LSmidth will be working with Goldcorp to develop EcoTails, a new system to dramatically improve tailings and waste rock disposal while economically processing mine waste and increasing water recovery and reuse by as much as 90–95%.

The companies are co-developing a system for co-mingling dewatered tailings with waste rock in a continuous process.

Designed specifically for large-scale mining applications, the system is expected to be environmentally safer for managing tailings and waste rock storage and has the potential to eliminate conventional slurry tailings dams completely. Combined with its co-developed filter press dewatering tech-

• M&A |

nology, FLSmidth says co-mingling is the missing piece of the puzzle to keep costs low for dry stacked tailings.

“As water resources become increasingly scarce and mining dams grow globally, so do the risks,” says Todd Wisdom, director of Tailings Systems, FLSmidth. “We believe that the target for the industry is to completely eliminate tailings dams, and to recirculate maximum water back to the process. Highly dewatered tailings is the sustainable route for tailings disposal, and our work with Goldcorp will help EcoTails develop into both a technologically viable and economically feasible solution for large-scale mining.”

The solution is being studied for fullscale testing at Peñasquito in Mexico, Goldcorp’s largest mine, with an average daily throughput of 130,000 t/day.

Co-mingled waste disposal has previously only been used at small-scale mines using dozers, trucks, high cost liquid-solid separation processes, and significant manpower, making the solution too costly for large-tonnage operations.

By using materials conveyance as the energy source for the mixing, Goldcorp and FLSmidth are testing a low-energy, low-cost co-mingling solution, with the waste blended in transit using specially designed material-handling technologies.

The partners say this method will make the solution economically competitive with traditional tailings disposal methods for large mines.

The method of co-mingling tailings with mine waste in a continuous process produces a new type of waste called GeoWaste. The filtered tailings cost is minimized by using fast filtering technology and waste rock to provide additional strength to the blended material. The risk of acid rock leaching from the waste rock is minimized by filter cake filling the voids of the waste rock matrix, greatly reducing oxygen flux. Once the system completes testing it will be offered commercially by FLSmidth.

FLSmidth grows with acquisition from Sandvik

F

FLSmidth’s headquarters in Copenhagen.

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CREDIT: FLSMIDTH

CANADIAN MINING JOURNAL

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LSmidth is acquiring a part of Sandvik Mining Systems, which provides design and engineering of material handling systems.

The deal includes continuous surface mining and material handling technologies.

Sandvik first announced it was divesting of the business in October 2015 to focus on its core operations, mining equipment and aftermarket offerings for surface and underground mining. The transaction is subject to regulatory approvals and should be closed by the end of 2017.

Ongoing order and deliveries to non-mining material handling projects and some mining projects will delivered by Sandvik through an operational agreement with FLSmidth.

FLSmidth says the acquisition will close a gap by covering a wider range of design, equipment and services from mine to plant to tailings, improving productivity for the company’s customers. FLSmidth plans to digitalize the full value chain to make the most of technology.

WWW.CANADIANMININGJOURNAL.COM

2017-07-26 1:12 PM

• Automation |

Sandvik launches intelligent trucks for underground haulage

Sandvik’s TH551i truck.

CREDIT: SANDVIK

S

andvik is introducing a pair of new intelligent mining trucks for automated underground haulage. They deliver safety, productivity and profitability benefits. Paired with AutoMine Trucking, mines can increase haulage tonnage by as much as 30%, says the manufacturer.

The new Sandvik TH551i and Sandvik TH663i high-capacity trucks are safer, efficient and easy to maintain with low cost per tonne. An integrated weighing system helps operators ensure a full payload every trip. The new trucks essentially deliver increased production with no increase in fixed costs.

Multi-machine control and improved operating discipline can reduce operating costs by as much as 50%. Better availability and improved performance mean that mines can achieve the same production volume with fewer trucks.

The addition of four to eight productive hours each day, which otherwise would be wasted for blast clearance, can increase production by as much as 30% compared with conventional trucks.

This is possible because operators are relocated from underground to the surface. Operator fatigue is also reduced, an added safety benefit.

Sandvik has proven its cost savings benefits with automation projects from Canada to South Africa.

The new evolution in AutoMine Trucking is decline haulage, which enables high level utilization and improved productivity also in declines for underground hard rock miners who use ramp haulage. This helps enable several additional daily hours of haulage with automation. Haulage level automation has been in operation since 2005 at Petra Diamonds’ Finsch mine in South Africa, and now the same proven technology is also available for decline ramp applications.

The new intelligent trucks have inbuilt data collection capabilities, ensuring all information can be visualized at any time. Every load is analyzed and high speed continuous production in autonomous mode enables higher utilization and extended equipment lifetime.

AUGUST 2017

14-16_CMJ Aug2017_Fast News.indd 15

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FAST NEWS • Hardware |

Harting adds EtherCAT board to award-winning MICA function module enables MICA to deliver further benefits, such as protection class IP67, and connectors suitable for industrial use.

MICA also has been certified for Microsoft Azure for IoT (Internet of Things). Microsoft’s certification process places certain demands on end devices so that they work seamlessly with Microsoft Azure services. A series of tests provided by Microsoft demonstrated that MICA meets the requirements of the “Microsoft Azure Certified for IoT” program. That program is intended to help speed up IoT projects with Azure by providing a set of available sensors and devices that are tested for usability and compatibility with the Azure IoT Suite.

Jon DeSouza, president and CEO of Harting North America; right: MICA. CREDIT: HARTING

H

arting Technology’s mini-industrial computer MICA, winner of the prestigious 2016 HERMES Award for industrial innovation, now is available with an EtherCAT board, allowing data to be collected directly from industrial production networks, pre-processed and forwarded to IT systems via standard protocols such as OPC UA or MQTT. Thanks to MICA’s modular hardware concept, which allows users to incorporate individual function boards, the other advantages of this mini-industrial PC are retained, like compliance with important industrial standards.

MICA’s modular Open Source Software Architecture makes it the ideal solution for developing edge and cloud applications in production.

Creating the EtherCAT functionality as an internal seabridge2017_QuarterPageAd_CMJ.eps 1 2017-07-04 4:31

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• Training |

Endeavour trains Burkina workforce with Immersive’s simulators PM

E

ndeavour Mining’s greenfield Houndé gold operation in Burkina Faso has recently gone into development with quick timelines to get equipment to site and operators trained. To get ready for production, Endeavour is using oper- Immersive Technologies offers simulators for mine operator training. CREDIT: IMMERSIVE TECHNOLOGIES ator training solutions from Immersive Technologies.

Operators are trained on specific behaviors that impact machine health, safety and productivity, and management is able to identify which operators require additional training.

“In our baseline evaluation we noted a common problem where many operators were using a gear too high for the grade thereby impacting transmission performance,” said Anthony Bruce, Immersive’s regional vice-president Africa, Europe & CIS. “After training was conducted, operators later returned to one of the two simulators for a re-measure and we found the training had resulted in an 85% decrease in improper gear selection.”

The Houndé mine reported these improvements: • 80% reduction in tire abuse errors; • 7% reduction in incorrect brake application; • 5% reduction in engine damage; • 11 second improvement in spot time; • 44 second reduction in average loading reversing time; and • 57 minute improvement in average circuit time.

Endeavour is using two simulators from Immersive Technologies with multiple simulator modules. Houndé is the first mine using this level of technology in Burkina Faso.

CMJ WWW.CANADIANMININGJOURNAL.COM

2017-07-26 1:12 PM

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T:10.75”

Together, we’ll move mountains.

T EC H N OLOG Y

?

Virtually

there

ARE MINERS GAME FOR VR

By Virginia Heffernan

I

?

n the lead up to the VRTO (Virtual Reality Toronto) conference in June, exhibitors had the opportunity to explain their innovations to the media, including Canadian Mining Journal. But without simultaneous immersion into the third dimension, some reporters had difficulty grasping the concepts.

Mining engineers and geoscientists face a similar barrier when they present plans to investors, Indigenous groups, or even their own managers. The 3-D reality of exploration and mining does not translate well onto 2-D maps and PowerPoint pre-

18 |

CANADIAN MINING JOURNAL

18-21_CMJ August2017_Virtual Reality.indd 18

sentations and vice versa. Without training in 3-D visualization, the human brain struggles to make such dimensional leaps of imagination.

The use of virtual reality (VR) and augmented reality (AR) overcomes this communication challenge by allowing stakeholders to travel to remote exploration and mines sites through a headset. They can lower themselves into a stope, get a bird’s eye view of what a tailings pond will look like in a decade, or immerse themselves in the natural environment of a mine reclaimed.

VR is a computer-generated simulation

of a real life environment, whereas AR layers computer-generated enhancements on top of an existing reality in order to make it more meaningful. Both technologies require a headset that costs about $1,200 for VR (e.g. Oculus Rift and HTC Vive, which both must be tethered to a computer) to $5,000 for AR or “Mixed Reality” (e.g. Microsoft’s HoloLens, the first self-contained holographic computer).

“Typically, virtual reality is good for communication and visualizing the future, whereas AR is much more of an operational tool to augment what you are WWW.CANADIANMININGJOURNAL.COM

2017-07-26 1:13 PM

seeing with what you need to do,” says Marni Rabassó, vice-president of Natural Resources at Dassault Systèmes, a French multinational software company that purchased Vancouver-based Gemcom in 2012. Dassault has built a 3-D platform that can connect people and processes during the life cycle of an orebody from exploration to closure.

The first virtual reality head-mounted display system, dubbed the “Sword Of Damocles”, was developed in 1968, but slow processing speeds and the inability CONTINUED ON PAGE 20

AUGUST 2017

18-21_CMJ August2017_Virtual Reality.indd 19

Top left: Metavrse’s VR/AR for mining field solution. CREDIT: METAVRSE. Above: Dassault Systèmes 3DEXPERIENCE platform enables users to virtually explore mining sites. CREDIT: DASSAULT SYSTÈMES.

CANADIAN MINING JOURNAL

| 19

2017-07-26 1:13 PM

T EC H N O LOG Y

Above: An engineer deploying a holographic model of a mine site during operation. CREDIT: BGC ENGINEERING. Middle: Nalaine Morin, project manager, Lands Department Tahltan Central Government and principal ArrowBlade Consulting wears a HoloLens. CREDIT: BGC ENGINEERING. Far right: Metavrse’s mining data visualization technology. CREDIT: METAVRSE

to shoot 360° video made the technology impractical. Fifty years later, the headsets remain unrefined – bulky, uncomfortable and frequently sick-making – but they are improving rapidly.

Appetite for disruption

The market for VR and AR is expected to grow to US$80 billion by 2025, according to Goldman Sachs. And costs should fall as the technology becomes more widespread and headsets evolve.

“Miniaturization is coming quickly.

All the players are working on it,” says Alan Smithson, CEO and co-founder of MetaVRse, a Toronto agency that provides VR and AR solutions for businesses.

Is the mining industry ready to join the virtual revolution? Although considered a technology laggard relative to other sectors, mining is ripe for disruption after a period of writedowns and poor returns on investment.

“There’s a real appetite for innovation,” says Rabassó. “It’s a big shift for people because it will change the way they work.

But the industry is not going back to its ‘bigger is better’ approach.”

Some miners are already experimenting with VR. In 2014 Rio Tinto partnered with Bravo Media to custom design the Oculus Rift to take users on an interactive journey down the Diavik diamond mine in the Northwest Territories. Amec Foster Wheeler offers a similar experience of the 20 |

CANADIAN MINING JOURNAL

18-21_CMJ August2017_Virtual Reality.indd 20

K+S Legacy project, a new potash mine in Saskatchewan deigned and built by Amec.

But greater adoption will take time.

“While there is certainly low-hanging fruit in sensors and wireless technologies, fully extracting the potential of Big Data and other next-generation technologies such as three -dimensional virtual reality and simulation will require the development of a rich ecosystem of talent and partners,” says Rick Howes, president and CEO of Dundee Precious Metals.

Howes won the Outstanding Innovator award from the International Mining Technology Hall of Fame in 2016 for marrying different wireless technologies and software systems to provide real time production management and tracking at the Chelopech copper and gold mine in Bulgaria.

That ecosystem is beginning to emerge. Companies such as Dassault and MetaVRse are targeting the mining industry to leverage the technology they have developed for other sectors. And at least one mining engineering consultancy, BGC Engineering, is starting to incorporate AR into its workflow.

Training

Virtual reality is likely to have the biggest impact on job training. Although some mining companies use simulators to train equipment operators, VR tools are less expensive and more versatile. Workers can

be trained to handle hazardous situations without having to experience them directly or even be near the site.

“We can transport a full virtual reality system to a training centre where multiple people can train on a particular machine,” Smithson says. “And using data feedback, we can tell if they are paying attention and getting the gist of the training.”

Sudbury’s NORCAT, for example, has developed a VR training program using Oculus Rift for Ontario Mine Rescue, the rapid response team for mining incidents.

The program resembles a video game in which team members, through avatars, must work together to manage emergency situations. It could become an invaluable tool for a risky occupation.

In the aerospace industry, Boeing estimates it can reduce training time for aircraft assembly by 75% using the Microsoft HoloLens to show engineers how to put different pieces of equipment together. Pop-up text and/or voiceovers would offer the guidance a human trainer traditionally provides.

Communication

Vancouver-based BGC Engineering has recently partnered with Seattle-based LOOOK to improve mining and geoengineering communication using Microsoft’s HoloLens. The consulting firm employs the HoloLens to convey complex 3-D and 4-D information to stakeholders.

WWW.CANADIANMININGJOURNAL.COM

2017-07-26 1:13 PM

“Within five years, this will be a standard part of our workflow,” says Matt Lato, a senior engineer for BGC, which specializes in mine and tailings pond design and closure. “Just as our engineers print off 2-D maps, they will put their designs onto the HoloLens.”

The technology will also allow engineers or other experts to be present on the mine or exploration site wherever they may be located. As Smithson points out, it’s impractical and expensive to put a specialized mechanic on a plane to fix a broken machine. But with communication from the remote expert to an onsite employee – both using headsets and seeing the same machine – the repair could be done in minutes at much less cost.

Data Visualization

The use of 3-D models in mining is becoming standard practice, but VR could take complex models a step further by allowing people to descend into a mine and jump from level to level or stope to stope, literally immersing themselves in the data without compromising their safety.

“If you have a virtual playground, you can get as crazy as you want without putting people at risk,” says Rabassó. “You can create a world and use it as an environment to imagine what ifs.”

Similarly, augmented reality would allow messages to pop up in the corner of a miner’s goggles to, say, warn of unsafe air quality, provide feedback on the stability of a rock face, or give instructions about what to do next. Smithson says research AUGUST 2017

18-21_CMJ August2017_Virtual Reality.indd 21

shows workers get more done when they don’t have to interrupt what they are doing to look at their phones or a clipboard for information or instruction.

The mining industry has an opportunity to shake off its reputation as an innovation laggard by incorporating virtual and augmented reality to improve training, com-

munication, and data visualization. The obvious downside of embracing VR, and new technology in general, is more redundancy as tasks traditionally performed by humans become automated.

How the industry balances this trade-off will determine its performance and reputation in the decades to come.

CMJ

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2017-07-26 12:42 PM

Photo: Transporter33, iStockphoto

A SPECIAL REPORT BY NEWS EDITOR MARILYN SCALES TAKES AN IN-DEPTH LOOK AT HOW CANADA’S TOP 40 MINING COMPANIES ARE PERFORMING AUGUST 2017

23-34_CMJ Aug2017_Top 40.indd 23

CANADIAN MINING JOURNAL

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2017-07-26 1:46 PM

TOP 40 CAN BEGIN TO BREATHE

The outlook for the global mining industry was a little brighter in 2016

By Marilyn Scales

Photos: Murphy Shewchuk, Bodnarchuk, mysticenergy, bgsmith, iStockphoto

A

lthough the economic outlook for Canadian miners brightened somewhat over the last year, this is still a difficult time to be profitable. A look at the current Top 40 ranking by gross revenue indicates that the biggest companies remain big, and there was little change from a year earlier.

Agrium again heads the list with gross revenue of $18.1 billion. The fertilizer producer rose to the top of the 2010 list – to the surprise of CMJ editors – and has pretty much stayed there. We shouldn’t be surprised though. A look through the previous 10 years shows Agrium climbing steadily through the ranks and always in the top 10.

With the merger of Agrium and Potash Corporation of Saskatchewan under the Nutrien name, Canada’s potash and fertilizer behemoth can be expected to top next year’s list, too. This year, PotashCorp had revenue of a $5.9 billion and ranked No. 5 in the Top 40 for the third 24 |

year in a row.

The world’s largest gold producer, Barrick Gold, took the No. 2 slot with revenue of $11.3 billion. The company recovered 5.5 million oz. of gold, although the total has declined steadily from 7.2 million oz. in 2013. This is also the first time Barrick has recorded net earnings – $1.1 billion – in several years.

Teck Resources and Suncor Energy swapped places this year to round out the top five.

Teck enjoyed revenue of $9.3 billion, sitting at No. 3.

Suncor grossed revenue from its oil sands operations of $7.2 billion, making it No. 4.

The remainder of the top 10 contains only one new company – Canadian National Resources – that is now producing steadily from its Horizon oil sands project.

Horizon is undergoing an expansion to 250,000 bbl/day of synthetic crude oil, so readers can expect to find CNRL near the top of the rankings next year. (Unless the oil price plummets.)

CANADIAN MINING JOURNAL

23-34_CMJ Aug2017_Top 40.indd 24

Backing up a bit, in the No. 6 spot is Goldcorp, another of the world’s largest gold mining companies. It recorded revenues of $4.7 billion in 2016 and finished the year in the black. A very close No. 7 is Kinross Gold with revenue of $4.6 billion.

Both held the same spots a year ago.

Again in the No. 8 spot is copper producer First Quantum Minerals. The company’s revenue was $3.5 billion, up a tidy $200 million from 2015. On the horizon is the Cobre Panama mine slated for commissioning in 2018 with annual copper production of roughly 300,000 to 350,000 tonnes. First Quantum owns 80% of the project and will benefit from the new source of revenue.

Watching Agnico Eagle rise through the ranking over the years has been satisfying. The company is up another notch this year to the No. 9 slot.

The gold producer had 2016

revenue of $2.8 billion.

Production from its 50% of the Canadian Malartic gold mine is a boon, as will be production from the Meliadine gold mine scheduled for startup in 2019.

The other half of the Canadian Malartic mine is owned by Yamana Gold, which had revenue of $2.5 billion, giving it the No. 11 spot. The company’s other producing mines are in South America, and it can look forward to initial gold production from the Cerro Moro gold-silver mine in 2018 at an annual rate of 150,000 oz.

It is with sadness that we note Dominion Diamond, No. 22 this year and No. 15 a year earlier, is going to be sold to a private group of companies in the United States. When that happens,

WWW.CANADIANMININGJOURNAL.COM

2017-07-26 1:46 PM

the owner of Canada’s first diamond mine, Ekati, will no longer be eligible for our list (see page 26).

There’s money in gold

Overall, a quick glance at the primary output of the Top 40 seems to indicate that it is a good time to be a gold producer. Those that are on the list had more positive net earnings in 2016 than a year earlier. Barrick, Goldcorp, Agnico Eagle, Iamgold, B2Gold, New Gold, Eldorado Gold, Kirkland Lake, Torex, Semafo, Terango, Centerra, and Tahoe all registered black ink in the earnings column.

Franco-Nevada, the gold streaming company, also finished in the black. Where a producer had a gold mine made little difference – one high grader in Canada or several scattered around the globe.

The gold price did not rise during 2016, but most of the gold producers either trimmed corporate debt or capital spending to conserve cash.

Both strategies seem to have had beneficial effects.

Primary silver producers also did well. Streaming company Silver Wheaton, Silver Standard and First

Majestic finished with positive net earnings. Their revenues were also up between about 20% and almost 40%.

Copper producers were some in the black and some in the red. Those that eked out positive earnings – Turquoise Hill, Nevsun and Imperial Metals – were outnumbered by those who didn’t, whether they were pure copper plays or had gold and/or other base metals as byproducts.

Another measure to examine is the amount of gross revenue measured against a company’s assets.

Once again, the primary gold producers peppered the list with that calculation between 11% and 29%. The measure might not mean much as nearly half of the Top 10 are primary gold producers.

It was difficult to compare year-over-year net earnings because there were only four companies out of the 40 that registered earnings in both 2016 and 2015. There were three gold producers – Eldorado, Centerra and Semafo – and one silver

streaming company – Silver Wheaton.

To shift gears and consider the size of Top 40 companies’ assets, those at the top of the list are producers of almost all commodities produced in Canada. Suncor Energy with its oil sands assets worth $55 billion tops the list, followed by base metal producer Teck Resources with $35.6 billion.

The gold producer with the most assets is Barrick ($33.5 billion), followed closely by Goldcorp ($28.4 billion).

Only uranium (Cameco with $8.3 billion), nickel (Lundin Mining with $8.1 billion), and diamonds (Dominion Diamond with $2.9 billion) were not part of the largest 10 asset holders group.

Again, gold producers are over represented. There is Banro No. 41, Golden Star No. 42, Primero No. 43, Klondex No. 47, Guyana Goldfields No. 50, Gran Colombia No. 52, Aura Minerals No. 54, and Argonaut Gold No. 55. Two of those – Klondex and Guyana Goldfields are newcomers to the list. Perhaps they will continue to rise through the ranks a year from now. Copper Mountain and Taseko, both copper producers, also made the runners-up list.

We at CMJ are proud of all the Top 40 Canadian miners. Congratulations to all, and we look forward to seeing what changes next year as mergers and sales are completed. CMJ

The Runners-up

We have also listed 15 runners-up to the Top 40.

If our readers find an omission to our list or wish further clarification, please contact the author, Marilyn Scales, at MScales@CanadianMiningJournal.com or 613-270-0213.

AUGUST 2017

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2017-07-26 1:46 PM

Canada’s Top 40

by Gross Revenue (C$ millions) 2016

2015

Rank 2016

Previous Company Year

Year end Type

Revenue Net Assets Earnings (Loss)

Revenue Net Assets Earnings (Loss)

1

1

Agrium

Dec 31

Potash, Fertilizer

18,106.1 789.7

2

2

Barrick Gold Corp.

Dec 31

Gold, Copper

11,339.4 1,140.8 33,474.8 11,963.4 (364.4)

34,858.1

3

4

Teck Resources

Dec 31

Zinc, Lead, Copper

9,300.0 1,041.0 35,629.0 8,259.0 (2,484)

34,688.0 42,967.0

22,476.0 19,603.4 1,322.4 21,700.0

4

3

Suncor Energy (oil sands only)

Dec 31

Oil sands

7,229.0 (1,149.0) 54,959.0 7,274.0 (856,0)

5

5

Potash Corp. of Saskatchewan

Dec 31

Potash, Fertilizer

5,904.2 428.0

22,862.9 8,319.7 1,682.8 23,146.4

6

6

Goldcorp

Dec 31

Gold, Copper

4,650.8 214.7

28,483.5 5,796.9 (5,508.0) 28,392.1

7

7

Kinross Gold Corp.

Dec 31

Gold

4,600.4 (137.8)

10,572.6 4,044.2 (1,304.5) 10,249.4

8

8

First Quantum Minerals

Dec 31

Copper

3,541.7 (25.2)

25,815.0 3,327.1 (808.3)

25,746.1

9

10

Agnico Eagle Mines

Dec 31

Gold

2,833.1 210.4

9,418.1 1,630.7 32.6

8,855.2 22,598.0

10

Canadian National Resources

Dec 31

Oil sands

2,657.0 570.0

24,852.0 2,764.0 708.0

11

11

Yamana Gold

Dec 31

Gold

2,501.2 (408.5)

11,662.3 2,279.8 (2,798.1) 12,611.5

12

9

Cameco Corp.

Dec 31

Uranium

2,431.4 (59.9)

8,249.2 2,754.4 63.4

8,794.6

13

12

Lundin Mining Corp.

Dec 31

Nickel, Copper, Zinc, Lead

2,047.9 (835.0)

8,138.8 2,255.0 (373.4)

8,983.5

14

13

Turquoise Hill Resources

Dec 31

Copper

1,594.4 141.2

16,509.8 2,166.1 406.9

10,918.1

15

16

Hudbay Minerals

Dec 31

Copper, Zinc

1,495.5 (46.6)

5,905.0 1,174.1 (439.1)

5,935.4

16

14

Iamgold

Dec 31

Gold

1,307.9 81.9

4,505.7 1,215.0 (998.4)

4,308.1

17

24

B2Gold

Dec 31

Gold

1,199.7 67.7

4,100.0 733.7

(192.3)

2,682.3

18

20

Silver Wheaton

Dec 31

Silver, Gold

1,181.4 258.5

8,153.1 859.5

214.65

7,462.7

19

25

Tahoe Resources

Dec 31

Gold, Silver

1,039.5 321.0

4,070.8 688.6

(105.5)

2,653.3

20

19

Pan American Silver

Dec 31

Silver

1,026.6 134.9

2,515.0 858.2

(306.9)

2,272.4

21

21

Centerra Gold

Dec 31

Gold, Copper

1,008.1 200.7

3,527.6 826.8

90.2

2,200.3

22

15

Dominion Diamond

Jan 31

Diamonds

954.8

(51.4)

2,868.4 1,213.4 97.5

3,107.8

New Gold

Dec 31

Gold

906.0

3.6

5,231.1 944.6

(266.9)

4,870.0

(218.1)

3,236.6

23 24

18

Detour Gold

Dec 31

Gold

872.2

(9.1)

3,141.4 746.0

25

23

Eldorado Gold

Dec 31

Gold

861.5

62.8

6,357.2 1,143.9 17.5

7,241.0

26

17

Franco-Nevada Corp.

Dec 31

Gold

808.5

244.9

5,593.6 587.8

(218.2)

4,832.7

27

27

Capstone Mining Corp.

Dec 31

Copper, Gold

701.5

(261.6)

1,848.4 557.2

(333.2)

2,075.9

28

28

Silver Standard Resources

Dec 31

Silver, Gold

650.6

86.1

1,906.3 497.3

(164.7)

1,155.0

29

30

Alamos Gold (merge w/AuRico Gold) Dec 31

Gold

638.9

(23.7)

3,302.2 470.5

(674.3)

3,263.7

30

32

Kirkland Lake Gold

Dec 31

Gold

538.9

57.5

1,720.8 153.4

(34.2)

464.0

31

46

China Gold Int’l Resources

Dec 31

Gold

448.6

(16.3)

3,930.7 450.4

(9.0)

3,684.3

32

29

Imperial Metals

Dec 31

Gold, Copper

428.2

(54.1)

1,527.8 128.7

(91.7)

1,479.4

Torex Gold Resources

Dec

Gold

414.1

4.2

1,598.5 nil

(32.6)

1,498.7

33 34

Semafo

Dec 31

Gold

398.2

54.7

1,186.3 397.6

40.5

1,035.5

35

33

Lucara Diamond Corp.

Dec 31

Diamonds

391.5

93.7

400.2

296.5

103.1

456.1

36

38

Dundee Precious Metals

Dec 31

Gold, Copper, Zinc, Silver

370.3

(201.7)

972.6

298.3

(63.6)

1,200.7

37

36

First Majestic Silver

Dec 31

Silver, Lead, Zinc, Gold

368.5

11.4

1,135.8 290.7

(143.6)

1,046.4

38

41

Teranga Gold

Dec 31

Gold

356.3

37.0

1,077.8 297.6

(73.7)

922.5

39

40

Brio Gold

Dec 31

Gold

307.9

(22.4)

717.8

(92.0)

636.3

40

31

Nevsun Resources

Dec 31

Copper

305.7

41.2

1,734.7 472.9

60.8

1,330.4

26 |

CANADIAN MINING JOURNAL

23-34_CMJ Aug2017_Top 40.indd 26

214.1

WWW.CANADIANMININGJOURNAL.COM

2017-07-26 1:46 PM

Revenue as % of Assets (C$ millions) Rank 2016

Company

Type

2016 Revenue

2016 Assets Revenue as % of Assets

35

Lucara Diamond Corp.

Diamonds

391.5

400.2

97.8%

1

Agrium

Potash, Fertilizer

18,106.1

22,476.0

80.6%

7

Kinross Gold Corp.

Gold

4,600.4

10,572.6

43.5%

40

Brio Gold

Gold

307.9

717.8

42.9%

20

Pan American Silver

Silver

1,026.6

2,515.0

40.8%

36

Dundee Precious Metals

Gold

370.3

972.6

38.1%

28

Silver Standard Resources

Silver, Gold

650.6

1,906.3

34.1%

2

Barrick Gold Corp.

Gold, Copper

11,339.4

33,474.8

33.9%

34

Semafo

Gold

398.2

1,186.3

33.6%

22

Dominion Diamond

Diamonds

954.8

2,868.4

33.3%

38

Teranga Gold

Gold

356.3

1,077.8

33.1%

37

First Majestic Silver

Silver, Lead, Zinc, Gold

368.5

1,135.8

32.4%

30

Kirkland Lake Gold

Gold

538.9

1,720.8

31.3%

9

Agnico Eagle Mines

Gold

2,833.1

9,418.1

30.1%

27

Capstone Mining Corp.

Copper, Gold

701.5

1,848.4

30.0%

12

Cameco Corp.

Uranium

2,431.4

8,249.2

29.5%

16

Iamgold

Gold

1,307.9

4,505.7

29.0%

21

Centerra Gold

Gold

1,008.1

3,527.6

28.6%

32

Imperial Metals

Gold, Copper

428.2

1,527.8

28.0%

24

Detour Gold

Gold

872.2

3,141.4

27.8%

33

Torex Gold Resources

Gold

414.1

1,598.5

26.9%

3

Teck Resources

Zinc, Lead, Copper

9,300.0

35,629.0

26.1%

5

Potash Corp. of Saskatchewan

Potash, Fertilizer

5,904.2

22,862.9

25.8%

19

Tahoe Resources

Gold, Silver

1,039.5

4,070.8

25.5%

15

Hudbay Minerals

Copper, Zinc

1,495.5

5,905.0

25.3%

17

B2Gold

Gold

1,199.7

4,100.0

25.3%

13

Lundin Mining Corp.

Nickel, Copper, Zinc, Lead

2,047.9

8,138.8

25.2%

11

Yamana Gold

Gold

2,501.2

11,662.3

21.4%

29

Alamos Gold (merge w/AuRico Gold)

Gold

638.9

3,302.2

19.3%

40

Nevsun Resources

Copper

305.7

1,734.7

17.6%

23

New Gold

Gold

906.0

5,231.1

17.3%

Canadian dollars

6

Goldcorp

Gold

4,650.8

28,483.5

16.3%

18

Silver Wheaton

Silver, Gold

1,181.4

8,153.1

14.5%

26

Franco-Nevada Corp.

Gold

808.5

5,593.6

14.5%

8

First Quantum Minerals

Copper

3,541.7

25,815.0

13.7%

25

Eldorado Gold

Gold

861.5

6,357.2

13.6%

4

Suncor Energy (oil sands ony)

Oil sands

7,229.0

54,959.0

13.2%

31

China Gold Int’l Resources

Gold

448.6

3,930.7

11.4%

10

Canadian National Resources

Oil sands

2,657.0

24,852.0

10.7%

14

Turquoise Hill Resources

Copper

1,594.4

16,509.8

9.7%

All figures in the tables are expressed in millions of Canadian dollars.

The numbers of those companies reporting in U.S. dollars have been converted using the Bank of Canada’s average 2016 exchange rate: US$1 equals C$1.325.

AUGUST 2017

23-34_CMJ Aug2017_Top 40.indd 27

HOW WE CHOOSE THE

TOP 40 To be eligible for CMJ’s Top 40 Canadian miners list companies must meet two of the following three criteria: 1 Be domiciled in Canada.

2 Trade on a Canadian stock exchange 3 Have a significant share of an operating mine or advanced development.

Sometimes we have been tripped up and nonCanadian miners have slipped onto the list.

However, we have put extra effort into checking the eligibility of all the miners on the current list.

We remain open to the suggestions of our readers.

CANADIAN MINING JOURNAL

| 27

2017-07-26 1:46 PM

Top Revenue Increases 2016/2015 (C$ millions)

Rank 2016

Company

Type

2016 Revenue 2015 Revenue

Revenue Change 2016/2015

31

Kirkland Lake Gold

Gold

538.9

153.4

+351.3

33

Imperial Metals

Gold, Copper

428.2

128.7

+332.7%

9

Agnico Eagle Mines

Gold

2,833.1

1,630.7

+73.7%

17

B2Gold

Gold

1,199.7

733.7

+63.5%

19

Tahoe Resources

Gold, Silver

1,039.5

688.6

+51.0%

40

Brio Gold

Gold

307.9

214.1

+43.8%

26

Franco-Nevada Corp.

Gold

808.5

587.8

+37.5%

18

Silver Wheaton

Silver, Gold

1,181.4

859.5

+37.5%

36

Lucara Diamond Corp.

Diamonds

391.5

296.5

+32.0%

28

Silver Standard Resources

Silver, Gold

650.6

497.3

+30.8%

15

Hudbay Minerals

Copper, Zinc

1,495.5

1,174.1

+27.4%

37

First Majestic Silver

Silver, Lead, Zinc, Gold

368.5

290.7

+26.8%

27

Capstone Mining Corp.

Copper, Gold

701.5

557.2

+25.9%

29

Alamos Gold (merge w/AuRico Gold)

Gold

638.9

470.5

+24.1%

36

Dundee Precious Metals

Gold, Copper, Zinc, Silver

370.3

298.3

+24.1%

21

Centerra Gold

Gold, Copper

1,008.1

826.8

+21.9%

38

Teranga Gold

Gold

356.3

297.6

+19.7%

20

Pan American Silver

Silver

1,026.6

858.2

+19.6%

24

Detour Gold

Gold

872.2

746.0

+16.9%

7

Kinross Gold Corp.

Gold

4,600.4

4,044.2

+13.8%

3

Teck Resources

Zinc, Lead, Copper

9,300.0

8,259.0

+12.6%

11

Yamana Gold

Gold

2,501.2

2,279.8

+9.7%

16

Iamgold

Gold

1,307.9

1,215.0

+7.6%

8

First Quantum Minerals

Copper

3,541.7

3,327.1

+6.5%

34

Semafo

Gold

398.2

397.6

+0.2%

Top Earnings Gainers 2016/2015 (C$ millions)

28 |

2015 Net Earnings (Loss)

Earnings Change 2016/2015

17.5

+358.9%

Rank 2016

Company

Type

Net Earnings (Loss)

25

Eldorado Gold

Gold

62.8

21

Centerra Gold

Gold, Copper

200.7

90.2

+222.5%

34

Semafo

Gold

54.7

40.5

+35.1%

18

Silver Wheaton

Silver, Gold

258.5

214.65

+20.4%

CANADIAN MINING JOURNAL

23-34_CMJ Aug2017_Top 40.indd 28

2016

WWW.CANADIANMININGJOURNAL.COM

2017-07-26 1:46 PM

Top Assets & Changes 2016/2015 (C$ millions)

Rank 2016

Company

Type

Assets

Assets

Asset Change 2016/2015

4

Suncor Energy (oil sands only)

Oil sands

54,959.0

42,967.0

+27.9%

3

Teck Resources

Zinc, Lead, Copper

35,629.0

34,688.0

+2.7%

2

Barrick Gold Corp.

Gold, Copper

33,474.8

34,858.1

–4.0%

6

Goldcorp

Gold, Copper

28,483.5

28,392.1

+0.3%

8

First Quantum Minerals

Copper

25,815.0

25,746.1

+0.3%

10

Canadian National Resources

Oil sands

24,852.0

22,598.0

+10.0%

5

Potash Corp. of Saskatchewan

Potash, Fertilizer

22,862.9

23,146.4

–1.2%

1

Agrium

Potash, Fertilizer

22,476.0

21,700.0

+3.6%

14

Turquoise Hill Resources

Copper

16,509.8

10,918.1

+51.2%

11

Yamana Gold

Gold

11,662.3

12,611.5

–7.5%

7

Kinross Gold Corp.

Gold

10,572.6

10,249.4

+3.2%

9

Agnico Eagle Mines

Gold

9,418.1

8,855.2

+6.4%

12

Cameco Corp.

Uranium

8,249.2

8,794.6

–6.2%

18

Silver Wheaton

Silver, Gold

8,153.1

7,462.7

+9.3%

13

Lundin Mining Corp.

Nickel, Copper, Zinc, Lead

8,138.8

8,983.5

–9.4%

25

Eldorado Gold

Gold

6,357.2

7,241.0

–12.2%

15

Hudbay Minerals

Copper, Zinc

5,905.0

5,935.4

–0.5%

26

Franco-Nevada Corp.

Gold

5,593.6

4,832.7

+15.7%

23

New Gold

Gold

5,231.1

4,870.0

+7.4%

16

Iamgold

Gold

4,505.7

4,308.1

+4.6%

17

B2Gold

Gold

4,100.0

2,682.3

+52.9%

19

Tahoe Resources

Gold, Silver

4,070.8

2,653.3

+53.4%

31

China Gold Int’l Resources

Gold

3,930.7

3,684.3

+6.7%

21

Centerra Gold

Gold, Copper

3,527.6

2,200.3

+60.3%

29

Alamos Gold (merge w/AuRico Gold)

Gold

3,302.2

3,263.7

+1.2%

24

Detour Gold

Gold

3,141.4

3,236.6

–2.9%

21

Dominion Diamond

Diamonds

2,868.4

3,107.8

–7.7%

20

Pan American Silver

Silver

2,515.0

2,272.4

+10.7%

28

Silver Standard Resources

Silver, Gold

1,906.3

1,155.0

+65.0%

27

Capstone Mining Corp.

Copper, Gold

1,848.4

2,075.9

–11.0%

40

Nevsun Resources

Copper

1,734.7

1,330.4

+30.4%

30

Kirkland Lake Gold

Gold

1,720.8

464.0

+370.9%

33

Torex Gold Resources

Gold

1,598.5

1,498.7

+6.7%

32

Imperial Metals

Gold, Copper

1,527.8

1,479.4

+3.3%

34

Semafo

Gold

1,186.3

1,035.5

+14.6%

27

First Majestic Silver

Silver, Lead, Zinc, Gold

1,135.8

1,046.4

+8.5%

38

Teranga Gold

Gold

1,077.8

922.5

+16.8%

36

Dundee Precious Metals

Gold, Copper, Zinc, Silver

972.6

1,200.7

–19.0%

39

Brio Gold

Gold

717.8

636.3

+12.8%

35

Lucara Diamond Corp.

Diamonds

400.2

456.1

–12.3%

AUGUST 2017

23-34_CMJ Aug2017_Top 40.indd 29

CANADIAN MINING JOURNAL

| 29

2017-07-27 2:46 PM

We expect some of this year’s runnersup to be among the Top 40 next year.

2016 Rank 2016

Company

Type

Revenue

Net Earnings

Earnings as a % of Revenue

19

Tahoe Resources

Gold, Silver

1,039.5

321.0

30.9%

26

Franco-Nevada Corp.

Gold

808.5

244.9

30.3%

35

Lucara Diamond Corp.

Diamonds

391.5

93.7

23.9%

18

Silver Wheaton

Silver, Gold

1,181.4

258.5

21.9%

10

Canadian National Resources

Oil sands

2,657.0

570.0

21.5%

21

Centerra Gold

Gold, Copper

1,008.1

200.7

19.9%

34

Semafo

Gold

398.2

54.7

13.7%

40

Nevsun Resources

Copper

305.7

41.2

13.5%

28

Silver Standard Resources

Silver, Gold

650.6

86.1

13.2%

20

Pan American Silver

Silver

1,026.6

134.9

13.1%

3

Teck Resources

Zinc, Lead, Copper

9,300.0

1,041.0

11.2%

30

Kirkland Lake Gold

Gold

538.9

57.5

10.7%

38

Teranga Gold

Gold

356.3

37.0

10.4%

The Runners-up (C$ millions) 2016

2015

Rank 2016

Previous Company Year

Year end

Type

Revenue Net Assets Earnings (Loss)

41

50

Banro Corporation

Dec 31

Gold

302.5

(67.4)

1,189.7 207.6

(97.9)

1,155.0

42

37

Golden Star Resources

Dec 31

Gold

293.2

(55.4)

396.0

338.1

(103.9)

316.7

43

34

Primero Mining

Dec 31

Gold, Silver

290.4

(311.2)

898.1

386.0

(141.6)

1,225.6

44

51

Fortuna Silver Mines

Dec 31

Silver

278.6

23.7

745.8

205.0

(14.0)

503.1

45

45

Copper Mountain Mining

Dec 31

Copper

278.0

11.6

647.8

242.0

(102.9)

647.3

46

39

Taseko Mines

Dec 31

Copper, Molybdenum

263.9

(31.4)

949.4

289.3

(62.4)

974.2

Klondex Mines

Dec 31

Gold

262.6

(2.3)

503.5

204.2

58.7

268.7

Sherritt International

Dec 31

Nickel

262.3

(378.9)

3,806.9 335.9

(2,076.7) 4,090.0

47 48

35

49

Revenue Net Assets Earnings (Loss)

Guyana Goldfields

Dec 31

Gold

257.3

35.8

581.4

nil

26.6

486.8

50

52

Sierra Metals

Dec 31

Silver, Lead, Zinc

251.4

(22.3)

483.4

177.7

(46.8)

488.3

51

44

Mandalay Resources Corp.

Dec 31

Copper, Gold, Zinc, Lead

245.8

(11.4)

464.0

257.7

29.0

459.2

52

53

Gran Colombia Gold

Dec 31

Gold

243.9

4.9

505.1

178.7

(17.4)

501.2

53

Endeavour Silver

Dec 31

Silver, Gold

207.8

5.2

239.2

243.3

(198.6)

151.3

54

47

Aura Minerals

Dec 31

Gold

193.7

25.2

233.1

219.7

(19.2)

189.9

55

49

Argonaut Gold

Dec 31

Gold

191.9

5.7

808.1

210.1

(268.6)

766.2

30 |

CANADIAN MINING JOURNAL

23-34_CMJ Aug2017_Top 40.indd 30

WWW.CANADIANMININGJOURNAL.COM

2017-07-26 1:46 PM

Earnings as % of Revenue (C$ millions) 2016 Rank 2016

Company

Type

Revenue

Net Earnings

Earnings as a % of Revenue

2

Barrick Gold Corp.

Gold, Copper

11,339.4

1,140.8

10.1%

14

Turquoise Hill Resources

Copper

1,594.4

141.2

8.9%

9

Agnico Eagle Mines

Gold

2,833.1

210.4

7.4%

25

Eldorado Gold

Gold

861.5

62.8

7.3%

5

Potash Corp. of Saskatchewan

Potash, Fertilizer

5,904.2

428.0

7.2%

16

Iamgold

Gold

1,307.9

81.9

6.3%

17

B2Gold

Gold

1,199.7

67.7

5.6%

6

Goldcorp

Gold, Copper

4,650.8

214.7

4.6%

1

Agrium

Potash, Fertilizer

18,106.1

789.7

4.4%

37

First Majestic Silver

Silver, Lead, Zinc, Gold

368.5

11.4

3.1%

33

Torex Gold Resources

Gold

414.1

4.2

1.0%

23

New Gold

Gold

906.0

3.6

0.4%

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CANADIAN MINING JOURNAL

| 31

2017-07-26 1:46 PM

The McCreedy West nickel mine, in Ontario, was once owned by Inco.

It was put on care and maintenance by KGHM in 2015. CREDIT: KGHM

TRENDS IN THE TOP 40

Business of largest Canadian miners shifts over years

By Marilyn Scales

CMJ

published the first Top 40 list in 1989. This year we are taking a look back at how the list has changed in almost three decades. There were even some company names that I had forgotten in my 41 years as a mining industry observer.

Let’s take a look at some of the companies on that first list. If the names are not familiar to our younger readers, they can ask a grandparent.

Who remembers Cape Breton Development Corp., Lac Minerals, Corona Corp., Cassiar Mining, Brenda Mining, Kerr Addison Mines, Dickenson, or Cambior?

Those names take some of us down memory lane. Any reader

32 |

CANADIAN MINING JOURNAL

23-34_CMJ Aug2017_Top 40.indd 32

who can accurately list the commodities each of these produced is welcome to bonus points. Double points for anyone knowing who operates these particular properties today.

The largest Canadian miner by sales was Inco at $3.3 billion in 1989. Falconbridge was right behind at $2.1 billion, followed by Cominco at $1.7 billion, and Noranda at $1.5 billion. Good for the base metal miners.

The largest gold producer was Placer Dome in the No. 5 slot with $788 million.

Then came two uranium producers – Rio Algom with $712 million and Denison with $424 million.

WWW.CANADIANMININGJOURNAL.COM

2017-07-26 1:46 PM

Left to right: The Fort Hills oil sands JV in Alberta. CREDIT: SUNCOR; Potash Corp. of Saskatchewan will become Nutrien after its planned merger with Agrium this year. CREDIT: POTASH CORP. OF SASKATCHEWAN; Teck’s Elkview metallurgical coal loading facility in B.C. CREDIT: TECK

Back to the base metals as Hudson Bay Mining & Smelting had sales of $409 million. Then Potash Corp. of Saskatchewan with $365 million and Fording Coal with $336 million rounding out the top 10.

For the next 15 years or so, base metal producers were regularly among the largest Canadian miners. Inco and Noranda were repeatedly in the top five. When Falconbridge wasn’t in the top five, it was in the top 10. Cominco, too, held a top 10 spot.

The sale of inco and Noranda/Falconbridge to foreign owners in 2006 changed the complexion of the top 10. Suddenly these companies no longer met our criteria for “Canadian.” The mines

in Sudbury and Thompson were still producing nickel. Those in the rest of the country were producing copper and zinc. But they remain unreported because they are foreign-owned.

There are base metal producers on the rise such as First Quantum. Once it merged with FNX, it acquired to bulk to keep it in the top 10. Teck Resources is also one of the largest Canadian miners, and more power to it. With a global profile that includes base metals, coal and now oil sands, it is a good bet to remain in the top 10.

The coal producers that used to appear in the Top 40 have also CONTINUED ON PAGE 34

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Agnico Eagle Mines’ Meadowbank operation, in Nunavut.

top spot seemed surprising at first. Then we looked at its performance since 1999 and realized it has consistently been in the top five except for 2001 when it was sixth.

When PotashCorp and Agrium merge under the Nutrien name, watch for the larger company to dominate the Top 40 again next year.

A notable change in the Top 40 over the last 10 years, is the rise of gold producers to higher rankings. The world’s largest producer of gold, Barrick, has been in second place since 2012 and regularly in the top 10 before that. Goldcorp, the number two gold producer, has risen into the top 10 in recent years and stayed there.

Agnico Eagle has risen through the list into top 10 territory the last two years. So has Kinross Gold. Yamana Gold has been a fixture in the top 10 to 15 rung of the ladder since 2012.

That leaves the oil sands miners, who have always been tricky to rank. Consolidations over the past few years make the job easier.

Suncor has the largest revenue, and the company breaks out its numbers for the oil sands only, which is a big help. Canadian Natural Resources is new to the list this year as the Horizon project matures and expands.

Comments from readers are always welcome either posted to our website or emailed to the staff.

CMJ

smartsense

®

dropped off. The reason is not necessarily foreign ownership, but rather due perhaps to a pair of trends.

One, coal revenue is now reported as part of a larger mining enterprise. Think Fording Coal, which used to report separately.

Now, it’s represented as part of Teck Resources.

Two, coal is falling out of favour as a fuel. Ontario has eliminated coal-fired power plants, and the rest of the country is following suit. Thermal coal mining in Canada may someday be a thing of the past (as is asbestos mining).

The Ontario uranium industry exhausted its resources, and Elliot Lake became a retirement destination. Denison, stung by its foray into northeast B.C. coal, lost its major revenue source.

Cameco, with major uranium production in Saskatchewan almost always ranks in the top 10.

The Top 40 used to include steelmakers Dofasco and Stelco when they owned at least part of major iron ore mines. Ownership may return to Canadian hands, but reopening the mines is not an option. Even Iron Ore Company of Canada is now owned by foreigners, namely Rio Tinto.

PotashCorp has been in the top five or six with great regularity.

And it is another fertilizer producer, Agrium, which has topped the rankings for five years running. Agrium’s stranglehold on the

CREDIT: AGNICO EAGLE MINES

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The effort began in 2014 when SMS Equipment initiated discussions with mining customers about specific enhancements they would like to see on this dozer. Engineers also visited jobsites to watch the 664-kW, 108,390-kg dozer in action and developed a prototype that was later dispatched to mining customers in Canada.

“This project was a huge undertaking for both SMS Equipment and Komatsu, but the results have been outstanding,” said SMS Equipment Manager-Technical Support Mark Haywood. “We received several great reviews from customers who demoed the modified D475. We knew we were on the right track when customers began asking when they could get one.”

While that sounds like a good development, most of the modifications to the dozer were done locally at SMS Equipment via aftermarket additions – a slow and costly process. With demand for the customized dozer rising, SMS Equipment and Komatsu teamed up to streamline production.

“We worked very closely with both Komatsu America and Komatsu Limited in Japan to begin production of the D475 with the miningspecific changes we introduced,” noted Haywood. “This was a great partnership because it enabled us to build the dozer and keep costs down since the updates were done at the factory level.”

Total commitment To further expedite the process, Komatsu America stationed Design Engineer Osamu “Sam” Shimizu at SMS Equipment on a three-year assignment to gain a better understanding of customer needs and effectively communicate market requirements to colleagues at Komatsu America and Komatsu Limited. Shimizu’s presence was felt immediately as he serves as a resource to support the product and directly convey customer feedback on the dozer to Komatsu.

“I am able to act as the conduit for information between our customers and Komatsu’s Product Development teams,” explained Shimizu. “As engineers, sometimes we think a decision makes perfect sense on paper, but it may not translate well to real-world

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applications. Because I am here on the ground, I can see what decisions are working and which ones aren’t. Then, I communicate that feedback directly to the design team.”

The level of collaboration on the project has been amazing, Haywood reported. “It’s uncommon for a Komatsu design engineer to work at a local distributor. It shows Komatsu’s level of investment in this project.”

Haywood said that Shimizu’s involvement in the project has been crucial to its success. “Not only does he have direct access to the design team, but he’s also able to bridge the language barrier.

Without him, it may have taken a couple of weeks to work through an issue, but now it can be accomplished with one phone call. He sees what we’re seeing and relays it back to his team.”

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With several of the mining models deployed in Canada since the initiative began, Haywood believes it is just the tip of the iceberg.

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“Even though the dozer is in production, it’s still early in the process from our perspective,” Haywood stated. “We are continuing to monitor the use of the dozers and talk to users about what they like and may still want to see applied to the D475.”

Another advantage of Shimizu’s extended stay with SMS Equipment is that it provides additional customer support time and continuity throughout the redesign process as well as the ability to quickly respond to questions or additional feedback once the mining-spec dozers are on the job.

“Customers have been very happy with the dozer and the continuous improvement process that SMS Equipment and Komatsu have demonstrated,” said Shimizu. “The more the dozer is used in the field, the more feedback we will receive and the better we will be able to make it. We want this machine to be the best it can be for our mining customers.”

The mining-specification D475 features several upgrades to the standard model. Serviceability was an area of emphasis for the AUGUST 2017

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new model. The D475 was outfitted with extra catwalks, improved handrails, overhead tie-off points and additional three-point contact. Komatsu also centralized the breathers and service stations on the rear of the machine for easy access during daily maintenance.

“When we polled our customers, safety and serviceability were two things that we heard frequently,” said Haywood. “We also added features to make the ride more comfortable and to increase performance and handling.

“It’s our goal at SMS Equipment, as a leader in the mining industry, to work closely with Komatsu to develop the very best mining dozer on the market and continue to back it up with first-class service,” he continued. “That’s what customers expect from SMS Equipment and Komatsu, and that’s what we intend to deliver.” n CANADIAN MINING JOURNAL

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verge 10 DEVELOPMENT PROJECTS WITH MOMENTUM

Illustration: JDawnInk, iStockphoto.com

Back River Coffee Eagle Gold Kemess Underground KSM NICO Prairie Creek Red Mountain Sugar Zone Whabouchi

By Alisha Hiyate

I

t hasn’t been an easy time to advance mineral projects to mines over the past five years. But with some metals prices firming up and project financing

AUGUST 2017

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becoming more attainable, it’s time to look at development projects that are starting to gain momentum.

We’ve searched for Canadian projects that have the potential to become promising mines and have permitting or other

milestones coming up that could bring that potential to bear sooner rather than later.

This is not an exhaustive list by any means – just a selection of projects that have caught CMJ’s eye. Projects are listed in alphabetical order.

CONTINUED ON PAGE 40 CANADIAN MINING JOURNAL

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P R OJ EC T S TO WATC H

Victoria Gold’s executive vice-president Mark Araynto at the Eagle project in the Yukon. CREDIT: MATTHEW KEEVIL

1 Back River

Sabina Gold & Silver – Nunavut

I

t was a bit of a shock when the Nunavut Impact Review Board (NIRB) decided to reject Sabina Gold & Silver’s Back River project last year over concerns about its impacts on caribou populations.

But in January, the federal ministry of Indigenous and Northern Affairs (INAC) sent the NIRB’s final report back, saying that the findings were premature and more information was needed to support a decision.

And in July, after a second review that considered more detailed information submitted by Sabina to address identified gaps, the NIRB recommended that the project proceed.

At presstime, the company was waiting for a decision by the Minister of INAC on the project, 520 km northeast of Yellowknife.

If the decision is positive, it could have a project certificate before the end of the year.

In June, Sabina retained a financial advisory firm to assist it in sourcing financing for the $415-million project. However, there’s little doubt the company will find the money.

A 2015 feasibility study showed the project’s economics to be robust. At US$1,150 per oz. gold and a 5% discount rate, the mine is expected to generate an after-tax net present value of US$480 and an internal rate of return of 24.2%.

The open-pit and underground project could produce nearly 200,000 oz. gold a year for 11.8 years.

2 Coffee

Goldcorp –Yukon

U

ntil mid-July, Goldcorp’s Coffee project in the Yukon seemed to be sailing along smoothly.

The gold major acquired the advanced gold project, 130 km south of Dawson City, through a takeover of Kaminak Gold last year. But the project hit a stumbling block when the Yukon Environmental Socio-Economic Assessment Board halted the assessment process after determining 40 |

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that Goldcorp hadn’t adequately consulted with First Nations communities affected by the project.

Consultation will certainly take time, but Goldcorp is still confident it will be pouring first gold at Coffee by the end of 2020.

The high grade, open pit project hosts indicated resources of 3 million oz. gold in 63.7 million tonnes grading 1.45 g/t.

(That includes probable reserves at the same grade totalling 2.2 million oz. gold.)

A 2016 feasibility study completed by Kaminak projected capital costs for the heap-leach project at $317 million. With production averaging 193,000 oz. gold per year over a 10-year mine life, the study estimated Coffee would generate a net present value of $455 million and an internal rate of return of 37%, after taxes. The study used a 5% discount rate.

3 V

Eagle

Victoria Gold – Yukon

ictoria gold acquired the Eagle gold project in the Yukon in 2009 through a takeover of StrataGold.

After a couple of years of advancing the project, which is located 375 km north of Whitehorse, it released a feasibility study in 2012. Unfortunately, the study came out at a low point in the industry when capital for new projects was non-existent.

But Victoria kept going, and in October last year, released an updated feasibility outlining a $370-million 33,700-tonneper-day heap-leach operation with a mine life of 10 years. At a discount rate of 5%, the mine would generate a net present value of $508 million after taxes and an

internal rate of return of 29.5%.

Reserves at Eagle and Olive, a nearby deposit, total 2.7 million oz. gold contained in 123 million tonnes at a diluted grade of 0.67 g/t gold.

Victoria has attracted some savvy institutional investors, including Sun Valley Gold and the Electrum Strategic Opportunities Fund, which last year invested $24 million into the company.

The momentum carried into January, when Victoria announced a US$220-million debt facility that was expected to close in the second quarter. Once it does close, it’s expected to be the foundation of the financing package that will fund the fully permitted project through to production.

4 Kemess Underground AuRico Metals – B.C.

T

he site of a former open pit mine from 1998-2011, AuRico Metals is making strides in advancing its Kemess Underground project in north-central British Columbia, 250 km north of Smithers.

The project hosts reserves of 107.4 million tonnes grading 0.53 g/t gold, 0.27% copper and 1.99 g/t silver for 1.9 million oz. gold, 630 million lb. copper and 6.9 million oz. silver.

A 2014 feasibility study pegged capital costs for a 25,000-tonne-per-day operation at US$380 million. Using a 5% discount rate, the study estimated net present value at $421 million after taxes, with an internal rate of return of 15.4%.

While AuRico CEO Chris Richter told The Northern Miner in March that AuRico WWW.CANADIANMININGJOURNAL.COM

2017-07-26 2:09 PM

would like to see sustainable metal prices at the level used in its feasibility study (US$1,250 per oz. gold and US$3 per lb. copper) before deciding to proceed with the mine, the company continues to make progress at Kemess South.

Environmental approvals were granted by both the provincial and federal regulators for Kemess South in March. And in May, AuRico signed an IBA with three Sekani First Nations: Takla Lake, Tsay Keh Dene and Kwadacha.

The company also released a PEA in May for the Kemess East deposit, only 1 km away from Kemess Underground, that showed positive economics for a standalone development. It’s now working on a feasibility study that will evaluate Kemess East and Kemess Underground as part of an integrated development scenario.

lion and an IRR of 8%. The study used an exchange rate of US80¢, US$1,230 per oz. gold, US$2.75 per lb. copper, US$17.75 per oz. silver and US$8.49 per lb. molybdenum.

With a projected US$5-billion price tag, the company is looking to bring down capital costs and improve the economics.

While a large upfront capital cost has stymied development at a time when large capex projects are being avoided, there’s no doubt this giant will be developed eventually.

The company is seeking a joint venture partner to help it develop KSM, but in the meantime, it’s been steadily adding value to the project through drilling the highgrade Deep Kerr and Iron Cap Lower zones, which contain inferred resources.

And the company also envisioning alternatives for development of KSM. An October 2016 PEA At Seabridge Gold’s KSM project in B.C., looking west. that incorporates the developCREDIT: SEABRIDGE GOLD ment of the Deep Kerr and Iron Cap Lower zones in an underground only mining scenario showed improved economics, although at higher capital costs of US$5.5 billion.

The project received environmental approvals in 2014 and recently received federal approval related to its tailings management facility plan.

6 NICO 5 KSM

Seabridge Gold – B.C.

S

eabridge Gold’s KSM project, located 65 km northwest of Stewart, B.C., is one of the largest undeveloped gold-copper deposits in the world. In four deposits: Kerr, Sulphurets, Mitchell and Iron Cap, KSM hosts reserves of 38.8 million oz. gold and 10.2 billion lb. copper in 2.2 billion tonnes grading 0.55 g/t gold and 0.2% copper.

An updated prefeasibility study released in September 2016 showed an open pit and underground development at KSM could produce an average of 540,000 oz. gold and 156 million lb. copper a year over a 53-year mine life.

Using a 5% discount rate, the study also projected a post-tax NPV of $1.5 bil-

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Fortune Minerals – N.W.T.

ing working capital) at $589 million, aftertax NPV (at a 7% discount rate) at $224 million and IRR of 15.1%.

While the study used US$1,350 per oz. gold, it also used a higher Canadian dollar (US88¢) and a cobalt price of US$16 per lb. In July, the spot price was over US$26 per lb.

Fortune already has environmental assessment approvals and major mine permits for its planned mine and concentrator facilities in the Northwest Territories and its planned refinery in Saskatchewan, where concentrate will be processed to battery grade cobalt sulphate.

The company is working with PwC to arrange financing for the project through a combination of strategic partnerships, debt, offtake deals and forward sales of gold.

In June, Glen Koropchuk, a director of the company and former chief operating officer of De Beers Canada, was appointed COO of Fortune.

A recent announcement of government funding for a public all-weather road to the nearby community of Wharti is another “critical enabler” for NICO. NICO hosts proven and probable reserves of 33.1 million tonnes grading 1.03 g/t gold, 0.11% cobalt, 0.14% bismuth and 0.04% CONTINUED ON PAGE 42

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ortune Minerals discovered the NICO deposit, 160 km northwest of Yellowknife, in 1996, but it’s getting a push now because of projected growth in the cobalt market.

More cobalt is needed to make electric vehicle batteries and portable electronics – but supply isn’t keeping up. Supply chain and ethics concerns that stem from the majority of the world’s cobalt being mined in the Democratic Republic of Congo is only adding urgency to the project.

Fortune hired Hatch and Micon in April this year to update a 2014 feasibility study that projected positive economics for a primarily open pit mine at NICO with a life of 21 years.

That study pegged capital costs (exclud-

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P R O J EC T S TO WATC H

copper for 1.1 million oz. gold, 82 million lb. cobalt, 1.11 million oz. gold, 102 million lb. bismuth and 27 million lb. copper.

7 Prairie Creek Canadian Zinc – N.W.T.

P

rairie Creek has been a mine-in-waiting for decades.

The Hunt brothers nearly completed building a mine and mill on the property, about 500 km west of Yellowknife in the Northwest Territories, in the early 1980s – just before the silver prices they had driven sky-high plummeted back to earth. Canadian Zinc acquired the project in the early ’90s.

So what’s giving this longstanding project a push now?

Higher zinc prices and a potential zinc shortage have revived interest, as has a prefeasibility study published last year that indicates positive economics for the project.

Building on that study, the company has hired AMC and Ausenco to conduct a full feasibility study, expected to be completed in mid-2017.

The study will hopefully support debt financing for Prairie Creek to finally finish development and bring the project into production.

The project hosts proven and probable reserves of 7.6 million tonnes grading 127.58 g/t silver, 8.33% lead, and 8.93% zinc.

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IDM Mining’s Red Mountain project, in B.C. CREDIT: MATTHEW KEEVIL

The prefeasibility last year estimated a 1,350-tonne-per-day underground operation would have preproduction capital costs of $244 million and a mine life of 17 years. At a discount rate of 8%, and after taxes, the NPV comes to $302 million and the IRR to 26.1%.

The study used prices of US$1 per lb. for zinc and lead and $US19 per oz. for silver.

8 Red Mountain IDM Mining – B.C.

I

DM Mining made a deal to acquire the Red Mountain project from Seabridge Gold in 2014, under a three-year option agreement. The project lies 18 km northeast of Stewart, B.C. The high grade project contains 2.1 million measured and indicated tonnes grading 8.75 g/t gold and 25 g/t silver for 583,700 oz. gold and 1.7 million oz. silver.

A feasibility study released in June outlined a $135.7-million underground operation with a mine life of 5.4 years. While not a long-lived mine, the study showed the project could generate a net present value of $104 million after taxes and an internal rate of return of 32%. The study used a discount rate of 5%, a gold price of US$1,250 per oz., a silver price of US$17 per oz. and an exchange rate of US76¢.

Unlike a July 2016 PEA, the study assumed a year-round rather than seasonal operation producing an average of 78,000

oz. gold per year.

Shortly after it released the study, the company submitted its project application and environmental impact statement with federal and provincial authorities.

IDM is aiming to start production in 2019, but in the interim, it’s also pursuing opportunities to further enhance the economics including through exploration, the use of more used processing equipment, and optimization of the mine plan.

9 Sugar Zone

Harte Gold – Ontario

H

arte Gold is rapidly advancing its Sugar Zone project, 60 km east of the Hemlo gold camp in Ontario.

With an indicated resource of 1.1 million tonnes grading 8.41 g/t for 302,000 oz. contained gold and 417,000 tonnes of inferred resources at 7.13 g/t gold, Sugar is certainly high grade.

The company completed a positive preliminary economic assessment in 2012, but is proceeding with development without completing a bankable feasibility study.

Instead it took a 70,000-tonne bulk sample last year, which gave the company a wealth of information about the narrow vein deposit.

The sample confirmed multiple important factors: continuity of mineralization, mineralized widths and modelled grades, the cost of contract mining, that the metWWW.CANADIANMININGJOURNAL.COM

2017-07-26 2:12 PM

allurgy is simple and recoveries from Sugar zone ore are high, and that longhole mining is an appropriate method to use, with minimal dilution.

Still to come before the end of the year, Harte expects to sign an IBA with the Pic Mobert First Nation; receive permits for full commercial production (federal approval is required for the operation if it exceeds 600 tonnes per day); and to complete an updated resource estimate.

The company began construction in July with plant commissioning to start in early 2018. Harte expects to begin phase 1 production (540 tonnes per day for around 50,000 oz. a year) before the end of the second quarter of 2018.

and $310 million for a hydromet plant in Shawinigan, Que. Nemaska plans to ship concentrate produced at mine by road to Chibougamau, then 555 km by rail to the processing plant in Shawinigan.

With an initial 26-year mine life, the project boasts an after-tax NPV of US$928 million and an IRR of 30.3% (using an 8% discount rate).

The company closed a $50-million

bought deal financing in June and expects to close a debt financing by the end of September. It’s also in talks with the Quebec government through Ressources Quebec regarding potential capital funding of the project. Ressources Quebec is the company’s largest shareholder with a 9% interest.

Whabouchi hosts proven and probable reserves of 20 million tonnes grading 1.53% Li2O and underground reserves of 7.3 million tonnes grading 1.28% Li2O. CMJ

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10 Whabouchi

Nemaska Lithium – Quebec

N

emaska Lithium is targeting commercial-scale production at its Whabouchi project in the James Bay region of Quebec by early 2019.

The junior’s timing is very good, given the burgeoning demand for battery grade lithium and a shortage of lithium hydroxide.

The company has developed a proprietary process to turn spodumene from Whabouchi into lithium carbonate and lithium hydroxide monohydrate. To show that the process works and can be used to make product to client specifications, it built a 610-tonne-per-year demonstration plant.

Now, Nemaska has few hurdles left to navigate: it’s received major federal and provincial environmental approvals for Whabouchi, and the fact that it has signed offtake agreements with Johnson Matthey and FMC for half of its lithium carbonate equivalent should make financing easier.

An April 2016 feasibility study projected capital costs for development at $549 million – $239 million for the open pit mine, located 300 km north of Chibougamau, AUGUST 2017

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2017-07-26 2:13 PM

CO S T I N G

?

how much will it cost STRATEGIES FOR ACQUIRING MAKE-OR-BREAK COST DATA

By Brad Terhune

C

osts are an inherent aspect of evaluating, advancing and generating profits from any mining property. They often make or

Understand what prefeasibility means

An obvious generic answer to when costs should be obtained and considered development decisions are made. As such, costs, in some form might be “on-going,” but for prefeasibility costing the true answer is “when you or another, are one of the biggest topics of discussion in the mining industry. have a measured and indicated resource.”

Despite that fact, I would also suggest that the process for obtaining costs is one Exploration stage properties or properties of the least discussed topics in our industry. with only an inferred resource do require cost considerations (scoping or prelimiThe process of obtaining cost data for early stage (prefeasibility nary economic analysis [PEA]) but they are still too speculative level) mine development projects is an important one. Several and provide only a hint of what could be. Similarly, if much of questions should be addressed, including: your engineering work is complete and of final feasibility detail • When should costs be obtained/considered? (feasibility study [FS]), you’ve waited too long and possibly sunk • How is the cost data to be utilized? unnecessary costs into the project. Figure 1 highlights the param• What costs are needed? eters for each study level.

• What accuracy is needed for costs to be useful to the estimator?

While these comments may seem rudimentary, the reality is • What hurdles must be overcome to obtain costs? that many in our industry do not fully understand the concept of • Are there specific strategies for obtaining cost data? prefeasibility. It is the author’s opinion that prefeasibility is the point at which you have enough scientific data in hand that you NOTE: a cost estimator may be someone dedicated to the task or can safely say, “I’ve really got something here!” it may be a mining engineer or geologist responsible for developIf you will notice, I have indicated that prefeasibility is continment decisions related to the property. gent upon the amount of scientific data in hand, not engineerbreak projects and are typically the final stop before “go/no go”

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FIGURE 1

Criteria Study

Technical & Economic Studies Preliminary Economic Assessment (PEA)

Feasibility Study (FS)

Prefeasibility Study (PFS)

Concept

“What it could be”

“What it should be”

“What it will be”

Objective

Early stage conceptual assessment of the potential economic viability of mineral resources

Realistic economic and engineering studies sufficient to demonstrate economic viability and establish mineral reserves

Detailed study of how the mine will be built, used as the basis for a production decision

+/- 50%

+/- 25%

+/- 15%

<1%

1–5%

5–25%

Cost Accuracy Engineering Mineral Estimate Inputs

Inferred/Indicated/ Measured Resources

Indicated & measured resources

Mineral Estimate Outputs

Inferred/Indicated/ Measured Resources

Probable & Proven Reserves Adapted from a March 2015 PDAC presentation by the Ontario Securities Commission and the TSX.

ing data. Generally speaking, when entering a prefeasibility level study, your project will have had very little engineering completed.

This is important to remember because the input data is all you will have to work with when we talk about the hurdles that must be overcome to obtain costs.

Hurdles to obtaining cost data

The output side of a prefeasibility level project provides insight as to what costs are needed and how the costing data is utilized.

For example, for a pre-feasibility level project, preliminary equipment lists and subsequent development costs are derived based on the results of trade-off studies for proposed mining and processing methods (Figure 2). Unfortunately, one of the larger tasks encountered during a pre-feasibility study is related to the process of obtaining costs for the needed equipment.

The three largest hurdles for the cost estimator in an exploration or mining company are: • A lack of data to obtain a reasonable quote; • Highly engineered and integrated systems; and • The time involved to obtain the cost data.

As noted earlier, it is typical at the prefeasibility level to have very little engineering data available. For example, while you may AUGUST 2017

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know that you have a surface copper project that requires loaders and trucks followed by crushing, milling and flotation, you may not have enough metallurgical work completed to know how fine the material must be ground or how the flotation circuit needs to be configured for the best recovery of all byproducts. This lack of data becomes an issue when you call equipment manufactures to obtain budget quotes for their products.

This issue of a general lack of data is compounded by the highly engineered and integrated systems we have in the mining industry today. This is particularly true for the processing side of the equation, where the cost estimator may no longer be able to simply derive overall costs from ‘off-the-shelf’ component prices. In fact, most manufacturers of complex processing equipment will not provide component costs at the prefeasibility level.

The time involved to obtain cost data can be substantial – on the order of weeks and months given the strategies that must be employed to mitigate the first two hurdles noted earlier. The more complex the project, the more time is needed to prepare quote requests and gather quotes. Time is money.

Procurement strategy

Given the hurdles outlined above, the best procurement strategy is CONTINUED ON PAGE 46

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Prefeasibility Input vs. Output

CO S T I N G FIGURE 2

GOING IN • Mineral resource • Maybe a little metallurgy?

• Expectation for surface/UG operation • Other misc. information (power supply, etc.)

COMING OUT

Reserves calculated

Mining method and production levels estimated (trade-off studies)

Generalized processing methods chosen (trade-off studies)

Preliminary equipment and labour levels

one that aims to simplify quotes and to mitigate the general lack of data available to you at the pre-feasibility stage. Simply put: • The overall cost accuracy of prefeasibility level development projects is typically +/- 25%. This is an important aspect to consider when contacting manufactures and suppliers for equipment pricing because firm, detailed quotes are not needed.

Budget or list pricing is adequate. For example, it is satisfactory to receive a quote of $9.5 million for a complete ball mill. A price of $9,620,423.25 is not necessary.

• If possible, request “base” machine pricing or pricing that reflects commonly configured pieces. Consider which specs are most important to you and eliminate other options. Base machine pricing levels the playing field between competing suppliers and simplifies the quote. The number you receive will be more than sufficient for prefeasibility work.

• Manufacturers and suppliers may request a long list of engineering or material specifications in order to provide a quote.

In the absence of detailed metallurgical and/or engineering data for early prefeasibility stage projects, the cost estimator may be required to make assumptions to fill in any information gaps – for example, feed and outflow particle sizes for a ball mill or conveyor length from the in-pit primary crusher to the secondary crusher.

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Estimated development costs based on the items to the left

Recommendations Recommendations for further resource for further mineral driling to better exploration to understand the increase resources deposit and to on the whole upgrade resource categories

• Installation costs may be included in the pricing, but it is often preferred that these costs be provided as a separate line-item or as a function of the capital investment, for example, installation costs are 10% of capital or installation costs are 2x capital.

• Included ancillary equipment may be handled in a manner similar to installation costs.

• To minimize the time required to obtain cost data, the cost estimator may need to enlist co-workers to process quote requests or to subscribe to mining cost databases. CostMine’s cost estimating tools and data can greatly reduce the amount of time required to obtain costing information.

Summary

The acquisition of cost data for prefeasibility level mine development studies is not simple. A thorough understanding of the three primary study levels is required to identify the types and accuracy of costing data appropriate for each level. Moreover, a well identified procurement strategy is recommended to overcome the hurdles associated with the acquisition of costs.

CMJ Brad Terhune is a cost analyst and senior geologist with CostMine, a division of InfoMine (www.costs.infomine.com). He can be reached at bterhune@infomine.com or 509-328-8023.

WWW.CANADIANMININGJOURNAL.COM

2017-07-26 1:53 PM

mining for value VA LU E M A NAG EMENT

WHATâ&#x20AC;&#x2122;S THE RIGHT WAY TO MEASURE MINING SECTOR PERFORMANCE?

By Mack Ferguson

T

he Canadian mining industry has destroyed considerable shareholder wealth over the past decade.

A cyclic drop in metals prices since 2011 worsened economic performance and challenged the viability of virtually all companies, with some not likely to remain intact. Attributing all of this economic damage solely to a drop in metals prices, however, is misguided. The mining industry has repeatedly proven to be a poor steward of invested capital, consistently producing returns below any reasonable estimate of the cost of capital and thereby destroying shareholder value and wealth.

The principles of corporate finance suggest that an investment of higher risk should produce a higher return, such that on a risk-adjusted basis, return is roughly equivalent across investment opportunities over time. How the mining industry has continued to attract investment capital is somewhat surprising, given that the industry as a whole has produced, over the 2002 â&#x20AC;&#x201C; 2015 time period, a mere 2.5% average return on capital when a reasonable estimate of an industry required return on capital, i.e. cost of capital, would be around 8-9%.

Given the inherent risk and performance history of the industry, investors are undoubtedly questioning continued involvement, notwithstanding all of the positive talk of yet another future cyclic recovery. The general decline of the aver-

AUGUST 2017

47-52 August2017_Artche Value.indd 47

age industry market to book ratio, i.e. market value to book value of invested capital, implies that investors are increasingly discounting the business case for the mining industry beyond the ups and downs of the business cycle.

Maintaining the interest of investors will require fundamental change in the industry. The existing business model needs to evolve towards one that emphasizes the centrality of the operating company (rather than the corporate office), where the managerial mindset is one of responsibility and accountability of ownership and decision making is focused on value creation.

This transformation presents a tremendous opportunity to refocus organizational strategy and performance management on

the creation of value as measured by economic profit. This back to basics approach will improve economic performance and corporate governance, and, importantly, provide the industry with a good case for future investment as shareholder value and wealth is created.

Flawed approach

A review of the economic performance of the Canadian mining sector readily reveals the poor economics of the industry. More importantly, it illuminates characteristics of performance that are symptomatic of a flawed approach to business and financial management.

When evaluating performance on the CONTINUED ON PAGE 48 FIGURE 1

Market/Book Value of Capital 300% 250% 200% 150% 100% 50% 0% 2003

2004

2005

2006

2007

2008

2009

n Mining Industry

2010

2011

2012

2013

2014

2015

2016

n TSX Industrial

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VA LU E M A NAG EMENT the founder of modern management, “what gets measured, gets managed,” and presumably, what isn’t measured is mismanaged. While the intent of focusing management on operating profit seems sensible, it may prove costly to the extent that capital management is neglected or worse, abused. For instance, an initiative that increases operating profit by moving cost off the income statement and onto the balance sheet, i.e. automation replacing labour, is of no economic benefit if the total cost base is unchanged. A more unfortunate situation emerges, however, when a reduction in operating cost (and related increase in operating profit) is achieved by adding an even greater amount of capital cost to the business. If managerial focus were simply limited to operating profit, this perceived increase

basis of operational profitability, i.e. net operating profit after taxes (NOPAT), the average Canadian mining company has, admirably, produced above average performance over the upside of the most recent commodity price cycle.

While the strong operational profitability 2005 – 2012 was in part due to good product pricing, it is also fair to assume that competent operations management also played a major role. Given that conventional performance management systems in the mining industry are focused on the management of operational cost and/or profitability, it should be expected that during favourable points in the cycle, management is highly motivated to deliver operational profit given the opportunity to generate a performance bonus.

However as suggested by Peter Drucker,

FIGURE 2

NOPAT Margin (NOPAT/Revenue) 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2003

2004

2005

2006

2007

2008

2009

2010

n Mining Industry

2011

2012

2013

2014

2015

2016

n TSX Industrial

FIGURE 3

Capital Intensity (Capital/Revenue) 500% 450% 400% 350% 300% 250% 200% 150% 100% 50% 0% 2003

2004

2005

2006

2007

2008

2009

n Mining Industry

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2010

2011

2012

2013

n TSX Industrial

2014

2015

2016

in business performance is illusionary, as the resultant increase in total cost would drive down economic profit and destroy value in spite of the fact that the business could be more profitable from an accounting perspective. Having managers focused on operating profit while shareholders are clearly concerned about economic profit is problematic, as it misaligns interest and rewards and generally results in weaker economic performance.

In situations where capital is not systematically costed within the operational financial management, i.e. an EBITDA based system, capital may be managed as if it were free, leading to an accumulation of trapped non-productive assets that create deadweight cost to the business. This non-productive capital could appear as, for example, excess inventory of spare parts, idle plant and equipment, and/or large stockpiles of semi-processed ore inventory. With no cost attached to the usage of capital, capital intensity will increase, and productivity and return on invested capital will suffer. Fig. 3 clearly illustrates the high capital intensity, i.e. capital/revenue, of the mining industry relative to the average Canadian industrial company.

Ironically, the most capital-intensive industries tend to bias performance management towards operational profitability at the expense of capital management and efficiency, when in fact these industries have large capital cost components that must be actively managed.

The Canadian mining industry provides an excellent illustration of this situation.

The industry is focused, from an operational standpoint, on metrics such as cash operating expenses, AISC, cash operating profit, EBITDA, etc. – measures that all commonly exclude any cost of employed capital. While capital investment decisions are typically made, ex ante, using credible corporate finance tools, i.e. net present value (NPV) of free cash flow models, the actual capital deployment and ongoing management decisions are governed by performance management systems that generally exclude the cost of employed capital. This exclusion has proven very costly to shareholders, as even during a period of high operational profitability (2005 – 2012), the high capital intensity and capWWW.CANADIANMININGJOURNAL.COM

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FIGURE 4

Canadian Mining Industry Spread 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% 2003

2004

2005

2006

2007

2008

n Return on Capital

ital cost of the average mining company resulted in a return on capital consistently below that of the average Canadian industrial company and well below a reasonable estimate of the cost of capital to the mining industry, resulting in the destruction of a tremendous amount of shareholder value and wealth over the past decade.

2009

2010

2011

2012

2013

2014

2015

2016

n Cost of Capital

illustrates the enhanced view of a valuebased financial management system relative to a conventional EBITDA based approach.

When a company generates positive economic profit, this implies that its return

on capital, i.e. operating profit/capital, exceeds its cost of capital, and therefore the company is creating value. A negative economic profit implies the reverse – that value is being destroyed.

Fig. 7 (page 51) presents 2016 year end performance for TSX listed mining companies. For purposes of illustration, a constant 8% cost of capital and 25% marginal tax rate (within the NOPAT calculation) have been used for all companies. In addition, non-recurring sources of income or expense have been excluded from the measurement of NOPAT and rather included as an element of capital to be amortized over time or on a per unit of production basis. By capitalizing and amortizing accounting-based asset writedowns, the performance measurement model is shifted from successful efforts to a full cost basis, as return on capital is computed based on all project efforts not just the good ones.

CONTINUED ON PAGE 50

A value-based management solution

Economic profit is the measure of value creation and the general term for a class of performance measurements that include economic value added (EVA), shareholder value added (SVA), economic value creation (EVC), and others. Economic profit is the measurement of value creation as the performance measurement reflects the total revenue and cost basis of a company.

When a company’s total cost, i.e. operating and capital investment related costs, is subtracted from its total revenue, what is left over is pure or economic profit as all costs have been reflected and any surplus is value creation.

While the adoption of economic profit may not guarantee industry-leading performance, it will ensure improved operational performance, health and profitability over time, as it introduces an approach to performance management that recognizes both operational profitability and capital efficiency.

An economic profit-based management system is designed to better align the interests and rewards of managers and shareholders, effectively making managers think and act like business owners. The following graphic AUGUST 2017

47-52 August2017_Artche Value.indd 49

This is what $16 million looks like

Our 2007 geotechnical study recommended a 5° increase to the pit slopes of Capstone’s Minto copper-gold mine in the Yukon.

Estimates suggested this would reduce waste stripping by ~4.5 million tonnes.

Fast forward to 2011. The pit is completed and we no longer need to talk about estimates.

We know what happened.

As our rock engineering predicted, the steeper, stable pit slopes saved ~$16 million in stripping costs.

All part of Capstone’s “relentless pursuit of value.”

Ask us how we can add value to your next project.

.com >1400 professionals • >45 offices • 20 countries • 6 continents

CANADIAN MINING JOURNAL

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2017-07-26 1:55 PM

VA LU E M A NAG EMENT This adjustment has a large effect on the computation of capital in the analysis, given the magnitude of asset writedowns in the industry between 2011 and 2015.

All figures are presented in thousands of US dollars.

Although virtually all companies reported positive EBITDA for 2016, very few are in fact generating positive economic profit and thereby creating shareholder value.

While the Canadian mining industry is producing a median level of EBITDA margin above that of the Canadian nonfinancial industrial sector (i.e. 36.4% for mining and 32.8% for all industries), the high level of capital intensity within the mining sector depresses its return on capital and economic profit. Without question, placing more focus on the management of capital with mining operations would improve capital efficiency and value creation, as a large amount of non-productive capital likely exists within the industry, and with the correct incentive, excess capital could be extracted and value generated at the margin.

What is important to investors and managers is that economic profit is improving – ideally in a sustainable, continuous fashion. Value management, therefore, can be simplified to four basic strategies: w Improve the performance of your existing business by generating more operating profit form the capital that is currently employed. Growing revenue, improving productivity and operating cost management will increase return on capital, (i.e. operating profit/capital) and create value. w Invest capital in value-creating opportunities as represented by new projects, products, customers and/or locations that will produce an anticipated return on capital above the cost of capital, on average and over time (i.e. the net present value of economic profit is expected to be positive). w Proactively harvest capital from valuedestroying investments, and redeploy it in new opportunities where value creation is expected (or distribute the capital to investors via dividends, share buybacks or interest and principal pay50 |

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FIGURE 5

Conventional

Value Based

Financial Management

Financial Management

Revenue Operational Profitability

Revenue

– Cash Cost of Goods Sold = Gross Profit

– Cash Cost of Goods Sold = Gross Profit

– Cash Operating Expenses = EBITDA

– Cash Operating Expenses = EBITDA Operational Profitability

– Depreciation Expense = EBIT

An economic profit approach makes managers think and act like business owners.

– Taxes = Net Operating Profit After Taxes (NOPAT) Invested Capital x Cost of Capital = Capital Charge [B]

Capital Efficiency

Economic Profit lA-B] FIGURE 6

Operating Approach Net Operating Profit After Tax (NOPAT) [A] Capital x Cost of Capital, C = Capital Charge [B]

Financing Approach 150

1,000 10% 100

Net Operating Profit After Tax (NOPAT) + Capital = Return on Capital, R – Cost of Capital, C = (R– C) Spread x Capital

Economic Profit [A–B]

$50

ments on debt if no value-creating investments are available). w Source capital as cheaply as possible to lower the weighted average cost of capital and hurdle for value creation.

Economic profit and shareholder wealth

Economic profit is effectively normalized free cash flow, where the one-time (cashbased) investment costs of a free cash flow model are converted into a series of periodic capital charges within the economic profit model. The net present value of economic profit equals the net present value of free cash flow, thereby allowing economic

Economic Profit

150 1,000 15% 10% 5% 1,000 $50

profit the joint benefit of being both a performance measurement and a strategic financial tool.

If a company is expected to generate positive future economic profit in net present value terms, it should trade at a premium to its book value, and likewise if the company were expected to generate ongoing negative future economic profit, it would trade a discount to book value. This foundation principle of corporate finance, implies that increases in economic profit, over time, should drive increases in enterprise value and share price. The example of Barrick (Fig. 8) clearly illustrates this relationship, with its recent restructuring and perforCONTINUED ON PAGE 52

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FIGURE 7 Company

Revenue

EBITDA

EBITDA Margin

Capital

Capital Intensity

Return on Capital

Economic Profit

2,138,232

852,523

39.9%

8,318,163

397.1%

2.1%

(485,931)

Alamos Gold Inc

482,200

140,300

29.1%

3,192,013

664.7%

0.5%

(239,386)

Argonaut Gold Inc

144,780

43,245

29.9%

748,508

526.2%

1.9%

(45,229)

Aura Minerals Inc

146,209

24,465

16.7%

335,905

237.6%

3.3%

(15,571)

8,128

(708)

-8.7%

156,994

1983.7%

-1.9%

(15,616)

Agnico Eagle Mines Ltd

AuRico Metals Inc. B2Gold Corp

683,293

316,273

46.3%

2,758,781

422.4%

3.7%

(112,741)

Barrick Gold Corp

8,558,000

4,289,000

50.1%

49,942,500

578.1%

4.1%

(1,959,150)

Cameco Corp

2,431,404

615,061

25.3%

8,745,750

356.8%

2.1%

(517,131)

Capstone Mining Corp

529,402

156,233

29.5%

1,667,921

310.3%

2.2%

(97,346)

Centerra Gold Inc

760,758

385,389

50.7%

2,397,912

376.8%

4.7%

(57,532)

China Gold International Resources Corp Ltd

338,601

116,849

34.5%

2,704,546

825.4%

0.9%

(190,576)

Detour Gold Corp

658,286

221,635

33.7%

2,342,017

350.1%

1.8%

(145,377)

Dominion Diamond Corp

570,855

255,006

44.7%

1,983,980

334.4%

-0.4%

(166,547)

Dundee Precious Metals Inc

279,489

76,400

27.3%

1,011,163

351.0%

-0.2%

(82,836)

Eldorado Gold Corp

432,727

149,133

34.5%

6,981,673

1554.4%

0.8%

(502,849)

Endeavour Mining Corp

673,469

232,020

34.5%

1,787,635

293.6%

4.8%

(47,207)

First Majestic Silver Corp First Quantum Minerals Ltd

278,077

107,405

38.6%

970,709

364.4%

2.0%

(57,367)

2,673,000

965,000

36.1%

18,622,300

693.6%

1.1%

(1,280,534)

Fortuna Silver Mines Inc

210,255

82,059

39.0%

477,991

265.5%

6.6%

(1,463)

Franco-Nevada Corp

610,200

480,300

78.7%

4,320,620

754.8%

3.4%

(190,775)

3,510,000

1,236,000

35.2%

28,356,095

810.3%

0.6%

(2,109,488)

221,290

23,214

10.5%

545,031

262.6%

0.3%

(42,072)

1,128,678

468,910

41.5%

4,580,783

406.5%

2.8%

(239,131)

987,100

303,500

30.7%

4,544,397

464.3%

0.7%

(333,552)

Kinross Gold Corp

3,472,000

1,113,400

32.1%

17,271,300

499.8%

0.8%

(1,242,279)

Lundin Mining Corp

1,545,591

588,076

38.0%

7,404,153

455.5%

1.6%

(477,425)

Nevsun Resources Ltd

230,705

114,237

49.5%

1,076,407

527.9%

3.8%

(40,161)

New Gold Inc

683,800

276,900

40.5%

4,598,705

689.9%

0.3%

(351,921)

OceanaGold Corp

628,634

303,752

48.3%

1,747,763

305.5%

6.4%

(16,737)

Pan American Silver Corp

774,775

281,379

36.3%

2,705,339

357.0%

4.5%

(92,359)

4,456,000

1,168,000

26.2%

17,029,225

384.8%

2.1%

(1,007,588)

Goldcorp Inc Golden Star Resources Ltd Hudbay Minerals Inc IAMGOLD Corp

Potash Corporation of Saskatchewan Inc Primero Mining Corp

219,176

39,214

17.9%

1,103,202

493.3%

-1.7%

(106,995)

Semafo Inc

300,483

147,322

49.0%

823,856

292.2%

5.9%

(14,159)

Silver Standard Resources Inc

490,986

199,223

40.6%

751,957

210.4%

8.9%

32,134

Tahoe Resources Inc

784,503

370,340

47.2%

2,590,613

397.7%

5.8%

(25,548)

9,300,000

3,165,000

34.0%

36,907,162

400.2%

3.6%

(1,617,573)

268,850

105,381

39.2%

757,673

303.8%

5.5%

(15,450)

Teck Resources Ltd Teranga Gold Corp Torex Gold Resources Inc Turquoise Hill Resources Ltd Wheaton Precious Metals Corp Yamana Gold Inc

312,505

161,576

51.7%

1,117,532

370.9%

6.5%

(13,798)

1,203,282

437,836

36.4%

10,324,847

1033.2%

0.1%

(808,861)

891,557

603,636

67.7%

6,248,162

732.9%

3.4%

(279,366)

1,787,700

638,500

35.7%

11,834,372

655.5%

1.0%

(825,700)

Industry Median

36.3%

400.2%

2.1%

TSX Industrials Median

32.8%

259.9%

3.4%

AUGUST 2017

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VA LU E M A NAG EMENT FIGURE 8 mance improvement program Barrick Gold Corporation driving value creation and share Economic Profit and Share Price price movement at the margin.

2,000 60.00 This connection between the 1,500 periodic creation of shareholder 50.00 1,000 value, as represented by economic 500 profit, and the generation of share40.00 0 holder wealth, as represented by -500 enterprise value and share price, 30.00 -1,000 means that companies can make -1,500 20.00 use of economic profit for decision -2,000 making with a high degree of con10.00 -2,500 fidence. In essence, all economic -3,000 business decisions are made in the -3,500 0.00 interest of driving economic profit 2008 2009 2010 2011 2012 2013 2014 2015 2016 upwards over time, obviously with n Economic Profit, US$MM n Share Price (US$) the requirement that a business be managed in a responsible and ethical manner. Linking managerial incentive compensation to the improvement in tance of getting the design of a business Mack Ferguson is a managing partner at economic profit ensures that capital invest- management system right. Given that you Arche Value Management. He has more ment is managed throughout the business, generally get what you pay for, focusing than 25 years of professional consulting as unwise capital spending would then be management on the delivery of economic experience in applied corporate finance costly to shareholders and managers alike. profit is the surest path towards delivering and business economics. He can be reached Recognizing that what gets measured shareholder value from within Canada’s at mferguson@archevaluemanagement.com or 416-848-7794. gets managed clearly illustrates the impor- mining industry.

CMJ

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2017-07-26 1:55 PM

NEW

MINING TECHNOLOGY NEW TOOLS OF THE TRADE P54 MAESTRO DIGITAL MINE LAUNCHES PLEXUS POWERNET P56 MINRAIL DEVELOPS A NEW ANGLE ON MINING

53_CMJ August2017_new tech cover.indd 53

2017-07-26 1:56 PM

N E W MI N I NG T EC H NOLOG Y

BRINGING THE DIGITAL REVOLUTION

underground Maestro Digital Mine unveils communication network for “the last mile”

By Alisha Hiyate

T

he nascent digital revolution in mining presents a special challenge for underground mines.

Not only do they have questions about which technologies to invest in and how to best make use of the burgeoning amount of data collected by their machinery, but they also have a big technical hurdle to contend with.

Most underground mines have a reliable communication network from level to level in the form of fiber optic cable that reaches down to an electrical sub-station on each level.

But fiber optic isn’t well suited to the “last mile” – the area between the sub-station and the active mining face, which is where miners really need real-time data and connectivity to make use of digital technologies such as remote drilling, and autonomous hauling.

“Most of the mines now have fiber right to each level, but they just can’t take it out towards the face affordably, reliably and quick enough to support operations,” says Michael Gibbons, vice-president of sales and marketing at Sudbury, Ont.-based Maestro Digital Mine.

A full fiber optic based system is expensive and the cable can be easily damaged by either blast concussion or mobile equipment.

The initial installation or repair requires a highly trained specialist.

To get around this hurdle, Maestro has designed and manufactured a solution in its Plexus PowerNet – a network that uses standard copper coaxial cable to transmit both power and gigabit data. Copper is not only less expensive than fiber optic and easier to install and repair, it’s also more resistant to the blasting environment, Gribbons says.

The challenge in getting data back and forth from the mine face

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has always been the media or the “highway” that data can travel on.

“What we’ve developed is a highway that is quicker to install, less expensive and does not require highly skilled labour – that’s really the whole crux of it. It can be fully installed by any electrician,” Gribbons says.

The Plexus PowerNet can provide power and data from a substation to an end point that is 1-2 km away, a distance that Gribbons says is adequate in almost all the applications Maestro has seen so far.

At presstime in July, Maestro’s Plexus PowerNet was being tested at Barrick Gold’s Cortez mine in Nevada – the flagship mine for the gold major’s digital reinvention, announced last September. The Plexus PowerNet is also being tested with HardLine’s autonomous equipment at the NORCAT test mine in Sudbury. Both tests are expected to be complete by the end of August.

So far, the system has performed well in testing, and Maestro is further enhancing both software and hardware based on comments and suggestions from the top ten global mining companies.

Maestro already has orders from several large mining companies, and by the end of the year, Gribbons expects that up to a dozen companies will have installed the technology on one or two levels to try it out.

The technology

Underground mining communication networks and companies have been proliferating to help the mining industry make use of new technologies. However, Maestro isn’t competing with the suppliers of fiber optic or wireless infrastructure.

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2017-07-26 1:57 PM

Maestro Digital Mine’s founders, David Ballantyne, vice-president of development and technology and Michael Gribbons, vice-president of sales and marketing, with the first Plexus device. CREDIT: MAESTRO DIGITAL MINE

The company doesn’t manufacturer wireless devices – just the infrastructure that wireless access points (WAPs) could be plugged into for power and data.

“This would be used in conjunction with wireless access points, so our system is the media that anything can be plugged into, whether it’s an IP camera, Cisco WAPs, VoIP phone, PLC etc.,” Gribbons says. “Our device will provide power to the WAP and any Power over Ethernet (PoE) data connection point. Everybody else would have to bring fiber and power to it.”

The system is totally “agnostic,” meaning it works with any company’s hardware.

While the Plexus is about the half the cost of fiber optic system, (and installation is about 70% less because specialists or expensive connectors are not required), the system is not meant to replace fiber altogether.

“Fiber has its application in an underground mine – there’s areas where it makes sense to deploy fiber so the solution really is from the sub-station out – that’s what we designed it for,” Gribbons says.

The network can also be installed outwards from either a level network switch or directly from the fiber patch panel.

The heart of the network are the Plexus PowerNet nodes, each of which has four PoE+ ports and provides power the wireless access points or end point devices. The nodes also have a USB port that can act as a serial port or allow an easy exchange of the node configuration files. Simple port diagnostics on the devices make it easy to see if power and data are flowing.

The number of nodes required depends on the application.

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54-55_CMJ August2017_Maestro.indd 55

“If the company wants to do remote operated rock breaking or drilling, they would only require a node at the rock breaker or drill and one at the starting point or network switch location,” Gribbons says.

“However, if the client is attempting to do autonomous operation of haulage trucks, they would need more. Each node would provide power to three WAPs and a mesh network would allow the autonomous vehicle to operate.”

About 300-500 WAPs would be required in an advanced mine, meaning 100 to 150 nodes would be needed to power them.

Rebranding

Formerly known as Maestro Mine Ventilation, the company rebranded itself in May, when it announced the launch of Plexus PowerNet. The new name better reflects the company’s high-tech offerings, Gribbons says: “We’re in the digital business and have been since Day One.” Founded by Gribbons and David Ballantyne, Maestro’s vice-president of development and technology, in late 2011, Maestro already has around 80 clients in more than a dozen countries using its other inventions, such as the Vigilante AQS Air Quality Station.

Engineers by training, Gribbons and Ballantyne only put the idea for the Plexus PowerNet on paper late last fall, after seeing the need for such a product among their clients.

“We have progressed quickly, but everything that we’ve done so far has been very fast!” Gribbons says.

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N E W MI N I NG T EC H NOLOG Y

A MATTER OF DEGREE Minrail’s new mining system aims at tough-to-mine shallow-angle deposits

By Alisha Hiyate

M

ining shallow-angle deposits – those that lie at between 10° and 45°– has long been a perplexing problem in the mining industry.

While the angle is too steep for mobile equipment on wheels, it’s not steep enough for muck flow. Dilution is hard to control and it can be awkward and difficult to secure the roof with bolts or screens. Typically, the angle results in slow development, low productivity and difficult work flow.

“Mining in these conditions has always been a nightmare from an engineering point of view,” says Marc Beauvais, a mining engineer with over 25 years of experience and the president and CEO of Minrail. “Gravity is working against you in this situation.”

The “nightmare” is one that’s haunted Beauvais since 2003.

Then working for Aur Resources as a consultant, Beauvais was assigned to investigate mine design for the company’s Duck Pond project in Newfoundland.

The deposit, which varied between 5 and 25 metres in thickness, lay at a 38° angle. Three different mining methods and numerous access drifts were required to access the ore.

“I woke up in the middle of the night and I said why not try to find a way to go in at the angle that the orebody is actually resting on,” Marc Beauvais. he said. “That’s literally what happened.”

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After investigating existing technologies and ideas, Beauvais found inspiration in a new mining method from a late-1990s R&D project initiated by Société de Recherche et Développement Minier and the Centre de Recherche Industrielle du Québec (CRIQ), tested at the Sigma mine, and then abandoned due to a low gold price. Beauvais spent seven or eight years developing the mining technique and enhancing the equipment before founding Minrail in 2012.

Cousin of the Alimak

Using SAMS, ramp development is the same as conventional mining; it’s stope development that is different.

Minrail’s Shallow-Angle Mining System (SAMS) gets around the difficulties traditional mining techniques have with shallowangle deposits by relying on a central railing that attaches to the roof. The double railing forms the backbone of the system: instead of navigating the slope of the ground with wheels, all the equipment is suspended from the rail.

Beauvais says the technology is a cousin of the Alimak Climber, developed in the 1950s, which similarly works on a monorail mounted on the ceiling. However, the Alimak is mostly for driving raises that are vertical – at 90° down to 50°. “In our case, we go from 10 degrees up to 45 degrees – so this is a range where nobody goes at all.”

Minrail estimates that a two-person crew that’s familiar with the WWW.CANADIANMININGJOURNAL.COM

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Minrail’s shallow-angle mining system (SAMS).

CREDIT: MINRAIL

“We found a few glitches here and there, but overall, everything is working as expected. We have to enhance a few things because this is the very first time this equipment is being tested underground, but we’re quite happy with the results.”

An independent report by CanmetMines, part of Natural Resources Canada, outlining the test results will be published sometime in August. Canmet representatives spent time observing SAMS in use and interviewed mine workers about their experience using the system. The results will be presented by Beauvais at the Quebec Mines conference in Quebec City in November.

Productivity boost

equipment can install the system within 10 hours. The first time it was actually set up in an underground mine (Richmont Mines’ Beaufor), it took about 20 hours with three people to install the railing and mount the equipment.

“This is a big achievement for us, knowing that time is money,” Beauvais says. “If you are going to spend two weeks installing a piece of equipment, right there you’re losing the advantage compared to other techniques.”

Once installed, the system can be operated by one person and can develop stopes that are 12 to 15 metres wide and a minimum of 1.2 metres high.

All of the equipment is electric and modular. This includes the telescopic platform from which the miner controls the system.

SAMS is designed for orebodies up to 6 metres thick to be mined in one pass., Mining cost is in direct relationship with the orebody thickness; as the orebody gets thicker, it gets cheaper to use.

“It’s because the size of the draise is basically the same for an orebody that’s 1.5 metres thick or the one that is 6 metres thick,” Beauvais explains. “So it’s the same preparation work, it’s the same installation time, the same drifting period time. But if you have a stope that’s 15,000 tonnes (of ore) compared to 3,000 tonnes, all the preparation work and cost is diluted.”

Much of the equipment is remotely controlled, and in the future Beauvais expects to automate tasks as well.

Real-mine conditions

Since 2012, Minrail has spent more than $2.3 million investing in the mining method – it’s now patented in Canada and in the U.S. The company has built prototypes of the equipment, and just this year, SAMS was tested for the first time in an actual mine – Beaufor in Val-d’Or, Que. The mining method at Beaufor is currently long-hole and room and pillar, but Beauvais is hopeful that Richmont could adopt SAMS once the technology is commercial.

A first phase of testing is complete and a second phase could start this summer.

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When using conventional mining methods on a shallow-angle deposit, it’s difficult to control dilution and secure the roof, Beauvais says.

“Our mining method is highly selective and allows you at any moment to control and keep the integrity of the rock surface to be safe and secure,” he says.

SAMS mechanizes much of the work that in traditional underground mining is done by hand – using long tom drills instead of handheld jack leg drills, for example.

So although the need to install infrastructure adds to development time initially, it reduces development time overall because of its greater productivity, Beauvais says.

SAMS can reduce the underground development that’s necessary to access ore by 40-50%. (A 2012 mine plan for Auriga Gold’s [now Minnova Corp.] Puffy Lake deposit in Manitoba estimated that SAMS would reduce development from 42,000 metres to 26,000 metres.)

While conventional mining methods require vertical separation between levels at every 10-15 to metres, with SAMS, levels are only required every 50 to 60 metres. That means less development in waste rock and a reduction in costs.

Gaining traction

There are several projects in Canada that could benefit from the technology – perhaps half a dozen are assessing their properties and reviewing their mine plans, Beauvais says.

“A lot of deposits have these features of being very difficult to mine because of the resting angle of the deposit.”

Beauvais says mining companies are also having more and more trouble finding and recruiting miners that are capable of “old fashioned” labour intensive mining techniques.

Minrail has met with several companies interested in SAMS and has plans to meet with more.

One thing that has helped get the word out about SAMS was Minrail’s selection as one of 11 semi-finalists chosen out of more than 150 entries at Goldcorp and Integra Gold’s Disrupt Mining competition in March.

“We are very enthusiastic and think that in 2018, we will have something to show to the public,” he says. “We are at the infancy of this technology.”

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ADVERTORIAL

BME’S SUCCESS TAKES IT GLOBAL

S

outh Africa-based blasting company BME has built a solid reputation and growing footprint in recent decades with its highquality emulsion explosives and its exciting range of electronic detonation technologies; now has Canada in its sights.

Joseph Keenan, Managing Director, BME

As the largest supplier of emulsion explosives to South Africa’s opencast mining sector, BME has established a significant presence in various parts of Africa – and is also now extending its products and services into underground mining.

According to BME’s managing director, Joe Keenan, the continent will remain the core focus area for the business, but it has identified a number of new international markets for expansion as a result of customer interest; these included Canada , Australia (where BME already has substantial presence), and the western coast of South America.

The bid to acquire Canada-based Nordex Explosives last year was a demonstration of BME’s intentions, and it is actively pursuing other opportunities in the country.

“We’re hopeful to have a business with production capacity in Canada in the near future,” said Keenan. “An indicator of our commitment has been the finalisation last year of our product registration and licensing agreements for North America.

Following our recent company and product registration in Colombia, we also finalised our first purchase order to the South American region.”

Keenan said that many of BME’s Canadian, Australian and American clients are expanding their African footprints, which bodes well for the company’s ability to prove itself in Africa as part of its reputation-building efforts in other parts of the world. Blasting contracts as far afield as Singapore have already demonstrated the company’s expertise and capacity; BME even supplied emulsion explosive to the remote island of St Helena as part of the airport construction project.

Permanent innovation BME’s permanent state of innovation recently led BME to formally establish a Blasting Science unit which is dedicated to applying its hi-tech know-how to solutions in the field. Its application of AXXIS™ electronic detonators recently allowed BME to earn the world record for the largest ‘electronic blast’ to date – at an Australian coal mine.

Last year, Daunia opencast coal mine in the north-eastern state of Queensland, Australia fired 5,665 detonators in 2,683 blastholes using its in-house AXXIS™ digital detonation system from BME. Having already set the industry precision-blasting benchmark with its AXXIS™ system, BME has now added a Centralised Blasting System (CBS) to the AXXIS™ package. The system allows mines to plan and initiate simultaneous underground blasts from surface, and now facilitates real-time communication of blast-related data and reports to and from the workings.

BME has leveraged the power of mobile technology and internet ‘cloud’ storage to develop mobile applications for monitoring and analysing blasting activities. These applications, such as Blastlog, are stepping beyond the pen and paper methods currently common on mine sites – to bring real-time reports and notifications to decisionmakers in time to improve their decisions.

The system allows data to be captured on mobile devices in the field, and to be presented to end-users on a mobile platform that renders the data immediately useful.

From opencast to underground Making the leap opencast blasting to an optimal underground solution has involved innovations such as a vertical pipeline from surface to underground workings, the design of underground storage and delivery systems, and the development of light-weight charging units to charge blastholes in narrow-reef stopes.

In conjunction with underground gold miner Gold One, BME recently engineered the world’s deepest vertical emulsion pipeline, and worked with Gold One to implement a range of systems to

About BME – www.bme.co.za: BME is the leading supplier of explosives and services to the African mining, quarrying and construction industries. Focusing on safety, supply security and value adding technical services, BME strives to remain at the forefront of technology by regularly participating in the research and trials of new blasting techniques and products, as well as attending and presenting at technical conferences worldwide. BME has operations in over 23 countries including Australia, Singapore, Indonesia, Columbia and 20 countries in Africa.

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A controlled blast using BME’s AXXIS initiation system

deploy emulsion explosives across the mine’s work-faces at its Modder East mine east of Johannesburg.

The use of emulsions at Modder East has drastically streamlined the handling BME’s application of AXXIS™ electronic detonators recently allowed BME to earn of explosives on the the world record for the largest ‘electronic mine, laying the way for blast’ to date efficiency improvements on various fronts. As emulsions are not classified – under most country’s regulations – as explosives until they are sensitised in the blasthole, they can be transported more safely and without disrupting mine operations. Neither do they consume any shaft time, freeing up this valuable facility for other vital functions.

Capacity and quality BME’s expansion has been made possible by evolving its processes and building its capacity to keep up with demand, while enhancing the final manufactured quality of its products. Last year, the company commissioned a world-class, world-scale automated emulsion facility at its Dryden premises in Mpumalanga province east of Johannesburg. It also installed two automated assembly AUGUST 2017

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machines for non-electric detonators at its Losberg facility in North West province, to improve the quality and predictably of its non-electric products. The company has subsequently produced a million units without a customer complaint.

The success generated as a result of these new automated processes has resulted in the installation of a similar automated machine for the company’s AXXIS electronic product line with another one on order.

“We are investing in our future to deliver greater capacity within the organisation with better standards and quality to accomplish a greater presence and better value-add,” said Keenan.

By June this year, BME will have tripled the output of its electronic detonators, and by September it will be producing four times more non-electric detonators.

“We have been successful in improving the quality of our products through the implementation of innovative systems like our proprietary automated production lines,” he said. “To be part of a long-term solution for our customers, we need to provide the same high quality of blast everywhere, no matter how far the client is from BME’s nerve centre in Gauteng.” n CANADIAN MINING JOURNAL

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SPONSORED CONTENT

Many stages of solvent extraction are involved to separate high purity HREE’s into individual elements.

S

SRC PROCESSES TO RECOVER AND SEPARATE RARE EARTH ELEMENTS

askatchewan’s uranium deposits may soon be recognized as a significant source of rare earth elements (REEs), due to new technologies that the Saskatchewan Research Council (SRC) is developing. High grade uranium deposits in Saskatchewan carry significant amounts of REEs and particularly heavy REEs which are more financially valuable than the light REEs. With no feasible way to extract REEs from uranium ores, these valuable minerals which remain in solution after recovery of the uranium are currently sent into the waste stream at mine sites, disposing of significant potential value to mining companies and the Saskatchewan economy.

While they are typically used in small quantities, REEs have a wide range of applications, including hybrid and electric cars, plasma screens, computers, wind power generators, permanent magnets, medical devices and aerospace applications especially for defense systems such as jet fighters.

The demand and value for REEs has increased over the past number of years, particularly for heavy REEs (HREE). There are very few companies outside of China that mine them, which produces 85 to 95 per cent of the world’s supply of REEs. However, over the past decade China has been exporting less to facilitate their own industrial needs. It is expected that these factors will contribute to a shortage of some critical REEs, and therefore recovery and separation of REEs from secondary

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sources, such as uranium, may be a cost-effective way to balance and secure the supply.

SRC has expertise in developing and commercializing REE recovery and separation technologies. Most recently, SRC has developed a REE separation pilot plant that has been built for this specific need, especially for separating HREEs. This plant involves many stages of solvent extraction to separate these high purity HREEs into their more valuable individual elements.

The next step for SRC is to develop a unique recovery technology that will extract the REEs directly from the uranium by-product solution at the mine site – all without negatively impacting uranium processing.

These REE technologies developed by SRC will help mining companies create a secondary product, increase their revenues, create security of REE supply for the technology industry, reduce the shortage of heavy REEs in the market and even benefit the environment by removing elements from the waste stream.

As the electronics, defence, aerospace and renewable energy industries continue to increase their consumption of REEs, Saskatchewan uranium deposits and SRC’s technology have the potential to provide a significant source and improve the security of supply of REEs for those industries. n

WWW.CANADIANMININGJOURNAL.COM

2017-07-26 12:48 PM

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2017-07-26 7/11/17 10:45 12:44AM PM

SPONSORED CONTENT

DOPPELMAYR’S ROPECON

®

Automatic conveying system helps to improve safety in bulk handling

S

afety in Bulk Handling comprises many aspects: the commodity may safely and reliably reach its destination, the staff operating a transport system work in a safe environment or the health of people living or working in the immediate vicinity are not affected by the transport system in use.

While being a cost-efficient solution, RopeCon® also has an eye on various aspects of safety. Transporting the goods or material safely to the place of its destination is, of course, one of the main goals.

But it is also important to keep the operator in mind, striving to allow for a safe working environment and to reduce the need for maintenance tasks as a whole. A third aspect which adds benefits to the product is the minimum impact the system has on dust or noise emissions.

This continuous bulk material and unit load handling conveyor combines the benefits of well proven ropeway technology with those of a conventional conveyor belt (hence the name RopeCon®).

The system operates off the ground, thus minimizing space requirements and easily crossing buildings, roads, rivers, valleys or other obstacles. The perfect adaptation of the conveyor to the natural terrain allows for a straight conveying line with only a minimum of line structures.

The controls of the RopeCon® system can be integrated in the main controls of a logistics chain and the system works fully automatically. Furthermore, as the wheel sets are bolted to the belt, practically all moving items constantly return through the stations and can be easily maintained there. Thus, there is no need to go out into windy, cold or rainy weather to perform maintenance tasks.

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Works can be carried out in a safe workshop environment. In case the line has to be inspected, the system offers an inspection trolley, which travels along the top strand of track ropes. This system can be used to reach every point of the line easily and safely.

The implementation of the installation requires only a very narrow line corridor, even when installed in difficult terrain or in an area with already existing infrastructure. It can cross roads or buildings and does not interfere with truck traffic. Furthermore, used as an alternative to truck traffic, it can improve safety, especially where roads are narrow and winding and road conditions are often icy.

When applied as an alternative to truck traffic the use of this conveyor also allows to reduce CO2 and fine dust emissions to a minimum. A very low noise emission along the line of only 55 dbA at a distance of 1 m would further benefit the health of people living close to the conveying route.

Doppelmayr Transport Technology GmbH is a 100% subsidiary of the international Doppelmayr Group with headquarters in Wolfurt, Austria. Within the group, Doppelmayr Transport Technology GmbH is the expert in transport systems and specialises in a wide range of transport solutions for different materials and bulk. Doppelmayr is the leader and a pioneer in ropeway engineering and, apart from material transport systems, designs and manufactures also other products such as passenger ropeway systems for summer and winter tourism or urban transport, rope-hauled automated people movers like the ones at Toronto, San Francisco and Mexico City airport and fully automated high bay warehousing systems. n

2017-07-26 12:49 PM

RopeCon® The Innovation in Bulk Material Handling Wherever bulk material needs to go – across impassable terrain, rivers, highways and buildings – RopeCon® delivers without a hitch!

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CMJ August2017_Ad pages.indd 63

2017-07-26 12:44 PM

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R E MOT E S I T E ST RU C T U RES

Cutlines.

CREDIT: XXXXX

ELEVATING BUILDING QUALITY LEGACY BUILDS A TRUCK MAINTENANCE SHOP AT A REMOTE CHILEAN MINE

E

ven with highly experienced workers and the most sophisticated equipment, mining operations are often difficult to tackle simply because of their unusually remote locations. In other words, the actual function of mining is one thing, but providing the proper infrastructure and support to make it possible is quite another.

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Located in the Andes Mountains about 65 km northeast of Santiago, Chile, the Los Bronces copper mine is one of the largest copper reserves in the country. It is also very well known for its many logistical challenges, due to the combination of extreme altitude, rugged terrain, and even occasional avalanches that characterize its environment.

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Legacy Building Solutions built a storage and maintenance shop at the remote Los Bronces mine in the Chilean Andes.

CREDIT: LEGACY BUILDING SOLUTIONS

This tough landscape was a big enough factor that mine operator Anglo American Sur decided to add a shop specifically dedicated to storage and maintenance of a single CAT 975F off-highway mining dump truck.

Mining companies frequently utilize fabric structures when adding permanent or temporary facilities to their operations, due to the building style’s cost-effectiveness and ease of installation.

In this instance, due to the building’s proposed location in a fully exposed area at the base of a mountain – a spot that always had high potential for harsh weather conditions – Anglo American would need look beyond typical building offerings and find a custom solution to meet its demands.

Legacy Building Solutions, one of the industry’s leading designers and constructors of fabric buildings, was contracted for the job. Among the advantages provided by Legacy was the ability to apply a tensile fabric membrane to a conventional structural steel I-beam frame.

This rigid-frame engineering concept – first introduced by Legacy about seven years ago – not only provides far more strength than the framing employed by traditional fabric buildings, but also it allows the structure to be customized to the exact dimensions required by the customer, down to the centimetre. This principle applies to any size building, from the Los Bronces truck shop to massive mineral storage facilities in Canada and the U.S. Measuring 20.1 by 25 metres with a peak clearance of 14.75 metres to accommodate the precise measurements of the CAT mining truck, the building frame was designed to support an impressive snow load of 1,200 kg/m2 (246 psf) and withstand winds up to 120 km/h. Built with a 7/12 roof slope, the structure 66 |

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also meets seismic D parameters and all other required design codes.

To further counter the weather conditions, as well as to enhance safety by resisting any accidental damage from manoeuvring the mining truck or other vehicles, the building was equipped with a TNR rubber rolling door. This overhead door measured 11 by 8.5 metres and was reinforced with additional custom framing. A small service door for personnel was included as well.

Featuring 15-ounce flame-retardant polyethylene fabric cladding, the enclosed structure was ventilated by mesh soffit that allows fresh air to enter the interior while keeping debris and weather out. Two Schaefer RV-3000 peak-mounted passive vents help exhaust and hot air escape out the roof of the structure, thereby maintaining a comfortable interior for anyone working inside.

The polyethylene roof offers a substantial level of translucency, allowing natural daylight to help illuminate the inside of the building. The fabric’s properties also help keep the building interior cooler during the summer months and warmer in the winter.

Beyond the precise dimensions and other customized building elements, the structure was afforded further operational advantages by its solid steel beam design. Unlike the hollow-tube, open web truss framing historically used for fabric buildings, Legacy’s solid structural steel beams are not vulnerable to unseen corrosion originating inside a tube. Additionally, all building steel, components and hardware utilized on the mining truck shop were primer coated to resist corrosive elements.

The solid frame structure also provided the shop with straight sidewalls, as opposed to the curved wall designed normally associated with older style fabric buildings that limits storage space or use of equipment along the walls. In effect, the straight sidewalls allow workers to maximize the entire footprint of the building, from the 9-metre inside eave clearance inward.

All building materials were shipped in 12-metre cube containers from Legacy’s headquarters, allowing for simple packaging and effective transport to the remote jobsite. Legacy sent a technical representative to oversee local crews during building construction.

Despite the challenges of working at a high elevation of more than 4,200 metres and often in snowy conditions, the building was erected within 40 days after the foundation was completed.

Remote mining locations will always present substantial challenges. But with the right support solutions – especially those that can be deployed in a timely fashion – companies like Anglo American Sur can tackle those problems head on – and get back to the primary task at hand.

CMJ This article was provided by Legacy Building Solutions (www.legacybuildingsolutions.com).

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MegaDome explains

WHY FABRIC BUILDINGS MAKE SENSE FOR MINE SITES O

nce the prospecting, exploration, discovery and advanced exploration stages of a project are completed, it’s time for development and construction. At this point, important investments have been made and the site needs to be prepared for the exploitation phase. Fabric buildings offer a cost-efficient and flexible solution for mining sites. Compared to conventional buildings, they are quickly installed, can be easily delivered in remote regions and generally come with a wide range of foundations that can be adapted to all kinds of grounds.

Installation of an 80- by 300-ft. building at the Gahcho Kué diamond project in the Northwest Territories.

CREDIT: MEGADOME

Adapted to remote locations

Mining sites are often located in far or isolated regions that are difficult to access. The first challenge is to find an efficient way to deliver the materials and structure for quick installation. At MegaDome, our in-house engineering team has designed buildings that can fit entirely in one container. This feature turned out to be very useful for the Gahcho Kué mining project, a diamond mine situated on an island to the north east of Yellowknife. We delivered a building to the site on an ice road that is only accessible two months a year. Installation of the 80 x 300-ft. fabric building only took six to eight weeks to complete.

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Remote sites are often located on different kinds of grounds, which can complicate the installation of buildings. Our team of experts has developed a wide range of foundations that can adapt to all kinds of grounds, the most popular of which are concrete blocks that require very little excavation. For one of our projects with De Beers, it was impossible to install foundations. Instead, we used beams and steel wire rods to secure the building. The result was a resounding success, with a solid structure resistant to all possible weather conditions.

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Clockwise from top left: An insulated truck maintenance building at Champion Iron Mines’ project; MegaDome buildings can be easily insulated; Installation of a building on containers at Canadian Royalties’ project; Fabric buildings can be used for storage. CREDIT: MEGADOME

Quick installation

One of our clients, Champion Iron Mines (formerly Consolidated Thompson), ordered four fabric buildings that were installed in a record time of 18 months. These were the first buildings to be installed on their construction site, which wasn’t initially cleared and was being used to store machinery and materials for the construction of their conventional buildings. Osisko Mining in Malartic also started developing its construction site with the installation of a MegaDome building, which they used to store equipment, machinery and materials. Once the construction phase was completed, they converted it into a storage building.

Fabric buildings can also be used as maintenance workshops or for drill-core storage.

Innovative engineering

Our designs ensure durable and resistant structures. They are built using structural steel subject to standard, with qualities such as fixed steel composition validated by mill testing. The structures are built with oval tubing, making them four times more resistant than round tubes and 1.5 times more resistant than rectangular tubes of similar dimensions. The lower section of the arches, which are the most exposed to dirt and corrosive elements, are always hot dipped after welding to ensure the protection of the 68 |

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steel and the durability of the structure. The entire structure and its components can also be hot dipped for extra protection.

The mining industry often faces operational challenges such as limited power supplies. To help with this issue, the structure is covered with a PowerShield membrane, designed with the most advanced polymer technology on the market. It lets natural light in easily all day, which is an essential feature where energy is scarce. This durable and waterproof membrane is assembled at our factory to ensure its quality.

Many mining sites face extreme weather conditions. Canadian Royalties’ project, for example, is located in the Far North where the company has to deal with extreme cold. They chose MegaDome buildings because they can be easily insulated and ensure a tempered room whatever the weather.

Our engineering team designs all of our buildings directly at our office, to boost efficiency and help meet the unique daily needs of our clients. Canadian Royalties, for example, had a very specific ask. They were looking to install one of their buildings on top of multiple containers. Our engineers adjusted the structure to make this possible, while ensuring the same safety and durability offered by all of our buildings. In addition, they made sure all industry norms and certifications were respected.

Our team of experts has a clear understanding of the challenges faced by the mining industry. With that in mind, we design innovative buildings that can adapt perfectly to mining industry environments. We begin every project by evaluating the client’s unique needs and goals, backed by the help of a dedicated expert that works with them in the field at every step, from concept to execution.

CMJ This article was supplied by MegaDome (www.megadomebuildings.com).

The company can be reached at info@harnois.com.

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2017-07-26 1:59 PM

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AUGUST 2017

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CSR & MINING

Corporate Human Rights Benchmark a useful indicator for miners – and stakeholders

By Michael Torrance

H

uman rights are increasingly a key topic of corporate social responsibility (CSR), of particular importance to the mining sector. Two new developments in this space point to the increased operationalization of human rights standards applicable to business, in particular the United Nations Guiding Principles on Business and Human Rights (UNGP).

The Corporate Human Rights Benchmark (CHRB) (www.corporatebenchmark.org) was developed in consultation with stakeholders from companies, governments and civil society organizations, as well as investors, academics and legal experts around the world.

The goal was to create the first open and public benchmark of corporate human rights performance globally. Focusing on agricultural products, apparel, and extractives, the CHRB uses publicly available information to determine a total score based on a number of themes. While the results are meant to be a good indicator of positive human rights management, they are not an absolute measure of performance, given that the scores are based only on publicly available information. The UNGP are a key standard for CHRB. Benchmarking measurements cover the following themes: w Governance and Policy Commitments (10% of overall score): This involves such things as policy commitments and board level accountability. Most companies scored points for having some level of policy commitments, but half the companies scored zero on board level accountability. Emerging practices include “respecting human rights defenders,” board discussions of human rights, and board incentives and performance management. w Embedding

Respect and Human Rights Due Diligence (25% of score): Assesses the extent to which a company’s policy

commitments are put into practice. Companies generally scored low across this theme. Emerging practices include incentives, monitoring and corrective actions, tracking and communicating.

w Remedies and Grievance Mechanisms (15% of score): Focuses on the extent to which a company provides a remedy when addressing actual adverse impacts on human rights. Most companies have some level of complaint mechanism, but do not involve users in the design of mechanisms. Emerging practices include publicly available procedures and commitment to nonretaliation. w Performance – Company Human Rights Practices (20% of score): Assesses companies based on use of living wages, aligning purchasing decisions with human rights, disclosing their supply 70 |

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The CHRB report is not meant to be a definitive measure of corporate human rights progress, but rather a useful indicator and relative benchmark of performance within an industry.

chain, and transparency and accountability. Risks highlighted are child labour, forced labour, interference with freedom of association, health and safety, water and sanitation, women’s rights, indigenous rights and working hours. w Performance – Responses to Serious Allegations (20% of score): Focuses only on response

to serious allegations, not the legitimacy of allegations. Most companies had few serious allegations.

Many companies responded publicly to allegations.

In 2017, a report card was released for 41 of the world’s largest extractives companies, including many Canadian companies.

The average score was 29.4% out of a possible 100%. The highest scoring companies were scored at 60-69%.

The CHRB states that no company achieves top scores across the board and scores are generally low, reflecting the fact that most companies are in the early stages of implementing the UNGP. Overall, the CHRB concludes that many companies have public commitments to human rights, but lack follow through on implementation. In particular, engagement with communities and workers is often lacking.

The CHRB report is not meant to be a definitive measure of corporate human rights progress, but rather a useful indicator and relative benchmark of performance within an industry. While companies have begun to consider human rights and to implement policies, the CHRB findings for 2017 suggest there is much progress to be made on following through on these commitments.

This now publicly available benchmarking is sure to be reviewed by financiers, investors, governments and other stakeholders.

Understanding its approach as a guide to improved human rights performance therefore presents opportunities for Canadian miners to stand out from their peers in future reports.

CMJ MICHAEL TORRANCE is a lawyer with Norton Rose Fulbright, Toronto.

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2017-07-26 2:03 PM

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