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CANADIANMINING
AUGUST 2018 VOL. 139, NO. 06
JOURNAL
CANADA’S TOP 40
19 Our annual ranking of Canada’s Top 40 miners.
29 Growing gold miner Kirkland Lake Gold moves up nine spots.
CMJ
FEATURES 16 Canada’s carbon pricing policies remain up in the air. 35 A cobalt streaming deal fuels Voisey’s Bay expansion. 37 A look at development projects that have landed mine financings
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this year.
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41 How Breaker Technology has built a global brand from small-town Ontario. 45 How mine costing, starting at an early stage, can help guide mineral project decisions.
NEW MINING TECHNOLOGY 50 Epiroc develops a line of continuous mining
machines for hard rock.
45
52 Orexplore’s 3-D core-scanning technology.
DEPARTMENTS 4 EDITORIAL | The Top 40 get back on track
6 COMMENTARY | Pat Poitevin of the Canadian Centre of Excellence for Anti-Corruption explains why mining companies need robust anti-corruption policies now more than ever. 8 CSR & MINING | Carolyn Burns and Jane Church of NetPositive describe how companies can better manage the social impacts of mine closure. 10 LAW | David Bursey, a partner at Bennett Jones, outlines the intergovernmental Canada Minerals and Metals Plan, expected to launch in 2019. 12 FAST NEWS | Updates from across the mining ecosystem. 62 UNEARTHING TRENDS | EY’s Iain Thompson on how miners can achieve a true business transformation through tapping digital technology.
www.canadianminingjournal.com AUGUST 2018
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50 ABOUT THE COVER
This month’s cover provided by SMS Equipment.
Coming in September Canadian Mining Journal’s Gold issue, plus a feature report on advances in heavy equipment.
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
CANADIAN MINING JOURNAL |
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FROM THE EDITOR
CANADIANMINING August 2018 Vol. 139 – No. 6
Back on track Alisha Hiyate
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ur annual feature on Canada’s Top 40 Miners, compiled by CMJ news editor Marilyn Scales, always provides a revealing snapshot of the state of the mining industry. This year’s list, based on reported financials from 2017, paints a picture of companies that are starting to finally reap the benefits of years of austerity. As opposed to last year’s list, when 15 companies reported lower revenues than the previous year, only two of our Top 40 this year reported shrinking revenue. Moreover, 16 companies in this year’s list expanded their net earnings compared to only four in last year’s list. There are several interesting standouts in this year’s Top 40, including two companies that made smart acquisitions that catapulted them up the list. Trevali Mining, for example, made its first appearance in the Top 40 after acquiring two zinc mines last year from Glencore and more than tripling its revenues. Similarly, Kirkland Lake Gold’s 2016 acquisition of Newmarket Gold and its high grade Fosterville mine in Australia helped it ascend our list nine spots. Iamgold was another standout – despite remaining unmoved at No. 16 on the list. The company boosted its net earnings by a whopping 825.8% on higher sales volumes, with a little help from the gold price. We’re pleased to see that his year’s Top 40 miners are a healthier bunch than last. Obviously, there’s more progress to be made, but it’s a positive trend we hope to see continued next year. There’s lots more data to sift through – just turn to Page 19 to begin. While Canada’s largest miners are getting back on track, the recent election of new Ontario Premier Doug Ford and his Conservative party in June points to regulatory uncertainty for mining companies around carbon pricing policies. Ford has pulled Ontario out of a cap-and-trade agreement struck with Quebec and California last year. It’s not yet clear what the financial consequences of that action will be, or what it will cost companies that have been buying and selling carbon credits in the program and had otherwise adjusted their business to the regime. In addition, with the federal government’s plan to impose carbon taxes next year on any provinces that haven’t instituted their own carbon pricing schemes, Ford is joining Saskatchewan Premier Scott Moe in challenging federal jurisdiction to impose carbon taxes. The federal Conservative party under leader Andrew Scheer is also strongly opposed to Ottawa’s imposition of carbon taxes on the provinces, and has pledged to come up with an alternate plan to meet carbon reduction targets set out under the Paris agreement that doesn’t involve a carbon tax. If the federal Liberals are voted out in the next election in October 2019, it’s possible that the idea will go away – at least temporarily. Regardless, mining companies, which have already started to measure and disclose their emissions, need to plan for the higher cost scenario. See Page 16 for some ideas on how. CMJ
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Legal deposit: National Library, Ottawa. Printed in Canada. All rights reserved. The contents of this magazine are protected by copyright and may be used only for your personal non-commercial purposes. All other rights are reserved and commercial use is prohibited. To make use of any of this material you must first obtain the permission of the owner of the copyright. For further information please contact Robert Seagraves at 416-510-6891. Subscriptions – Canada: $51.95 per year; $81.50 for two years. USA: US$64.95 per year. Foreign: US$77.95 per year. Single copies: Canada $10; USA and foreign: US$10. Canadian subscribers must add HST and Provincial tax where necessary. HST registration # 809744071RT001.
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COMMENTARY
Anti-corruption compliance: Adapting to the new business environment By Pat Poitevin
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hese days, it seems that not a week goes by without a headline trumpeting a new bribery and/or corruption scandal, or yet another example of unethical behaviour by an executive or politician. The leaks from the Panama and Paradise Papers have, along with increased reporting by company executives and political leaders, highlighted the seriousness of the corruption issue around the world. Corporate reputations are sullied, public confidence is eroded, and governments are changing regulations and laws in response. And the mining industry has had more than its share of corruptionrelated scandals over the past several years. Contrary to what many may think, however, the growing trend of exposing scandals is a good sign because it means that we are on the right path. The culture and environment that has allowed corruption to thrive for so many years is slowly beginning to change. Five or ten years ago, the headlines we see today didn’t exist. Corruption scandals were buried, and the individuals involved continued to operate with impunity and without fear of public disclosure, never mind prosecution. With aggressive global enforcement action and an increased demand for greater transparency and accountability, however, this is changing. A growing demand for ethics, compliance, and robust anti-corruption measures is changing the landscape in which business is conducted – across the globe. To be successful in this new business environment, public and private organizations must adapt and be able to demonstrate that their business practices and culture reflect the new reality. No controls, policies or compliance program can completely prevent unethical people from wrongdoing, but the absence of a robust anti-corruption compliance program seriously increases a company’s risk and liability. In addition, it can depreciate M&A and joint venture value, potentially damage a company’s brand, undermine and reduce trust and confidence, increase the potential for prosecution, and threaten sustainability. On the flip side, having such a program along with an ethical business culture can help a company detect and mitigate misconduct, and will markedly increase the chances authorities will go after individual wrongdoers instead of the company itself. A growing number of countries are enacting anti-corruption laws. Many countries have implemented or are considering “failure to prevent bribery” laws that put the legal onus on companies to have adequate anti-corruption measures (ex: UK Bribery Act Section 7). Others, such as the U.S., do not have specific “failure to prevent bribery” laws, but they still provide procedural and prosecutorial incentives and credits, under Deferred Prosecution 6 | CANADIAN
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Agreements (DPAs), for companies to implement an AntiBribery/Corruption (ABC) compliance program. In Canada, for instance, the government recently announced the introduction of Remediation Agreements (RAs) as its version of DPAs to deal with corruption and other financial crimes, including offences under the Corruption of Foreign Public Officials Act (CFPOA). The underlying premise of this approach is to motivate and incentivise companies to self-disclose, cooperate in the prosecution of individual wrongdoers, and be proactive in implementing robust ABC measures. The Canadian Extractive Sector Transparency Measures Act (ESTMA) and the Extractive Industry Transparency Initiative (EITI) highlight the industry-specific anti-corruption efforts being made by the government to tackle corruption and CSR issues. The Canadian mining industry is also taking steps to address these issues by working with governments to institute proactive and responsible business practices. The Canadian Mining Association’s Towards Sustainable Mining (TSM) initiative is the latest example of how the industry is demonstrating its commitment to improve the way business is conducted. The mining industry is particularly vulnerable to becoming entangled in bribery and corruption schemes in high-risk countries. At every stage of a mining project’s life cycle, contacts with foreign government officials are constant and numerous. This exposes individuals to potential opportunities for and pressure to take bribes and become involved in corruption. It is critical for mining companies to ensure they protect themselves from such risks through the implementation of robust ABC compliance measures. In today’s business environment, a growing number of businesses and government agencies are looking to mitigate their risk and exposure to bribery and corruption. Adopting ethical business practices that include having a robust compliance program in place is becoming a competitive business advantage. To find out more about ABC compliance programs, contact the Canadian Centre of Excellence for Anti-Corruption (CCEAC) at the University of Ottawa. CCEAC is an academically based platform that encourages the exchange and communication of best practices to help detect and deter corruption related issues. CCEAC offers ABC training and a toolbox that aggregates relevant information, links, best practices and tools CMJ to help industries implement ABC measures. PAT POITEVIN is a cofounder and senior advisor with the Canadian Centre of Excellence for Anti-Corruption
www.canadianminingjournal.com
2018-07-24 11:12 AM
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CSR & MINING
Managing the social impacts of mine closure By Carolyn Burns and Jane Church
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n the past several decades, mining companies and governments have greatly improved how mines are closed and rehabilitated from an environmental perspective. Over the same period, our expectations have changed for how we manage the social impacts of mining, including those felt during the closure period. The practice of managing closure-related social impacts is known in the industry as “social closure.” The social impacts of closure are the socioeconomic and cultural aspects of mine closure. They can be real or perceived and are distinct from the social impacts of construction and operations. Every site and community are different, and the changes brought by closure can be both positive and negative. The term ‘social closure’ is currently the most commonly used term to describe social aspects of mine closure. However, that term is increasingly being called into question for several reasons. It can be confusing and misleading: we aren’t talking about ‘closing’ the community; and we hopefully aren’t talking about ‘closing’ the relationship between the community and company or other stakeholders. Additionally, the social impacts of mining activities are never truly ‘closed.’ The presence of a mine will always change the local area in some way and after closure, things won’t go back to exactly how they were before. Increasingly the term ‘social transition to closure’ is being used as it more accurately describes the process of mine closure as being one of transition. Some of the common social impacts of closure are changes to the community’s economic structure (e.g. employment and business opportunities) and dynamics (e.g. demographic changes, the return of or departure of employees). Local emergency or health services may be affected if a company’s support is removed or as local government revenues are reduced. Environmental impacts of the mine on water or the land can be long lasting and impact future land access and use. Infrastructure can be removed or repurposed. Likewise, post-closure the land may be used or accessed in different ways. For example, it could be used for cultural practices, smaller scale resource extraction, renewable energy projects, or tourism activities. If done well, the process of mine closure can empower community structures and leaderships. Managing the social impacts of closure properly has many benefits. Companies and the mining industry will have a more
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Well-planned social closure leads to stronger local support throughout the life of mine because people feel their long-term concerns and objectives are being addressed. positive reputation, which can lead to support for mining activities from communities and governments alike. Well-planned social closure leads to stronger local support throughout the life of mine because people feel their long-term concerns and objectives are being addressed. Stakeholders and rightsholders are also then better prepared to manage the changes from closure and can benefit from the mine in new ways, such as through access and use of land to support cultural and economic endeavours. Managing the social impacts of closure properly helps the industry live up to our commitments and values of responsible environmental and social performance. There are still many questions about what the management of the social impacts of closure looks like in action. Those involved in social closure should focus on three core elements. Work Systematically. Having an integrated and transparent process to understand, plan and make decisions related to social closure is paramount. This can be achieved by hosting multi-stakeholder and multi-discipline working groups, integrating closure plans and future land use into mine site planning early on, and including the social impacts of closure in assessments and monitoring socio-economic changes throughout the life of mine. The costs of social closure must be budgeted and accounted for in plans and models. Working systematically also requires the use of social performance experts, people who understand how to identify and manage impacts and support positive engagement and collaboration. Partner and Collaborate. Partnering and collaborating means that all rightsholders and stakeholders keep the lines of communication about closure and mine planning open. There are often many unknowns and the future can be unclear, but companies, communities, and government must continuously
www.canadianminingjournal.com
2018-07-24 11:14 AM
communicate about mining activities, other economic activities in a region, major social changes or issues, and government plans. Support a long-term vision for the local area. It is a human
tendency to focus on short-term opportunities and issues. A vision helps extend that focus to consider long-term goals and objectives and set a path forward. Mining brings change, but mining is also finite and on their own mining operations cannot sustain development. A mine needs to fit into a broader vision for development for the area where the mine is located. A long-term vision may be articulated in a regional development plan or a community development agreement (often referred to in Canada as an Impact Benefit Agreement). Specific closure goals can be developed to articulate how to achieve this vision. Defining the goals should be led by the local community in partnership with the government and mining company. Closure goals may describe how: w Social programming can be maintained (e.g. health services, education support); w Economic activities can be diversified (e.g. training and skill
development, support for employees to transition to other industries); and w Changes to community structure and dynamics can be managed (e.g. support for employees who return from fly-in-flyout contracts). The earlier we start thinking about and planning for the social impacts of closure the more successful we will be. We are often afraid to talk too much about the future, especially early in the life of a mine. But having open and honest discussions with local rightsholders and stakeholders early, allows us to better manage relationships throughout the life of mine and into closure. That being said, it’s never too late to plan for the transition to closure and as a new generation of mining operations looks to closure it will become more important than ever. CMJ CAROLYN BURNS is director of operations at NetPositive, a non-profit that works with diverse stakeholders to help local communities see sustained positive outcomes from mining. JANE CHURCH is a co-founder and director of collaboration with NetPositive.
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CANADIAN MINING JOURNAL |9 2018-03-28 11:01 AM
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LAW
Intergovernmental plan aims to retain Canada’s leadership in mining By David Bursey, Simon Foxcraft, Sharon Singh and Charlotte Teal
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n August 2017, the federal, provincial and territorial mining ministers called for a Canadian Minerals and Metals Plan (CMMP). Expected to launch in 2019, the CMMP aims to enhance Canada’s competitiveness in the global mining industry and increase opportunities domestically and internationally. In March 2018, the Intergovernmental Working Group on the Mineral Industry released Mining Ideas for the Canadian Minerals and Metals Plan: A Discussion Paper. Throughout 2018, governments will consult with industry stakeholders, Indigenous partners, and the public. The paper notes that Canada’s position in the global mining industry is declining and government action is necessary to maintain its leadership role. Since the Whitehorse Mining Initiative was signed in 1994, Canada has enjoyed success as a global leader in mining both for its socially responsible and sustainable practices and for its ability to attract investment. In recent years, Canada’s share in global exploration spending has decreased and the number of mining projects and investment in the mining sector has declined. The industry faces numerous challenges, including: a complex, uncertain and changing regulatory environment; uncertain land access; increasing costs to get products to market; a lack of infrastructure in mineral-rich areas; fragmented research and innovation; and increased investment by competitor countries. Expected elements of the CMMP In the paper’s own words, the CMMP’s “aim is to encourage synergies and support existing provincial and territorial priorities, while bringing together resources from across Canada to address systemic challenges and take advantage of opportunities.” To continue growing Canada’s mining industry, the CMMP must “reflect today’s reality,” including issues such as climate change, Indigenous participation, sustainable development, and social acceptance. The Discussion Paper identifies six potential focus areas on which the various levels of government seek feedback: 1. Unlocking Canada’s resource potential by fostering mineral exploration and encouraging the development of infrastructure to address challenges to remote communities; 2. Fostering innovation, including the research, development and adoption of clean technologies and artificial intelligence; 3. Providing regulatory certainty and transparency and improving harmonization between regulators at all levels; 4. Realizing community benefits, including socio-economic 10 | CANADIAN
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benefits of exploration, and supporting a diverse workforce; the participation of Indigenous peoples, which will help build trust, provide opportunities, and advance reconciliation; and 6. Capitalizing on Canadian leadership in a global market, including attracting investment in projects, infrastructure and nnovation. 5. Advancing
Getting the CMMP right Strengthening the Canadian mining “brand” as a leader in best mining, technology, social and environmental practices is essential to attract capital investment that has many global options. Developing a coherent federal/provincial plan has great value since most of the current regulatory challenges stem from a conflicting government policy and regulation. Among the biggest challenges are: w CMMP champion. Coordinating the diverse interests of the participating governments requires a strong leader to champion the plan. Who will assume that role? w Regulatory certainty. The environmental review of projects must have a clear and efficient process and timeline. The regulatory burden during operation until decommissioning must also be clear. The current trend towards increasing regulation and taxes will constrain investment and innovation. w Reconciliation of Indigenous peoples’ interests. Government must lead reconciliation through broad policy including fiscal measures, and not shift the burden to project developers to reconcile interests project-by-project. w Public perception. Government can help increase mining literacy by communicating the value of mining in our economy and everyday life. w Infrastructure support. Mining relies on infrastructure to support the flow of goods and people. w Innovation and research support. Government can support the move to best practice, technology innovation and research both in industry and in academic institutions. Canada has a strong foundation to lead sustainable and responsible mining, but it must work hard to strengthen its brand. The CMMP is only one of many steps on the path. The CMJ steps to enact the plan will matter more. DAVID BURSEY is partner and co-head of Aboriginal Law at Bennett Jones; SIMON FOXCRAFT is partner; and SHARON G.K. SINGH and CHARLOTTE TEAL are associates.
www.canadianminingjournal.com
2018-07-24 11:15 AM
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FAST NEWS • SUSTAINABILITY |
Updates from across the mining ecosytem
Swedes look to revolutionize underground mining
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he mine of the future is carbon dioxide free, digitalized and autonomous. To set a new world standard for sustainable mining at great depth, LKAB, Epiroc, ABB, Combitech and AB Volvo have joined forces in a partnership and are starting a unique testbed in the ore fields of northern Sweden. The testbed, SUM (sustainable underground mining) will be created in LKAB’s underground mines in Kiruna and Malmberget and will also take the form of a virtual mine. Here, new technology will be developed and tested in a real mining environment to ensure that the Swedish mining industry can remain competitive and create jobs and growth, both locally in Norrbotten and nationally. Being globally competitive requires new control systems, new and improved mining equipment, as well as complex and efficient management systems that meet future demands for a sustainable industry. Reaching that goal will demand a new type of collaboration, a digital ecosystem in which the partners’ digital systems and operations are linked. “Sweden’s mining and minerals industry is competing to be the world’s most sustainable. Since sustainability require-
• CSR |
Epiroc’s Boomer M2C battery-powered face drilling rig, launched in 2017. CREDIT: EPIROC
ments and technology are now developing at a rapid pace, Swedish companies have to join forces to ensure that we can mine safely and sustainably in the future. That bodes well for a mining nation like Sweden,” said Mikael Damberg, minister for enterprise and innovation. After 2030, LKAB must be ready to mine at greater depth in the Kiruna and Malmberget mines. For this, one of Sweden’s biggest industrial investments ever, decisions will have to be made in the mid-2020s. To be able to realize the technology shift and reduce climate impact, LKAB, ABB, Epiroc, Combitech
and Volvo have joined forces to find solutions and set a new world standard for sustainable mining at great depth that would entail a major leap in technological development. Within the framework of the testbed the best means of building an efficient autonomous production system that is carbon dioxide free and has the highest conceivable level of safety will be studied. As the project will require significant investment, the partners are seeking collaboration with more suppliers, the Swedish state, research institutes and universities. CMJ
New global standard for responsible mining
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n June 28, the Initiative for Responsible Mining Assurance (IRMA) released the Standard for Responsible Mining, a precedent setting global certification program for industrial scale mine sites. With growing awareness and demand for ecologically and socially-responsible products, jewellers, electronics businesses, auto makers and others have sought assurances that the minerals they purchase are mined responsibly. The standard applies to individual mine sites, not mining companies. The Standard seeks to emulate for industrial scale mine sites what has been 12 | CANADIAN MINING JOURNAL
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done with certification programs in organic agriculture, responsible forestry and sustainable fisheries. The Standard for Responsible Mining reflects the input from over 100 companies, organizations and individuals worldwide and has support from leading companies like Anglo American, ArcelorMittal, Microsoft and Tiffany & Co. IRMA has also worked with mines and technical experts to conduct two field tests of the Standard for Responsible Mining to ground-truth the Standard through simulated mine audits in the United States and in Zimbabwe. Auditors
hired by IRMA reviewed company documentation, made first-hand observations at the mine sites, and conducted interviews with company representatives and other stakeholders to verify the requirements in the Standard are clear, practicable, and measurable. An online Responsible Mining Map is also available that will allow responsible producers and purchasers of minerals to demonstrate their commitment to a responsible minerals value chain and enable business relationships to develop. Learn more at www.ResponsibleMining. net/. CMJ www.canadianminingjournal.com
2018-07-24 11:18 AM
• ENVIRONMENT |
Terratec teams up with Vale to manage biosolids
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Terrapure worked with Vale Canada to pilot the program at the Copper Cliff tailings area near Sudbury. Vale had tried conventional methods to remediate inactive tailings sites in the past, but all had been costly with varying levels of success. By using biosolids, Vale was able to greatly offset conventional reclamation costs – which include extracting and transporting virgin soil from neighbouring land – and get results. Since first applying the biosolids in April 2014, Vale has observed a clear increase in volume and health of vegetation. Wildlife is also returning, including large flocks of Canada geese, Sandhill cranes, black bears and white tail deer. The project has diverted over 23,000 dry tonnes of biosolids from disposal, and 1.5 sq. km of mine impacted lands are now able to provide a natural habitat. The success of the Vale project has led others to request similar programs, such as the Kam Kotia reclamation site in Timmins (managed by the Ministry of
erratec Environmental, a division of Terrapure, has established a new, sustainable option for managing biosolids during winter months, when farmland application is prohibited and storage is complicated. Instead of disposing of a nutrient-rich resource through incineration or landfill, Terratec developed a program to apply biosolids to mine-impacted land for reclamation and revegetation. Terrapure and Vale have received the 2018 Exemplary Biosolids Management Award for the project from the Water Environment Association of Ontario. “The program is the first of its kind in Ontario, so we’re excited to see that it’s gaining momentum; the mining industry is now identifying biosolids as a key strategy in mine closure scenarios,” said Jeff Newman, director of business development at Terratec, calling the approach “a win-win. “Municipalities get an off-season biosolids management alternative, and mining companies get an effective tailings cover system.”
Vale’s Copper Cliff nickel operation in Sudbury, Ont. CREDIT: VALE
Northern Development and Mines). Terratec also partnered with Iamgold to complete a biosolids application program at its Chester mine site in 2017. To learn more, see www.TerrapureEnv.com. CMJ
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ENVIRONMENT
CARBON PRICING
CONFUSION Ontario’s move away from cap-and-trade clashes with federal goals and market trends
By David Godkin
E
verything was moving along nicely. Four provinces with carbon tax and/or cap-and-trade programs. Six others and the territories looking on in anticipation and yes, in some cases with deep foreboding at Ottawa’s plans for its own carbon pricing framework scheduled for legal launch this January. Everyone was paying attention. Then a fly in the ointment – a big one – fledgling Ontario premier Doug Ford announces on July 3 that the province will begin an immediate, “orderly wind-down of all programs funded out of cap-and-trade carbon tax revenues,” making it illegal “to purchase, sell, trade or otherwise deal with emission allowances and credits.” Never mind that this amounts to an aggregate of nearly $3 billion or that the Mining Association of Canada (MAC) endorses both cap-and-trade and a carbon tax as options. “It’s a waste of money,” Ford loudly opines and the program is dead. Well, maybe not, says Michel Carreau. “It’s not so easy to kill carbon pricing,” says Hatch’s director of hybrid power. “It’s extremely costly because there are obligations that come with it.” Not the least of these is Ontario’s Sept. 22, 2017 agreement with California and Quebec to link their greenhouse gas (GHG) cap-and-trade systems. “People have already purchased carbon credits and others have sold them,” said Carreau. “Those credits have value, so someone has to reimburse them.” In other words, government, perhaps even Ontario’s government. “I don’t think Ford is going to be able to remove that system,” says Carreau. Turns out others agree with him. Getting good advice The five mining companies Carreau works with are under enormous pressure to help the provinces and territories meet their jurisdictional GHG reduction targets. It doesn’t matter if 16 | CANADIAN
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some mining companies are unhappy, says Carreau. “Regardless of whether they agree or not, they understand that this is where the market is going. And so they need to prepare for it.” Hatch’s job is to help them, Carreau says. Even if Ontario’s cap-and-trade program is gone for good, the federal government will require provinces to have either a carbon tax or cap-and-trade system in place by the beginning of 2019, or it will impose its own regime. Ottawa’s goal is to reduce GHG emissions by 80% by 2050, with intermittent goals along the way and a range of incentives for offsetting carbon tax payments. These include emission credits that encourage facilities to maximize emission reductions above the required amounts. Or you can do the easy thing “and just pay the tax,” says Carreau. A far better strategy is to buy certainty, by purchasing, for example, $25 million in carbon credits today to remain compliant with your annual carbon emission targets in each of the next five years. “By doing that, I’m buying those credits at the current price today as opposed to paying a price that grows seven per cent every year,” says Carreau. For its part, much of Deloitte Canada’s work, says Nathan Steeghs, senior manager for sustainability and climate change, has been in keeping with the movement towards “science based target setting.” This means helping mining companies such as Barrick Gold align themselves with government GHG reduction targets, thereby contributing to the 2 degree drop in the global temperature as agreed to in the Paris climate change agreement. “In some cases they align pretty well with government targets,” says Steeghs. “In other cases they would exceed those targets. Barrick aligns quite well because their targets landed around www.canadianminingjournal.com
2018-07-24 11:22 AM
Image: Olivier Le Moal, iStockphotos.com
TYPICALLY, TWO-THIRDS OF EMISSIONS AT AN UNDERGROUND MINE ARE GENERATED FROM THE DIESEL BURN OF ITS MOBILE FLEET. – John Mullally, Goldcorp’s vice-president corporate affairs and energy
Ottawa’s with a thirty per cent cut in GHG emissions by 2030.” Broadly speaking, there are a few layers mining companies need to pay attention to when considering climate change, Steeghs adds. Among them is an overall vision of governance touching on the level of board oversight around the topic of climate change. How is the organization effectively making and overseeing decisions? What are the types of commitments the organization wants to make? “We’ve worked with clients that have made decisions around using one hundred per cent renewable energy or that want to reduce emissions for certain operations to zero. Those are the types of commitments that can be made.” It’s not all about surplus credits Two problems arise around surplus credits, says Carreau: if no AUGUST 2018
16-18_CMJ Aug2018_Carbon.indd 17
one is selling excess credits they can’t be used to offset GHG emissions. Buying and selling carbon credits also tends to be a zero sum game, with nothing actually done to cut GHG emissions. Enter a second, very ambitious approach: rewarding companies with new tax revenues for their investments in eligible emissions reduction projects. A case in point: Teck Resources’ pilot of LNG as a fuel source in haul trucks at its Fording River steelmaking coal operation in southeastern B.C. The goal: eliminate 35,000 tonnes of CO2 emissions and reduce fuel costs by more than $20 million annually. Goldcorp is doing something similar using electricity at its Borden underground gold mine in Chapleau, Ont. Typically, two-thirds of emissions at an underground mine are generated from the diesel burn of its mobile fleet, says John Mullally, Goldcorp’s vice-president corporate affairs and energy. By converting the mine to an all-electric operation “our reduction at Borden is in the neighbourhood of 7,000 tonnes of GHG emissions per year. That represents a sixty-five to seventy per cent reduction on what otherwise would have been a standard diesel environment.” Goldcorp’s reward from the Ontario government: $5 million in recycled revenues from cap-and-trade. The mine will be safer and healthier, but also cleaner. As for Ontario’s decision to axe CONTINUED ON PAGE 18
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ENVIRONMENT cap-and-trade, one hope Mullally has is a rumoured $500-million clean technology fund. Good news if it’s true, he says. “It just depends on what kind of scheme (they) put in place.” B.C. a model for federal carbon pricing? Back in September 2016, speaking before the Greater Vancouver Board of Trade, MAC president Pierre Gratton said B.C.’s carbon tax program is held up as model for its simplicity and revenue. Problem was that program risked exposing an already trade-exposed mining sector to carbon leakage, more GHG emissions and lost jobs. Since then, the province’s NDP government has begun consulting on a package of reforms to address industry concerns. MAC’s message to B.C. is the same one it is delivering to Ottawa, says Brendan Marshall, MAC’s vice-president of economic and northern affairs. “We need robust protections that prevent carbon leakage. Otherwise, we’re going to end up in a lose-lose situation.” If you have a carbon tax added to your cost base while a mine in another jurisdiction doesn’t, you lose. The mine may also face higher costs when its suppliers and service providers – like railways, for example – automatically pass on the carbon tax they had to pay to the mining company in higher transportation rates. Gratton also opined that B.C.’s carbon tax had been revenue neutral for the government, but not so much for the mining sec-
Environmental impacts are mitigated. Closure is planned from the start. Communities are bettered. Together we can create a legacy of value.
We thrive on challenges golder.com
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tor, especially during low commodity price cycles. Corporate tax reductions can help offset company exposures, says Marshall, “but when you’re not making money and operating at a loss, corporate tax breaks are not an effective tool to abate carbon costs or to shield you from carbon leakage.” Has Ottawa learned anything from B.C.’s example in advance of federal carbon price action in January? “I hope the federal government has been listening,” says Marshall. “There have been some valuable lessons learned and a lot of knowledge out there from subject matter experts who have been navigating the B.C. system since it’s been put in place.” Duelling graphs How do you know for certain the amount of GHGs you’re emitting and cutting, at what cost per unit and how much you’re saving? It depends on who you talk to and on their methodology. Carole Ferguson, head of investor research at CDP in London has issued dire warnings about Teck’s coking coal operations. Normalized to copper equivalent production, she says, Teck is higher on a copper equivalent unit cost basis than other companies, i.e. 8th place out of 12 and 6th place for emissions intensity reduction. In short, “Teck is going to take a hit because of the coking coal market,” Ferguson says. Teck is having none of this, noting with veiled scorn Ferguson’s contention that with the Canadian carbon tax coming in, Teck margins will be squeezed to an amount payable equivalent of 3% - 14% of their revenue from Canadian operations. “That’s incorrect,” says Chris Stannell, senior communications specialist with Teck. “As all of Teck’s operations in Canada are located in B.C. and Alberta, “we already pay carbon tax on our Canadian operations and have for almost a decade.” Moreover, “the emissions intensity of our steelmaking coal production is less than half that of the industry average and the emissions intensity of our copper production is 35% below the industry average.” Why do duelling reports like these matter in a discussion about carbon pricing? Because of investors. Steeghs says since the U.S. stepped away from the Paris climate change agreement, carbon pricing has become “a hot topic” in the investment community. So much so they’re increasing pressure on mining companies for greater transparency over what’s being done to manage climate change. “A lot of it was driven by companies having material financial risk, the most obvious one being regulations around climate change, with carbon pricing the most evident form,” says Steeghs. All of this is stoked, he adds, by companies in the U.S. going insolvent as a result of regulations targetting carbon emissions. Hence the concern among investors in Canada. “A carbon tax could have a material impact, particularly on mining or oil and gas,” says Steeghs. Carbon pricing “is a bit of a patchwork across the provinces now,” but that could change with Ottawa’s drive towards a $50 per tonne target by 2021. Investors’ questions: What is the risk? How material is it? Most important of all: is there a strategy in place to deal with CMJ the risk? www.canadianminingjournal.com
2018-07-24 11:22 AM
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Teck’s Highland Valley Copper mine, in B.C. CREDIT: TECK
A SPECIAL REPORT BY NEWS EDITOR MARILYN SCALES TAKES AN IN-DEPTH LOOK AT HOW CANADA’S TOP 40 MINING COMPANIES ARE PERFORMING AUGUST 2018
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CANADIAN MINING JOURNAL |
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2018-07-24 11:24 AM
40
TOP MINERS REGAIN FOOTING
By Marilyn Scales
The outlook is better than recent years, but caution advised
T
he world’s miners took a collective sigh of relief in 2017, as metals and commodity prices rose somewhat. Their days of huge debt are behind them, and they can concentrate on operations. With fiscal responsibility and better prices, some corporations may be tempted to throw money into capital projects in expectation of higher demand. They might want to hold off for now lest oversupply and debt swamp them again. Failure to fund exploration can be just as disastrous as over building. Funding either should be balanced to ensure longer term success. Juniors are still scrambling for funding as they explore what could be the next boost in production capacity. Those that 20 | CANADIAN
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are more easily finding backers are those with interests in cobalt, lithium, or other metals with growth anticipated as the electric vehicle market expands. Precious metals investors are also reasonably easy to find, but base metals and non-metals still lack appeal. Once again we at CMJ have crunched the numbers every which way, and we are proud to offer our readers a look at Canada’s Top 40 mining companies by revenue. Stronger metals and commodity prices have lifted most of the winners into the black. There were far fewer companies reporting a net loss for 2017 than there were in 2016. Unsurprisingly, the No. 1 company is Agrium with $18 billion in revenue. Teck
Resources moved up one spot to No. 2 with $12 billion, and former No. 2 Barrick Gold slipped one spot to No. 3 with revenue of $11 billion. Suncor Energy’s oilsands business was No. 4 with close to $10 billion. Wrapping up the top five is Canadian Natural Resources with $7 billion. That is an upward movement of five places, compared to a year ago as the company doubled its oilsands output. Readers are aware that Canada’s two powerhouse potash producers – Agrium and Potash Corporation of Saskatchewan – have merged. If we add PotashCorp’s sixth place revenue of $4.5 billion to Agrium’s $17.9 billion, the sum is a whopping $22.4 billion – enough to vault the combined company under the www.canadianminingjournal.com
2018-07-24 11:24 AM
Trevali Mining’s Perkoa mine, in Burkina Faso. CREDIT: TREVALI MINING
name Nutrien to the head of the list. However, we could not do that this year. The merger did not close until Dec. 31, 2017, meaning that Agrium and PotashCorp reported independently for last year. Nutrien also filed an annual report, but it did not reflect the revenues of the underlying enterprises. Nutrien’s 2017 annual report had no revenue and a net loss of $596.4 million. Watch for this company to head next year’s Top 40. TransAlta Utilities reached the No. 20 spot with revenue to $999 million. This number is for the company’s Canadian coal business only. TransAlta was not among the Top 40 last year, but we suspect it should have been had we found the number for its Canadian coal arm. AUGUST 2018
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Another first-timer to the Top 40 is Trevali Mining which has expanded aggressively. Trevali bought two zinc mines in Africa from Glencore. The move doubled Trevali’s count of producing mines and helped bring in revenue of $429 million, good enough make Trevali No. 33. Kirkland Lake Gold made the biggest jump up the list – advancing nine places to No. 21 with revenue of $971 million. All it took was a lot of high grades, and an aggressive exploration and expansion plan. (See separate article in this issue.) Interestingly the majority of the Top 40 miners are primary producers of gold or copper-gold. A look at how much companies’ revenue grew from 2016 to 2017 reveals that there were only two whose revenue stream shrank, compared to a year earlier when there were 15. As expected there are always a couple standouts. One this year is Trevali (more than tripled revenue) thanks to the pair of African mines it acquired. The other is Canadian Natural (reporting two-and-ahalf times more revenue) as it completed the phase three work at the Horizon oilsands project. Kirkland Lake, which led last year’s list with growth of three and a half times for 2016 over 2015, had another respectable increase of 85.3% for 2017 over 2016. First Majestic Silver, Centerra Gold and Golden Star Resources all had revenue increases of roughly 50%, thanks to strong precious metals prices. Revenues are one thing, but how much of it a company retains as net earnings is another measure of success. Both Canadian Natural Resources and Teck had earnings over $2.5 billion. Barrick ($2 billion) and Suncor’s oilsands operations ($1 billion) had handsome earnings, as well. Money was tight last year for Canada’s
C A N A D A’ S
TOP
miners, and we could report only four that had larger net earnings in 2016 than in 2015. Looking at 2017 compared to 2016, a total of 16 corporations expanded their net earnings. Iamgold had the biggest jump – more than eight times. Canadian Natural Resources and Goldcorp saw increases of four-and-a-half and four times, respectively. Congratulations also to Fortuna Silver, Kirkland Lake, Teck, and Trevali, all of which recorded at least twice the earnings last year. Comparing net earnings to a company’s revenue, offers some indication of how carefully it controls operating costs. By that standard, the best is Iamgold (47%), followed by Canadian Natural (37%), Franco-Nevada Corp. (29%) and Fortuna Silver (25%). The truly mind-boggling numbers come when the assets of mining companies are examined – close to $60 billion for Suncor, over $40 billion for Canadian Natural, $37 billion for Teck, and $33 billion for Barrick. But it is not necessarily the miners with the most assets that managed to boost the value of their assets in 2017. Trevali heads this list, close to tripling its assets (remember the two mines it bought), followed by Canadian Natural with a 63% boost (okay, one of the big ones) and Fortuna Silver with 26%. The ranks of the 10-20% gainers has 12 names, and at the bottom of the list is Barrick with year-over-year asset increase of only 0.2%. When looking at revenue compared to assets in 2017, Kirkland Lake rises to the top again. It generated revenue of $4.3 billion on assets of $3.0 million – or up 145%. This is definitely one of Canada’s top miners by many measures, and high grades and high quality management are likely to keep it in the Top 40 for many years. CANADIAN MINING JOURNAL |
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C A N A D A’ S
Canada’s Top 40 by Gross Revenue C$ millions
2017 2016
Rank Previous Company Year end Primary output Revenue Net Assets Revenue Net Assets Year Earnings Earnings 2017 (Loss) (Loss)
1 1 Agrium 2 3 Teck Resources 3 2 Barrick Gold Corp. 4 4 Suncor Energy (oil sands only) 5 10 Canadian Natural Resources (oil sands only) 6 5 Potash Corp. of Saskatchewan 7 6 Goldcorp 8 8 First Quantum Minerals 9 7 Kinross Gold Corp. 10 9 Agnico Eagle Mines 11 13 Lundin Mining Corp. 12 11 Yamana Gold 13 12 Cameco Corp. 14 15 Hudbay Minerals 15 21 Centerra Gold 16 16 Iamgold 17 14 Turquoise Hill Resources 18 18 Wheaton Precious Metals 19 20 Pan American Silver 20 TransAlta Utilities (Cdn coal only) 21 30 22 19 23 24 24 26 25 17 26 23 27 27 28 28 29 31 30 25 31 32 32 36 33 34 42 35 33 36 38 37 40 38 37 39 44 40 34
22 | CANADIAN
Dec 31 Potash
17,882.0 409.2
23,306.7 17,480.6 774.2
22,034.9
Dec 31 Zinc, Copper, Coal
12,048.0 2,538.0 37,058.0 9,300.0 1,041.0 35,629.0
Dec 31 Gold
10,877.8 1,969.3 32,875.1 11,116.8 1,118.4 32,817.9
Dec 31 Oil sands
9,586.0 1,009.0 56,961.0 7,229.0 (1,149.0) 54,541.0
Dec 31 Oil Sands
7,072.0 2,588.0 40,559.0 2,657.0 570.0 24,852.0
Dec 31 Potash
4,547.0 327.0
16,998.0 4,456.0 323.0
17,255.0
Dec 31 Gold
4,446.5 845.7 28,168.8 4,559.5 210.4 27,924.6
Dec 31 Copper, Gold
4,299.7 (310.5) 28,088.3 3,472.2 (24.7)
25,308.4
Dec 31 Gold
4,290.6 574.4
2,967.4 4,510.1 (141.7) 2,702.8
Dec 31 Gold
2,913.1 32.3
10,217.4 2,777.5 206.3
Dec 31 Copper, Gold
2,698.7 652.1
8,166.0 2,007.7 (818.6) 7,979.1
Dec 31 Gold
2,343.1 (265.1) 11,383.5 2,322.2 (400.5) 11,433.4
9,233.3
Dec 31 Uranium
2,156.9 (204.7) 7,779.8 2,431.4 (59.9) 8,249.2
Dec 31 Copper, Zinc
1,770.0 212.9
6,038.7 1,466.2 (45.7)
Dec 31 Gold, Copper
1,557.5 272.1
3,601.1 984.3
Dec 31 Gold
1,422.3 663.1 5,153.1 1,282.2 80.3
196.8
5,789.1 3,448.6 4,417.2
Dec 31 Copper, Gold
1,219.5 5.3
16,670.5 1,563.1 (0.5)
16,185.8
Dec 31 Gold, Silver
1,095.3 75.0
7,772.3 1,158.2 253.4
7,993.1
Dec 31 Silver
1,061.0 160.4
2,589.3 1,006.5 132.2
2,465.6
Dec 31 Coal
999.0
(88.0)
1,048.0 166
Kirkland Lake Gold
Dec 31 Gold
971.0
172.0
1,930.1 523.9
Tahoe Resources
Dec 31 Gold
952.9
106.3
4,001.7 1,019.1 153.2
54.7
1,687.0 3,522.6
Detour Gold
Dec 31 Gold
919.4
114.8
3,140.3 855.1
(9.0)
3,078.8
Franco-Nevada Corp.
Dec 31 Gold
876.8
252.9
6,105.8 792.6
158.7
5,483.9
B2Gold
Dec 31 Gold
829.7 86.5 3,488.1 887.6 50.1 3,033.3
New Gold
Dec 31 Gold
785.1
(140.3) 5,218.5 679.1
(9.1)
5,109.0
Capstone Mining Corp.
Dec 31 Copper, Gold
704.1
71.6
1,819.2 687.7
(256.4) 1,812.1
SSR Mining
Dec 31 Silver, Zinc, Lead, Gold
583.0
92.9
1,997.2 637.8
84.4
1,868.9 3,853.6
China Gold Int’l Resources
Dec 31 Gold
535.1
117.0
4,196.3 439.8
(34.8)
Eldorado Gold
Dec 31 Gold
508.4
(27.8)
6,612.3 562.1
(450.6) 6,232.5
Imperial Metals
Dec 31 Copper, Gold
453.1
77.1
1,723.8 428.2
(54.1)
Dundee Precious Metals
Dec 31 Gold, Copper
452.2
(0.5)
1,097.4 335.1
(195.6) 953.5
1,527.8
Trevali Mining Corp.
Dec 31 Zinc, Lead, Silver
429.3
26.2
1,533.1 133.7
12.0
532.1
Golden Star Resources
Dec 31 Gold
409.3
53.3
468.2
(54.3)
388.3
287.5
Torex Gold Resources
Dec 31 Gold
409.1
(16.4)
1,517.4 405.9
4.2
1,567.0
Teranga Gold
Dec 31 Gold
378.9
44.8
1,060.2 349.3
36.2
1,055.9
Nevsun Resources
Dec 31 Copper, Zinc, Gold
375.9
(129.4) 1,411.2 299.7
21.0
1,238.8
First Majestic Silver
Dec 31 Silver
366.7
(69.2)
911.1
231.4
11.2
1,113.5
86.1
917.9
273.0
23.3
731.2
Fortuna Silver Mines
Dec 31 Silver
348.3
Semafo
Dec 31 Gold
336.4 30.7 1,335.9 390.3 53.6 1,163.0
MINING JOURNAL
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www.canadianminingjournal.com
2018-07-24 11:24 AM
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 The Lanigan potash mine in Saskatchewan.
3 Have a significant share of an operating mine or advanced development.
CREDIT: NUTRIEN
Sometimes we have been tripped up and non-Canadian miners have slipped onto the list. However, we have put extra effort into checking the eligibility of all the miners on the current list.
Canadian dollars | 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 2017 exchange rate: US$1 equals C$1.299.
We remain open to the suggestions of our readers.
The runners-up
C$ millions
2017 2016
Rank Previous Company Year end Primary output Revenue Net Assets Revenue Net Assets 2017 Year Earnings Earnings (Loss) (Loss)
41 47 Klondex Mines Dec 31 Gold 42 45 Copper Mountain Mining Dec 31 Copper 43 35 Lucara Diamond Corp. Dec 31 Diamonds 44 39 Brio Gold Dec 31 Gold 45 52 Gran Colombia Gold Dec 31 Gold 46 46 Taseko Mines Dec 31 Copper, Molybdenum 47 North American Palladium Dec 31 Palladium 48 48 Sherritt International Dec 31 Nickel 49 50 Sierra Metals Dec 31 Copper, Silver. Gold, Zinc, Lead AUGUST 2018
19-30_CMJ Aug2018_Top 40_REV.indd 23
312.7 (30.8) 508.7 257.5 (2.2) 493.6 304.1
35.8
667.9
278.0
(11.7)
647.8
286.8
85.6
475.2
383.9
91.8
392.3
283.1 (27.3) 795.0 301.9 (22.0) 703.7 279.8
47.8
584.6
239.1
4.9
495.2
278.3
34.3
988.7
263.9
(31.4)
949.4
272.4 30.3 597.4 166.9 (37.5) 562.7 267.3
293.8
2,244.8 262.3
(378.9) 3,806.9
266.4
(1.2)
442.4
(16.5)
186.0
473.9
CANADIAN MINING JOURNAL |
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2018-07-25 11:15 AM
C A N A D A’ S
TOP
Companies with the greatest revenue gains C$ millions
Revenue Change Company Primary output 2017 Revenue 2016 Revenue 2017/2016 Rank 2017
33 Trevali Mining Corp. Zinc, Lead, Silver 5 Canadian Natural Resources Oil Sands 21 Kirkland Lake Gold Gold 38 First Majestic Silver Silver 15 Centerra Gold Gold, Copper 34 Golden Star Resources Gold 32 Dundee Precious Metals Gold, Copper 11 Lundin Mining Corp. Copper, Gold 4 Suncor Energy (oil sands only) Oil sands 2 Teck Resources Zinc, Copper, Coal 39 Fortuna Silver Mines Silver 37 Nevsun Resources Copper, Zinc, Gold 8 First Quantum Minerals Copper, Gold 29 China Gold Int’l Resources Gold 14 Hudbay Minerals Copper, Zinc 6 Potash Corp. of Saskatchewan Potash 26 New Gold Gold 16 Iamgold Gold 24 Franco-Nevada Corp. Gold 36 Teranga Gold Gold 23 Detour Gold Gold 31 Imperial Metals Copper, Gold 19 Pan American Silver Silver 10 Agnico Eagle Mines Gold 27 Capstone Mining Corp. Copper, Gold 1 Agrium Potash 12 Yamana Gold Gold 35 Torex Gold Resources Gold 30 Eldorado Gold Gold 28 SSR Mining Silver, Zinc, Lead, Gold 22 Tahoe Resources Gold 25 B2Gold Gold 18 Wheaton Precious Metals Gold, Silver 9 Kinross Gold Corp. Gold 20 TransAlta Utilities (Cdn coal only) Coal 17 Turquoise Hill Resources Copper, Gold 7 Goldcorp Gold 3 Barrick Gold Corp. Gold 40 Semafo Gold 13 Cameco Corp. Uranium
24 | CANADIAN
MINING JOURNAL
19-30_CMJ Aug2018_Top 40_REV.indd 24
429.3
133.7
+321.1%
7,072.0
2,657.0
+266.2%
971.0
523.9
+85.3%
366.7
231.4
+58.5%
1,557.5
984.3
+58.2%
409.3
287.5
+42.4%
452.2
335.1
+34.9%
2,698.7
2,007.7
+34.4%
9,586.0
7,229.0
+32.6%
12,048.0
9,300.0
+29.5%
348.3
273.0
+27.6%
375.9
299.7
+25.4%
4,299.7
3,472.2
+23.8%
535.1
439.8
+21.7%
1,770.0
1,466.2
+20.7%
4,547.0
4,456.0
+20.4%
785.1
679.1
+15.6%
1,422.3 876.8
1,282.2 +10.9% 792.6
+10.6%
378.9
349.3
+8.5%
919.4
855.1
+7.5%
453.1
428.2
+5.8%
1,061.0
1,006.5
+5.4%
2,913.1
2,777.5
+4.9%
704.1
687.7
+2.4%
17,882.0 17,480.6 +2.3% 2,343.1
2,322.2
+0.9%
409.1
405.9
+0.7%
508.4
562.1
–9.6%
583.0
637.8
–8.6%
952.9
1,019.1
–6.5%
829.7 1,095.3
887.6 –6.5% 1,158.2
–5.4%
4,290.6
4,510.1
–4.9%
999.0
1,048.0
–4.7%
1,219.5
1,563.1
–22.0%
4,446.5
4,559.5 –2.5%
10,877.8 336.4 2,156.9
11,116.8
–2.1%
390.3 –13.8% 2,431.4
–11.3%
www.canadianminingjournal.com
2018-07-25 10:52 AM
Trevali Mining’s Santander mine, in Peru.
CREDIT: TREVALI
Companies ranked by net earnings C$ millions
Company Primary output Rank 2017
2017 Net Earnings (Loss)
5 Canadian Natural Resources Oil Sands 2 Teck Resources Zinc, Copper, Coal 3 Barrick Gold Corp. Gold 4 Suncor Energy (oil sands only) Oil sands 7 Goldcorp Gold 16 Iamgold Gold 11 Lundin Mining Corp. Copper, Gold 9 Kinross Gold Corp. Gold 1 Agrium Potash 6 Potash Corp. of Saskatchewan Potash 15 Centerra Gold Gold, Copper 24 Franco-Nevada Corp. Gold 14 Hudbay Minerals Copper, Zinc 21 Kirkland Lake Gold Gold 19 Pan American Silver Silver 29 China Gold Int’l Resources Gold 23 Detour Gold Gold 22 Tahoe Resources Gold 28 SSR Mining Silver, Zinc, Lead, Gold
2016 % Change Net Earnings (Loss) 2017/2016
2,588.0
570.0
+454.0%
2,538.0
1,041.0
+243.8%
1,969.3
1,118.4
+76.1%
1,009.0
(1,149.0)
n/a
845.7 663.1
210.4 +401.9% 80.3 +825.8%
652.1
(818.6)
n/a
574.4
(141.7)
n/a
409.2
774.2 –47.1%
327.0
323.0
+1.2%
272.1
196.8
+38.3%
252.9
158.7
+59.4%
212.9
(45.7)
n/a
172.0
54.7
+314.4%
160.4
132.2
+21.3%
117.0
(34.8)
n/a
114.8
(9.0)
n/a
106.3
153.2
–30.6%
92.9
84.4
+10.1%
Companies ranked by assets C$ millions
Rank 2017 Company Primary output Assets Assets Asset 2017 2016 change 2017/2016
4
Suncor Energy (oil sands only)
Oil sands
56,961.0
54,541.0
+4.4%
5
Canadian Natural Resources
Oil Sands
40,559.0
24,852.0
+63.2%
2
Teck Resources
Zinc, Copper, Coal
37,058.0
35,629.0
+4.0%
3
Barrick Gold Corp.
Gold
32,875.1
32,817.9
+0.2%
7
Goldcorp
Gold
28,168.8 27,924.6 +1.0%
8
First Quantum Minerals
Copper, Gold
28,088.3
1
Agrium
Potash
23,306.7 22,034.9 +5.8%
6
Potash Corp. of Saskatchewan
Potash
16,998.0
17,255.0
–1.5%
17
Turquoise Hill Resources
Copper, Gold
16,670.5
16,185.8
+3.0%
12
Yamana Gold
Gold
11,383.5
11,433.4
–0.4%
AUGUST 2018
19-30_CMJ Aug2018_Top 40_REV.indd 25
25,308.4
An electric shovel at Suncor Energy’s Fort Hills oilsands mine; secondary exstraction at Fort Hills. CREDIT: SUNCOR ENERGY
+11.0%
CANADIAN MINING JOURNAL |
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2018-07-24 11:24 AM
TOP
C A N A D A’ S
Earnings compared to revenue C$ millions
2017
Rank 2017 Company Primary output Revenue
16 Iamgold Gold 5 Canadian Natural Resources Oil Sands 24 Franco-Nevada Corp. Gold 39 Fortuna Silver Mines Silver 11 Lundin Mining Corp. Copper, Gold 29 China Gold Int’l Resources Gold 2 Teck Resources Zinc, Copper, Coal 7 Goldcorp Gold 3 Barrick Gold Corp. Gold 21 Kirkland Lake Gold Gold 15 Centerra Gold Gold, Copper 31 Imperial Metals Copper, Gold 28 SSR Mining Silver, Zinc, Lead, Gold 19 Pan American Silver Silver 9 Kinross Gold Corp. Gold 34 Golden Star Resources Gold 23 Detour Gold Gold 14 Hudbay Minerals Copper, Zinc 36 Teranga Gold Gold 22 Tahoe Resources Gold 4 Suncor Energy (oil sands only) Oil sands 25 B2Gold Gold 27 Capstone Mining Corp. Copper, Gold 40 Semafo Gold 6 Potash Corp. of Saskatchewan Potash 18 Wheaton Precious Metals Gold, Silver 33 Trevali Mining Corp. Zinc, Lead, Silver 1 Agrium Potash 10 Agnico Eagle Mines Gold 17 Turquoise Hill Resources Copper, Gold
Net Earnings Earnings as % of (Loss) revenue
1,422.3 663.1 46.6% 7,072.0
2,588.0
36.6%
876.8
252.9
28.8%
348.3
86.1
24.7%
2,698.7
652.1
24.2%
535.1
117.0
21.9%
12,048.0
2,538.0
21.1%
4,446.5 845.7 19.0% 10,877.8
1,969.3
18.1%
971.0
172.0
17.7%
1,557.5
272.1
17.5%
453.1
77.1
17.0%
583.0
92.9
15.9%
1,061.0
160.4
15.1%
4,290.6
574.4
13.4%
409.3
53.3
13.0%
919.4
114.8
12.5%
1,770.0
212.9
12.0%
378.9
44.8
11.8%
952.9
106.3
11.1%
9,586.0
1,009.0
10.5%
829.7
86.5 10.4%
704.1
71.6
336.4
30.7 9.1%
10.2%
4,547.0
327.0
7.2%
1,095.3
75.0
6.8%
429.3
26.2
6.1%
17,882.0 409.2 2.3% 2,913.1
32.3
1.1%
1,219.5
5.3
0.4%
Iamgold’s Rosebel mine, in Suriname. CREDIT: IAMGOLD
26 | CANADIAN
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www.canadianminingjournal.com
2018-07-24 11:24 AM
Revenue compared to assets C$ millions
2017
Rank 2017 Company Primary output Revenue
9 Kinross Gold Corp. Gold 34 Golden Star Resources Gold 1 Agrium Potash 21 Kirkland Lake Gold Gold 15 Centerra Gold Gold, Copper 32 Dundee Precious Metals Gold, Copper 19 Pan American Silver Silver 38 First Majestic Silver Silver 27 Capstone Mining Corp. Copper, Gold 39 Fortuna Silver Mines Silver 36 Teranga Gold Gold 3 Barrick Gold Corp. Gold 11 Lundin Mining Corp. Copper, Gold 2 Teck Resources Zinc, Copper, Coal 23 Detour Gold Gold 14 Hudbay Minerals Copper, Zinc 28 SSR Mining Silver, Zinc, Lead, Gold
Assets
Revenue % of Assets
4,290.6
2,967.4
144.6%
409.3
468.2
87.4%
Reclamation at Iamgold’s Rosebel mine, in Suriname. CREDIT: LAMGOLD
17,882.0 23,306.7 76.7% 971.0
1,930.1
50.3%
1,557.5
3,601.1
43.3%
452.2
1,097.4
41.2%
1,061.0
2,589.3
41.0%
366.7
911.1
40.2%
704.1
1,819.2
38.7%
348.3
917.9
37.9%
378.9
1,060.2
35.7%
10,877.8
32,875.1
33.1%
2,698.7
8,166.0
33.0%
12,048.0
37,058.0
32.5%
919.4
3,140.3
29.8%
1,770.0
6,038.7
29.3%
583.0
1,997.2
29.2%
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CANADIAN MINING JOURNAL |
27
2018-07-24 11:24 AM
Revenue compared to assets, continued 10 Agnico Eagle Mines Gold 33 Trevali Mining Corp. Zinc, Lead, Silver 13 Cameco Corp. Uranium 16 Iamgold Gold 35 Torex Gold Resources Gold 6 Potash Corp. of Saskatchewan Potash 37 Nevsun Resources Copper, Zinc, Gold 31 Imperial Metals Copper, Gold 40 Semafo Gold 22 Tahoe Resources Gold 25 B2Gold Gold 12 Yamana Gold Gold 5 Canadian Natural Resources Oil Sands 4 Suncor Energy (oil sands only) Oil sands 7 Goldcorp Gold 8 First Quantum Minerals Copper, Gold 26 New Gold Gold 24 Franco-Nevada Corp. Gold 18 Wheaton Precious Metals Gold, Silver 29 China Gold Int’l Resources Gold 30 Eldorado Gold Gold 17 Turquoise Hill Resources Copper, Gold
2,913.1
10,217.4
28.5%
429.3
1,533.1
28.0%
2,156.9
7,779.8
27.7%
1,422.3 5,153.1 27.6% 409.1
1,517.4
27.0%
4,547.0
16,998.0
26.8%
375.9
1,411.2
26.6%
453.1
1,723.8
26.3%
336.4 1,335.9 25.2% 952.9
4,001.7
23.8%
829.7 3,488.1 23.8% 2,343.1
11,383.5
20.6%
7,072.0
40,559.0
17.4%
9,586.0
56,961.0
16.8%
4,446.5 28,168.8 15.8% 4,299.7
28,088.3
15.3%
785.1
5,218.5
15.0%
876.8
6,105.8
14.4%
1,095.3
7,772.3
14.1%
535.1
4,196.3
12.8%
508.4
6,612.3
7.7%
1,219.5
16,670.5
7.3%
We are better together Norwest is now part of Stantec. Together we offer expanded geoscience, mine planning, geotechnical, water and tailings management services to the mining community. Visit stantec.com/mining-norwest to learn more.
28 | CANADIAN
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www.canadianminingjournal.com
2018-07-24 11:24 AM
TOP
C A N A D A’ S
Kirkland Lake Gold stages a turnaround
Top mover advances nine spots in our Top 40 list By Virginia Heffernan
F
ive years ago, Kirkland Lake Gold was struggling to say the least. The junior had just announced a net loss of $3.6 million, operating costs at Macassa – its only mine – exceeded US$1,100 per oz. of gold, and its shares could be had for less than $4 each. Compare that to the gold producer’s current performance. Kirkland Lake is on track to produce 620,000 oz. of gold at operating costs of US$425-450 per oz. this year, having nearly doubled annual revenue to US$747 million in 2017 and moved into 21st place on CMJ’s Top 40 list. At press time, its shares were trading above $29. How did a marginal Canadian gold miner stage such a turnaround, especially in an era that has been unkind to acquisitive gold producers? Though the company was unresponsive to requests for an interview, Kirkland Lake’s success appears to be related not to a rising gold price (gold is trading at US$1,250 per oz., roughly the same level as it was in mid-2013) but to a combination of new management, smart acquisitions, and exploration success. Improvement was slow at first as the
Kirkland Lake has demonstrated that sound management combined with intelligent targets for acquisition and exploration can catapult a company into realm of top-tier producers even in a stagnant gold price environment. company shifted to mining higher grades at Macassa in northern Ontario to survive, but 2016 proved to be a pivotal year. Under the guidance of gold guru Eric Sprott, who became a large shareholder and company chairman in 2015, the former president and CEO of Lake Shore Gold, Anthony Makuch, replaced CEO George Ogilvie. Within a few months, Kirkland Lake had merged with Australia’s Newmarket Gold, owner of the Fosterville mine in the state of Victoria, to form a new mid-tier gold producer. As if on cue, spectacular exploration results started to roll in from Fosterville, including grades of up to 1,429 g/t gold
over 15 metres from down plunge extensions of the Lower Phoenix gold system. In June 2017, Kirkland Lake released a new mineral reserve estimate for the operation that doubled underground reserves to 1.03 million oz. and increased the estimated grade by 83% to 17.9 g/t gold. The reserve estimate shot up another 65% to 1.7 million oz. at an average grade of 23.1 g/t gold at the end of 2017. The market took note, sending Kirkland Lake shares soaring from less than $7 at the end of 2016 and making the company the best performer on the S&P/TSX Composite Index in 2017 with a 174.5% gain. Results from Fosterville continue to impress investors, while a proposed new shaft at Macassa will help the company achieve its ultimate goal of becoming a 1 million oz. annual producer. The four-compartment shaft will allow Kirkland Lake to pursue underground exploration to the east of the South Mine Complex at Macassa, support higher levels of production and lower unit costs, and improve ventilation and working conditions. The shaft will have a hoisting capacity of 4,000 tonnes per day, allowing the CONTINUED ON PAGE 30
Top, left to right: Kirkland Lake Gold’s Macassa mine, in Ontario; A gold bar produced at the Fosterville mine, in Australia; and the mill at Macassa. CREDIT: KIRKLAND LAKE GOLD
AUGUST 2018
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CANADIAN MINING JOURNAL |
29
2018-07-24 11:24 AM
C A N A D A’ S
TOP
From top: At Kirkland Lake’s Fosterville gold mine; The mill at Macassa. CREDIT: KIRKLAND LAKE GOLD
company to ramp up to production of 400,000 oz. per year over the next few years. Kirkland Lake also owns the Holt and Taylor mines near Matheson, Ont., which are expected to contribute 125,000-
145,000 oz. to production in 2018. Its Cosmo mine in Australia’s’ Northern Territory is currently on care and maintenance, but recent discoveries in the vicinity of the mine give management hope
Kirkland Lake expects to allocate US$75-90 million to exploration in 2018, with the bulk of spending going to Australia. Some of that budget is earmarked for an aggressive greenfields program to search for large ore deposits that can rival the heft of Fosterville.
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that production will eventually resume at an annual rate of about 100,000 oz. Kirkland Lake expects to allocate US$75-90 million to exploration in 2018, with the bulk of spending going to Australia. Under the leadership of John Landmark, vice-president of exploration for Australia, some of that budget is earmarked for an aggressive greenfields program to search for large ore deposits that can rival the heft of Fosterville. The focus of the program, including 76,000 metres of drilling, is 7 km of strike length along the Fosterville Trend and another 3-km section of the parallel O’Dwyer’s Trend. Once the sickly junior, Kirkland Lake has demonstrated that sound management combined with intelligent targets for acquisition and exploration can catapult a company into realm of top-tier producers even in a stagnant gold price environment. It doesn’t hurt to have a savvy gold investor CMJ like Sprott in your corner. www.canadianminingjournal.com
2018-07-24 11:24 AM
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2018-07-23 4:04 PM
ADVERTORIAL
MASSIVE PRODUCTION Komatsu’s new 400-ton mining truck is the perfect match for the Canadian market
M
ining customers asked for a bigger truck and Komatsu answered the call with its largest model ever, the new 980E-4. The 3,500-horsepower electric-drive 980E delivers a true 400-ton payload, increasing productivity and efficiency in mining operations. The truck made its Canadian debut in 2016 to an audience that was more than ready to put it to work. “Our customers were waiting for it,” noted SMS Equipment Mining Customer Account Manager, Don Wilson. “Having a 400-ton option really opens up what our mining customers can do. It’s the perfect match for today’s mines and the equipment that is used there.” The 980E met and surpassed the high expectations surrounding its release. “Customers tell us they are able to move more material, more efficiently,” added Wilson. “Some places are running 20 hours a day with amazing results.” Bigger brother The 980E is the bigger brother of the 960E, a 360-ton truck, which was previously Komatsu’s largest mining truck. To achieve the 400-ton payload,
32 | CANADIAN
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32-33_CMJ Aug2018_SMS Advertorial.indd 32
Komatsu took the existing 960E model and beefed it up to handle the additional tonnage. “Komatsu expedited the development of this new truck by building on the foundation of the 960E while maintaining our strict standards of design, testing and product quality,” said Komatsu Product Manager Tom Stedman. “The frame and wheel motors could handle the additional weight; the only major redesign was to help accommodate the larger tire size.” A payload management system (PLM IV) enables mines to track payloads, cycle times, load counts, frame torque and much more. Businesses can store more than 20,000 downloadable records of data, while using PLM IV to monitor truck production and prevent overload conditions. Komatsu designed the 980E-4 to improve truck performance and lower per-ton costs. Its features include a powerful 18-cylinder diesel engine that’s comparable to other trucks in the 400-ton class for speed on grade, while maintaining a high-stall torque capacity for mines with soft underfoot conditions. The AC electric-drive system enables efficient operations even in deep-pit applications.
“Today, a 400-ton-class truck is essential for a mining operation,” stated SMS Equipment Senior Manager, Autonomous Haulage Systems Scott Schellenberg. “The 980E is more than just a 400-ton truck, it’s a 400-ton Komatsu. It features the technology and reliability that Komatsu users have come to expect.” Designed for Canada When Komatsu began to engineer the 980E, it did so with one market in mind: the oil sands of western Canada. “One of the driving forces for the development of a 400-ton truck was the feedback we were hearing from SMS Equipment customers who work in the oil sands,” recalled Stedman. “We knew there was a specific market for this truck
www.canadianminingjournal.com
2018-07-23 4:10 PM
With the soft conditions in the oil sands, the frame of a truck is continuously twisted and flexed during operation. The frame on the 980E is much more robust than anything else on the market; it makes the truck perfectly designed for oil sands users.
in that area, so we made sure it would perform in those conditions.” Great care was taken to deliver exceptional vehicle control and handling. The 980E’s high-capacity retarding package, which provides longer life and improved horsepower for downhill descents, delivers both. The electric, dynamic retardation force maintains constant downhill speed and decelerates without the frequent use of brakes. “The most unique aspect of working in the oils sands is the soft underfoot conditions; handling that element was vital to the 980E’s development,” detailed Stedman. “The dynamic retarding package is a major factor in why the 980E thrives in that environment. The entire system is
electric, which means the truck is using stored energy to slow itself down instead of relying on mechanical systems and brake pads. It greatly reduces the amount of wear parts needed during the life of the machine.” To combat demanding conditions, the 980E uses a continuous horse-collar and ladder-type frame that provides long life and long-term reliability. A new dump body incorporates high-tensile strength and abrasion-resistant steel, giving it a rugged-chassis construction to withstand the rigors of off-road hauling. “With the soft conditions in the oil sands, the frame of a truck is continuously twisted and flexed during operation,” explained Wilson. “The frame on the 980E is much more robust than anything
else on the market; it makes the truck perfectly designed for oil sands users.” Ready for the future In addition to serving the needs of customers today, the 980E is equipped for the job site of tomorrow. “Komatsu was looking ahead when they developed the 980E,” shared Schellenberg. “Many of our customers plan to keep these trucks for 80,000 hours and then rebuild them. While some users may not be ready at this moment for advanced technology, like autonomous hauling, the 980E is already equipped for it. That’s huge. It gives SMS Equipment customers the confidence that the 980E they use today will be the one they operate in the future.” n
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2018-07-23 4:05 PM
DEVELOPMENT PROJECTS
Vale’s Voisey’s Bay project, in northern Labrador. CREDIT: VALE
VOISEY’S BAY EXPANSION A GO
Cobalt streams to pay for 40% of US$1.7B capital cost
C
obalt is technically a byproduct at Vale’s Voisey’s Bay nickel-copper-cobalt mine in northern Labrador, but expected demand for the battery metal is playing an outsized role in the operation’s future. Vale announced in June that it’s going ahead with a long delayed underground expansion of the mine due to an infusion of cash made possible by cobalt. The company has sold 75% of its cobalt production at Voisey’s Bay for a total upfront payment of US$690 million via two streaming deals – an amount that will cover 40% of the expected capital cost of US$1.7 billion. “By unlocking the value of the cobalt byproduct at Voisey’s Bay through this streaming deal, Vale has found a way to resume substantive work on the underground project in Voisey’s Bay and support the market’s increasing demand for nickel, copper and cobalt, as well as uphold its commitment to the govern-
AUGUST 2018
35-36_CMJ Aug2018_Vale.indd 35
WE SEE NUMEROUS SIMILARITIES BETWEEN COBALT AND SILVER, AS BOTH ARE PRIMARILY PRODUCED AS BYPRODUCTS AND BOTH ARE INTEGRAL TO SUSTAINABLE CLEAN ENERGY AND ELECTRONICS. – RANDY SMALLWOOD, PRESIDENT AND CEO OF WHEATON PRECIOUS METALS.
ment, our Indigenous stakeholders and the people of Newfoundland and Labrador,” said Eduardo Bartolomeo, Vale’s executive officer for base metals. The development will allow Vale to
tap the Reid Brook and Eastern Deeps deposits via two decline and ramp systems, extending the mine life from 2023 to 2034. Production at Voisey’s Bay, 35 km south of Nain, Nfld., and 2,000 km north of St. John’s, began in 2005 from open-pit mining at the Ovoid deposit. Vale produced a positive feasibility study for the expansion in early 2015 and approved the development in mid-2015. But nickel prices, which declined to under US$4 per lb. in late 2015 from US$9 per lb. in 2014, had the company rethinking the investment. (Nickel has rebounded somewhat and was around US$6.25 per lb. at presstime.) Vale says the investment is in line with its “rigorous capital allocation process,” which requires projects to generate returns at current price levels rather than depending on future forecast prices. “The transaction unlocks important EV optionality for Vale and is consistent
CONTINUED ON PAGE 36
CANADIAN MINING JOURNAL |
35
2018-07-24 11:28 AM
DEVELOPMENT PROJECTS
Left: Another view of Voisey’s Bay; Right: The Reid Brook portal. CREDIT: VALE
with Vale’s rigorous discipline of capital allocation, as it reduces the financial risks of the (expansion) project,” the company noted in a release. The streaming deals, with Wheaton Precious Metals (US$390 million) and Cobalt 27 Capital (US$300 million) give Vale US$690 million in return for 75% of Voisey’s Bay’s cobalt production, starting in 2021. In addition to retaining 25% of cobalt production, Vale will also receive ongoing additional payments from Wheaton and Cobalt 27 linked to the cobalt price
(about 20% of the price of cobalt per pound of finished cobalt delivered). All the metals produced at Voisey’s Bay could benefit from a surge in electric vehicle sales and production. But as a low-volume specialty metal, cobalt is enjoying special attention from investors. In fact, for Wheaton Precious Metals, the Voisey’s Bay stream is its first outside of the precious metals space. “We see numerous similarities between cobalt and silver, as both are primarily produced as byproducts and both are integral to sustainable clean energy and electron-
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36 | CANADIAN
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ics,” said Randy Smallwood, Wheaton’s president and CEO. “In addition, given cobalt supply is concentrated in high political risk jurisdictions, Voisey’s Bay is particularly attractive for cobalt production as it is located in Canada.” EVs comprise a tiny portion of the overall auto market, but their market share is expected to increase dramatically in future. Construction of the underground mine at Voisey’s Bay is expected to take five years. Major components of the project include: underground development to access the Reid Brook and Eastern Deeps deposits, which are located at between 200 and 900 metres depth; fresh and return air fans; and increased power generation and fuel storage. Accommodations, maintenance shops and other buildings will also need to be expanded, and water and sewage treatment facilities, as well as paste backfill and shotcrete plants, will need to be upgraded. The bulk of project spending, US$750850 million of the total US$1.7 billion, is slated for 2019-2020. The first full year of underground production is expected to be 2021, when current open pit mining begins to ramp down. For the first four years, underground refined cobalt production is expected to average 1,800 tonnes per year. When operating at full scale, from 2025 to 2033, production is forecast to ramp up to 2,600 tonnes annually of refined cobalt, at average grade of 0.13% cobalt. Between them, the Reid Brook and Eastern Deeps deposits contain mineral reserves of 23.6 million tonnes grading 2.17% nickel, about 0.9% copper and 0.14% cobalt. Open pit mining at the Ovoid deposit has so far produced over 600,000 tonnes of nickel, 400,000 tonnes of copper concentrate, and 12,000 tonnes of cobalt. CMJ www.canadianminingjournal.com
2018-07-24 11:28 AM
DEVELOPMENT PROJECTS
Nemaska Lithium’s Whabouchi project. CREDIT: NEMASKA LITHIUM
UNDER CONSTRUCTION Background photo: nathan4847, iStockphoto
Canada’s next mines-to-be get creative with financing There’s no shortage of shovel-ready mine development projects that are looking for funds for construction. But the list of mining projects that can actually attract financing dollars these days is much shorter.
No matter how promising their economics, Canada’s next mines-to-be have all had to get creative with financing in order to move ahead. Here’s a look at three that have landed mine financing deals this year. AUGUST 2018
37-40_CMJ Aug2018_Dev't projects.indd 37
• Eagle
Victoria Gold’s Eagle project has been on our radar for several years. The company released an initial feasibility study for the central Yukon project in 2012, and then an updated feasibility study in 2016. The 190,000-oz.-gold per year project is set to be the Yukon’s largest ever gold mine. In March, Victoria Gold closed a $505-million financing package that will fully fund construction, with first gold slated for the second half of 2019.
CONTINUED ON PAGE 38
CANADIAN MINING JOURNAL |
37
2018-07-24 11:33 AM
DEVELOPMENT PROJECTS The components of the financing (royalty streaming, private equity and OEM financing components) – and the absence of any public equity component – said a lot about the state of the market. The biggest part of the financing consisted of two credit facilities with private equity firm Orion Mine Finance totalling US$175 million ($219 million). The next single biggest component was a $98-million royalty with Osisko Gold Royalties. An equipment financing package with Caterpillar Financial totalled US$50M ($63M); and an equity component totalling $125 million rounded out the package with two private placements totalling with Orion for $75 million and with Osisko for $50 million. A September 2016 feasibility study pegged initial capital costs at Eagle at $370 million. With the project now fully financed, Phase 2 construction began in March with the company reporting that overall engineering was 65% complete in late May. Foundations for the crushing and gold recovery facilities were slated to begin in July and a camp expansion from 250 to 450 beds was to be completed by the end of May. Major long-lead items have been ordered; mobile equipment was expected to be shipped to site starting in June, with the crushers to follow in the fall. Phase 1 construction work, including 50% of detailed engineering, camp expansion, earthworks and road upgrades was completed in November 2017. The 33,700-tonne-per-day, open-pit,
Road building in the crusher area at Victoria Gold’s Eagle project, in the Yukon. CREDIT: VICTORIA GOLD
heap-leach operation has a projected mine life of 10 years and a strip ratio of 0.95 to 1. Average annual production is forecast at 190,000 oz. gold at cash costs of US$550 per oz. or AISC (including royalties) of US$750 per oz. At a gold price of US$1250 per oz., a 2016 feasibility study pegged Eagle’s post-tax NPV at $508 million and its IRR at 29%. Eagle hosts reserves of 2.66 million oz. gold in 123 million tonnes grading 0.67 g/t gold. The deposit is part of the 555-sq.-km Dublin Gulch property, 85 km from town of Mayo. Eagle enjoys access to infrastructure, including grid power within 45 km and year-round road access.
• Whabouchi
Building on growing momentum in the battery minerals market, Nemaska Lithium has secured financing totalling $1.1 billion to build its Whabouchi lithium mine and electrochemical plant in Quebec. The company announced some of the various components of the deal over April and May, with the complete package for the $801-million project closing at the end of May. The financing includes the first streaming deal in the lithium space – a $150-million agreement with Orion Mine Finance. In return for the advance payment, Orion will receive about 8.7% of sales revenue from production of both
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• Sugar Zone
Nemaska Lithium’s Whabouchi project. CREDIT: NEMASKA LITHIUM
lithium hydroxide and lithium carbonate. (Nemaska has the option to buy back 50% of the stream.) The largest component of the deal is debt, with a US$350 million ($455 million) offering of senior secured callable bonds completed on a private placement basis. Also part of deal, a $99-million financing with SoftBank Group that will give it 9.9% of the company’s shares; and an $80-million private placement with Ressources Québec. Unlike the other financing deals, a significant component of Nemaska’s financing comes from the public market in the form of a $280-million public offering of common shares issued on a bought deal basis. In addition to clinching the multi-faceted financing deals, Nemaska has lined up several customers for its product, signing offtake agreements with FMC, Johnson Matthey and LG Chem. The Whabouchi project includes a spodumene mine and concentrator in the James Bay region, 300 north of Chibougamau, and an electrochemical plant in Shawinigan, which will produce high-purity lithium hydroxide and lithium carbonate via a proprietary process. An updated feasibility study released in January extended the mine life of the open-pit and underground operation to 33 years from 26. With a capex of $801 AUGUST 2018
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million, the project has an after-tax NPV of $2.4 billion (at an 8% discount rate) and an IRR of 30.5%. With an annual production capacity of 33,000 tonnes of lithium-carbonate equivalent, the plant now has added flexibility to produce up to 16,000 tonnes per year of lithium carbonate, or to produce only lithium hydroxide, depending on the market. It’s expected to be the lowest-cost producer of lithium hydroxide. Construction of the mine is expected to take 15 months with commercial production of spodumene concentrate starting in the third quarter of 2019. The Shawinigan plant will take 24 months to complete, with commerical production of lithium hydroxide and lithium carbonate (both are used in electric vehicles batteries) expected to begin in the third quarter of 2020. Nemaska has an offtake agreement in place for all spodume concentrate production for two years covering the period before the Shawinigan plant is ready. Combined open-pit and underground proven and probable reserves at Whabouchi total 37 million tonnes averaging 1.4% Li2O. Open-pit production will last for 23.6 years to a maximum depth of 224 metres, and with an average strip ratio of 2.95 to 1. Underground mining will be via longhole stoping.
With a smaller-scale, less expensive project and a staged approach to development, Harte Gold has been able to take a different financing approach at its Sugar Zone project in northern Ontario, 80 km east of the Hemlo camp. With a US$70-million debt financing announced closed in June, Harte is fully funded for the first two stages of its threestage mine plan for the Sugar Zone. The financing with two private equity funds, Sprott Private Resource Lending and Appian Natural Resources Fund, is comprised of a US$50-million senior secured debt facility with Sprott, and a US$20-million subordinated loan with Appian. There’s no commitment to draw down the total US$70 million so Harte will only use what’s required. Due to construction that’s already been completed at the mine and long CONTINUED ON PAGE 40
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DEVELOPMENT PROJECTS
lead item orders having been made in 2017, the company has only about $36 million left to spend on preproduction capital costs. The cost of the procesesing plant, paste fill plant, tailings management, site power and other infrastructure was pegged at $83 million in a PEA published in May 2018. In late June, mill construction was substantially complete and connection to the power grid was scheduled for late July. The Sugar Zone is expected to produce an average of 80,700 oz. gold annually over its 11-year mine life, and first production is slated for later this year. The project is already permitted for a 540 t/day operation and Harte has conducted a 70,000-tonne bulk sample to assess resources, the continuity of mineralization, the metallurgy and gold recoveries, the mining method and mining costs. It’s also mined an additional 30,000 tonnes of material. Phase 2 production of 800 tonnes per day will start in 2020, and in a third phase in 2021, the company plans to increase throughput to 1,400 t/day, which will bring production to over 100,000 oz. gold annually. Additional infrastructure, including a second ball mill and leach circuit, will be required for Phase 3 production. While it initially can only mine at 540 t/day, the company can mill 800 t/day
Harte Gold independent consultant George Flach (centre) at the Sugar Zone gold project in northern Ontario. CREDIT: HARTE GOLD
and will do so by combining underground feed with material from the 40,000 tonnes of stockpiled material already on surface. The target date for final permits for Phase 2 commercial production was in late July, to coincide with grid connection and mill startup. According to the recent PEA, at a gold price of US$1,250 per oz., and a 5% discount rate, the Sugar Zone project has a post-tax NPV of $244 million and an IRR of 42%. However, the company believes there’s lots of room to optimize the PEA numbers. First, it has a half-million oz. in resources that are not yet in the mine plan. There are also indications that the
company can improve on head grades as infill drilling of inferred resources at both the Sugar Zone and Middle Zone deposits has shown. Harte also believes it can improve on mining costs. The Sugar Zone and Middle Zone deposits at the project will both be accessed by ramps and mined via longhole stoping. Harte expects to be a first-quartile cash cost producer with a life-of-mine operating cost of US$507 per oz. gold or AISC of $708 per oz. Indicated resources currently stand at 2.6 million tonnes grading 8.52 g/t gold for 714,200 oz. with inferred resources at 3.6 million tonnes grading 6.59 grams CMJ gold for 760,800 oz. gold.
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COMPANY PROFILE
BTI BUILDS GLOBAL REPUTATION FROM SMALL TOWN ONTARIO By Alisha Hiyate
F
trom the parking lot at Breaker Technology Ltd.’s head office in Thornbury, Ont., a two-hour drive from Toronto, you can see right down to the vivid blue waters of Georgian Bay. It’s been from this location in a picturesque vacation town that the company has built a reputation as one of the world’s foremost manufacturers of rockbreaker systems for the mining sector. “We’re known around the world as one of the leading suppliers of this product and it goes from small right through to the really big ones and all different types of applications,” says Terry McKague, Breaker Technology’s director of sales, International and Canada.
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Rockbreakers are used at both underground and open pit mines to break down oversized ore so it can enter the crusher. However, Breaker, also known as BTI, makes much more than just rockbreakers. It also manufactures a complete line of mobile equipment, including scalers, ANFO loaders, remixers and Mine Runner vehicles for various production and support applications. The company was founded as JMG in 1958, when three mining professionals – two metallurgists and a former mining executive with a cottage in Thornbury – started their own business manufacturing replaceable drill parts for the industry. Just five years later, the company was bought by Teledyne, a
A BTI rockbreaker in use. CREDIT: BREAKER TECHNOLOGY
U.S. company. It was in the mid-1970s that the company (then Teledyne Canada Mining Products) became the first to sell purpose-built rockbreaker systems to break up oversized ore that wouldn’t fit through the grizzly stations covering the ore passes. Working closely with mining companies, Breaker developed the first purpose-built rockbreaker and found a ready market. Rockbreaker Systems are still a key part of ore flow facilitation and BTI’s
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COMPANY PROFILE
clients include some of the largest mines in the world. “These mines can’t have any down time,” says McKague. “If that machine goes down it costs them a lot of money. So they’ve come to know our product as one of the most reliable to keep running day in, day out for years.” In 1999, NASDAQ-listed Astec Industries bought Teledyne Canada Mining Products and the company was renamed Breaker Technology, after its best-known product. Since then, it’s been a part of Astec’s Aggregate and Mining Group. Astec, which also has infrastructure and energy groups, has 19 companies in total, each retaining its own distinct brand and identity. Led by President Don Sissons, BTI currently employs around 160 people, including 20 in the U.S. Offices in the Cleveland suburb of Solon, Ohio, and in Riverside, Calif., provide sales and service support stateside, while the main Thornbury office serves Canadian and international clients. More than rockbreakers To date, BTI has completed around 3,000 installations of rockbreaker systems, including the world’s biggest rockbreaker, the TRX, which stretches out an impressive 64 ft. and weighs over 100,000 lb. BTI developed the TRX in 2013 for the Iron Ore Company of Canada’s Labrador City operations. Other notable clients include Codelco’s El Teniente underground mine and its Chuquicamata open pit mine in Chile. In addition to rockbreaker systems, BTI has a long history making scalers – equipment that’s used to dislodge loose rocks in underground mine headings after blasting to lower the risk of falling rocks. It made the first one in 1981 with the help of a Canadian government grant and ended up selling three to a mine in Peru. (Incidentally, two of those original scalers – now rebuilt – are still working.) Until recently, BTI’s scalers were large, heavy, and on the expensive side. While it still has a few dedicated customers who keep coming back for this type of machine, the company recognized it couldn’t break into new markets with the 42 | CANADIAN
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These mines can’t have any down time. If that machine goes down it costs them a lot of money. So they’ve come to know our product as one of the most reliable to keep running day in, day out for years. –TERRY MCKAGUE, BREAKER TECHNOLOGY’S DIRECTOR OF SALES, INTERNATIONAL AND CANADA
existing product. Finding inspiration from a client in Peru who had built their own homemade machine with increased flexibility, in 2012, BTI introduced its RMS 18 scaler. The machine offered enhanced flexibility and extremely high availability. However, it was still a little too big, so in 2016, BTI came out with the ScaleBOSS
3D Scaler – a machine that’s smaller and cost effective for smaller headings. It also offers improved flexibility with a 5-axis boom and operate up to 5.5 metres. “We’re finding that it’s more productive, more reliable and more comfortable for both the operator and maintenance personnel,” says McKague, who joined BTI in 1988. The machine scales up two times faster than any other scalers, has faster controls, 5-axis positioning of the hammer, excellent operator visibility, and ergonomic design that reduces operator fatigue. Another product that’s unique to BTI is its Mine Runner vehicles, first introduced four years ago. The all-purpose mining vehicles can carry much more than trucks typically used at mine sites – 6,000 lb. in comparison to 900 lb. “A lot of people think that it’s too large for their environment and they don’t realize that it has a very tight turning radius,” says BTI’s marketing coordinator, Julie Simmonds. “It’s very agile.” A new version with an extended wheel www.canadianminingjournal.com
2018-07-24 11:36 AM
Top: BTI’s TRX rockbreaker is the largest in the world. Bottom: A tour of BTI’s facilities, lead by Terry McKague (at right). CREDIT: BREAKER TECHNOLOGY
third party inspectors to come in and check our quality records and check the products,” McKague says. “Our system… marries up really well with what they’re asking for. If we didn’t have that system in place, we would not be able to build equipment for large mines and large engineering firms.” BTI uses lean manufacturing principles, such as value stream mapping, to focus energy and resources into two different streams – the rockbreaker system line and mobile equipment manufacturing. Each stream has dedicated engineers, manufacturing experts and purchasing experts.
base will be unveiled shortly. The new Mine Runner will have the ability to carry even more weight, with an environmentally controlled ROPS / FOPS (roll over and falling object protection systems) passenger cabin that can carry up to 15 people at once (up from 8). A second generation of the ScaleBOSS is also in the works, Simmonds says. “Right now, it’s good for the 3- to 5-metre heading. The next model will be designed for 4-to-7 metre headings while still keeping it compact and flexible.”
“Often, the large mining companies and the engineering firms will ask us to hold at certain points of the manufacturing process so they can send their own
‘It’s good to be busy’ Like any OEM, BTI’s business ebbs and flows with industry fortunes. But after a couple of slow years in 2014-16, orders have picked up, says product manager John Wittenberg. “The North American economy is doing rather well,” he says, estimating that business in the U.S. and Canada is up substantially. “Our international CONTINUED ON PAGE 44
Focus on quality On a tour of BTI’s manufacturing floor in June, Terry McKague notes that BTI manufactures as many parts and components as possible in-house – first to ensure quality control and second, to minimize delays on new orders. As an ISO certified company since 1998, BTI has a quality management system equipped to meet the high standards required by large mining and engineering companies. AUGUST 2018
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COMPANY PROFILE A BTI rockbreaker at work. CREDIT: BREAKER TECHNOLOGY
business in certain countries has almost doubled.” Wittenberg says the company is as busy now as it was in 2012-13 – a very good year for BTI. “We’re back up near peak,” he says. “It’s good to be busy.” With that, however, comes the challenge of longer lead time times for parts that aren’t manufactured in house. “Our suppliers are seeing extended lead times – what used to be stock for
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a lot of components seems is now back ordered with extended lead times,” Wittenberg says, extended the lead times for engine, drive line and hydraulic components are hardest hit. Innovation An increasing number of underground rockbreaker systems that BTI sells are operated remotely via the company’s Breaker Intel Systems, a long distance remote system. BTI supplies an array
of scalable long distance control systems with single or multi-boom control combined with integrated low latency video monitors. As the company steps towards automation, further enhancements include position feedback systems for site specific collision avoidance and park/deploy functions improved operator experience and cycle times. And for what it’s already achieved with its rockbreakers’ remote operation capabilities, BTI recently received the 2017 Science and Technology from the China Gold Association after it was nominated by client Shandong Gold. “It’s the innovation that I love because when we come out with these new machines, we’re taking the existing problem at a mine and trying to solve it with something that’s not available – taking the mining industry to a new level,” CMJ McKague says.
www.canadianminingjournal.com
2018-07-24 11:36 AM
MINE COSTING
GETTING A HANDLE ON
REMOTE
MINE
COSTS Photo: sharply done, iStockphoto.com
By Sam Blakely and Jennifer Leinart
I
t is becoming harder and harder to find the next mine. While the benefits of hunting for deposits in developed areas are clear, explorers are being forced to go into more difficult areas to find the next big discovery. Companies must understand that finding a deposit is just the beginning and that a thorough
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understanding of costs is essential. By developing cost models, an evaluator can determine where to best spend precious dollars and make the all-important go or no-go decisions. In Canada, this means that companies are looking to develop new mines in the harsh conditions of the North. Fortunately, Canada has a strong history of mining in the North from previ-
t
How cost estimating can help guide project decisions early on s
ous operations such as Cantung, Polaris, Pine Point and Faro to current producers such as Diavik, Meadowbank, Ekati and Minto, where building and operating mines in harsh conditions is just another day at the office. To get a sense of what companies are working on, we searched the Mining Intelligence database to see which
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MINE COSTING
Canadian Projects from Preliminary Economic Assessment to Construction Developed Regions
Remote Regions
11
36
6
11
19
13 PEA
Prefeasibility
5 4
Feasibility
Permitting
1 6 Construction
Source: www.miningintelligence.com
projects had reported moving beyond advanced exploration. Of the 111 Canadian developing projects in the database, 34 of them were located in remote areas which either have no infrastructure available or will require additional infrastructure. The biggest hurdle that any new project has going forward is economic. The figure below illustrates these proj-
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ects by stage of development. Clearly, projects in remote locations are going to become more and more important as Canada develops new mines. Evaluating the cost of building and operating mines in remote environments is critical to understanding the economics. CostMine, a division of Mining Intelligence, has been evaluating projects and Input Parameters
Remote Area Developed Area
Total Minable Resource Production Rate (ore)
46 | CANADIAN
Average Gold Grade
1.2
1.2 grams/tonne
Average Silver Grade
8.0
8.0 grams/tonne
4 $1,300 $20
4 years $1,300
US$ troy ounce
$20 US$ troy ounce
For these models, we considered the difference between the cost of equipment, supplies, labour, power generation, infrastructure and capital required. Items such as electric power can be three to four times higher at a remote mine.
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40,000 tonnes/day 4:1
Silver Price
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40,000 4:1
Gold Price
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300,000,000 300,000,000 tonnes
Average Stripping Ratio
Pre-Production
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collecting data on supplies, equipment, labour and other key costs since 1983. In this article, we wanted to see what difference location would make if all of the other parameters at a theoretical gold mine were the same. We used the same resources, grade, mining method, processing method and deposit type for each model. The only difference between the two models was location. By comparing the models, we could examine the differences between operating in a developed region where infrastructure is already in place, to operating in a remote region where roads, power, supplies and a local workforce do not exist. The theoretical mine models in this article do not attempt to evaluate any current mine and are only used to illustrate the challenges. Both models are open pit gold mines with an associated mill. They are assumed to be located in Ontario, one in a remote location and one with ready access to infrastructure. Our remote mine example will have a fly-in, fly-out camp, a winter
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2018-07-24 11:40 AM
ice road to bring in bulk supplies, on-site generators and an airstrip. We have assumed that both mines will have the same operating parameters for the open pit mine and the mill. All of the costs listed are in Canadian dollars, with the exception of the commodity prices which are in US dollars. Gold Project – Open Pit Mine with Mill For these models, we considered the differences between the cost of equipment, supplies, labour, power generation, infrastructure and capital required. We used our Mining Intelligence Evaluate software to calculate the capital and operating costs. The inputs for capital and operating costs were drawn from Mining Cost Service and the 2018 Canadian Mine Salaries, Wages and Benefits report, published by CostMine. Items such as electric power can be three to four times higher at a remote mine versus a mine with access to a grid. Diesel fuel, explosives and lubricants can be 50% to 60% higher and labour can range from 20% to 40% higher at remote locations. In addition, camp and remote location facilities can increase the labour force by 15-25%. In our models, we included all of the major equipment, supplies and labour costs common at this type of mine. To
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Key Cost Assumptions
Remote Developed Location Location
Diesel
1.55
1.05 $/litre
Lube
6.26
4.49 $/litre
Bulk Explosives
1.61
1.09 $/kg
Grinding Media
0.99
0.67 $/kg
Sodium Cyanide
5.08
3.44 $/kg
Electric Power
0.25
0.08 $/kWh
Gold Project – Open Pit Mine with Mill
Economic Summary – 40,000 tonnes ore per day - 4:1 stripping ratio
Capital Costs in 2018 Canadian Dollars
Remote Area
Developed Area
Open Pit Mine
$629,461,800 $496,600,000
Mill, Tailings and Facilities
$414,219,100 $389,775,500
Remote Infrastructure (including airstrip and camp) $35,185,600 TOTAL
$1,078,866,500 $886,375,500
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MINE COSTING
Gold Project – Open Pit Mine with Mill
Economic Summary – 40,000 tonnes ore per day - 4:1 stripping ratio
Operating Costs in 2018 Canadian Dollars
Remote Area
Developed Area
Open Pit Mine
$27.43 $23.19
Mill, Tailings and Facilities
$16.76 $10.54
Remote Infrastructure (including airstrip and camp) $2.10 TOTAL
$46.29 $33.73
Operating Costs in 2018 Canadian Dollars Results
Remote Area
NPV (@10% discount rate)
-$297,980,000 $450,845,000
Payback Period
11.01
Internal Rate of Return (IRR)
5.58
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Developed Area
4.19 years 14.39
The cost of getting equipment, people and supplies to remote regions is by far, the biggest challenge faced by miners. In addition, the risks associated with changing markets for consumables cannot be understated. Cost estimates need to take into consideration changes in prices and market conditions and should be reviewed and revised at each stage of the project.
per cent
illustrate some of the differences, the table below lists some of our assumptions for a sample of key costs. The cost of getting equipment, people and supplies to remote regions is, by far, the biggest challenge faced by miners. In addition, the risks associated with changing markets for consumables cannot be understated. Cost estimates need to take into consideration changes in prices and market conditions and should be reviewed and revised as more information is available at each stage of the project. Just as resources are refined and improved, so should costs. Below is a summary of the capital costs for both models. In our example, the remote mine model represents a 16% higher capital cost than the model in a developed area. However, the real difference occurs at the operating cost level. As shown below, the operating costs at the remote example are 37% higher than a mine in a developed area. Once we estimated the capital and operating costs for each scenario, we were able to calculate the net present value (NPV) at a 10% discount rate, payback
period and internal rate of return (IRR). The table below illustrates the impact that operating in harsh conditions has on the economics of the project. In many cases, the economics could be improved by changing the mine design or method to improve grade or the processing technology to a different method to save both capital and operating costs. In conclusion, the high cost of operating mines in remote areas of northern Canada has a direct impact on profitability simply based on location. Using economic modelling to understand these impacts will help explorers determine the minimum viability of a project. Cost estimating at the advanced exploration stage can help target the best projects, determine cutoff grade and assist in the overall strategy of obtaining financing. CMJ Sam Blakely is a cost analyst and project geologist with CostMine, a division of Mining Intelligence (www.costs.infomine.com). He can be reached at sblakely@infomine.com. Jennifer Leinart is President of InfoMine USA, Inc., the CostMine division and a cost analyst. She can be reached at jleinart@infomine.com. www.canadianminingjournal.com
2018-07-24 11:40 AM
NEW
MINING TECHNOLOGY
NEW TOOLS OF THE TRADE P50 EPIROC’S CONTINUOUS MINING MACHINE P52 OREXPLORE’S NEW CORE-SCANNING TECH
Orexplore’s GeoCore X10. CREDIT: OREXPLORE
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2018-07-24 11:42 AM
NEW MINING TECHNOLOGY
By Alisha Hiyate
EPIROC
INTRODUCES MECHANICAL MINERS
I
t’s no wonder Epiroc is fielding calls from miners around the world about the company’s new Mobile Miners, officially launched last July. The continuous mining machines deliver something the industry has long been asking for – a mechanical miner that’s capable of cutting through hard rock, streamlining the stop-and-go underground mining process. The machines have the potential to reduce drill and blast in most underground mines and completely replace it in mines with small orebodies. The technology is not entirely new, but represents a twist on well-established tunnelling technology, says Mikael Ramstrom, Epiroc’s director, global strategic projects and alliances. “We use the technology that is commonly used in civil engineering for big tunnelling projects, but what is really unique here is to use this technology in underground mining – this is something that we haven’t seen before in this format 50 | CANADIAN
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or configuration,” Ramstrom says. The mobile miner is an upgraded and redesigned version of equipment that Epiroc was selling in the ‘80s and ‘90s. “For Epiroc, this has been something that’s been in our portfolio for a very long time but we have modernized it over the past six, seven years in cooperation with customers.” The original version of the mobile miner struggled with performance and had a high cost of consumables as the cutting head wore down quickly. The modernized machine uses steel disc cutters to introduce stress to the rock as it rolls over the surface, causing the rock to split and fall from the face. “The machine touches the rock, but not by dragging something over the surface of rock” as continuous miners used in coal mining do, Ramstrom says. “In our case, we are rolling something, and that can take a lot harder type of rock than if you try to rip it down the rock.
Ramstrom says company has succeeded in eliminating performance issues encountered with the older version of its continuous mining machine, but as a new product, it doesn’t yet have enough operation time to prove that costs will be lower. “We need to run a little bit more time for the hard facts on that, but on the performance, we have achieved that, absolutely.” Advance rates In addition to being safer than drill and blast, the Mobile Miner is also faster. “We are around twelve metres per day in advance rates,” Ramstrom says. “That’s a completed tunnel with ground support, etc. If we benchmark this to a typical underground mine that is doing drill and blast, you typically find that the advance rates are at four, five metres per day. So we are at least twice as fast compared to drill and blast.” www.canadianminingjournal.com
2018-07-24 11:43 AM
Opposite: The 22H model of the Mobile Miner, which is currently being tested at Anglo American’s Twickenham mine. Above: The 40V (which Hecla Mining has ordered for its Lucky Friday mine) and 55V models. CREDIT: EPIROC
While harder rock (from 200 to 220 Megapascal and upwards) will slow the performance of the machine, Epiroc hasn’t encountered rock that is too hard to be cut by the mobile miner. As a selective mining method, the mobile miner also reduces dilution. Models The 22H model of the mobile miner is being tested at Anglo American’s Twickenham mine in South Africa since 2016. The original 55V model, which was built for Rio Tinto, was sold by the miner but is now in use at a nuclear waste storage testing facility in Sweden. And Hecla Mining just ordered the first 40V model for its Lucky Friday mine in Idaho in November. All models are fully electric and can be manually or remotely operated and consist of a rear power unit and a front miner, which includes the steel disc cutting head. The front frame attaches to the AUGUST 2018
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excavation to provide stability while the cutting head works. Each model has a different tunnel profile, turning radius, and other features. The 40V produces a 4- by 4-metre tunnel; the 55V produces a 5.5- by 5.5-metre tunnel; and the 22H low profile mining produces a 2.3- by 5.5-metre tunnel. Because Epiroc is starting a new generation of machines, Ramstrom says the company has the flexibility to add to the product line based on customer need. “We hope that customers will be attracted by the ones that we have made so far,” Ramstrom says. “If there happen to be customers that want something different than what we have, then we will add to our portfolio and do a new project together with customers.” Lucky Friday And as mines go deeper, and encounter more issues with rock stress and stability, heat and diesel particulates, there are increasing concerns about safety, productivity and costs for ventilation and cooling. Those are all factors for Hecla Mining at its Lucky Friday silver-lead-zinc mine, which has been in operation for 75 years. In 2017, the company completed a new
internal shaft to 2.9 km depth to reach the high-grade 30 Vein. Hecla and Eprioc began working on a continuous miner to meet conditions at Lucky Friday in 2015. “At Lucky Friday, the orebody’s about two to three metres wide and that means that you can actually cut the whole orebody with this technology,” said Ramstrom. “They will replace the drill and blast completely and go for mechanical cutting both in ore production and mine development.” Hecla’s first mobile miner is in the manufacturing and testing phase at Epiroc’s facilities in Sweden. Before it’s shipped to site for a field trial at Lucky Friday in early 2020, it will undergo a test trial at an Epiroc test mine. “Next year, they will take delivery of the first machine and then they’ll make the decision on the next and the next.” In the meantime, Epiroc has been busy arranging visits to see the Mobile Miners in action in South Africa and in Sweden. “It is a big step to take and also a large investment,” Ramstrom says. “I would say that after seeing what we did in these places it’s a lot easier for these potential new customers to make the decision to go forward.” CMJ CANADIAN MINING JOURNAL |
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2018-07-24 11:43 AM
NEW MINING TECHNOLOGY
OREXPLORE LAUNCHES DIGITAL CORE SCANNER GeoCore X10 allows 3-D core analysis in near real-time
O
rexplore has released a digital core scanning technology that could one day replace assay labs as we know them. The company’s GeoCore X10 laboratory extracts structural and elemental information from an entire drill core in near real-time. The technology gives an accurate reading of element concentrations and minerals that compose a drill core, as well as providing a 3-D image of the rock’s internal structure. “The novelty of the technology and what makes Orexplore unique is the fact that we can see through the drill core and 52 | CANADIAN
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not only the surface as traditional XRF or hyperspectral technologies do,” said Orexplore CEO and cofounder Kevin Rebenius in an email interview with CMJ. “Apart from revealing 3-D structural information, textures and density, Kevin Rebenius the analysis combines attenuation data with X-ray fluorescence to inform the element abundance analysis. In essence, Orexplore technology combines well known X-ray detection techniques, namely high-energy X-ray
fluorescence and X-ray transmission detection in a new unique way.” Because it can “see through” the rock, no sample preparation is necessary for analysis, meaning no portion of the core has to be destroyed. The origin of the technology behind the GeoCore X10 was in medical X-ray research performed by one of the cofounders of Orexplore in the 1990s that looked at measuring heavy elements in the human body (for example platinum compounds used in cancer therapy). He met a geotechnician who was intrigued with the technology and had the idea to apply it to rocks. However, it wasn’t until www.canadianminingjournal.com
2018-07-24 11:45 AM
Orexplore’s GeoCore X10 was recently launched in Australia and could be coming to North America next. CREDIT: OREXPLORE
2010 that advances in computing power and detectors made it possible to use the technology to analyze rock in a reasonable amount of time, Rebenius says. That’s when Orexplore was founded. “The Orexplore R&D team has evolved the technology over the past eight years and is now not only able provide accurate wide range element concentration analysis, but also 3-D tomographic imaging revealing internal bed rock structures, mineral identification, density measurement and texture data,” Rebenius says. In 2013, Orexplore partnered with Australia’s Swick Mining Services and it finally launched the GeoCore X10 this year, as well as opening an office in Perth. It signed its first customer in Australia, Saturn Metals, which is using the machine at its Apollo Hill gold project, this summer. The GeoCore X10 has been tested on-site at a Boliden mine in Sweden, and is currently being tested at Lovisagruvan, a lead-zinc mine in Sweden. Right now, the GeoCore X10 is being offered as a rental – machine plus a technician. Companies can also send core to one of Orexplore’s offices in Perth or Stockholm to be analyzed. Rebenius says the price works out to about A$80-100 per metre. Ultimately, he envisions larger mine sites would want to use more than one machine on-site.
Apart from revealing 3-D structural information, textures and density, the analysis combines attenuation data with X-ray fluorescence to inform the element abundance analysis. – KEVIN REBENIUS. OREXPLORE CEO AND COFOUNDER
AUGUST 2018
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Applications For exploration projects and mine sites, the GeoCore X10 dramatically cuts down the time it takes to analyze drill core – instead of waiting weeks for drill results, the machine can have data available in a digital archive to both field geologists and head office in about an hour. That allows exploration teams to make quick, informed decisions to redirect or refocus drill holes, if necessary. For mine sites, the technology can be used in combination with an ore tracking system to provide information about grain size, liberation, density, and hard and soft mineral ratios that can help metallurgists adjust processing parameters in advance. “The machine is really easy to operate,” Rebenius says. “The brainpower is
required for interpreting and making use of the data. The user who is typically a geologist or metallurgist, access the data in our Insight software.” The software allows visualization and manipulation of the data in 3-D – including magnification and rotation to view the rock’s composition and geostructural features from any angle. When the data is imported into ore modelling software, it allows a more comprehensive picture of the orebody. “The tomography data, revealing internal geological structures, such as foliations, folds and veins are really making geologists excited. Professionals are also excited about the possibility to identify textures and mineral distributions,” Rebenius says. “People are a bit overwhelmed with the wealth of information and I think it is going to take some time for the industry to figure out how to best make use of the data. I believe we have only seen the tip of the iceberg, when it comes to the possibilities to extract valuable information from the vast amount of data generated.” As for the accuracy of technology and how it compares to results from assay labs, Rebenius says comparative studies are under way. Since labs take a few grams from a half drill core and base the assay on that small sample, sometimes it is representative of the entire drill core and sometimes it isn’t. “For heterogeneous and low-grade ore samples, the error is significant,” he says. “For those cases especially, the Orexplore analysis gives better results since we are looking at all the material in the sample. For higher-grade samples the labs tend to be more competitive. However, our method improves over time. The more geologies we encounter and learn from, the better the analysis becomes.” Rebenius predicts that within a decade, the assay process will have become completely digitized. “In that sense, I believe the traditional labs will become obsolete in time,” he says. “Perhaps labs will adopt our or other coming scanning technologies themselves in order to transform their business models and become part of the ongoing digitalization transformation process. Digitalization is evident across all industries and companies need to adapt to stay CMJ competitive going forward.” CANADIAN MINING JOURNAL |
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2018-07-24 11:45 AM
ADVERTORIAL
BME expands into North American explosives market
S
outh Africa-based explosives leader BME has taken another important step in internationalising its footprint by supplying its market leading AXXIS electronic detonators to customers in North America. According to BME managing director Joe Keenan, the company is already active with shipments of AXXIS detonators to customers in Atlanta and Texas, and the introduction of a number of BME’s other products and services is soon to follow. “Our range of highly stable emulsion formulations has also been approved by the necessary authorities, and these will soon be available to the North American market,” said Keenan. “We expect considerable interest from users and distributors alike as we unveil our offerings to this market.” He highlighted that much of the anticipated initial demand is likely to come from large existing customers who have good experience of working with BME in Africa and Australia – and who also have operations in North America which could benefit from BME’s offerings. Providing a base for BME’s presence is its recently opened offices in Denver, Colorado. “We expect that the powerful features of the AXXIS system and its user-friendly interface are going to prove as attractive to this
new market as they are in our existing markets,” he said. “Our immediate plans for the North American market are to establish and develop our distribution network for the AXXIS system and emulsion explosives – to develop customer relationships in mining, quarrying and construction.” BME’s emulsion products – which have been developed over the past three decades and have proved highly successful – will be toll manufactured in the US to BME’s specifications. The company’s emulsion technology, production capacity and customer service culture has made it one of the largest explosives suppliers to Africa’s opencast mining sector. BME’s AXXIS system – which has built a strong customer base in the mining sectors of Africa and Australia especially – has been behind the world’s largest surface blasts, measured by the number of electronic detonators fired in a single blast. At Zambia’s Kansanshi Mine – the largest copper mine in Africa – 6,690 electronic delay detonators were successfully initiated in one blast last year using AXXIS. Electronic detonation has become increasing popular due to its reliability, accuracy and flexibility, making blasting practice more predictable and allowing for larger and more cost-effective blasts. n
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 Angola, Botswana, Burkina Faso, DRC, Malawi, Mali, Mauritania, Namibia, South Africa, Senegal, Sierra Leone, Swaziland, Zambia, Zimbabwe and where opportunities present themselves.
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ADVERTORIAL
DOPPELMAYR Ropeways as a means to transport people and material R
opeways can look back on a long history when it comes to making transport easier – or even possible – in difficult terrain. The Doppelmayr Group is the world’s leading expert on ropeways, having built more than 14,900 ropeway systems in 95 countries. Apart from their application as a safe means to transport passengers, they are also perfectly suited to transport material. For instance, the Cerattepe underground copper mine of the Turkish Eti Bakır A. Ş. mining company (a member of Cengiz Holding) is situated in very mountainous terrain approx. 3.5km southwest of Artvin, a city in the Black Sea region in north-eastern Turkey. The mined copper ore is transported to the river with a 4.5km long ropeway, which covers a difference in elevation of more than 1,500m on its way there. The mouth of the Cerattepe copper mine is at approx. 1,700m above sea level. From there, the ropeway transports the ore into the valley over a distance of 4.5km across steep, wooded terrain. The incline is more than 43° at the steepest point. The ropeway can also be used to transport backfill material from the valley to the mouth of the mine. Furthermore, the Cerattepe ropeway allows for the combined transport of material and people. Apart from the material buckets in which the ore is transported, the system will also be equipped with some passenger cabins. In these cabins, the mineworkers can travel to their workplace comfortably and in safety. A trip in any of the cabins takes approx. 20 minutes. Operation of the ropeway is fully automatic. Operating costs can
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thus be optimised. There are also hardly any moving parts along the track. All material buckets and cabins travel through the stations regularly and can be easily inspected and maintained there. To cover the entire distance and the enormous difference in elevation of 1,500m, the ropeway requires only 11 towers. The footprint on the ground can thus be minimized, and because the system is elevated off the ground, it does not represent an insurmountable obstacle for man or wildlife. The ropeway took up operation in December 2017 and has since been transporting 60 tons of copper ore per hour into the valley.
Doppelmayr builds ropeway for material transport in Colombia Another example of how ropeways can help to overcome transport challenges will be built in North-western Colombia, approx. 72km from the city of Medellín. CGL Sucursal Colombia, a subsidiary of the Canadian mining company Continental Gold, Inc. is developing the gold ore deposit Buriticá. The logistics of the project has to overcome some challenges in this very mountainous region. A ropeway will be installed to transport tailings from the valley floor to the paste backfill plant at 1,700m.a.s.l. covering a difference in elevation of 646m. In October 2017, Doppelmayr, headquartered in Austria, was awarded a contract to build an approx. 1.4km long ropeway to transport 175 tonnes of material per hour in buckets. Commissioning of the system is planned to take place in March 2019. n
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2018-07-23 4:06 PM
ADVERTORIAL
Getting more value from brines:
tech improvements reduce costs and increase recoveries for lithium By Bryan Schreiner, Jack Zhang and Lucinda Wood
The following is an excerpt from an article on the Saskatchewan Research Council’s (SRC) blog, From the Lab to the Loading Dock. Read the full version at www.src.sk.ca/blog
L
ithium, the lightest metal on earth, has numerous applications, ranging from lubrication grease and glass fabrication to rechargeable batteries that power many electronics and electric vehicles. The demand for lightweight, rechargeable lithium batteries has increased significantly as markets grow for mobile devices, electric vehicles and renewable power storage. The challenge for the mining industry is to keep up with this fast-rising market demand. Although lithium is found in many minerals and some brines, it is typically in low concentrations and these sources each have unique characteristics. This makes extraction expensive and time consuming. More efficient and economically viable recovery solutions are needed so that companies can stake their claim in the lithium race. How is lithium sourced and extracted? The typical sources of lithium are hard rock deposits, sedimentary deposits or formation brine deposits of saline groundwater (salars). Salar brines are underground reservoirs that contain high concentrations of salts, including lithium, potassium and sodium. Downstream processing technologies for brines can be more challenging than traditional hard-rock processes because of unit operation complexity and generally
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high energy and water requirements. Each brine also requires a unique processing sequence that needs to be developed and piloted.
heating and cooling stages, which contribute to high energy and water consumption.
Traditional processing for brines involves pumping the brine from wells to a set of evaporation ponds where the lithium (and often potassium as a byproduct) is concentrated. The concentrated brine is then subjected to a complex series of impurity removal steps to produce a lithium salt (e.g., hydroxide, carbonate) product that is typically not at batterygrade purity – this requires additional purification.
Improving lithium extraction and processing methods
Lithium-from-brine recovery challenges Mining companies face numerous challenges when recovering lithium from brines. The ponds are capital intensive, and solar evaporation can take 18-24 months depending on climate conditions. Lithium-containing brines are also composed of numerous minerals, including undesirable elements such as magnesium, that need to be separated until only lithium remains. Conversely, brines also contain desirable by-products such as potassium, which can potentially increase the economic value of the deposits if they can be recovered. Another challenge is the lithiumconcentrated brine undergoes a series of processing steps that involve significant
The Saskatchewan Research Council (SRC) is working with mining companies to develop lithium recovery processes from various sources to produce battery-grade lithium products, and also to pilot and test new lithium recovery technologies. They have the equipment, facilities and expertise to develop, optimize and test lithium recovery technologies from all sources - hard rocks, clays and solutions (brine and produced water). To overcome the challenges of the traditional lithium recovery process, SRC is developing its own more selective and cost-effective lithium recovery from brine technology. The successful implementation of this technology will significantly reduce the lithium production cost – both capital and operating – and make it easier to recover and produce battery-grade lithium. Brines have the potential to provide major resources for lithium into the future. As the industry grows, there will be new challenges and opportunities that will require innovative methods and processes to help mining companies sustainably get more value out of their brines. n
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CANADIAN MINING JOURNAL |
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2018-07-24 12:17 PM
UNEARTHING TRENDS
Riding the wave to digital transformation By Iain Thompson
I
s riding the digital wave the key to a competitive advantage? It may not be the only factor but it’s certainly a large enabler of margin improvement and competitiveness today. The opportunity for mining and metals companies is significant – but many executives acknowledge digital effectiveness as the top risk facing the sector today. The reason stems, in large part, from the history of productivity challenges that began in 2000. Companies chose to pursue growth and headline revenue at any cost during the boom in commodity prices. An integration gap emerged – between the mine and production plant, maintenance and supply chain – causing productivity losses estimated at 20%. Miners have turned their attention back to productivity in recent years – and begun embracing digital. Of course, digital solutions go back further back than that in the sector – from simulation modelling to remote mine monitoring – but they’ve typically been one-off initiatives versus part of a holistic approach. And, as a result, haven’t done much to enhance margins. The emphasis now needs to be on a clearly defined digital strategy that contributes to a business transformation. Industry players who are committed to a multi-year “digital wave” approach will regain ground lost over the super-cycle and avoid falling into the trap of a digital disconnect. There are four distinct components to this model: Digital pre-start This is where the digital vision starts to take shape. This involves understanding where your organization sits on the digital maturity continuum, and establishing a clear link between productivity and your digital agenda. A minimum investment in infrastructure, communications and data is required before you can move on to the next stage. Wave 1 Wave 1 activities begin the process of transformation. At this stage, organizations should look to add business value through local optimization or automation, which doesn’t necessarily require changes to the existing operating model. With that said, work should be linked to overall productivity and the performance improvement agenda. Examples of Wave 1 activities may include: developing a predictive analytics strategy to better understand potential component failures, tuning up
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existing fleet management systems and fully digitizing maintenance tactics. Wave 2 This stage involves significant changes to a company’s operating model or process change across organizational boundaries. These activities span the whole value chain to better manage margin through interactions with customers and suppliers. For instance, automating supply chain operation, and real-time mine planning with a focus on pricing and equipment health. Using predictive analytics to better gauge changes in customer demand is another way to leverage technology at this stage in the process. Wave 3 This is when disruption gives rise to significant level of change in how the sector operates – and requires a step change in business strategy to be fit for the new future. Consider how emerging technologies have driven convergence and enabled the entrance of new competitors in areas like retail, hospitality and transportation. In mining and metals, we could see this level of change emerge from service companies becoming more dominant in the value chain and or the introduction of artificial intelligence to make autonomous decisions. These changes aren’t always easy to see coming and so require companies to evolve in ways they can’t predict now. Risk and return The movement between each of these waves is not static, and mining and metals players will need to be nimble and adapt accordingly to remain competitive. It’s not necessarily a sequential process, either. Organizations should examine where they are in terms of digital maturity and adjust their strategy. At its core, the strategy needs to be guided by a clear, longterm vision and should incorporate key phases and milestones. Market leadership takes time to win, but is lost quickly. Adopting a progressive wave approach can help companies balance risk and return, capitalize on innovation potential and help move towards true digital transformation. CMJ IAIN THOMPSON is the EY Canada Mining & Metals Advisory Leader. He is based in Vancouver. For more information, visit ey.com/digitalmine.
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