Canadian Mining Journal June/July 2016

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June/July 2016

MOVING FORWARD PRAIRIE PROJECT PUSHES MINING TO A BRIGHT FUTURE

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CANADIAN Mining Journal www.canadianminingjournal.com

JUNE/JULY 2016 VOL. 137, NO. 5

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FEATURES PRAIRIE PROJECT 1O Denison Mines’ Wheeler River project in Saskatchewan provides miner with encouraging signs for resource growth.

14 Small Ontario-based company looks at the futuristic picture of ‘moon mining’ by designing a robotic drill capable of functioning on the moon.

14 22 Well-maintained airends on drills can often outlive the host machines.

24 New high-pressure washing systems help increase profits and make maintaining equipment easier and more efficient.

28 Seven tips to improving maintenance. A look at ways to help avoid shutdowns and improve profits.

DEPARTMENTS 5 EDITORIAL This month Field Editor Marilyn Scales takes a look at the recent fires in Alberta that devastated many mining communities in the province.

6 FIRST NATIONS A regular column by Isadore Day, Wiindawtegowinini, Assembly of First Nations, Regional Chief Ontario.

7 IN MY MINE(D) This month`s guest columnist is Chaya Cooperberg, Vice-president of Investor Relations and Corporate Communications at Progressive Waste Solutions. She talks about Canada and its relationship with Wall Street.

8 LAW George Dubé from the law firm of Bennett Jones LLP, Toronto, discusses the new take-over bid regime that came into place in Canada in May.

22 ABOUT THE COVER

Cover photo provided by Siemens.

30 MINE MANAGEMENT Doug Hanson, Director of IMB’s Oilsands and Natural Resources Solutions Centre, outlines how proper Mine Management is the key to saving operational dollars.

Coming in August Canada’s “Top 40” miners.

36 CSR AND MINING This month’s column on Corporate Social Responsibility is by regular contributor Michael Torrance, and Carole Gilbert, lawyers with Norton, Rose, Fulbright’s Toronto office.

38 UNEARTHING TRENDS

By Sean Verret, EY Manager, Business Tax Incentive.

JUNE/JULY 2016

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For More Information

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

CANADIAN MINING JOURNAL

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2016-05-25 9:49 AM

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2016-05-25 9:58 AM

CANADIAN Mining Journal

EDITORIAL

June/July 2016 Vol. 137 — No. 5 80 Valleybrook Dr., Toronto, Ontario M3B 2S9 Tel. (416) 510-6789 Fax (416) 447-7658 www.canadianminingjournal.com

Editor Russell B. Noble 416-510-6742 rnoble@canadianminingjournal.com Field Editor Marilyn Scales 613-270-0213 mscales@canadianminingjournal.com Production Manager Jessica Jubb Circulation Manager Cindi Holder 416-510-6789, ext. 43544 cholder@glacierbizinfo.com Publisher & Sales Robert Seagraves 416-510-6891 rseagraves@canadianminingjournal.com Sales Western Canada, Western U.S.A. and Quebec Joelle Glasroth 416-510-5104 jglasroth@canadianminingjournal.com Toll Free Canada & U.S.A.: 1-888-502-3456 ext 2 or 43734 Group Publisher Anthony Vaccaro

Established 1882 Canadian Mining Journal provides articles and information of practical

use to those who work in the technical, administrative and supervisory aspects of exploration, mining and processing in the Canadian mineral exploration and mining industry. Canadian Mining Journal (ISSN 0008-4492) is published 10 times a year by BIG L.P. Mining.

BIG is located at 38 Lesmill Rd., Unit 2. Toronto, ON, M3B 2T5.

Phone (416) 510-6891.

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

Subscriptions — Canada: $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: 1-888-502-3456 ext 2; Fax: 416-447-7658; E-mail: cholder@glacierbizinfo.com Mail to: Cindi Holder, BIG Mining LP, 38 Lesmill Rd, Unit 2, Toronto. ON, M3B 2T5.

We acknowledge the financial support of the Government of Canada through the Canada Magazine Fund toward our editorial costs.

JUNE/JULY 2016

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On the firing line

By Marilyn Scales

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he forest fires near Fort McMurray, AB, that started on May 2, are finally abating as press time nears at the end of the month. The fire, dubbed “The Beast,” blazed virtually unchecked for three weeks fanned by wind and dry, hot weather. In the first week, almost 90,000 people were forced from their homes and about 2,000 buildings in the town were leveled. At press time, more than 525,000 hectares had been consumed. With luck, the return and rebuilding will have started when you see this.

The Beast was unpredictable. Fires spread almost unchecked toward the Saskatchewan border, leaving behind blackened residential neighbourhoods next door to those that were untouched. The pictures of devastation are staggering. It will be months, even years, before life returns to pre-fire normal for those who go back to rebuild. Total damages may be as much as $9 billion, outstripping even Hurricane Katrina.

The Canadian mining industry has been at the mercy of forest fires since the Porcupine gold rush in northern Ontario. It is the nature of forests to burn occasionally. It is also the nature of mining camps to be located in remote, usually forested regions. Fire ripped through the Porcupine camp in 1908, and again in 1911, the region burned.

If The Beast teaches us nothing else, it teaches us that modern communications, monitoring and transportation can save lives. No people died in the Fort McMurray blaze, and only two traffic deaths occurred during evacuation.

Of particular interest is the fate of Alberta’s oil sands producers. When the fires first threatened the town, employees and contract workers were sent to join their families and concentrate on their safety. Production was cut as workers left job sites and dealt with the mandatory evacuation. As the fires moved to the east, companies made plans to return to normal bitumen production.

But no sooner had some companies announced reopening plans than the fires changed direction and moved to the north. People who were originally relocated from town to various labour camps were re-evacuated. Finally on May 23, emergency services agreed to the phased re-entry to several camps north and south of town.

Even though the fire has faded from the headlines, the need to give, remains.

In our opinion, a donation to the Canadian Red Cross remains the best way to help. A hundred years from now, people will remember The Beast of Fort McMurray.

CMJ

CANADIAN MINING JOURNAL

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2016-05-25 9:51 AM

FIRST NATIONS

Climate change offers many opportunities

By Isadore Day, Wiindawtegowinini, Assembly of First Nations, Regional Chief Ontario

Let me begin this month’s column with a quote:

“We do not doubt for a moment that the rest of the world would find us at fault, and hold us liable, should we fail to ensure adequate protection of that environment from pollution or artificial deterioration.”

The person who said that was Prime Minister Pierre Trudeau during a House of Commons debate on protecting the Arctic environment. That statement was made nearly half a century ago, in October of 1969.

Nearly 50 years later, the whole world now accepts the scientific fact that climate change is the greatest threat to the future of our planet. World leaders now recognize massive investments must be made to halt rising temperatures and rising waters. To avoid this reality is to turn away from the truth that climate change is here, and we must deal with it or life on this planet will cease to exist.

For the sake of our children and future generations, we must stop polluting the air we breathe and the waters that sustain life. Now, more than ever, Canada needs First Nations at the table. This is our right. It is a Treaty Right. It is a human right.

Indigenous peoples’ observations contribute importantly to advancing climate science, by ensuring that assessments of climate change impacts and policies for climate change adaptation are meaningful and applicable at the local level. Animal migration patterns have adversely affected hunting, while warmer winters have reduced or eliminated winter roads to remote communities.

The winter of 2015-16 was the worst ever in terms of access to remote communities. There were 31 Ontario First Nations virtually cut off from the regular delivery of goods and materials because heavy trucks are not permitted. Imagine the continued impact this would have on mining and large-scale energy projects. All-season roads must also be part of the solution in

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terms of access to the north for our Peoples, and future economic opportunities for all.

Farther south, Ontario’s lakes and rivers hold 20 per cent of the world’s fresh water. First Nations are in the best position to preserve and protect our environment. We can also work to reverse the damage that has been done.

Perhaps the most significant part of last December’s COP 21 Paris Climate Accord is the pledge to invest trillions of dollars in the decades to come on clean energy projects, which will mitigate and reverse the harmful effects of fossil fuels. There are already many Ontario First Nations communities involved in wind, solar and hydro projects. Now is the time for the both the provincial and federal governments to make significant investments in First Nations controlled green energy infrastructure projects.

WORLD LEADERS NOW RECOGNIZE MASSIVE INVESTMENTS MUST BE MADE TO HALT RISING TEMPERATURES AND RISING WATERS. First Nations must also be fully involved in greenhouse gas (GHG) and carbon cap discussions. We are in the best position to preserve and protect our environment. We can also work to reverse the damage that has been done. By investing in green energy, reforestation – and in environmental protection – First Nations in Ontario can set an example for Canada and the world.

By working together – on a Nation to Nation basis – and utilizing centuries of traditional knowledge – we will do our part in preserving the planet for our children and for future generations. By working together – and utilizing 21st century technology – we will create long-term prosperity for our children and all Ontarians.

CMJ

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2016-05-25 9:52 AM

IN MY MINE(D)

Wall Street and Canada

By Chaya Cooperberg*

M

any Canadians are still divided as to whether we’ve experienced a true recession or a statistical anomaly thanks to a GDP contraction that belies the nuanced and complex components of the Canadian economy.

One’s view of the data is doubtless influenced by which part of the country you call home. For many on Wall Street, Canada is a monolithic commodity-driven mass, perched on the edge of a fiscal precipice.

Since the start of 2015, when spiraling oil prices began to lower Canadian growth forecasts, my meeting with American investors and analysts have frequently began with questions about our country’s economic prospects. The focus quickly moves to how we anticipate the economy will affect our Canadian-based operations which, to be clear, are not in the energy sector, as we are an industrial-providing service throughout the country.

For many unlisted companies, particularly those with a significant revenue base here, it’s been a similar story; the theme of the Canadian exposure has dominated discussions with both the U.S. buy-and-sell sides all year.

For everyone in that spot, here are a few suggestions for conducting cross-border investor relations in the environment; tip for talking with Wall Street about Canada.

n1 Put the Canadian economy in context The vast and diverse sweep of our country’s geography is mirrored in the range of its economic performance. Move from east to west and the drivers of growth vary greatly. And, as has been observed in the past, when fortunes flag in one province, they often boom in another; the seesaw effect that keeps our country’s fiscal stability in a state of fine balance.

Remind U.S. investor of Canada’s breadth and that the majority of economists do not expect the country to dip into a broad-based recession again. Yes, the provinces hit by the oil shock, Alberta, Newfoundland and Labrador, likely meet the criteria. But other provinces, particularly Ontario with its manufacturing and export base, will benefit from lower energy prices and a weaker Canadian dollar.

It’s also worth mentioning to American investors that their economy has a material impact on Canada’s outlook, with the U.S. being our largest trading partner. There is still a clear correlation between the two North American economies, even if it JUNE/JULY 2016

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is not as strong as it once was with greater trade diversification and comes with a lag factor.

2 Quantify the impact of your exposure. n To the extent it is possible, and desirable, within a company’s disclosure framework, it should consider quantifying its exposure to an economic contraction in Western Canada. This helps frame the downside scenario and limit baseless speculation in a company’s stock.

For companies with currency exposure, consider providing a sensitivity analysis to every penny change in the foreign exchange rate to revenues, earnings and other key financial measures.

For companies with direct exposure to areas of weakness, such as the oil and gas sectors, it is even more important to provide U.S. investors and analysts with perspective.

As Canadians, we are familiar with the cyclicality of commodity-based markets and this experience is worth sharing with U.S. investors and analysts. Explain the characteristics of your company that will help it withstand the down cycle, whether it’s a strong balance sheet, relatively low cost base, or management expertise.

FOR MANY ON WALL STREET, CANADA IS A MONOLITHIC COMMODITY-DRIVEN MASS, PERCHED ON THE EDGE OF A FISCAL PRECIPICE. 3 Stay visible and connected. n As with any crisis communication, it is critical to stay out in front of the story rather than hide from it. An open and transparent approach to the subject of the Canadian economy and a company’s Canadian operating outlook can help build a productive, long-term relationship with U.S. shareholders.

Lay the groundwork for the discussion so that when Wall Street’s glance turns north, it’s with a less apprehensive and more of an appraising eye.

CMJ

*CHAYA COOPERBERG, is vice-president of investor relations and corporate communications at Progressive Waste Solutions, Vaughan, Ontario CANADIAN MINING JOURNAL

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2016-05-25 9:54 AM

LAW IN MY MINE(D)

Take-over bid regime comes into force in Canada

By Georges Dubé

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new take-over bid regime in Canada came into force on May 9, 2016. In implementing the new regime, the Canadian Securities Administrators (the “CSA”) focused on, among other things, giving bidders, target boards and target security holders increased clarity on the regulatory treatment of one defensive tactic: the “poison pill.”

Other defensive tactics, however, such as strategic private placements, may now become the focal point of contested public M&A transactions.

The recent decision of the British Columbia Securities Commission (“BCSC”) in Re Red Eagle, may act as a helpful guide in evaluating the appropriateness of a target board using a private placement to secure a friendly deal.

The New Canadian Take-Over Bid Regime The CSA stated that the purpose of the new bid amendments is to enhance the quality and integrity of the take-over bid regime and rebalance the current dynamics among bidders, target boards, security holders and targets by: (i) facilitating the ability of the target security holders to make voluntary, informed and coordinated tender decisions; and (ii) providing the target board with additional time and discretion when responding to a take-over bid.

Specifically, the new regime requires that all non-exempt take-over bids: (i) receive tenders of more than 50 per cent of the outstanding securities of the class that are subject to the bid (excluding securities owned by either the bidder or any person acting jointly or in concert with the bidder) (the “Minimum Tender Requirement”); (ii) be extended by the bidder for an additional 10 days after the Minimum Tender Requirement is achieved; and (iii) remain open for at least 105 days unless, generally speaking, the target board agrees to a shorter period (not to be less than 35 days), or announces a specified “alternative transaction” (such as an amalgamation or arrangement), in which case all contemporaneous take-over bids can remain open for only 35 days.

The new Minimum Tender Requirement may incentivize target boards to pursue a strategic private placement. A target board could disrupt a hostile bidder’s attempt to meet the threshold under the Minimum Tender Requirement by placing additional securities into the hands of friendly investors. However,

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the Re Red Eagle decision suggests that securities regulators may intervene in circumstances where such actions interfere with the ability of a target’s shareholders to tender to a bid.

The Re Red Eagle Decision Re Red Eagle centred around CB Gold Inc. (“CB Gold”), a junior mineral exploration company. CB Gold was the subject of hostile bid launched in June 2015 by Red Eagle Mining Corporation (“Red Eagle”). Red Eagle’s bid initially had a 50.1 per cent minimum tender condition.

On July 24, 2015, CB Gold announced a friendly transaction with Batero Gold Corp. (“Batero”) pursuant to which Batero agreed to acquire CB Gold. Batero had also agreed to provide cash to CB Gold under a private placement of CB Gold shares (the “Private Placement”).

At the initial expiry date of Red Eagle’s bid, approximately 48 per cent of the CB Gold shares had been tendered to Red Eagle’s bid, which would have constituted 52 per cent of the CB Gold shares if the shares issued under the Private Placement had been excluded from the calculation. As a result, Red Eagle extended its bid and made an application to the BCSC to, among other things, cease trade any securities issued pursuant to the Private Placement on the basis that the Private Placement was an inappropriate defensive tactic.

The BCSC declined to cease trade the Private Placement stating that the Private Placement: w did not violate applicable securities laws, there had been no abuse to the capital markets and, in fact, without the Private Placement, it is unlikely that the auction for CB Gold would have occurred; w was not clearly a defensive tactic. At the time of the Private Placement, CB Gold required financing to maintain itself as a going concern; and w did not limit CB Gold shareholders from tendering to the Red Eagle bid, as prior to the hearing, Red Eagle had waived its 50.1% minimum tender condition (something that will not be possible under the new bid regime), thus negating the possibility that the Private Placement could act as a bar to the CB Gold shareholders having their shares acquired under the Red Eagle bid.

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2016-05-25 9:55 AM

STRATEGIC PRIVATE PLACEMENTS MAY NOW BECOME THE FOCAL POINT OF CONTESTED PUBLIC M&A TRANSACTIONS.

Future Considerations The new bid regime no doubt will impact the manner in which Canadian public M&A transactions are conducted. Parties to an M&A transaction will need to consider the following: w Acquirers will need to be mindful of the implications of attempting to use a private placement as a deal protection device, as securities regulators could view a private placement as an inappropriate defensive tactic restricting target shareholders from tendering to a competing bid. w Where a target company has a legitimate need for imminent financing, the target will want to consider conducting a private placement in the context of a supported take-over bid provided that the private placement does not limit target shareholders from tendering to a competing bid. w As Canadian securities regulators continue to exercise their “public interest jurisdiction muscles”, participants will need to weigh what forum – the commissions or the courts – will better serve their needs for proceedings in connection with contested public M&A transactions.

CMJ GEORGES DUBÉ, is a partner at Bennett Jones LLP in Toronto and represented one of the parties at the BCSC hearing in the Red Eagle case.

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On May 9, 2016, the new Canadian formal take-over bid regime came into force. Here are some of the changes: Old Regime

New Regime

No Minimum Tender Requirement.

A bidder can acquire any and all shares that get tendered to its bid.

50% plus 1 Minimum Tender Requirement.

To acquire any shares of the target, at least a majority of the target’s shares need to be tendered to a bid.

Bids have to stay open for 35 days.

Bids have to stay open for 105 days, unless a target’s board agrees to a shorter time period (not to be less than 35 days).

Bids do not have to be extended beyond their original expiry date.

Successful bids must be extended for an additional 10 days after the original expiry date to give target shareholders another chance to tender to the bid.

CANADIAN MINING JOURNAL

Photos: Ugurhan Betin, iStock; NinaHenry, Thinkstock

The BCSC stated that it had the authority to determine whether a particular transaction was an improper defensive tactic and “... to override the business judgment rule and cease trade a private placement that inappropriately alters the basic dynamics of an M&A transaction.” The BCSC cautioned that “... securities regulators should tread warily in this area and that a private placement should only be blocked by securities regulators where there is clear abuse of the target shareholders and/or the capital markets.”

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SPECIAL

REPORT

PROMISING

PROSPECTS DENISON TABLES ENCOURAGING PEA FOR WHEELER RIVER PROJECT

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enison Mines’ preliminary economic assessment (PEA) for its flagship Wheeler River uranium project in northern Saskatchewan’s Athabasca Basin has left a good first impression on analysts.

The project, located approximately 35km north-northeast of Key Lake and 35km southwest of the McArthur River, contains the high-grade Gryphon and Phoenix deposits and is held 60 per cent by Denison, 30 per cent by Cameco, and 10 per cent

by JCU (Canada) Exploration.

The PEA envisions mining the two deposits as a single underground operation that would use Denison’s 22.5 per-centowned McClean Lake mill for processing. (Areva Resources holds 70 per cent of the mill, with Ourd holding the rest.)

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MINING IN SASKATCHEWAN

S U

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uranium

Photos: MarcelC, iStockphoto

238.029

McClean Lake Mill.

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MINING IN SASKATCHEWAN Underground development and mining would first start at the Gryphon deposit, followed by Phoenix, 3km away. The operation should produce 104.8 million lb. uranium oxide (U3O8) over a projected 16-year-mine life, at average cash costs of US$19 per lb.

The study pegs start-up capital at $560 million, with life-ofmine sustaining costs at $543 million, bringing the total to $1.1 billion. Denison would be responsible for 60 per cent of the costs.

Compared to the initial capital of building other high-grade uranium projects in Canada, Raymond James analyst David Sadowski writes that Wheeler River has “modest” costs and a “strong likelihood” of being developed.

Denison, he believes, could finance its share of upfront costs of $336 million, given its current $378-million market capitalization.

Partners Cameco and Japan’s JCU have the “financial horsepower” to do the same.

The project is said to have encouraging economics. Using a base-case, long-term uranium price of US$44 per lb. and an 8 per cent discount rate, Wheeler River has a $206-million aftertax net present value (NPV) and 17.8 per cent internal rate of return (IRR). Payback should occur in three years.

“Given modest capital requirements and low operating costs, the underground mine would return solid economics, even at the low base-case uranium price of US$44 per lb., which is in-line with the current posted long-term price,” says Sadowski.

If uranium prices improve to US$62.60 per lb., the after-tax NPV and IRR should increase to $548 million and 29.2 per cent, with the payback dropping to 18 months.

Cantor Fitzgerald analyst Rob Chang says the second scenario with the higher uranium price is more likely, as he forecasts uranium hitting US$80 per lb. by the time production starts at Wheeler River.

The PEA assumes pre-production in 2021, with production from the Gryphon deposit starting in 2025.

Denison intends to begin with Gryphon (“the more profitable deposit”) due to its lower development and operating costs. The deposit sits 720 metres below surface and 220 metres below the sub-Athabasca unconformity. Its stable ground conditions allow for conventional development and underground extraction techniques, such as longitudinal longhole mining.

In comparison, the higher-grade Phoenix deposit sits at the unconformity between the Athabasca basin sandstone and basement rocks, 400 metres below surface. Given its proximity to the unconformity and that it sits below the water-saturated Athabasca sandstone, it would require ground freezing to prevent water inflows, as well as remote mining to safely extract the high-grade uranium mineralization.

Denison intends to use jet boring, which is used at Cameco’s Cigar Lake deposit.

Based on 55 drill holes, Gryphon has an inferred resource of 43 million lb. U3O8 from 834,000 tonnes grading 2.3 per cent U3O8. The study assumes extracting 6 million lb. annually for seven years at an average operating cost of US$14.28 per lb., before moving onto the neighbouring Phoenix deposit.

Phoenix’s A and B zones host 70.2 million lb. U3O8 in indi12 |

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Wheeler core.

The study pegs start-up capital at $560 million, with life-of-mine sustaining costs at $543 million, bringing the total to $1.1 billion. Denison would be responsible for 60 per cent of the costs. cated (166,400 tonnes at 19.1 per cent U3O8) and 1.1 million lb.

U3O8 in inferred (8,600 tonnes at 5.8 per cent U3O8), based on 196 drill holes.

The deposit should provide 7 million lb. annually for nine years at an average operating cost of US$22.15 per lb. The estimated combined average costs for both deposits are US$19 per lb.

However, BMO analyst Edward Sterck points out that cash costs at Gryphon seem “optimistic,” versus his US$24 per lb. estimate for Rabbit Lake production, which is the “closest comparable operation, albeit a mature one.”

That said, he notes Wheeler River’s development timeline appears “realistic” and matches his forecast of when “additional new mine supply will be needed to meet demand growth.”

Sequencing Phoenix’s production after Gryphon also gives Denison time to develop a 3-km-long underground connection drift between the deposits and finish freezing the deposit, as well as time for more engineering to lower costs and anticipate risks.

The plan aligns with the expansion at the McClean mill, located 160km northeast of Wheeler River. Annual production capacity at the mill could reach 24 million lb. U3O8, giving it enough capacity to process ore from Cigar Lake and Wheeler River, which would be on a toll-mill basis. (Cigar Lake’s firstphase production should peak at 18 million lb., before lowering in the late 2020s.)

“The PEA benefits from the infrastructure-rich nature of the eastern side of the [Athabasca] basin, as it capitalizes on items such as the existence of excess mill capital, provincial highways WWW.CANADIANMININGJOURNAL.COM

2016-05-25 10:02 AM

The study should take 12 to 18 months to complete.

Wheeler drills in 2015 In mid-April, Denison reported completing the 21,800-metre winter drill program at Wheeler River. Some of the program’s highlights include expanding the mineralized zone discovered immediately north of the Gryphon deposit as well as extending the mineralized K-North trend roughly 1.4 km southwest of Gryphon.

Planning for the roughly 25,000-metre summer program at Wheeler River is underway. That program will focus on expanding mineralization at Gryphon and testing other high-priority areas.

In early May, Denison announced a $10 million bought deal with Dundee Securities and TD Securities. The underwriters have offered to buy 12.2 million flow-through shares at 82¢ apiece. The offering has an overallotment option and a provincial power grid,” writes Chang. and should close in late May. The proceeds will go towards fund“With the opportunity for resource growth at Gryphon and ing the company’s exploration efforts in Saskatchewan. higher uranium prices on the horizon, the PEA provides CMJ Denison with a solid foundation … and supports our decision to explore on the property and advance the project immediately Information for this Special Report provided by Salma Tarikh, into a prefeasibility study,” David Cates, Denison’s CEO, said a writer with The Northern Miner, a sister publication of Canadian in a statement.

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2016-05-25 10:02 AM

MOO

By Eastern Correspondent D’Arcy Jenish

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ining here on earth is a brute force industry, says Dale Boucher, chief executive officer of Deltion Innovations Ltd. of Capreol, Ont. “If a rock is too big, you just get a bigger hammer to hit it with,” says Boucher.”

You can’t take the same approach with space mining. You have to learn how to do things with very little weight and very little power.”

Mining in outer space may seem like the stuff of science fiction but, in fact, it is going to happen sooner than most of us can imagine. NASA is currently planning a lunar Resource Prospector Mission; with a “notionally targeted launch” in 2018.

While the mother ship orbits the 14 |

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moon, a lander will descend to the surface. A rover will emerge from the lander, equipped with a robotic drill designed to explore for ice water at the South Pole, and Deltion is one of the companies in the running to supply the drill.

With funding from both NASA and the Canadian Space Agency, Boucher and his team have spent the past decade designing and testing a robotic drill capable of functioning on the surface of the moon where the temperature typically hovers at around minus 230 Celsius, and there is no atmosphere.

Deltion’s drill, formally known as the Vacuum Capable Drilling Unit (VCDU), weighs less than 25 kilograms and operates on less than 100 watts of power.

Last June, Boucher and his team put their device to the test. They transported it to NASA’s Glenn Research Center in Cleveland and demonstrated its capabilities in the center’s moon chamber; a silo about one metre in diameter and two high which replicates conditions on the lunar surface.

Earlier this year, the CSA awarded Deltion a $700,000 contract to develop another device called a Progressive and Rotary Multi-purpose Tool (PRMPT) which will operate on the end of a 1 1/2metre robotic arm. It will weigh less than five kilograms and requires, on average, less than 50 watts of power and will be capable of drilling into a celestial surface and collecting samples.

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INNOVATION

ON

MINING

But it must also be able to perform others tasks, such as assembling structures in space. PRMPT will have to be able to remove its coring drill and replace it with a half-inch socket wrench that can be used to fasten nuts to bolts. It will also be expected to perform a third function; drilling holes through aluminum struts, if necessary, to complete an assembly on the surface of the moon, or perhaps even Mars.

However, before any of Deltion’s devices make it into space, the CSA needs an expanded mandate from the federal government.

Currently, Boucher says, the agency is mandated to focus on earth-observation satellites and support for the International JUNE/JULY 2016

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Space Station, where the Canadarm has performed remarkably well and proven its value.

In 2012, NASA invited the CSA to participate in the upcoming lunar resource prospector mission, but the agency was unable to accept due to the limits of its mandate. NASA then began pumping millions of dollars into U.S. companies in order to match Deltion’s capabilities. Meantime, the CSA has continued to fund Deltion to keep the company in contention should federal politicians give the agency leave to participate in a lunar mission.

“The CSA has been trying to edge us closer to flight-ready status in anticipation of getting a change of mandate,” says

Boucher. “We have never hit the point where the politicians have said: Okay, do it.”

He says the agency needs political approval by this fall or Canada will be sitting on the sidelines and a huge opportunity will be lost.

“Space mining is inevitable,” Boucher adds. “It will happen. As a mining nation, Canada should be taking a stand. We’d be in a good position to lead the world if we got on the lunar Resource Prospector Mission.”

The purpose of the RPM is to determine how much frozen water is contained within the top metre of the lunar surface and within a specific area near the South Pole.

CANADIAN MINING JOURNAL

Photo: Diane Labombarbe, iStockphoto

It’s closer than ever thanks to a small Canadian company

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INNOVATION Orbital reconnaissance has led NASA scientists to conclude that water and ice comprises three to five per cent of the surface by weight. However, scientists have not been able to determine whether the surface is hard and cement-like, or loose and granular like a beach and there are good arguments for both.

Deltion’s VCDU device is capable of drilling through either a cement-like surface to collect a core sample or gathering loose, granular material. The company demonstrated its capabilities at a CSA research facility in St. Hubert, Que. by drilling through a two-metre high container filled with layers of dried sand, clay, dolomite, basalt and other materials. And Deltion had to do the drilling without using fluids or lubricants of any kind since they would instantly be vaporized if exposed to the vacuum on the surface of the moon.

The company also demonstrated during the test last June at NASA’s Glenn Research Center in Cleveland that it has solved a heat-management problem. The electric

motor in the device is the size of a coffee cup and was designed specifically for use on the moon by a Swiss company called Maxon Motor. When the motor is driving the drill, the coils can reach a temperature of plus 200 degrees Celsius.

That wouldn’t be a problem if it were operating on earth because the heat could dissipate into the atmosphere. However, the moon has no atmosphere, meaning that the device will have to operate in a vacuum, which acts as an insulator and prevents the heat from escaping.

Boucher and his team have designed something called a heat path to transfer that energy from the motor to a heat management system within the rover.

The lunar Resource Prospector Mission is merely the first step in a long-range plan currently under consideration by space agencies around the world. They are considering a next generation space station that will either orbit the moon, or alternately, may be parked in space at what is known as a lagrange point, where the gravitational

forces of the earth and the moon cancel each other, allowing a small object like a space station to remain immobile.

“They are talking about how to provide fuel and water to the space station from the moon,” says Boucher. “They need to have a long-term mining operation on the moon to do that.”

Ice from the moon could serve several purposes. It could be a source of drinking water. It could be broken into its constituent elements to provide a supply of oxygen for the astronauts. The hydrogen and oxygen could be used as sources of energy in fuel cells that generate electricity.

Finally, spacecraft en route to Mars and, reliant on hydrogen and oxygen, could stop at the space station to load up on fuel.

Deltion is a small company (it has just seven employees at the moment) but Boucher and his team are aiming for the moon. They stand a good chance of succeeding if the CSA can convince its political masters to expand its mandate to include participation in lunar missions.

Jim Richard, (centre) Chairman, and Dale Boucher (right) CEO, talk about the various pieces of equipment, including the long-haul dump system shown in the main photo below.

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If that doesn’t happen, Deltion will have to find earthly applications for its space-age technology.

The company has already transferred some of its dry-drill technology to Winnipeg-based Dimatec Inc., a manufacturer of high-quality diamond drilling equipment.

Deltion’s heat-management system may be of use to mining companies that are delving ever deeper and encountering rock temperatures in the range of 40 to 50 degrees Celsius.

Deltion has also figured out how to mitigate the impact of moon dust on bearings without oiling the surfaces and the dust on the moon is made up of sharp, angular surfaces as opposed to the rounded particles of earthly dust.

“We understand robotics, battery-powered systems, thermal management and dust management,” says Boucher. “There’s a whole array of capabilities that we or our partners have that can be transferred to the mining industry.”

CMJ

Heavily studded wheels are a key design feature while the inset photo shows a close-up look at the drill in action.

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ADVERTORIAL

ANOTHER MINE GOES

Las Bambas mine in Peru was recently started successfully with gearless drives from Siemens for the conveyors and mills

I

n November 2015, high above in the Andes at an altitude of 4,200 metres above sea level (masl), production started at the Las Bambas mine. Over the next 20 years, the mine is expected to produce circa 400,000 tons of copper in concentrate per year, as well as gold, silver and molybdenum as by-products.

Xstrata Copper – which originally owned the mine and sold it to MMG in 2014 – wanted the same reliability and economic operation as its Antapaccay mine, also in Peru. So once again, gearless drive technology from Siemens was chosen for the overland conveyor system as well as for the SAG and ball mills.

Fast and dependable conveyor transport After going through the primary crusher at the excavation site, the copper ore is transported to the processing plant on overland conveyors designed and supplied by ThyssenKrupp. Each of the two overland conveyors is approximately 2.5 km long with a lift of almost 300 m.

The belts are 1,830 mm wide, travel at 6.5 m per second, and are designed to transport approximately 9,400 tons of material per hour. The Siemens drive systems for each of the two overland conveyors comprise two low-speed synchronous motors – each with a total power of 4,400 kW – and the associated

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Sinamics SL150 cycloconverters. Further equipment includes the e-house, cooling system and converter transformers.

This gearless drive solution has a number of advantages over the combination of high-speed motor and gearbox drives usually used on conveyor systems. Higher power per single drive system is achieved, thus eliminating the necessity to install multi-motor drives. The power required to drive a belt can be provided by just one drive per belt pulley. This enables the size of the electrical room to be reduced, thus saving space and weight. The elimination of a whole series of mechanical and electrical components increases the efficiency of the overall system by between 3% and 4%, as all the force is transferred touch free via the magnetic field. Not only does the solution increase reliability, maintenance requirements and costs of the drive system are also substantially lower.

Efficient processing From a stockpile that is up to 50 m high, the ore is fed into mills powered by gearless drives: two SAG mills with an inner diameter (ID) of 40 ft and a nameplate rating of 24 MW each, and two ball mills with an ID of 26 ft and 16.4 MW each. The gearless mill drives (GMDs) were delivered by Siemens and comprise a synchronous motor, a

The Las Bambas copper mine in Peru is the latest to profit from gearless technology for both the conveyors and mill drives.

Sinamics SL150 cycloconverter installed in a prefabricated and pre-commissioned e-house, together with low-voltage motor control centres (MCCs) and the automation system for the mill and drive. Further associated equipment includes converter transformers and the cooling system. By using the same drive platform for the mills as for the gearless conveyor, the maintenance and operation of both systems is eased.

All the major components are installed outdoors without a roof on the concentrator. As such, they withstand the harsh environment including snow in the winter at the high altitude of the operation.

Basically the same advantages of the gearless system on the conveyors apply to the mill drives. These advantages convinced MMG to also equip the ball mills with GMDs, despite the higher investment costs compared to conventional systems. In the end, payback comes during operation. For example, the higher efficiency of up to WWW.CANADIANMININGJOURNAL.COM

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ne from he

4% equals 500,000 USD yearly in energy cost savings per ball mill. But even more important is the higher availability due to the lack of principal wear and tear parts. In fact, the availability of the GMDs stabilized with the finalization of load commissioning at almost 100%.

Fast commissioning “Las Bambas has been a great success and Siemens was a large contributor to this outcome. Siemens provided solid support during construction, precommissioning and commissioning. As a result, we were able to complete the overland conveyor commissioning very quickly – in just under two months. This was a fantastic achievement,” stated Peter Mizera, MMG’s general manager for Las Bambas project delivery. In parallel the GMDs were installed and commissioned in time to meet the first copper concentrate production in November 2015.

For the GMDs, the Hardware in the Loop (HiL) simulator supported JUNE/JULY 2016

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the fast commissioning time. With the HiL simulator, a real control device is linked to a simulated plant or system via its inputs and outputs – for instance, it is linked to a converter, a motor and load. This digital twin simulates the real system environment with sensor data from the model, while the control device outputs are fed back to the model. With this system, commissioning engineers could facilitate smooth implementation of applications and test the control using the functional digital twin system.

Service support to assure a smooth operation Seamlessly after commissioning, Siemens started to support the client with its vast service portfolio. Especially during the ramp-up phase of the plant, operator MMG benefited from on-site operational assistance from Siemens’ local Peruvian field service specialists. For complex topics, around-the-clock on-call service from headquarters is available. Support from specialists at headquarters is

to become even more beneficial and streamlined as a remote access is implemented and authorized specialists can access the plant from around the world. In addition, Las Bambas has opted for spare parts management to assure the availability of critical spares when required.

Part of the service package also includes the Siemens Training Simulator for Gearless Mill Drives. With the Training Simulator, operators can conduct a full simulation of all the operations of the GMDs. They can start and stop the mill and run it in all kinds of operational modes, and it’s also possible to re-program the software and change parameters.

All of these service topics were elaborated together to establish an optimum, tailor-made maintenance strategy for the plant.

With back-up from the Siemens service team, the equipment is running smoothly and to the satisfaction of the operator of Las Bambas.

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KEEPING MACHINES WORKING A SERIES OF ARTICLES LOOK AT WHAT IT TAKES TO KEEP TOOLS AND MACHINES PERFORMING

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FOR

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EQUIPMENT MAINTENANCE & REPAIR S PECIA L R EPO RT *

Well-maintained airends on drills can often outlive the host machines

A

irends in a drill or air compressor are precision components that help ensure efficiency and success on the jobsite.

They can spin as fast as 4,900 rpm with less clearance than the width of a human hair so, it’s understandable that such precise equipment demands great attention when it comes to routine service and maintenance.

Not only will care and attention help the airends last longer, but diligent maintenance will also help save time and money by preventing expensive replacements and long periods of downtime.

Airends play an incredibly important role at drilling sites by creating the pressure and flow necessary for clearing aggregate and debris out of holes during drilling, but they also provide the energy required to activate the hammer in downhole drilling.

If maintained properly, an airend can last as long (if not longer) than the life of the machine in which it is installed.

So how can you maximize the life span of an airend and prevent malfunctions on the job before they happen? Here’s a look at a few suggestions:

Maximizing life of drill component made easy

1

Read the machine manual.

Become familiar with proper operation, maintenance, safety precautions, tips to improve performance and who to contact for troubleshooting/maintenance assistance.

2

Conduct routine maintenance per manufacturerrecommended schedule.

Always follow the manufacturerrecommended routine maintenance schedule. Not only will it help ensure efficient operation and longevity, but some manufacturers offer no-charge or low-cost

extended airend warranties for using OEM consumables and following the recommended maintenance schedule. Preventive maintenance is also vital for guarding against premature wear. Visually check hoses for signs of deterioration, check connections for leaks and make sure the pre-cleaner is free of debris.

3

Monitor the oil level to help ensure the airend receives adequate oil lubrication.

Adequate lubrication extends the life of the airend by preventing

If you suspect it’s time to replace an airend: it’s losing pressure or flow but the engine rpm is functioning properly, consider an airend exchange. Today, more and more equipment owners are looking at the option of remanufacturing airends versus purchasing new. Not only is a remanufactured airend less expensive, but this option also involves little to no risk.

During the remanufacturing process, new and used components are used to

premature wear of rotors and removing excess heat for optimal performance. Airends with oil pumps mounted on the shaft ensure consistent lubrication to extend the life of the airend.

4

are found, it’s important to flush the system to completely remove the foreign matter.

Identify and remove contaminants from the system.

Periodic oil sampling should be done to check for the presence of any foreign matter in the lubrication system, such as dirt, moisture or metallic shavings, which could be an indicator of airend damage from inefficient oil lubrication. If contaminants

rebuild an airend that meets OEM standards. Many OEMs offer the same warranty as a new airend or an optional extended warranty for remanufactured airends.

The cost of buying a remanufactured airend can be reduced further if a used airend meets specific criteria and is returned to the OEM. At that time, a core credit is granted and applied toward the purchase of a remanufactured airend through an authorized dealer.

5

Purchase parts from a reputable and qualified dealer. They are expertly trained by the OEM in maintenance and troubleshooting.

The manufacturer has tested the airend using original filters, fluids and oil separator elements. Using OEM approved consumables in the machine will significantly reduce the possibility of a malfunction or untimely breakdown.

Ultimately, the best thing you can do for your business is build a relationship with an authorized dealer who knows how to maintain your equipment, and follow the manufacturer recommended airend maintenance schedule to ensure optimum preservation of your drills and air ompressors. And when the time comes to replace an airend, the dealer can help you find an economical solution for procuring a high-quality, remanufactured product backed by a factory warranty. EMR

Information for this Special Report* provided by Rus Warner, Director of OEM business, Doosan Portable Power.

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changing s Haver & Boecker’s HydroClean has only two main wear parts: spray nozzles and valve seals. Its efficient design allows easy accessibility to the wear parts simply by opening the washing drum’s lid for simple, operator-level maintenance.

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BEFORE

Innovative technology heightens sustainability and productivity, while producing more profits

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EQUIPMENT MAINTENANCE & REPAIR

g standards

ns y,

S PECIA L R EPO RT *

M

ore and more frequently, provincial governments impose water limitations on producers across Canada, thereby, affecting thousands of operations from coast to coast.

With obstacles such as water restrictions, droughts and increased energy costs, getting the most profit from an operation keeps getting tougher. But thanks to a new washing technology, these stressors don’t need to impact your bottom line.

AFTER

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Before & After: Haver & Boecker’s Hydro-Clean helps producers add value to materials that would otherwise be considered waste. Some process as much as 360 tons per hour, removing impurities from deep crevices and pores on stones — areas log washers can’t access.

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EQUIPMENT MAINTENANCE & REPAIR

Log washers use as much as 800 gpm in a washing cycle.

A high-pressure washer trims that down to 26 gpm — just 3 percent of the consumption of log washers.

Instead, these innovations should increase long-term savings and return on investment.

Consider five key benefits when it’s time to upgrade or choose new washing equipment: the machine’s design, energy expense, water usage, maintenance and of course, profits. These aspects, which vary from machine to machine, influence capabilities and overall performance as well as time spent on maintenance. That’s why understanding these five factors contributes toward better efficiency and profits.

Design Differences When producers consider upgrading washing equipment, it’s natural to look for ways to decrease expenses and increase efficiency.

In the forestry industry, for example, log washers continue operating with the same technology that dates back to the late 19th century; when water conservation wasn’t nearly as strong of a concern.

Today, however, new technologies, such as high-pressure washers, consume less energy and water than previously possible without sacrificing quality. Plus, 26 |

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Michael Honea is the process engineer at Haver & Boecker Canada.

He manages all aspects of the Hydro-Clean washing system, from testing materials at jobsites to ensuring customer satisfaction.

these washers require minimal maintenance and upkeep, resulting in decreased servicing expenses and increased efficiency over log washers.

While these washers work well for cleaning thick, dense material such as stones coated with more than four inches of clay, they cannot get deep into the pores of material like high-pressure washers.

Washers with high-pressure water nozzles can achieve that level of cleanliness on stones as large as six inches in diameter, while log washers manage only heavier deposits on stones ranging from two to five inches, depending on the size of the equipment.

Although log washers may handle large clay deposits better, a high-pressure washer helps producers add value to materials that would otherwise be considered waste.

Some process as much as 360 tons per

hour, removing impurities from deep crevices and pores in stones. This helps producers get the most sellable product for their operation, which reduces their waste pile and increases profits.

In the coal industry, for example, recent trials revealed that a high-pressure washing system effectively removes contaminants from coal refuse in just one pass, which significantly increases its Btu value.

Water & Energy Use Persistent drought conditions in some parts of the world continue to result in severe water usage restrictions. This makes a high-pressure washer more favourable as governments motivate producers to use new technology to stay within those boundaries.

While water restrictions haven’t been as stringent in the energy sector, they’re still concerning for producers, financially and WWW.CANADIANMININGJOURNAL.COM

2016-05-25 10:25 AM

environmentally. Choosing a new, highpressure washer helps reduces energy consumption by as much as 15 per cent. Part of this is due to the speed at which the new washers complete a cycle. On average, older washers retain materials for three minutes or more, while materials stay in a high-pressure washer drum for just seconds.

Beyond low retention time, a high-pressure washer includes sensors that detect the end of each washing cycle to limit wear to the machine from unnecessary use.

Maintenance & Upkeep When it comes to maintaining equipment, a high-pressure washer requires less maintenance. Older washers have many parts that require regular maintenance, including bearings and belts. Replacing paddles each year is expensive as well as labour-intensive; sometimes taking as long as four days to complete.

A high-pressure washer, on the other hand, has only two wear parts: spray nozzles and valve seals. A high-pressure washer

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is easy to maintain because the operator can access the main wear parts through the lid on its drum.

Producing Profits High-pressure washers help companies produce the most sellable product by removing impurities from deep crevices of the materials.

For example, recent trials revealed that, beyond stone, a high-pressure washer effectively removes contaminants in just one pass from coal refuse, limestone, quartz, and iron ore.

In one case history, an aggregate producer recently purchased a high-pressure washer to clean stockpiles of clay-contaminated stone, which contained non-liberated sand products.

Initially the company had little interest in the stone, and sought to reclaim the sand product. However, they found there was a market demand for clean stone so, in short, they not only saved resources and expenses, but also became more profitable by selling

a product that was previously waste.

Also, a high-pressure washer saves time and labour in cold regions, where washers are dumped daily to prevent freezing.

Unlike a log washer, which can take hours to fill and drain due to its large size, a high-pressure washing system fills and drains in a matter of seconds, saving time and labor.

An Alternative Solution Overall, high-pressure washers take producers into the 21st Century and beyond thanks to a design focused on lowering energy and water usage. Plus, the minimal maintenance and upkeep fits the schedules of the modern workforce. That all adds up to decreased expenses, increased efficiency and, in some cases, more areas to profit.

EMR Information for this Special Report* provided by Michael Honea, process engineer at Haver & Boecker, Canada.

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TIPS

To Improving Maintenance

E

quipment maintenance costs can take a significant bite out of the bottom line, while malfunctioning equipment means production losses and unhappy customers, so it makes obvious sense to improve maintenance practices to reduce equipment shutdowns due to breakdowns or unplanned maintenance.

Here are a few tips to help avoid shutdowns and improve profits.

1

Regularly check your maintenance procedures and see how you can simplify them. Over time, many of your maintenance procedures will have grown longer. They also may have become confusing or contradictory. You may find that some steps may not be needed any longer. New procedures and tools or better spare parts may make them redundant. There is also a natural process for job instructions to grow over time!

Frequently more and more detailed steps are added to ensure that the job is done just right. However, people get confused with too much complexity. The maintenance technicians will start to check off checklists without really doing all the steps. So, use a regular review to identify the most important steps and specify them correctly.

2

Educate non-maintenance personnel to identify possible maintenance problems and how to report them. For example, an unusual noise during machine operation that may signal a potential bearing failure. Use the maintenance request management features in your maintenance software. This will make it easier for them to request maintenance or report potential problems.

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EQUIPMENT MAINTENANCE & REPAIR S PECIA L R EPO RT *

3

Equipment Costs

200

200

HVAC – B

0

Equipment

HVAC – M – Pump

400

HVAC – M – Condenser

400

HVAC – M

600

Forklift #1

600

EPJ #2

800

EPJ #1

800

Air Compressor #1

Cost

Make sure to have the right tools – maintenance management software, for your needs. When looking for CMMS software it may be tempting to get products with a rich list of features. These can be things like fancy reports, integration with other systems, advanced monitoring or prediction capabilities and so on. However, in many cases the value of the system will depend on the efforts you put into it. If you put “garbage in” you will get “garbage out”! If a lot of information needs to be collected and entered, you can be sure that it will not be done after some time. Integration with other systems may be incorrectly done or not implemented at all resulting in bad data.

Equipment monitoring systems can fail. They may need regular maintenance and calibration which may not be done. This results in bad data or missed equipment maintenance. You should get the “right-sized” CMMS package that will work for your needs and that your team can handle without too much effort.

0

Labor Material Other

Grand Total Cost: $1,079.14 (Labor Costs: $309.08 Material Costs: $770.06 Other Costs: $0.00

Example report comparing equipment maintenance costs over a period.

4

Estimate future spare parts and supply needs. You do not want to run out of spare parts or supplies when you have major preventive maintenance due! Your maintenance software may have a report to check availability of parts and technicians for future dates when work orders are due. This can be useful as it provides warnings when parts are estimated to be insufficient for future work orders. This allows you to order them in advance from suppliers rather than waiting till re-order limits are reached to order supplies.

5

7

Create a maintenance calendar of work to be done in the next month, quarter or year by equipment and or location. Share maintenance dates on critical equipment with operations. Make sure that it will not conflict with their plans.

EMR Information for this Special Report* provided by Sanjay Murthi, Sales Manager, SMGlobal Inc., a maintenance management software company based in Apex, North Carolina.

Give priority to equipment breakdowns based on whether delays in fixing them are acceptable. For example, if one machine of several similar machines fail it may not be so much of an emergency if the other machines can handle the lost production. Alternatively you may be able to “borrow” a replacement from the vendor. This will give you some flexibility in deciding when to fix equipment breakdowns.

6

Use historical data to identify equipment that breaks down frequently. Identify the most common causes and see if regular preventive maintenance would have reduced these breakdowns. You may decide to replace such equipment if more reliable alternatives are available.

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MINE MANAGEMENT

Problem Solving: A look at analyzing mining data to improve performance

M

aximizing production, while increasing efficiency and safety, are paramount in today’s mining operations where companies are grappling with some of the toughest commodity pricing conditions in memory.

Consider that at the end of last year, the price of coal was down 32 per cent from the end of 2014; iron ore was down 24 per cent; palladium down 30 per cent; copper down 25 per cent; zinc down 30 per cent, and aluminum down 19 per cent, with only gold recovering slightly from the lows of 2015.

To help mitigate this price challenged environment, IBM is now putting the full force of its analytics capabilities behind the mining industry in an effort to help companies increase production and make fundamental shifts in the way they operate efficiently.

Working with a large, multi-national mining company, our company developed a new proof-of-concept that is able to analyze existing data and produce a novel set of data visualization reports that show where inefficiencies are occurring in a mine’s operations.

Combining data from mine dispatch systems, fueling, location and other available data, the solution provides a single, fact-based view of the orchestration in the mine, and uses an analytical model to identify where the inefficiencies are.

This information then allows mine personnel to determine possible causes and rectify them quickly.

In the proof-of-concept testing phase, the solution focused on a core mining process – hauling cycle times.

Typically a mine’s mobile fleets are continuously moving throughout the mine: queuing, loading, dumping, and hauling both in full and empty modes. And the hauling process is complex due to many factors, like weather conditions; regulations, other processes like blasting, the minerals being mined, human behaviour and inherent uncertainties like mechanical failures.

These complexities also lead to inefficiencies, some of which a mine’s dispatch system is designed to capture, but which a dispatch system alone is not suited to analyze for recurring patterns that are outside the norm, and pinpoint where a supervisor needs to go and investigate further.

In one Brazilian operation, for example, our software solution was able to visualize repetitive patterns in the truck/shovel hauling process that were previously undetected.

By analyzing many, many days of truck/shovel cycle times – 30 |

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both historic and real time – it was able to determine that an inordinately high number of trucks in the shovel que were being passed by other trucks prompting the question, “what is going on here?”

The mine management team was then able to take these visual analytical results and determine the possible root cause.

In this particular case, mine staff discovered that older operators were letting younger drivers pass by and load up, thereby getting extra break time.

The solution not only identified a critical inefficiency in the mine’s operations, it was also able to help mine management put a dollar value on this particular truck/shovel inefficiency and make the appropriate adjustments.

Truck/shovel operations generally involve high costs. In surface mining, for example, truck haulage is the largest item in the operating budget, constituting about 50 to 60 per cent of the total mining costs. So, in a competitive market environment, coupled with the current price-challenged environment, closing the gap and maximizing potential truck/shovel capacity is of critical importance.

This Operational Effectiveness Analytics solution, developed

by IBM’s Haifa Research Lab, was tested over a full year in an open-pit environment and can be customized for any type of mining operation or mineral.

Not only does it address operational excellence in the mining industry by identifying defects and minimizing process variabilities, as was the case at the Brazil mine mentioned above, the solution has broader implications for health and safety, as well as compliance in general. It can help verify proper evacuations before blasting, identify circumvention of safety equipment, verify pre-shift checks and training, and identify deviations from recommended speeds and routes.

In total, it allows a mine to be productive, efficient and safe; all key imperatives for the sustainable operations of today’s modern mines.

By mining the data, IBM is helping transform the mining industry – improving operations, democratizing key processes by creating transparency, and lowering costs while expanding marCMJ gins – even in a downturn.

DOUG HANSON is Director at IBM Oilsands and Natural Resource Solution Centre, Calgary.

Photo: Peshkova, iStock.com

By Doug Hanson

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CSR MINING IN MY& MINE(D)

FIFA’s human rights obligations provides a framework for change

By Michael Torrance and Carole Gilbert

T

he Fédération Internationale de Football Association, better known as FIFA, recently engaged noted human rights expert John Ruggie to assess how the organization can apply the United Nations Guiding Principles on Business and Human Rights (UNGP) to advance its commitment to respecting human rights. The report was prepared in light of allegations of labour and migrant worker abuse associated with the forthcoming World Cup, which has been the subject of criticism by human rights organizations like Amnesty International.

While not mining related, the report provides valuable guidance that businesses in any sector can harness in order to identify and address human rights obligations in every aspect of their operations. Importantly, the UNGP are endorsed by the Government of Canada in the CSR Strategy for the Extractive Sector, as a standard expected of Canadian miners operating abroad.

The report offers six key findings that can serve as a blueprint for any organization seeking to develop and implement a human rights strategy in accordance with the UNGP:

n1 Adopt a clear and coherent human rights policy The report recommends that FIFA adopt a human rights policy that applies both internally, to FIFA’s leadership and staff, and externally to its relations with business partners and other relevant parties. It is recommended that this human rights policy be made publically available, and that FIFA revise its governing documents to ensure consistency across the organization.

2 Embed respect for human rights n The recommendations under this heading focus on configuring FIFA’s operations so that respect for human rights is reflected both in policy and in practice. The report suggests making a member of FIFA’s top management team accountable for human rights and tasking a department with responsibility for the dayto-day operations relating to FIFA’s human rights commitment.

Further, the report recommends that those tasked with the responsibility for human rights be provided with the training, capacity and resources necessary to execute their mandates.

3 Identify and evaluate human rights risks n With respect to human rights risks, the report’s recommendations emphasize the importance of focusing not only on the risks

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to the business enterprise itself, but also on the business’ risks to external stakeholders. In FIFA’s case, the report focuses on the importance of stakeholder engagement and suggests including human rights criteria in the tournament bidding process in order to better identify and evaluate risks.

4 Address human rights risks n The report provides numerous recommendations on how to address human rights risks once they have been identified. Based on the UNGPs, leverage is a business enterprise’s primary tool for addressing these risks. For example, the report recommends that FIFA use its leverage in its supply chain relationships to implement provisions in its contracts that specifically address human rights. In severe cases, when an organization is unable to successfully use its leverage to reduce human rights impacts, then the organization should consider suspending or terminating the business relationship.

In the context of FIFA’s operations, it is recommended that FIFA impose human rights requirements as early as possible in its business relationships, including in bidding documents and in its supply chain. The report identifies the Men’s World Cup tournament as being the event where FIFA has the most leverage and consequently the event where it bears the greatest burden to address its human rights risks.

5 Track and report implementation n FIFA is tasked with improving its public reporting and better monitoring the organization and its supply chains in order to ensure that human rights requirements are being implemented and enforced. The UNGPs have an associated Reporting Framework, which the report recommends using as a foundation when creating reporting requirements at an organizational level.

6 Enable access to remedy n The remaining recommendations in the report focus on the need to provide an adequate remedy where FIFA has caused or contributed to negative human rights impacts. The report notes that while states have the duty to provide access to judicial remedies, business enterprises like FIFA are in a good position to provide non-judicial remedies that complement those judicial channels.

CMJ

MICHAEL TORRANCE AND CAROLE GILBERT are lawyers with Norton Rose Fulbright, Toronto.

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2016-05-25 10:32 AM

UNEARTHING TRENDS

Hiding in plain sight: making

the most of exploration tax credits

By Sean Verret

E

nsuring the quarterly books are in the black has been a challenge for several companies in the mining sector lately, especially with dipping commodity indexes and the resulting slower economy. But if your books are potentially drifting towards the red, you need to examine what you’re doing to stem that tide.

Whether you’re in British Columbia or Newfoundland – or anywhere in between – there are some leaders and some stragglers when it comes to diversifying methods of generating income in the form of refundable and non-refundable tax credits. More and more we are seeing some of Canada’s mining leaders take advantage of the Canada Revenue Agency’s (CRA) Scientific Research & Experimental Development (SR&ED) program, saving themselves anywhere from hundreds of thousands to millions of dollars.

IN TIMES LIKE THESE, ENSURING YOU’RE MAXIMIZING YOUR CASH FLOW FOR YOUR BUSINESS, YOUR SHAREHOLDERS AND YOUR EMPLOYEES IS CRITICAL.

One way Canada’s mining leaders are maximizing their SR&ED return is by actively engaging in experimental production trials. Paraphrased from the CRA SR&ED glossary, Experimental production is defined as the output produced as a result of an experiment or a trial that is required to answer a question or required to gain a new understanding. The purpose

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of the production run, in which the output is experimental production, is to evaluate the technical aspects of the proposed question.

As time goes on, companies are also getting better at determining the extent of the SR&ED. They do this by identifying the specific production runs that are part of the experimental development work through specific methods of documenting their trials and performing the necessary post trial analysis to demonstrate key learnings. They’re educating their engineers, scientists, and technologists on this process and, as a result, they’re capitalizing on the beneficial SR&ED tax credits available to them. The key is to identify the potential to use the SR&ED program before you get started.

Here’s an example: imagine your company was thinking about experimenting with a new blast pattern in an area that was technologically challenging, but you weren’t sure how it would affect your overall recovery or if it was even possible to meet your objectives. So, you corner off a separate test blast section and then run the ore through various comminution operations to remove the gangue and produce an experimental concentrate.

Then, you test the concentrate to see what impact your experimental tests had on the recovery. Believe it or not, performing work like this could result in valuable tax credits coming back your way if you document your process properly!

So how would something like this impact your company? The Federal Investment tax credits (ITC) for this type of work would be 15% of your claimed expenditures – with a 35% refundable credit if you are a qualified Canadian controlled private corporation. In addition, some provinces have fully refundable tax credits that vary between 5% and 20%, that can be stacked on top of the Federal credit. If your company is in a loss position, these refundable credits become extremely desirable. The nonrefundable ITCs can be carried back up to three years and forward up to 20 years.

In times like these, ensuring you’re maximizing your cash flow for your business, your shareholders and your employees is critical.

The SR&ED program is a valuable tool that can help you offset CMJ the cost of innovation, and help you stay in the black.

SEAN VERRET, EY Manager, Business Tax Incentives.

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2016-05-25 10:33 AM

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