Canadian Mining Journal December 2019 by The Northern Miner Group

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Mexico FRUTA DEL NORTE NEARS THE FINISH LINE MATERIAL HANDLING: TRENDS IN IPCC

DECEMBER

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CANADIANMINING

DECEMBER 2019 VOL. 140, NO. 10

JOURNAL

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CANADIAN MINING JOURNAL

FEATURES 12 25

Highlights from The Northern Miner’s annual Progressive Mine Forum.

Dräger and Newmont Goldcorp collaborate on a mine rescue vehicle for the 21st century mine.

INTERNATIONAL MINING 16 20

Lundin Gold closes in on first gold at Fruta del Norte. The outlook for miners in Mexico remains positive, despite some setbacks.

30 MATERIAL HANDLING 31 Why in-pit crushing and conveying (IPCC) is

growing in popularity with miners.

DEPARTMENTS 4 EDITORIAL | Mining’s trust challenge.

5 LAW | Robert Mason of Norton Rose Fulbright outlines the implications of rising gold prices for M&A.

6 CSR & MINING | Jane Church and Carolyn Bennet of NetPositive on the complicated relationship between mining and climate change. 8 FIRST NATIONS | Chad Norman Day, president of the Tahltan Central Government in B.C., discusses what UNDRIP means in practice. 10 FAST NEWS | Updates from across the mining ecosystem.

www.canadianminingjournal.com DECEMBER 2019

ABOUT THE COVER

This months cover provided by Doppelmayr and showcases the RopeCon® system at Booysendal South in South Africa.

Coming in January Canadian Mining Journal looks at battery minerals and base metals, plus mining in B.C., the Yukon, and Northwest Territories.

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 |

FROM THE EDITOR DECEMBER 2019 Vol. 140 – No. 10

CANADIANMINING Mining’s trust challenge Alisha Hiyate

t’s often noted that mining has been much slower than other industries to change and modernize. But at The Northern Miner’s recent Progressive Mine Forum event in October, it wasn’t the technology gap that keynote speaker George Hemingway identified as the biggest risk to mining’s future. “We are at a time when the mining industry seeks to transform, a time unlike any other in centuries, where we have the technology, we have the will, we have the tools, we have the knowledge,” said Hemingway, a partner at innovation consultancy Stratalis. “And we have a potential problem – a challenge that needs to be overcome in order to reach (mining’s) vision of the future.” That challenge, Hemingway said, is trust: “Trust is the new competitive advantage.” The rules of business are changing. Whereas in the past, all companies had to do was make money, profitability isn’t enough anymore. Trust is not something the mining industry currently enjoys. This is seen, for example in the great lengths Apple has gone to separate itself from the mining industry in order to build trust, by attempting to replace mined metals in its products. “They’re the hero of the story – not us. And the problem is that the mining industry gives them plenty of ammunition.” All natural resource industries face the trust challenge, and Hemingway gave some examples of what some leaders are doing about that. Amid widespread movements to reduce and, in future, eliminate carbon-based fuel, the CEO of Shell – one of the world’s largest petroleum producers – declared a couple of years ago that his next car would be electric. “Why?” Hemingway asked. “Trust. Because you’ve got to rebuild trust, you’ve got to part of that wave of change or that wave will hit you and knock you over.” In mining, companies like BHP Billiton are talking about social value alongside profitability, while Vale has launched its PowerShift electrification strategy to reduce GHG emissions and energy use. “But it’s going to take more than just 1, 2 or 3 big mining companies to make the difference... because the price that’s being paid is the price of decades, the price of perception, and the price is going to require all of the industry to come together to make change, because what is valued has changed,” Hemingway said. In a future where it’s not enough that the world needs the products of mining, and in which trust in necessary to do business, the industry will have to embrace a search to define its societal value in order to thrive. Finally, a quick note on some changes here – as we congratulate Marilyn Scales on her retirement after an incredible 45 years with CMJ, I’d like to officially welcome Magda Gardner to the team. A mining engineer by training, we are thrilled to have Magda join us as news editor. You can drop her a line at mgardner@canadianminingjournal.com.

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225 Duncan Mill Rd. Suite 320, Toronto, Ontario M3B 3K9 JOURNAL Tel. (416) 510-6789 Fax (416) 510-5138 www.canadianminingjournal.com Editor-in-Chief Alisha Hiyate 416-510-6742 ahiyate@canadianminingjournal.com Twitter: @Cdn_Mining_Jrnl

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News Editor Magda Gardner CANADIAN MINING JOURNAL mgardner@canadianminingjournal.com Production Manager Jessica Jubb jjubb@glacierbizinfo.com Art Director Barbara Burrows Advisory Board David Brown (Golder Associates) Michael Fox (Indigenous Community Engagement) Scott Hayne (Redpath Canada) Anthony Moreau (Iamgold) Gary Poxleitner (SRK) Manager of Product Distribution Jackie Dupuis 403-209-3507 jdupuis@jwnenergy.com Publisher & Sales Robert Seagraves 416-510-6891 rseagraves@canadianminingjournal.com Sales, Western Canada George Agelopoulos 416-510-5104 gagelopoulos@northernminer.com Toll Free Canada & U.S.A.: 1-888-502-3456 ext 2 or 43734 Circulation Toll Free Canada & U.S.A.: 1-800-387-2446 ext 3505 Group Publisher Anthony Vaccaro Established 1882

Canadian Mining Journal provides articles and information of practical use to those who work in the technical, administrative

and supervisory aspects of exploration, mining and processing in the Canadian mineral exploration and mining industry. Canadian Mining Journal (ISSN 0008-4492) is published 10 times a year by Glacier Resource Innovation Group (GRIG). GRIG is located at 225 Duncan Mill Rd., Ste. 320, Toronto, ON, M3B 3K9. Phone (416) 510-6891. 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. From time to time we make our subscription list available to select companies and organizations whose product or service may interest you. If you do not wish your contact information to be made available, please contact us via one of the following methods: Phone: 1-800-387-2446 ext 3505; Fax: 403-245-8666 ; E-mail: jdupuis@jwnenergy.com Mail to: Jackie Dupuis, 2nd Flr. 816–55th Ave. N.E. Calgary, Alberta T2E 6Y4. We acknowledge the ﬁnancial support of the Government of Canada.

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LAW

Soaring gold prices: a mixed blessing for M&A By Robert Mason

he price of gold rose sharply in 2019 – about 20% over the last 12 months – leading to many immediate benefits for the Canadian mining sector. The upswing boosted the stagnant mining equity markets and triggered an increase in equity financings, which returned in 2019 to help mining companies at all stages of development to fund next steps. The surge in gold prices also stimulated renewed interest in new project development and M&A activity. This resulted in a number of high-profile consolidations among gold producers with many smaller transactions in the pipeline. Overall, there is a new sense of cautious optimism in the precious metal markets. But where do we go from here? It seems unlikely that the current gold price environment will lead to any fundamental shifts in mining investment activity in Canada. There remains a significant funding gap in the mining sector and no apparent way to fill it completely. That said, it’s probable that the higher gold prices will provide opportunities to select junior mining companies to fund continued development towards construction and/or a takeover by a producer. The numerous streaming and royalty companies that evolved to fill the funding gap left by the exodus of mining equity investors will also probably benefit. A stream is essentially a forward contract whereby a mining company agrees to sell a certain amount of its future metal production to a streamer in exchange for a combination of upfront payments and discounted payments at the time of delivery of the metal. Owners of streams and royalties on producing gold projects have booked significant profits in 2019 as a result of higher gold prices. The need to deploy these profits into new investments should lead to increased activity in precious metals streaming in the next couple of years. The most likely scenario is for the streamers to continue to invest in promising precious metals projects in safe mining jurisdictions like Canada, but to also look increasingly further afield to riskier jurisdictions in search of investment opportunities. This will no doubt result in a mix of safer investments in more conventional mining countries and higher risk-reward transactions where there may be geopolitical concerns. A greater focus on stream restructuring and insolvency solutions will inevitably flow from the increased investment in such higher-risk projects.

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Owners of streams and royalties on producing gold projects have booked significant profits in 2019 as a result of higher gold prices. The need to deploy these profits into new investments should lead to increased activity in precious metals streaming in the next couple of years. As for private equity, it is unclear what role it will play in mining in the near-term. Private equity investors have brought signiﬁcant capital to the mining sector in recent years as consideration for a mix of equity, streams, royalties, offtake and debt. We expect higher gold prices to cause them to continue to invest strategically in the mining industry and to play leading roles in funding certain mining projects through construction to production. However, any hope of a resurrection of the frothy mining IPO markets may be misguided. Gold prices would need to increase another 25% from today’s levels to make many private projects economically interesting enough to warrant a going public transaction. Investors seem unwilling to make large bets on new unproven companies and would instead rather make safer investments in established mining names, or else look to new sectors such as cannabis for riskier, but higher potential returns. As 2019 draws to a close and 2020 approaches, the focus for us will be on whether higher gold prices can be sustained long enough to allow the continued development and ultimate sale of some of the more advanced junior gold companies listed in Canada. In the longer term, we believe that streaming and private equity investors will continue to be the main drivers of mine development and construction as they reinvest proﬁts and new capital into the industry. We look forward to exciting new transactions in the months ahead. CMJ ROBERT MASON is a Toronto-based partner and the head of mining in Canada at Norton Rose Fulbright.

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CSR & MINING

It’s complicated … Mining and climate change By Carolyn Burns and Jane Church

round the world, mining activity brings environmental and social changes to local communities. Many of those communities are also at the forefront of the climate crisis. Whether it be the nomadic pastoralist Turkana tribe living near the development of the first oil production in Kenya or the Innu and Inuit in Labrador near the Voisey’s Bay nickel mine, the intersection of mining impacts and climate change exacerbates negative changes and limits the benefits from mining. Community well-being can be affected by environmental changes which in turn cause social changes. Extreme rain, storms and flooding can lead to tailings dam failures or contaminate community water sources. Longer and more frequent droughts may put further pressure on community land access and agricultural and pastoral livelihoods already affected by mining. Even if communities use income from mining activity to support and practice traditional lifestyles, changes to ice roads and flora and fauna related to climate changes may make it harder for them to do so. Mining activity is inextricably linked to both the causes and solutions of the climate crisis. Mining processes contribute to greenhouse gas emissions. In Australia, for example, the mining sector consumes 500 petajoules of energy per year, which amounts to approximately 10% of the country’s total energy use, according to the International Institute for Sustainable Development (IISD). The mining industry is working to reduce GHG emissions by moving to renewable energy sources and reduce its environmental footprint through innovation and improved technology. However, it is not possible to eliminate all environmental impacts of mining. At the same time, mining activity will continue even as we shift to the use of renewable energy. Researchers have estimated that meaningful climate solutions will require renewable energy to make up 60% of global energy use by 2030, and 77% by 2050 (Intergovernmental Panel on Climate Change, 2019). Regardless of how quickly we balance our energy mix, a low-carbon economy will require technologies that will drive demand for minerals, including aluminum, bauxite, copper, iron, zinc, lead, rare earths, cobalt, manganese and nickel. In fact, as the World Bank concluded in its Climate Smart Mining initiative, “the technologies assumed to populate the clean energy shift are in fact significantly MORE material intensive in their composition than current traditional fossil-fuel-based energy supply systems” (World Bank, 2017.) Recycling miner6 | CANADIAN

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Mining activity is inextricably linked to both the causes and solutions of the climate crisis. als will not meet this growing demand, and we will continue to rely on mining of the relevant minerals and metals (IISD). Solutions to the climate crisis will require increased mining activity in vulnerable, climate-stressed areas, further complicating the relationship between mining activity and climate change. Data from the U.S. Geological Survey shows that a significant portion of the minerals needed will come from communities that are remote and more often vulnerable. For example, already 65% of the world’s cobalt is mined in the Democratic Republic of the Congo, a country where communities are particularly vulnerable to environmental and social impacts of both mining and climate change. The World Bank confirms that “while the growing demand for minerals and metals provides economic opportunities for resource-rich developing countries and private sector entities alike, significant challenges will likely emerge if the climate-driven clean energy transition is not managed responsibly and sustainably.” Responsible mining activity must be a central part of our response to the climate crisis. If we develop renewable energies in a way that continues to create negative environmental and social impacts, how clean will that energy be? These concerns are already being raised by NGOs and civil society groups: “as demand for these scarce minerals skyrockets, the associated environmental and human impacts are likely to rise steeply as well. We have a timely opportunity to scale up our dependence on clean, renewable energy sources, while scaling back our dependence on dirty mining.” (Earthworks, 2019). Responsible mining in the new energy economy will require collective action from industry, government, civil society and communities and focus should be placed on climate-stressed communities affected by extractive development. There are several ways that stakeholders are supporting this.

Resources for innovation. The World Bank’s Climate Smart Mining Facility is a $50-million fund that provides ﬁnancing for initiatives that “help resource-rich developing www.canadianminingjournal.com

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countries beneﬁt from the increasing demand for minerals and metals, while ensuring the mining sector is managed in a way that minimizes the environmental and climate footprint.” (WorldBank, 2017.)

Global collective action. Rio Tinto has publicly acknowledged climate change, endorsed the Paris Agreement and published data on GHG reduction in line with internal targets. Rio Tinto has also highlighted the importance of collective action with particular industry associations and has publicly laid out its strategy for driving industry commitment. This approach is evident in its September 2019 announcement of a memorandum of understanding with China’s largest steel producer, China Baowu Steel Group and Tsinghua University, to explore ways to develop and implement new methods to reduce carbon emissions and improve environmental performance across the steel value chain.

Responsible supply chain initiatives for key metals and minerals, such as the Global Battery Alliance. Within the GBA, the NGO RESOLVE has launched LiFT – Sustainable Lithium for a Responsible Energy Transition to “to catalyze and accelerate action towards a socially responsible, environmentally sustainable, and innovative battery value chain

and optimize the contribution of sustainable lithium to a responsible global energy transition.” LiFT is designed to align with and ﬁt into existing upstream initiatives like the Mining Association of Canada’s Toward Sustainable Mining and downstream responsible sourcing initiatives like the Responsible Mining Initiative (developed by end-users including leading electronics companies).

Action at the local level. Taking a cross-cutting lens on climate change as communities respond to and manage the impacts of mining, and as they maximize the benefits will ensure that climate change is not an afterthought. For example, how are climate impacts assessed during impact assessment process? When communities receive financial benefits and revenues from mining activity, could resources be invested in green business or climate resiliency projects? Climate change should become a critical dimension in all aspects of the relationships between communities, companies, and other stakeholders. Communities can also lead the charge on innovative approaches to managing the impacts of mining and climate change. 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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ConstruCtion AnD Mining serviCes

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2019-11-19 12:23 PM

FIRST NATIONS

Tahltan Nation’s proactive stance with UNDRIP By Chad Norman Day

he Tahltan Nation is proud of our longstanding history of being a mining people, but this was always predicated on preserving the integrity of our territory by safeguarding our borders and ensuring we were proper stewards of our homeland. For millennia, Tahltans have fought for the control over every square kilometre of our territory. Why? The existence of those who came before us depended on the bounty that our territory yields – water, ﬁsh, wildlife, minerals and other natural resources that allow us to thrive. Contact did not change our rightful claim to ownership over our land. The 1910 Declaration of the Tahltan Tribe afﬁrms such claims: “We claim the sovereign right to all the country of our tribe – this country of ours which we have held intact from the encroachments of other tribes, from time immemorial, at the cost of our own blood. We have done this because our lives depended on our country. We have never treatied with them, nor given them any such title.” (We have only very lately learned the British Columbia government makes this claim and that it has long considered its property all the territories of the Indian tribes in B.C.)

The Tahltan Nation supports mineral exploration and mining projects in most portions of the territory, but such activities must be socially responsible, have robust environmental mitigations in place and contribute to the well-being of the Tahltan people through a series of commitments and beneﬁts that respect our collective title and rights.

The Tahltan Nation has never surrendered its land to anyone and we have never stopped our long and remarkable history of occupying, utilizing and protecting our land. From preventing BC Hydro from damming the Stikine 8 | CANADIAN

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River in the 1970s, to shutting down Royal Dutch Shell’s coalbed methane project in our Sacred Headwaters in 2008, to banning Fortune Minerals from proceeding with an open-pit coal mine in 2013, Tahltans remain undaunted and united in protecting what is sacred to us. In the process, we have also protected some of the environmental marvels of B.C., Canada and the world. This past August and after many years of hard negotiation, the Tahltan Nation signed the Klappan Plan with the provincial government which aims to preserve the Klappan Valley’s cultural and environmental assets, and creates a guide for potential resource development in the surrounding area. The Tahltan Central Government is also in advanced stages of developing a Tahltan Land Stewardship Plan which will create several different regions to be managed or, in the very least, thoroughly co-managed by the Tahltan Nation. Of course, none of this means that the Tahltan people are against mining and exploration. Rather, we believe that land stewardship and ensuring the economic independence of our people, via exploration and mining opportunities, are not mutually exclusive. The Tahltan Nation supports mineral exploration and mining projects in most portions of the territory, but such activities must be socially responsible, have robust environmental mitigations in place and contribute to the well-being of the Tahltan people through a series of commitments and beneﬁts that respect our collective title and rights. That is why the Tahltan Nation does not currently support the jade and placer mining industries in our territory, which have devastating environmental impacts, are inadequately regulated, and provide negligible beneﬁts to the Tahltan people, let alone the province or the people of British Columbia. This past July, accompanied by multiple Tahltan governors from the local communities, I visited 10 different jade and placer sites where I told each company that their operations within our territory do not have the consent of our people and that they are infringing on our Tahltan laws, rights and title. I informed these companies that their ongoing activities are extremely disrespectful and illegal under Tahltan law and demanded that they cease all activities. Many decided to stop operating, and some of have permanently damaged their relationship with the Tahltan Nation by ignoring us. The companies that ignored our respectful requests will have no future in Tahltan territory once the industry shifts and the Tahltan www.canadianminingjournal.com

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Though many stakeholders are wary of the economic climate that UNDRIP may create in B.C., the reality is that the Tahltan Nation has for years created processes and agreements, both internally and externally, that are consistent with UNDRIP.

people become increasingly involved in many important decisions and processes on the landscape. The province is currently working with us to rectify the outstanding jade and placer issues. For the jade and placer companies that stay in tune with evolving Indigenous law in Canada, some are admittedly not surprised by the steps we have taken; they understand their industry has minimal environmental standards and gives back very little to B.C. and First Nations. In fact, once the province begins using millions of taxpayer dollars to properly clean up the environmental damage caused by the jade and placer miners, British Columbians will wish the Tahltan Nation had taken steps to drastically change or stop these industries much sooner. Our position against jade and placer mining is not radical. In fact, it is very simple and reasonable. For a project to proceed, exploration and mining companies must respect the environment and the rights of Indigenous people. The United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), legislation of which the provincial government introduced in October, supports our stance. Though many stakeholders are wary of the economic climate that UNDRIP may create in B.C., the reality is that the Tahltan Nation has for years created processes and agreements, both internally and externally, that are consistent with UNDRIP. Over time, I am confident that better relationships and the implementation of UNDRIP will benefit all British Columbians more than they recognize, both from an environmental standpoint, and by saving significant tax dollars by ensuring Indigenous peoples are able to build capacity and become healthier, both physically and economically, with each generation. I look forward to the ongoing growth of the Tahltan Nation and British Columbia, and will certainly do my best to assist other First Nations across the province and to show industry and the world how working alongside Indigenous peoples as true partners can help secure more certainty, ecoCMJ nomic benefits and pride for everyone involved. CHAD NORMAN DAY is president of the Tahltan Central Government in British Columbia.. DECEMBER 2019

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2019-11-19 12:25 PM

FAST NEWS • R&D |

Updates from across the mining ecosytem

GoldSpot Discoveries joins MERC’s Metal Earth project

oldSpot Discoveries has begun a four-year collaboration with the Metal Earth project, a $104-million applied R&D program led by the Mineral Exploration Research Centre (MERC) at Laurentian University. GoldSpot is a Canadian technology company that applies artiﬁcial intelligence and machine learning to make new mineral discoveries and better investment decisions. Its collaboration with Metal Earth will involve the examination of extensive geological and geophysical datasets to develop algorithms that will quantify the prospectivity and metal endowment across the Precambrian regions of Canada. As the lead organization for the Metal Earth project, MERC has focused its research on determining the processes that result in differential metal endowment, or why portions of greenstone belts have high concentrations of metals and parts have low concentrations. Developing an understanding of these processes and making them predictable and mappable will provide the minerals industry with tools to

• M&A |

reduce exploration risk and discovery costs. “Today, metallogeny is the study of regional-toglobal distribution of mineral deposits. We know that ore deposit formation is non-deterministic, and we believe machine learning can facilitate the objective and unbiased interrogation of the complex relationships between geological variables. Our proThe Superior Craton, one of the areas of interest for the Metal Earth prietary AI algorithms research project. CREDIT: MINERAL EXPLORATION RESEARCH CENTRE (MERC) integrate and analyze data layers so that many variables can be con- structural geology, resource geology, sidered simultaneously,” said Denis geophysics, geological mapping and geoLaviolette, GoldSpot president and CEO. statistics to further advance the progress In addition to furthering exploration being made within Metal Earth,” said capabilities, the commercialization of Dr. Ross Sherlock, director of MERC/ analytical tools to query and extract rele- Metal Earth. vant information from geological dataGoldSpot’s AI and machine learning sets will also provide a means for future technology is also being used to generate research and analyses worldwide. exploration targets at sites held by compa“We are eager to collaborate with nies such as Yamana Gold, Vale and Gran GoldSpot and integrate their expertise in Colombia Gold. CMJ

Major Drilling acquires Norex

ajor Drilling Group International has finalized its acquisition of Norex Drilling, a family owned drilling company and a leading exploration drilling contractor based in Timmins, Ont. The acquisition was valued at $19.7 million, $15.2 million in cash on closing, $2 million in Major Drilling shares and $2.5 million in cash following the third anniversary of closing. “Norex has been operating successfully in the Ontario marketplace for some 40 years, and has a solid reputation with its clients,” said Denis Larocque, president and CEO of Major Drilling. “The acquisition of Norex is a unique opportunity for Major Drilling to gain a strong position to service our customers in both surface and underground exploration drilling services in the prolific northeastern Ontario region.

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The culture and operational values of both companies are very similar in terms of personnel and strategies, and this will allow us to provide our customers with expanded drilling services.” The acquisition brings 120 Norex employees into the Major Drilling group. Major is retaining the management team, and through the acquisition is gaining access to skilled and experienced drillers and personnel, and is taking over existing contracts. Through this purchase, Major Drilling will also acquire an additional 22 drill rigs, including 17 compatible specialized surface drill rigs and five underground drills, together with related support equipment and inventory. For the last two years, Norex had average yearly revenue of roughly $21 million and EBITDA of $5 million. CMJ

• M&A |

JLR acquires Porcupine Engineering

.L. Richards & Associates (JLR) has acquired Timmins-based engineering firm Porcupine Engineering Services (PES). The strategic integration will allow JLR to expand its existing team in Timmins and offer a diversified suite of services to clients in the mining, industrial, forestry, and energy sectors in northern Ontario and beyond. PES is a multidisciplinary engineering firm with specialized expertise in brownfield mining. Founded in 2004 by partners Mario Colantonio, Frank O’Donnell and Brian Emblin, PES has a proven reputation in northern Ontario for high-quality design and project management. The founders and the

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• EQUIPMENT |

MacLean and Nunavut Investments launch new partnership

acLean Engineering has partnered with the Rankin Inlet-based Nunavut Investments to create Nunavut MacLean Inc., an Inuit-owned business registered on NTI’s Inuit Firm Registry. This new business will provide a longterm platform for supporting MacLean specialty mobile equipment at Agnico Eagle’s underground mines in the Kivalliq region of Nunavut. Nunavut Investments is owned and operated by Patrick Tagoona, a Rankin Inlet resident and entrepreneur who also has an extensive professional background with executive staff positions at the Kivalliq Inuit Association and the government of Nunavut, as well as the president of Sakku Investments Corp. There are currently over 30 MacLean mining vehicles servicing Agnico Eagle’s Nunavut operations at the new Meliadine underground mine and the Amaruq Whale Tail underground project. “I am excited to partner with a leading mining vehicle manufacturer in support of a leading mining company that is creating sustainable job and business opportunities

existing PES team will be integrated into JLR’s established Industrial and Mining Group. With the combined capabilities of this newly expanded team, JLR will have an unprecedented capacity to provide bespoke solutions to meet the unique needs of its industrial and mining clients. “This represents a significant business development and technical growth opportunity for us all,” said Guy Cormier, JLR president and CEO. “Where once stood two competitors now stands a stronger, more dynamic, and unified front.” “This is a very positive and exciting time for us,” added Brian Emblin. “We truly are better and stronger together.”

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for the Kivalliq,” said Tagoona, president of Nunavut Investments. “This type of true partnership is how resource development should be done.” “This is the third Aboriginal agreement we have forged in Canada, building on the success of our First Nation partnership for the Borden project in Ontario, as well as the First MacLean Engineering specializes in mobile equipment for underground Nation and Inuit partner- mines. CREDIT: MACLEAN ENGINEERING ships for the Voisey’s Bay project in Newfoundland and Labrador,” said MacLean president ground at Meliadine and Amaruq have the best possible support network above Kevin MacLean. “Creating a business with Patrick ground, one that builds local capacity for Tagoona is a testament to our commit- servicing heavy equipment in the Arctic,” ment to the Kivalliq and to ensuring that noted Tony Caron, MacLean’s VP for our mining vehicles working under- the Americas. CMJ

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2019-11-19 12:27 PM

FEATURES

ACCELERATING THE

EVOLUTION OF

mining

The trends in automation and AI that are bringing us closer to the mine of the future The 3rd annual Progressive Mine Forum was held at the MARS Discovery District in Toronto CREDIT: THE NORTHERN MINER

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From left: Louis-Pierre Campeau, Stephen De Jong, Nadine Miller, Pavel Abdur-Rahman, Edward Bilborough and Walter Siggelkow. CREDIT: THE NORTHERN MINER

he mining sector is already behind other industries when it comes to the use of new technologies, but the rate of adoption has finally started to rise in past couple of years. How can we keep the momentum going and even pick up the pace? That’s one of the questions a panel of industry experts discussed at the 3rd annual Progressive Mine Forum, organized by The Northern Miner. The panellists at the event, which took place in Toronto in October, discussed trends in automation and big data that are beginning to transform the mining industry and offered concrete ideas on what miners can do to reap the rewards of emerging and existing technology right now. The panel of six experts included: Edward Bilborough, business line manager for automation and digitalization at Sandvik Mining and Rock Technology; Stephen de Jong, the CEO of VRIFY and chairman of Integra Resources; Louis-Pierre Campeau, team lead of Artificial Intelligence at NewTrax Technologies; Pavel Abdur-Rahman, head of IBM Services’ data-science consulting practice in Canada; Walter Siggelkow, the president and founder of Hard-Line Solutions; and Nadine Miller, an independent director for Wesdome Gold Mines. Here are six of our takeaways from the discussion, which was moderated by CMJ editor Alisha Hiyate.

New technology’s compatibility with commitment to communities New technology is often assumed to detract from local employment, particularly in developing regions, but that assumption should be more closely examined. While it may seem counterintuitive, one of the world’s most automated mines is in West Africa: Resolute Mining’s Syama underground gold mine in Mali. All the mine’s underground equipment is operated from surface via automation – trucks, loaders, production drills, said Edward Bilborough of Sandvik, which has been a

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partner at the mine for the last two to three years. “That came around from a vision from their senior management, their CEO saying that we need to do things differently in a country like Mali.” Bilborough said. Conventionally in West Africa, mining companies bring in an Australian contractor to operate the mine, for somewhere in the range of $250,000. “That really wasn’t a sustainable part of the business for them going forward and in how they saw their business being a part-

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FEATURES ner in their community,” Bilborough said. “So they saw automation and technology as a step change in how they leverage or create a sustainable partnership with the local community.” Rather than the advanced technology being a detractor from local employment, the company has found that the two can be compatible. Bilborough noted that Resolute realized that although only 20-30% of the local community might have a high school education, 80-90% are familiar with digital technology simply by knowing how to operate a cell phone. “That was one of the light bulb moments for them to say technology in this community is not such a big step change.”

The need to standardize data In order to make the most of all the data miners now have access to, they need to find ways to standardize it. Stephen De Jong, former CEO of Integra Gold (which was bought by Eldorado Gold in 2017) discussed the company’s experience with opening up its data and creating the Integra Gold Challenge in 2015. Integra bought the Sigma-Lamaque property in Quebec in 2014. The purchase came with a big dataset the company didn’t know what to do with, or have time to parse as it was focused on a large drill program. So Integra took a page from the Goldcorp Challenge from 15 years earlier and put its 6 terrabyte database online for anyone to comb through. “We spent about $1 million cleaning it out, so I think one thing that’s very important with big data in general is the quality of that data,” De Jong said. “The data came from two different mines and even though those mines were only 500 metres apart, they never spoke to each other so it might as well have been written in Chinese and Russian.” One example of standardizing the data was that between the two operations, there were eight different ways to describe granodiorite, which the company narrowed down into just three. Louis-Pierre Campeau of NewTrax agreed standardization of data is key, in mining operations as well as in exploration. “Right now there are a lot of datasets coming in from different parts of the mine that are optimized locally, but we’re not taking into consideration the whole big picture,” he said. “There’s a reason why it’s called ‘big data’ and not ‘siloed independent data that doesn’t talk to each other.’ It’s because this is where the real power is with predictive maintenance. We’ve seen a great improvement in predicting power based on do you train on one vehicle, do you train on 10 vehicles or 10 vehicles from 10 different mines? So I think standarization in order to be able to put the data together is really the way to go to make more out of it.”

The changing nature of the data scientist Whereas high-tech industries have thousands of people working on data analytics in internal teams, and less techsavvy industries like banking may have companies with 400-600 people working on analytics, mining and agribusiness are only starting down this path, said IBM’s Pavel Abdur-Rah-

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man. Some companies in the space have up to 100-150 people in external teams, while a few are starting to build teams of 20-40 internally that are focused on data analytics, he noted. But this will continue to evolve, and with all the open source data analytics technology and education that’s available, in future, geologists will be able to use both backgrounds to apply analytics tools to mining. “I think we have to think about data scientists and data engineers in a different way,” he said. “The future geologists, the future mechanics, they’re all going to be data scientists. They’re just going to be geologists (or mechanics) first. Then they’re going to know how to run python code and all sorts of things. The world is moving in a space where everybody is going to be a data-savvy professional.”

Importance of change management While everyone in the mining industry understands that they have no choice but to start adopting new ways of doing things, Walter Siggelkow of Hard-Line Solutions – a company that retrofits equipment for remote and teleremote operation – noted that change management is key. “The real answer to everything is the players – it’s all people at the end of the day,” he said. “If those people are not on board 100% with making this major change – and it is a major change from sending everybody underground to just sending technicians underground to fix the machines and running (the mine) from surface – you have to have everybody on line to make those projects go through.” www.canadianminingjournal.com

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Delegates at one day event listen to the panel on automation and big data. CREDIT: THE NORTHERN MINER

The need for collaboration Along with the idea of being willing to take risks comes the understanding that collaboration on an industry-wide level between companies, with universities and other entities is a necessity – and the only way to close the technology gap between mining and other industries, said De Jong. “I think we have to accept the fact that R&D is not a linear process and we can put a lot of money into these innovative ideas and a lot of them are going to have a zero per cent IRR – they’re not going to return anything for us because they just didn’t work. We can grab off-the-shelf technologies, but some of them just aren’t going to work. We have to accept that reality – otherwise we’ll just become stagnant and keep doing what we’re doing.” He added: “We need to create tools as an entire industry where we share that knowledge so if your company has success with your R&D and mine doesn’t, maybe some of that can transfer over because ultimately. if our industry becomes more profitable, that is good for everybody.” CMJ

To speed up adoption, we need to take risks It may not be what miners want to hear, but they need to take more risks with technology – even if they’ve tried something in the past that hasn’t worked out. “We talk a lot about innovation in mining but we have a real problem adopting new technologies,” said Nadine Miller, a director of Wesdome Gold Mines. “We have to learn how to crawl before we walk.” Miller, who is also a strategic adviser for Awz Ventures, a venture capital fund that invests in advanced technology for cybersecurity and homeland security, noted, for example, that the earliest adopters of SAP in the chemical industry started implementing the technology in the late 1980s/early 1990s. “I would guarantee you that there are mining companies out there that still don’t have SAP or Oracle. So we’re very slow. We’re on geologic time and cybersecurity – they’ve got the time machine. They can go backwards and forwards,” she said. “So I say shame on us – we should really look at people who are coming out with innovative ideas that can help.” For example, the mindset in mining that technology has to be proven in a mining setting before it can be implemented is counter-productive. “In mining, the first thing they say is “Where else have you put it in? They don’t want to be the first one – nobody does because what’s my ROI?” she said. “If there’s something that’s off the shelf and it’s working in a different industry, why aren’t we using it? We shouldn’t be 20 years behind. Let’s strive to be with all the other industries. We don’t have to be ahead of the pack, but within the pack.”

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FEATURE

Lundin Gold prepares to bite into Fruta del Norte Ecuador’s first large-scale gold mine on track for first production in Q4 By Alisha Hiyate

hen Lundin Gold pours its ﬁrst gold at the Fruta del Norte mine – an event that is expected in the fourth quarter of 2019 – it will prove that the company was right to take a chance on mining in Ecuador back in 2014. Despite its promising geology shared

with other Andean nations, Ecuador is only seeing its ﬁrst, large-scale modern mines this year – starting with the Mirador copper mine north of Fruta del Norte (FDN). And the journey to advance mining in the country hasn’t been without its perils. FDN’s previous operator,

Kinross Gold, spent several years trying to advance the project after buying it for US$1.2 billion 2008 – only to walk away after being unable to negotiate a revenue sharing agreement with the government. With Lundin now on the cusp of opening the country’s ﬁrst large gold mine, in

Lundin Gold’s Fruta del Norte mine, in Zamora-Chinchipe province, Ecuador. CREDIT: LUNDIN GOLD

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d Ron Hochstein, Lundin president and CEO.

Zamora-Chinchipe province, it is both an exciting and delicate time for the single-asset company. So what’s been the key to Lundin’s success so far at FDN over the past ﬁve years? Lundin president and CEO Ron Hochstein led the company’s due diligence efforts leading up to the US$240-million acquisition from Kinross Gold in 2014 and has been at the helm at FDN ever since.

Hochstein, who has a long history of working with the Lundin family, says that the Lundins have a knack for sensing when an untested jurisdiction is ready for outside investment and for ﬁnding ways to work with governments. “The family going back to Adolf and Lukas and I think now with the sons, have this innate ability to understand and be able to talk to people,” Hochstein told Canadian Mining Journal in November from Quito. “Lukas came down and we met with several government ministers and he could sit there and say ‘I’m willing to invest the family’s money here – are you guys serious about moving forward?’” The Lundin family, known for oil and gas and mining investments around the world, is a major investor in all Lundin Group companies and Lukas Lundin is chairman of Lundin Gold. “Our whole philosophy is we’re doing this with the country – this isn’t us coming in and we’re going to build a mine and then take all the gold,” Hochstein says. As part of that philosophy, the company has invested heavily in local training and local procurement. With the Lundin

Foundation, the company put together a procurement program that now results in spending of over $2 million per month in a region that had a total GDP of $60 million before its arrival. The company’s success has also been a matter of the right timing. Ecuador’s economy has a high dependence on oil, and when Kinross was trying to advance the project, oil prices were flying high. Since oil prices have come down in late 2014, the government has put a big emphasis on growing its mining industry. As the real and perceived barriers to investment have fallen away – including the infamous 70% windfall proﬁts tax, which current President Lenin Moreno recently formally abolished – other mining companies have begun investing in Ecuador, including BHP Billiton, Anglo American, SolGold, INV Metals and several Chinese owned companies. Tight timelines From the beginning of Lundin’s involvement with FDN, there’s been pressure to move quickly. CONTINUED ON PAGE 18

Underground portal platform at Fruta del Norte, in September. CREDIT: LUNDIN GOLD

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FEATURE

“From the time we signed the deal (with Kinross) in December 2014, we had 18 months to complete a feasibility study,” Hochstein says. “Kinross had done a bunch of work but when we started really getting into it that was a tall order.” Lundin completed a positive feasibility study in June 2016, which then allowed the company to negotiate an exploitation agreement and an investment protection agreement with the government later that year, and receive an environmental licence that fall. After that, Hochstein says the company moved forward with ﬁnancing and developing the project to advance as quickly as possible. “I think, too, our timing was perfect because with (former President Rafael) Correa’s administration, everyone in government knew what their responsibilities were and what they were expected to do,” he adds. “So we had a lot of support from the government to move forward and get all our agreements done,” which Hocstein says were done with fairness.

FDN BY THE NUMBERS: • Probable reserves of 5 M oz. gold and 6.9 M oz. silver in 17.8 M t @ 8.74 g/t gold and 12.1 g/t silver. • Production of 3,500 t/d for 310,000 oz. gold/year • After-tax IRR of 17.5% • After-tax NPV of US$786 million (5% discount rate) • Operating costs of US$103.65/t • AISC of US$583 per oz. • Mining method: Longhole transverse stoping and driftand-fill

“Essentially all those agreements do is say this is the laws that are in place at this point in time. We don’t get any special tax holidays or anything like that, it essentially says here are the laws that were in place and this is what we’ve agreed to.” Hochstein notes that special tax holidays or treatment “can go south on you really quick.” Development of the underground project has been swift: Construction, includ-

ing ramp construction began in May 2017 and was followed by other facilities at the planned 3,500 t/d operation. Connection to the national power grid via a 42-km power line was completed this fall. And as of early November, project construction was 89% complete and commissioning of the process plant was under way. In late September, mine production was on plan with about 150,000 tonnes of ore stockpiled. The US$692-million mine is expected to produce 310,000 oz. gold per year or 4.6 million oz. in total over a 15-year mine life. And there is potential for mine life extension as the deposit is not fully deﬁned to the south. Last permits issued With all of that accomplished, there have been a couple of hiccups on the way to production. Ecuador saw Indigenous-led anti-austerity protests in early to mid-October. The mass protests shut down highways and were marred by chaos, some violence and a temporary relocation of the

Progress at the processing plant at FDN, as of September. CREDIT: LUNDIN GOLD

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national government from the capital of Quito, as well as several protester deaths. The protests were aimed at the government’s elimination of a four-decade-old fuel subsidy, which has been reinstated. Hochstein said that things have calmed considerably since the protests ended. Moreover, they haven’t thrown FDN off schedule. “The shutdowns were not focused on the mine at all, we just had shutdowns of personnel and supplies primarily due to several road blockades on the national highways,” Hochstein said in early November. “It’s been pretty calm here since then, but I think people are on edge.” At presstime in mid-November, the last remaining hurdle to production at FDN was resolved: permitting. Lundin needed two permits – one it applied for in December 2016 and the other in January 2017 – to begin production. It received them both from the agency SENAGUA (La Secretaría Nacional del Agua) on Nov. 14, shortly

after changes the national government made at the ministerial level in October. The previous minister in charge of SENAGUA resigned in early October and a new interim minister, Marco Troya Fuertes, was appointed in mid-October. Under the previous minister, Hochstein said SENAGUA had been an “obstructionist” agency and had not been issuing water permits for any type of project, including mining, oil, infrastructure or power. But shortly after Troya’s appointment, Hochstein said the company received copies of a letter from the president to the new minister saying that it was important that all permits get moved, including the ones for Fruta del Norte. The company was also able to meet with the new minister and later host him at site. Community support Hochstein says Lundin Gold has good local support thanks to the positive relationships built by both Aurelian

Resources, which discovered the FDN deposit in 2006, and Kinross, as well as its own focus on local employment and procurement. The company worked with the ministry of education and an NGO called Fe Y Alegria on an accelerated high school program that was the ﬁrst of its kind in Ecuador to help locals upgrade their education. Lundin has also invested about $10 million on training locals in underground mining and for process plant jobs. The program, which involved simulators, has graduated well over 200 people from the local community, county and province. The mine will employ 9001,100 people when in production. In terms of local procurement, Lundin has found capable contractors with experience in oil and gas and power projects that has proved transferrable to mining. “I think because Ecuador has a strong oil industry, the education level’s very high – so there were a lot of the trades CONTINUED ON PAGE 34

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INTERNATIONAL MINING

Mixed messages in

Mexico Despite Almaden lawsuit, the country retains its mining friendly reputation By D’Arcy Jenish

hat a difference a year makes. In December, 2018, Vancouver-based Almaden Minerals released a feasibility study on its Ixtaca gold-silver deposit in Mexico’s Puebla state and Almaden president and CEO Morgan Poliquin expressed confidence that the company would be making a production decision by the end of 2019. But as 2019 drew to a close, the project was stalled. Mexico’s environmental agency, the Secretaria de Medio Ambiente y Recursos Naturales (SEMARNAT), had halted its review of Ixtaca due to a lawsuit against the government of Mexico based on claims Almaden staked in 2001. The suit was filed by an ejido, a group of communal landowners, based dozens of kilometres from the proposed mine. The community of about 150 people contends

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We staked these claims 18 years ago according to the law of the land. If this suit succeeds, it would suggest that every claim in Mexico is unconstitutional. – MORGAN POLIQUIN, PRESIDENT AND CEO OF ALMADEN MINERALS

that Mexico’s mining laws are unconstitutional because they were not consulted when the claims were staked. In April, a lower court in Puebla state agreed, and suspended Almaden’s claims until consultation is completed. That decision is being appealed by the Mexican Congress,

the Senate, the Secretary of Economy and Mining Authorities and, as an affected third party to the lawsuit, Almaden. “It’s an attack on the institutions of Mexico and we think there’s an international NGO behind it,” Poliquin says. “We staked these claims 18 years ago according to the law of the land. If this suit succeeds it would suggest that every claim in Mexico is unconstitutional.” None of the 12 communities within the Ixtaca project area are part of the lawsuit. The suit may be frivolous and vexatious, but it is a setback for a single-asset developer like Almaden. It also adds to the growing perception among many investors that Mexico is becoming a risky jurisdiction for mining ventures. “I have buy-side clients and Mexico is a www.canadianminingjournal.com

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Top: Almaden Minerals’ Ixtaca project, in Puebla state. CREDIT: ALMADEN MINERALS Above: A December 2018 community meeting hosted by Almaden Minerals. CREDIT: ALMADEN MINERALS Left: Core from Minera Alamos’ Santana project, in Sonora state. CREDIT: MINERA ALAMOS

no-go zone for them,” says Ian Parkinson, managing director, mining research, with GMP Securities in Toronto. “There’s perceived risk and investors are looking for extremely safe jurisdictions.” Those perceptions have been fuelled by a number of things. There was the unionbacked, illegal blockade of Torex Gold DECEMBER 2019

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Resources’s ELG Mine in Guerrero state that lasted from November 2017 until April 2018. There was the 2018 election of left-wing president Manuel Lopez Obrador, whose government cancelled a number of infrastructure projects and suspended auctions for energy exploration contracts for a three-year period.

After years of murderous rivalry between drug cartels, there are wellfounded concerns over personal security – highlighted yet again in early November by the roadside massacre of several Mormon families in the state of Sonora – an important mining jurisdiction. CONTINUED ON PAGE 22

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INTERNATIONAL MINING

Above: At SilverCrest Metals’ Las Chispas project in Sonora state. CREDIT: SILVERCREST METALS. Rght: Orla Mining’s Camino Rojo project in Zacatecas state. CREDIT: ORLA MINING

Despite the spate of bad news, executives of several Canadian exploration and development companies say Mexico remains open to mining ventures and Parkinson agrees. “Mexico is a very mining-friendly country,” he says. “Getting permits and projects developed is not a problem.” And, in an interview with Canadian Mining Journal, Mexico’s ambassador to Canada, Juan José Gomez Camacho insisted the country welcomes investment in mining and sees the industry as a major contributor to the economy. (See sidebar on this page.) Quick permitting Vancouver-based Minera Alamos is currently developing two properties in Mexico, its Santana gold project in Sonora and it La Fortuna gold-silver-copper project in Durango. Santana, located a 3.5-hour drive south of the state capital of Hermosillo, is the more advanced and could be in production as early as mid-2020. “Even with the change of government we got state and federal permits in a little over a year,” says president Doug Ramshaw. “We were surprised how quickly it happened.” The company is moving forward without having released a feasibility study, but planned to file its first resource estimate early in 2020. CEO Darren Koningen says construction of an open-pit, heapleach operation will take six to seven months and cost only $10 million. 22 | CANADIAN

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The low cost is due, in part, to a low strip ratio of 1.5:1. The company plans to use outside contractors to build and operate the mine and it won’t be processing and pouring doré on-site. Instead, gold-bearing material from the leach pads will be shipped to the U.S. to be refined.

“We’re finding elegant ways to cut costs, not corners,” Ramshaw says. Vancouver-based SilverCrest Metals is also developing a gold project in Sonora. Its 14-sq.-km Las Chispas property is located 180 km northeast of Hermosillo. Last May, the company released a prelim-

MEXICO’S AMBASSADOR OUTLINES GOVERNMENT PRIORITIES There are over 200 Canadian mining companies operating in Mexico and they are responsible for 70% of foreign direct investment in the country’s mining sector, according to Mexico’s ambassador to Canada Juan José Gomez Camacho. In an interview with Canadian Mining Journal, Gomez Camacho said that his country remains open to outside investment in the sector and he outlined four policy priorities of the new government. LABOUR: “We want healthier labour relations to avoid conflicts and challenges. If there are accidents, for example, there has to be a proper conversation between the parties.” SOCIAL INCLUSIVITY: “The mining industry, together with the Mexican government, has to make better use of the potential of local communities. Very often, companies import labor and source materials from other areas. We need to create a better ecosystem where companies find labour and supplies within local communities.” ENVIRONMENTAL SUSTAINABILITY: “There is nothing new anticipated in terms of legislation. We need a better conversation to ensure that companies are doing whatever is necessary to ensure that their operations are environmentally sustainable.” VALUE ADDED TAX: “Companies extracting minerals that are exported have a right to VAT refunds, but there is a huge backlog. This is a challenge because companies count on the refunds to keep operating. The Minister of Economy and Secretary of Mines, in close co-ordination with tax authorities, is expediting the processes.” Lastly, the ambassador offered the following comments on the security issue: “Security is a serious issue in some parts of some states. The government is putting in place a strategy to address the problem, first by creating a new National Guard to replace the former federal police. The National Guard is being built quickly and will have national jurisdiction. In specific cases of mines facing security challenges, the mining authorities and the Ministry of Public Safety will ensure that the National Guard can get involved quickly.”

www.canadianminingjournal.com

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Right: Orla Mining’s general manager for the Camino Rojo project with children from nearby communities.

inary economic assessment (PEA) that forecasted average annual production of 55,700 oz. of gold and 5.4 million oz. of silver over an initial mine life of 8.5 years. In July, SEMARNAT conditionally approved a 3,000-tonne/day underground

mine and a conventional processing facility with dry-stack tailings and underground backfill. “We’ve had no issues at all in terms of geopolitical risk,” says Jacy Zerb, SilverCrest’s manager of investor relations. “In terms of permitting, it’s

CREDIT: ORLA MINING

been great.” Case in point: the company initially received permission to construct a 3- by 3-metre decline to conduct underground drilling, but realized it would need a CONTINUED ON PAGE 24

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INTERNATIONAL MINING 4.5- by 4.5-metre decline for production. SilverCrest applied for a permit for the larger decline, which was granted within two weeks. Since last February, the company has pushed the decline 1 km below ground and sub-surface drilling has revealed higher grade ore than the PEA resource, which was based on drilling from surface. Zerb adds that SilverCrest hopes to have the mine in production by late 2021 or early the following year. In the interim, it will be stockpiling ore and currently has an estimated $150 million worth stored on surface. Community support Community support is an essential first step to moving mining projects forward and SilverCrest has worked hard to win local backing. Part of the Las Chispas project is located on land controlled by an ejido and, among other things, SilverCrest has hired between 40 and 50 workers from that community. “If you can build a relationship from the start, it eases permitting and you can get a mine up and running faster,” Zerb says. Jason Simpson, president and CEO of Vancouver-based Orla Mining, says getting permission from local communities is as important as obtaining government permits. “We recognize that part of our development plans have to include sharing the benefits with those who’ve given us permission to dig a hole in their backyard,” Simpson says. Orla’s Camino Rojo gold and silver project in the state of Zacatecas, was discovered in 2007. While a local road was being built, geologists spotted traces of gold in the material from an aggregate pit. Subsequent exploration revealed an orebody containing an estimated 9.5 million oz. of gold in global resources. Just over 2 million oz. is contained in oxide ore to a depth of 120 metres. The remaining 7.3 million oz. gold (in measured and indicated resources) is in sulphide ore below that. In July, Orla released a feasibility study that pegged proven and probable reserves at 1 million oz. gold and 20.1 million oz. silver in 44 million tonnes of oxide ore grading 0.73 g/t gold and 14.2 g/t silver. 24 | CANADIAN

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Capital costs for a heap leach operation were estimated at US$123 million. The heap leach gold and silver in solution would be processed in a Merrill-Crowe recovery plant to yield gold and silver doré. The open-pit mine would be capable of processing 18,000 tonnes of ore per day and, at that rate, would produce 97,000 oz. of gold annually over seven years. And the capital cost of building it would be recovered in three years, given precious metal prices of US$1,250 per oz. for gold and US$17 per oz. for silver. At a 5% discount rate, the study pegged the project’s after-tax net present value

Top: Minera Alamos’ Santana project. CREDIT: MINERA ALAMOS

Below: At SilverCrest Metals’ Las Chispas project, in Sonora state. CREDIT: SILVERCREST METALS

(NPV) at US$142 million and its internal rate of return (IRR) at 28.7%. Good corporate citizen Almaden Minerals has been working in Puebla state for nearly 20 years and has been a quintessentially good corporate citizen. The company was well on its way CONTINUED ON PAGE 34

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MINE SAFETY

CASE STUDY

A MINE RESCUE VEHICLE st for the 21 century

CONTINUED ON PAGE 26

MRV 9000 now in use at three mines in Canada The MRV 9000 mine rescue vehicle is the result of a collaboration between several companies, including safety technology company Dräger.

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CREDIT: DRÄGER

CANADIAN MINING JOURNAL |

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MINE SAFETY

The MRV 9000 is in use at Newmont Goldcorp’s Musselwhite mine and several others in Canada. CREDIT: DRÄGER

By Trevor Flynn and Le Yang Xu

f you wanted to sum up mining in the 21st century in a few words, they would be: deeper, longer, more complex. Technological progress and economic conditions now make it possible to dig even deeper and wider than ever before for mineral deposits like gold, iron ore, salt, and potash. Yet, this expansion also presents new challenges – rescue teams will need to navigate complex mines quickly and with enough oxygen to reach the most remote corner of a mine. The amount of breathable air that the rescuers can take with them is 26 | CANADIAN

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one of the key factors restricting the optimization of escape and rescue procedures. One of the most innovative answers to this challenge has been deployed in the Musselwhite mine, operated by Newmont Goldcorp, in northwest Ontario. Since last fall, a new kind of mines rescue vehicle has called this site home: the MRV 9000. Its origins stem from a shared desire for mining safety and collaboration between Newmont Goldcorp, safety technology company Dräger and mining vehicle manufacturer Hermann Paus Maschinen-fabrik.

Risk identified, danger averted “The vehicle allows safety and rescue personnel to reach even the most remote areas of a mine without being restricted by the range of their breathing apparatus,” says Markus Uchtenhagen, former safety superintendent at Newmont Goldcorp. “This not only improves safety, but also has an effect on everyday working practices and a mine’s operating costs.” Uchtenhagen had already noticed the changing risk proﬁle of ever more sprawling mines some years ago and started to think about potential solutions. www.canadianminingjournal.com

2019-11-19 12:41 PM

The Musselwhite mine extends across 12 km horizontally. Uchtenhagen’s research revealed that mines rescue teams quickly reach the limits of their technical capabilities when dealing with such distances. Even when travelling at 25 km/hour, it would still take around 45 minutes to reach certain areas of the mine.

Musselwhite has been in operation since April 1997 and is now mined at a depth of 1.2 km. In 2014, the mine produced around 278,000 oz. of gold. This yield comes with expansive growth – Musselwhite now extends across 12 km horizontally. Uchtenhagen’s research revealed that mines rescue teams quickly reach the limits of their technical capabilities when dealing with such distances. Even when travelling at a speed of 25 km/hour in good visibility, it would still take a team around 45 minutes to reach certain areas of the mine. They would DECEMBER 2019

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have to use their Dräger BG4s (breathing apparatus) on the way there, which would provide breathable air for up to four hours, depending on use. In the worstcase scenario, they would reach the scene only to turn around again without having achieved anything, because reserves of breathing air would have reached the critical 50% mark. “Some areas were located beyond the range of our breathing apparatus, so we had to find an answer to this problem,” Uchtenhagen says. With this in mind, he reached out to Kent Armstong, who has worked all over the world for Dräger as a business developer in the area of mine safety solutions. “Markus came to me to pick my brain on this problem,” says Armstrong. “He said: ‘Here’s my problem, what can we do?’” Initially, Armstrong was stumped. “We spent about eight months throwing ideas around on paper and looking at various types of equipment and vehicles, and philosophies and specs,” he says, adding that this was a brand new hurdle for the industry. “It hadn’t been done before.” Rescue vehicles that drive into the mine like an off-road ambulance to fight fires and tend to the injured are nothing new. “Solutions of this kind have been used for a number of years. What has been missing is a vehicle with an air supply that is not dependent on the ambient air,” Armstrong explains. “In the course of our talks with Newmont Goldcorp,

we discovered that the best solution consisted of a vehicle with an airtight driver’s cabin and cassette – in other words, a rescue chamber – in which a rescue team can safely travel, where the individual’s breathing apparatus is only activated once they reach the rescue site.” In close consultation with experts at Newmont Goldcorp and Dräger’s Engineered Solutions division, Uchtenhagen and Armstrong designed an all-wheel drive rescue chamber. They also got another experienced manufacturer on board: Hermann Paus Maschinen-fabrik GmbH, a German manufacturer that specializes in mining vehicles. Two and a half years elapsed between those initial drafts and the ﬁnished vehicle. Climbing power and Formula 1 character With a top speed of 33 km/hour and climbing power of up to 60%, the vehicle is designed for tough underground use. It weighs around 9 metric tonnes fully loaded. The driver’s cabin and cassette are equipped with an air purging system, which supplies the crew with breathing air. The operating time is up to four hours, depending on how many people are on board – one and a half hours for the outward journey, two hours at the rescue site, and one and a half hours for the return journey. As soon as the mines rescue team members have put on their personal breathing apparatus and left the vehicle, the airflow for the remaining team members can be turned down to save breathing air. The driver’s cabin and cassette provide space for nine people – including a rescue basket for carrying injured miners to safety. This concept exceeds Canada’s legal requirements that stipulate a rescue team must consist of at least ﬁve people. Breathing air stored at a pressure of 6,000 psi flows from six gas cylinders in the vehicles used by Newmont Goldcorp. Here a solution was chosen that is normally only seen in Formula 1 pit stops. “An important factor for us is the ability to restore operational readiness in the shortest possible time after returning from a call-out,” explains Uchtenhagen, describing the requirements. CONTINUED ON PAGE 28

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MINE SAFETY “At the same time, it was important for us to have an initial customer on board,” says Kent Armstrong. “A vehicle of this kind costs several hundred thousand dollars, which means you can’t just build it on a trial basis and launch it onto the market in the hope that the industry takes an interest in it.” The ﬁrst two bright yellow models of the MRV 9000 were delivered to Goldcorp in 2016 and are now on standby at the Musselwhite mine and Porcupine mine in Timmins, Ont. Denis Leduc, emergency and safety coordinator at the Musselwhite mine, quickly taught his 70-man team how to use the new vehicle. “It is an exciting new acquisition that gives us a freer hand to be able to react quickly and safely in emergency situations,” he says.

A hydraulic lifting system allows the MRV 9000’s gas cylinders to be replaced by an unused set in as little as 45 minutes. CREDIT: DRÄGER

As such, a hydraulic lifting system was developed that allowed the gas cylinders to be replaced by an unused set in as little as 45 minutes. The vehicle also has a gas monitoring system that measures the concentration of oxygen, nitrogen dioxide, methane, and carbon monoxide in the ambient air as well as oxygen, carbon dioxide, and carbon monoxide in the vehicle’s interior. Visual and acoustic signals indicate as soon as the levels exceed or fall below a set limit. Permanently installed thermal imaging cameras at the front and rear replace handheld models, simplifying navigating dusty or smoky environments. Through thick and thin Franz-Josef Paus of Hermann Paus Maschinen-fabrik explains how the colossus on wheels was built: “Each one is adapted to a customer’s requirements and the conditions of a particular mine.” All three companies had to get together at regular intervals to turn the idea into reality. “The unusually close transatlantic collaboration was a success,” Paus says. “Mine operators can bring their rescue concepts right up to date with this vehicle.” The real challenges became evident 28 | CANADIAN

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There is now a reliable answer to the question of how mine rescue can work in the 21st century. – KENT ARMSTRONG, BUSINESS DEVELOPER, MINE SAFETY SOLUTIONS, DRÄGER

during the planning and realization. At first glance, according to the CEO, it was about designing a rescue chamber on wheels and mounting it on an existing vehicle body. But during the discussions on the exact design, they kept coming up against practical requirements that called for structural modifications. It turned out, for example, that the seats had to be adapted to the ergonomic needs of mines rescuers. Since the closed-circuit breathing apparatus is worn on the individual’s body, the front seats on the MRV 9000 have no backrests. Notably, the design of the doors also had to be modified to allow the rescue team to get in and out of the vehicle unimpeded. It subsequently took a handful of Paus employees 15 months to realize the finely adjusted plans.

Every mine presents its own challenges Currently there are three MRV 9000s operating in Canada, one at Musselwhite, one at Porcupine, and another at a mine in Quebec. A fourth is receiving its finishing touches and is nearing delivery. And now that the word is out, Armstrong says some companies are either designing new ramps or retrofitting existing ones to accommodate this type of equipment. Initial feedback on the new rescue vehicle has been very positive, but it still needs to secure its place in the international mines rescue community, cautions Armstrong. “It’s not about simply buying a new vehicle and being prepared for anything. It is more about incorporating it in a modern safety and rescue concept.” But, he adds: “there is now a reliable answer to the question of how mine rescue can work in the 21st century.” Recently, the MRV had to jump into action at the Musselwhite mine. On March 29, a vehicle fire occurred during the evening shift changeover. None of the mine’s 712 employees reported any injuries, but the MRV was deployed to assess the situation and ensure no one was left behind during the evacuation. CMJ – Trevor Flynn is project engineer, engineered solutions with Draeger Safety Canada and Le Yang Xu is a marketing intern. www.canadianminingjournal.com

2019-11-19 12:41 PM

SPONSORED CONTENT

Doppelmayr RopeCon serves as an efficient link to new mining areas ®

The Austrian company Doppelmayr Transport Technology GmbH, a 100% subsidiary of the international Doppelmayr group, pioneer in ropeway engineering, always strives to open up new perspectives in material handling in challenging terrain. The following case study focusses on a RopeCon® application in South Africa, transporting platinum ore efficiently through hilly terrain.

he RopeCon® system which transports platinum ore from Booysendal South to the existing processing plant has recently gone into operation. The South African mining company Booysendal Platinum (Pty) Limited, a subsidiary of Northam Platinum Limited, is relying on technology by Doppelmayr for their expansion project at the Booysendal concession.

The terrain between the new mining areas to the north of the Booysendal concession and the existing processing plant is challenging in terms of topography. In a straight line, a distance of approx. 4.8km and a difference in elevation of 530m must be covered. For the expansion of the Booysendal mine, a cost-effective, reliable and safe means of transport was required, and Booysendal Platinum (Pty) Limited opted for a RopeCon® system to tackle the challenge of transporting 909 tons of platinum ore per hour. RopeCon® is a technology developed by the ropeway manufacturer Doppelmayr. The system offers the advantages of a ropeway and combines them with the properties of a conventional belt conveyor. It essentially consists of a flat belt with corrugated side walls. Just as on conventional belt conveyors, the belt performs the haulage function. It is driven and deflected by a drum in the head or tail station and fixed to axles arranged at regular intervals to carry it. The axles are fitted with plastic running wheels which run on fixed anchored track ropes and guide the belt. The track ropes are elevated off the ground on tower structures.

A switch chute allows for the material either to be transferred directly onto a feeder conveyor to take it to the processing plant, or to be discharged onto a stockpile via a second, smaller RopeCon® thus creating a temporary buffer. Booysendal was also particularly careful to choose a transport system that would minimise the environmental footprint of the mine. Because RopeCon® is guided over towers, the only space required on the ground is for these structures, which, in the case of Booysendal, amount to no more than 12. At the same time, the system does not represent an insurmountable obstacle for wildlife or humans. The track crosses a number of roads, and even wildlife can roam freely underneath the RopeCon®. Construction of the RopeCon® commenced in January 2018. 11 months later, and perfectly on schedule, commissioning began. Since 20 December, 2018, the installation has been transporting approximately 20,000 tons of platinum ore per day over a distance of 4.8km between the mining area and the existing plant. As part of an additional expansion programme, Booysendal awarded to Doppelmayr the contract for a second RopeCon®, which will connect with the first system and enable transport from another mining area north of the concession. The second system is designed to transport 400 tons per hour over 2.8km and a difference in elevation of -160m.

TECHNICAL DETAILS: LENGTH 4,767 m DIFFERENCE IN ELEVATION 530 m CONVEYING CAPACITY 909 t/h SPEED 4.2 m/s NUMBER OF TOWERS 12 MOTOR RATING CONT. 2,400 kW STOCKPILE FEEDER LENGTH 185 m DIFFERENCE IN ELEVATION 25 m CONVEYING CAPACITY 909 t/h SPEED 3.0 m/s NUMBER OF TOWERS 1 MOTOR RATING CONT. 100 kW CONTACT:

Doppelmayr Transport Technology GmbH Konrad-Doppelmayr-Straße 1 6922 Wolfurt / Austria T +43 5574 604 1800 dtt@doppelmayr.com doppelmayr-mts.com Doppelmayr Canada Ltée/Ltd 800 rue St-Nicolas, Saint-Jérôme, Qc, J7Y 4C8, Canada T +1 450 432 1128 EXT.281 C +1 450 821 1743 silviu.varzescu@doppelmayr.ca

The material mined at Booysendal South is loaded onto the RopeCon® belt via a silo and two chutes. In the vicinity of the processing plant, the RopeCon is linked to the existing conveying equipment.

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MATERIAL HANDLING

CREDIT: SUNSHINE SEEDS, ISTOCKIMAGES.COM

P31 | IPCC solutions resonate with miners

30 | CANADIAN

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www.canadianminingjournal.com

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MATERIAL HANDLING

IPCC

has begun to convey its true value in mining By Thomas Jabs

CREDIT: SUNSHINE SEEDS, ISTOCKIMAGES.COM

ver the last few years, there has been a perceptible upsurge in interest and increased investment in in-pit crushing and conveying (IPCC) solutions in mining. This trend is noticeable across many commodities where the reduction of truck fleets is one of the main motivators for customers to contemplate IPCC solutions. The advantages of a decreased truck fleet help answer some of the wider issues in the mining industry. For example, IPCC can help lessen the wide-ranging workforce recruitment problem, which many mines in isolated areas face. This often makes it extremely difficult to maintain a sizable truck fleet as people are required to operate the machines. A changing mining mindset Another element speeding up the implementation of IPCC systems in mines is the growing drive towards the digital mine: A mine with reduced or completely eliminated truck traffic makes the application and standardization of digitalization much easier. This is due primarily to the fact that there is less equipment to be connected and managed – but also because all elements of an IPCC system are perfectly adaptable and standardized to a specific digital approach. So overall, customers are unquestionably viewing conveyors as a very economical alternative to trucks, while operators can see how this can be the most economical and forward-thinking approach when moving material from point A to B. Over the past few decades, mine operators turned to shoveland-truck without considering alternatives. Now, however, the game is really changing: practically every greenfield project, every expansion project and even brownfield operations investigate alternatives to shovel and truck. The most interest is coming from mining companies that have already introduced conveyors previously – they fully understand the savings that can be accomplished. Customers with conveyor systems are also less risk averse when it comes to changing up maintenance processes compared to those operating trucks. So people are doubling down on IPCC solutions but then there are greenfield operators, who DECEMBER 2019

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have not previously introduced any conveyors, looking at IPCC as a more economical and future-safe move. They are recognizing the potential cost benefit and productivity gains that a conveyor system can deliver; i.e., lower opex, more robust operations and less downtime. The IPCC drivers go beyond just this post-downturn period or fuel price risk. It is the whole mining setup – for in-stance, manpower, road maintenance, dust emissions, CO2 footprint, water consumption and work shop requirements – that is pushing operations to rethink their approach. I am in no doubt that this rethink will continue. Productivity gains are important to convey In the past decade, mining corporations have gone to great lengths to reduce capex, but currently we see focus changing to total cost of ownership. Especially on greenfield projects, in-pit crushing and conveying can reduce the total cost of ownership as it reduces opex and truck costs. Ignoring the long-term opex is detrimental in the new norm for the mining sector, in general. These trends are delivering productivity and cutting costs on many mine sites and are preparing mines for a more efficient future as well, so the increasing focus on total cost of ownership will only continue to grow. This belief was one of the factors in FLSmidth’s decision, for instance, to move into the IPCC area and provide the mining industry with the deepest range of IPCC options available through one provider. Strategically integrating IPCC with our other offerings means the industry can look towards greater synergy and coherence between products in the process line. This allows the potential for additional productivity. It has also become easier to prevent changes along the supply chain as equipment for the entire pit-to-plant process are delivered from one source. Digital will deliver more in IPCC Even though the likelihood for fiscal savings and productivity improvements can be apparent for some customers that are considering a switch to conveyors, there can be other obstruc-

CONTINUED ON PAGE 32

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MATERIAL HANDLING FLSmidth conveyor system at the Mae Moh lignite mine in Thailand. CREDIT: FLSMIDTH

tions when it comes to making a strong and definite commitment. The switch requires changes in the ways a mine operates and affects mine planning on the operations side. But sooner rather than later, change needs to come. It is becoming gradually more and more obvious that what has worked thus far will not necessarily work in the future due to changing conditions in mining. Mines will need to examine alternatives and we, as an OEM, have the responsibility to produce these solutions or to develop them together with third parties and interested customers. And already we are coming up with new solutions as we see some current limitations. The mechanical side is advanced, although innovations are probable and likely in this area. The major steps forward will come through digitalization, automation, intelligent systems (smart IPCC) and in the feedback of information to the control centre. We are prepared to push the digital progress in mining and work with the industry so we present solutions that fit their single requirements, risks and conditions – and ultimately increase their productivity. Some mines are breaking new ground in this area. Vale’s S11D iron ore mine in Brazil is the lighthouse operation when it comes to IPCC. The selection of fully truckless mining with a high degree of automation and digitalization is certainly remarkable. But there are other mines which have paved the way for IPCC in the last two decades. Codelco’s Chuquicamata copper mine and BHP Billiton and Rio Tinto’s Escondida copper mine, both in Chile, have both been front runners in the development of semi-mobile IPCC. And then we have the example of the EGAT-mines of Mae Moh in Thailand. 32 | CANADIAN

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IPCC is set for continued growth The growth of IPCC and for FLSmidth in this area is clear. We have several new installations coming up in India, as well as in China, and we are currently executing the next semimobile expansion in a Brazilian iron ore mine. In total, FLSmidth currently has eight IPCC projects under execution. We are seeing a particular interest in IPCC when it comes to mine expansions. One reason for that is that bigger opera-tions have usually already collected experience with conveyors, which are still the corner stone of every IPCC. Everything you do with an IPCC is trying to get the material onto a conveyor as early as possible. This is where the savings are. Another reason is that large operations often already have direct experience with IPCC and therefore are aware of the benefits, but also the limitations. Part of the growth for us is natural shift in technology on the customer side, but in our experience, customers are also seeking advantages by working with a single pit-to-plant supplier. This means maintenance and technical support can be streamlined, which can increase time and cost efficiency. For instance, should a problem arise and the root cause is difficult to identify, it is a clear advantage to only have to enter into dialogue with a single supplier, who can effectively deal with all issues, rather than having to engage with a host of different suppliers. The daily benefits include more clearly defined responsibilities, reduced total cost of ownership and improved productivity. CMJ – Thomas Jabs is global head of mining projects at FLSmidth. He can be reached at Thomas.Jabs@flsmidth.com. www.canadianminingjournal.com

2019-11-19 12:45 PM

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LUNDIN GOLD PREPARES TO BITE INTO FRUTA DEL NORTE, CONTINUED FROM PAGE 19 and that type of thing that we were able to rely on.” Underground mine development work was awarded to Chilean mining contractor Mas Errazuriz and a civil construction contractor from Ecuador called Semaica. “That was a perfect match because they did a 50/50 consortium and now there’s an Ecuadorian company that can say, ‘Yeah, we helped developed Fruta del Norte,’ so they have that mining expertise in house.” Other mining projects have run into trouble in Ecuador, including several owned by Chinese companies. EcuaCorriente’s Mirador open pit copper mine and the San Carlos-Panantza open pit copper project in Zamora-Chinchipe province have both been targeted by Indigenous protesters. And Ecuagoldmining’s Rio Blanco in Azuay province has been halted by court order because of a lack of consultation with local communities. Hochstein says that Chinese-owned companies operating in Ecuador are

FDN’s remoteness as well as its location in the Amazon, where water scarcity is not an issue have also helped avoid issues other projects have seen. starting to improve the way they work with local communities and in implementing responsible mining. He’s not necessarily worried about a backlash against mining spreading to include Fruta del Norte because of the high local support the project enjoys. FDN’s remoteness as well as its location in the Amazon, where water scarcity is not an issue have also helped avoid issues other projects have seen. The project is 139 km east-northeast of Loja, Ecuador’s fourth-largest city, 40 km from Los Encuentros, and about 9 km from a smaller village called San Antonio. “Where we are and at Mirador, we’re

in the Amazon rainforest. We have 3.5 metres rainfall a year, so people are never too concerned about where they’re getting the water from and both of us are focusing a lot on making sure any discharges, which are small, meet all the criteria – both national and international,” Hochstein says. “In Azuay province it’s a little different – you’re in the highlands so a lot of people are reliant on rainfall or glacier water so there are some concern that mining may have an impact on their water sources.” Hochstein notes that as a Canadian company, responsible mining is a given. “Certainly for the Canadian mining industry, community involvement, the protection of the environment, all those things, that’s just kind of a given. But here, we’re teaching Ecuadorians about responsible mining and what that means. The Canadian government has been a huge help for us and Lundin Gold being a Canadian company has certainly helped.” CMJ

INTERNATIONAL MINING, CONTINUED FROM PAGE 24

Community members look at core from Almaden Minerals’ Ixtaca project. CREDIT: ALMADEN MINERALS

to a production decision before being blindsided by the lawsuit against the Mexican government. The company staked 7.2 sq. km in 2001 and conducted field work until 2010 when it zeroed in on a promising five hectare target and began drilling. 34 | CANADIAN

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Over the next several years, Almaden drilled 160,000 metres and delineated a deposit containing proven and probable reserves of 1.4 million oz. of gold and 85.2 million oz. of silver in 73.1 million tonnes at a diluted grade of 0.59 g/t gold and 36.3 g/t silver, according to the feasibility study released last December. The study envisions an open-pit mine producing an average of 90,800 oz. of gold and 6.14 million oz. of silver annually over 14 years. The study put the initial capital cost at US$174 million, repayable in 1.9 years based on an IRR of 42%. The project has an NPV of US$310 million (at a 5% discount rate). “We have strong community support for the project,” says Poliquin, adding the company has gone beyond the legal requirements and met international standards. Almaden has hosted nine community meetings that attracted over 4,100 people and it organized 46 forums in which

community members were able to question experts on issues such as Mexican mining law, mineral processing and water consumption in mining. Almaden has also hired 70 local residents and, among other things, has trained some of them to operate drills because the company does its own drilling rather than relying on outside contractors. Nevertheless, a community located at the extreme southeast corner of Almaden’s claims, and a considerable distance from the area of impact, has opposed the project. Poliquin notes that the community in question is quite poor, but adds they can be “sophisticated in terms of their international funding sources and media strategies” and that they have published inaccurate reports on the Ixtaca project. For the moment, while the ejido’s lawsuit against the government is before the courts, the project remains stalled. CMJ www.canadianminingjournal.com

2019-11-19 12:35 PM

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