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Alexco advances Keno Hill Rubicon’s reboot Sayonara cyanide?
precious metals
SEPTEMBER 2019 | www.canadianminingjournal.com | PM # 40069240
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CANADIANMINING
SEPTEMBER 2019 VOL. 140, NO. 7
JOURNAL
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PRECIOUS METALS
12 Alexco Resource advances its Keno Hill silver project in the
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Yukon – again.
17 A look at the alternatives to using cyanide in gold processing. 21 Rubicon Minerals is back with a new PEA for its Phoenix gold project.
FEATURES
31 Why complex mining projects fail, time and again.
HEAVY EQUIPMENT 25 How Kirkland Lake Gold transitioned to a battery electric fleet at its
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Macassa mine.
28 Using the scientific method to build a business case for the digital mine.
DEPARTMENTS 4 EDITORIAL | Gold’s lustre returns. 5 UNEARTHING TRENDS | EY’s Theo Yameogo advises on how companies
can incorporate renewable energy into their operations.
6 CSR & MINING | Human rights lawyer Isabelle Gilles discusses the
importance of building a gender-inclusive culture at mining companies. Lawyers from Osler’s regulatory, environmental, Aboriginal and land practice provide an update on Bill C-69’s impacts for miners.
8 LAW |
10 FAST NEWS | Updates from across the mining ecosystem.
www.canadianminingjournal.com SEPTEMBER 2019
ABOUT THE COVER
This month’s cover supplied by Pure Gold Mining.
Coming in October Canadian Mining Journal looks at mining in Quebec and the Maritimes. Plus, a feature report on ventilation and our semi-annual Equipment Maintenance & Repair supplement.
For More Information
Please visit www.canadianminingjournal.com for regular updates on what’s happening with Canadian mining companies and their personnel both here and abroad. A digital version of the magazine is also available at www.digital.canadianminingjournal.com
CANADIAN MINING JOURNAL |
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FROM THE EDITOR SEPTEMBER 2019 Vol. 140 – No. 7
CANADIANMINING Gold’s lustre returns Alisha Hiyate
S
ince our last precious metals issue one year ago, gold’s fortunes have gone from lacklustre to brilliant. Last August, the gold price had dipped below US$1,200 per oz. But early this summer, gold broke through US$1,400 an oz. – and not only held above that level, but continued to climb. As I write this, gold has reached US$1,532 per oz., boosted by increasing economic uncertainty, trade disputes between the U.S. and China, and declining interest rates. There are lots of pundits who believe the ascent of gold, which is still not anywhere close to its 2011 peak of USS$1,900 per oz., has only just begun. Investors have taken notice of gold’s rise, but while some interest is beginning to return, the flow of actual funds still seems to be limited. Companies that have been able to raise money for gold exploration and development have, for the most part, been relying on a couple of investors. Eric Sprott alone was responsible for $139 million in private placements in gold and silver juniors in June and July, according to Oreinc, which tracks junior financings. Generalist investors haven’t followed suit yet – but Sprott is known as a contrarian investor who aims to stay ahead of the crowd. Gold mining companies are becoming more confident. Gold M&A that started last year with Barrick Gold’s acquisition of Randgold, then Newmont Mining’s friendly merger with Goldcorp, has continued. Australian companies have emerged as buyers of Canadian companies and assets after Melbourne-based St. Barbara bought Nova Scotia miner Atlantic Gold and Newcrest Mining acquired a 70% stake in Imperial’s Red Chris mine. More M&A is anticipated. Regardless of where the gold price goes from here, gold miners have real work to do on the ground. They must rebuild investor confidence by showing they can manage their operations with discipline, and build projects on time and on budget. They are making progress on this front, reining in costs and switching their focus from producing the most ounces to producing a return on investment. The rise of gold could be coming at just the right time for gold miners – so that they can make the most of their assets and wisely make new acquisitions with the same discipline they’ve been forced to embrace over the last seven years. At the same time, gold miners must also gain the trust of the general public, a large portion of which views all mining as environmentally and socially destructive. For gold miners, there’s another layer of negative perception tied to the use of cyanide – a highly toxic chemical – in conventional gold processing technology. Advances in gold processing are being developed that could help ease public concerns about cyanide by eliminating its use altogether. (See story on page 17.) While these alternatives are still to be proven on a commercial scale, they may hold CMJ the key to an even brighter future for gold miners.
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MINING JOURNAL
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
CMJ •
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News Editor Marilyn Scales CANADIAN MINING JOURNAL mscales@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 BIG L.P. Mining. BIG 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.
www.canadianminingjournal.com
UNEARTHING TRENDS
Renewing the energy mix to meet a low-carbon future By Theo Yameogo
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ur world is changing and the global transition towards renewable energy is driving a surge in demand for metals. According to the International Energy Agency, for example, electric vehicles (EVs) sales alone are expected to reach 125 million by 2030. And with each EV requiring approximately 83 kg of copper, consumption could rise 50% over current global levels. Meeting increased demands for copper – as well as other base metals like lithium, cobalt and nickel used in battery technologies – will require a massive increase in exploration, mining, processing and refining. As a result, coupled with the challenges of deeper mines, we can expect intensified energy consumption for mines, mills and smelters. With the sector already pegged as a leading carbon emitter, companies should be asking how to leverage renewable resources to contribute to a low-carbon future. Renewables can offer many benefits. They can: • Improve economics: The cost of energy represents up to onethird of a mining company’s total cost base, making it a keenly managed component of operations. With the costs of wind and solar generation and energy storage falling rapidly, renewables – or a mix of fossil fuels and renewables – can reduce operation costs driven by the demand for power. • Diversify energy sources and reduce dependency on imported fuels: As global prices for oil and gas continue to fluctuate, renewables can lower the exposure to oil and gas prices, import duties and inbound logistics risks.
• Contribute towards a low-carbon economy: Like many industries, mining and metals companies are getting called on by key stakeholders to reduce carbon emissions. As renewables anchor on local sources of non-fossil fuels, swapping diesel for electricity powered by renewable sources is a way to commit to a low-carbon future, while creating local jobs for installation and maintenance. While many mining companies are known to have considered such an energy mix, the industry has seen minimal adoption to date. Operations still largely rely on fossil fuels to run equipment and electricity for processing, and mines in remote areas are likely to use diesel power generation. As companies start to consider the potential advantages of renewable energy,
SEPTEMBER 2019
we need to think through what’s required to get there. Here are five things mining and metals companies need to consider: • Understand the feasibility: Solar, wind, hydro and biofuels are all renewable resources, but may not all be feasible options for a given operation. Location, infrastructure, regulations and community relations are all factors that need to be considered when exploring sources for renewable energy. • System changes: New operations will not have a legacy energy system to replace, which will make decisions easier if the feasibility is positive. But, for legacy systems that require retirement or co-generation, change design and management is required to provide assurance that the power is reliable and appropriate for the existing plants and equipment. • Integration of multiple sources and back-up strategies: If an operation loses power without a back-up, it could also lose days of productivity and put people at risk. Assessing the integration of fossil fuels and renewable energy sources could be critical for reliability of the power systems. • Attracting local skills and talent: For renewables, local talent can be hired and trained to execute projects, which create new skill sets beyond the traditional mining operations ones. • Explore alternative financing options: Independent Power Producers (IPP) have been present in the sector offering to raise the capital to develop and operate renewable power plants, in return for power offtake agreements. Such mechanisms, when well thought out, improve the likelihood of adopting renewables as a beneficial energy source. As the industry looks at options to become more energy efficient, cut costs and contribute to a more sustainable mine, companies agree that renewables offer opportunities of a new dawn. Every journey towards renewable energy will be different, but in the end will present a viable channel for the mining sector to explore, mine and process mineral resources while CMJ meeting environmental and social expectations. THEO YAMEOGO is the EY Canada mining & metals co-leader. He is based in Toronto. For more information, visit ey.com/mining.
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CSR & MINING
Building a gender-inclusive company culture By Isabelle Gilles
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he business case for a gender-inclusive company culture is evident across industries, and the mining sector is no different. The recently released Prospectors and Developers Association of Canada (PDAC) Gender Diversity and Inclusion: A Guide for Explorers, illustrates that society (including shareholders, investors, stock exchanges, employees and communities) expects mining companies to build inclusive workplaces. Companies that support a gender-inclusive culture have a healthier, more innovative workforce that leads to sustainable, responsible and profitable operations. While a gender-inclusive culture has many benefits, it can be challenging to achieve. A rights-based approach is an effective lens to illustrate the hurdles that stand in the way of a gender-inclusive company culture. Companies that commit to international standards, such as International Labour Organization (ILO) Conventions, must respect them even when they are more stringent than local norms. There are also good business reasons to implement gender inclusion policies, including to retain talent, build a local workforce, and foster a productive workplace culture. Hiring and retention The mining industry experiences difficulty in recruiting and retaining female employees. The Mining Industry Human Resources Council (MiHR) published the report Gender Equity in Mining Works in 2018, which noted that in 2017, women represented 19% of the labour force in mining, quarrying and oil and gas extraction, while they accounted for 48% of the labour force as a whole. The MiHR report Exploring Gender Inclusion (2016), based on results from a survey conducted in Canadian mining companies, noted that the workplace culture can be described as “gendered.” The survey results demonstrated that the “glass ceiling” barrier and unconscious bias are experienced by women, who state that it can be difficult for them to be considered for promotions and that “boys clubs” are still challenging to enter. The survey also showed that 32% of female respondents reported having experienced harassment, bullying or violence in their workplace in the last five years. Many Canadian mining companies have projects operating close to communities with high poverty levels, often with little access to education, skills training and employment opportunities. Companies usually hire local workers for non-skilled 6 | CANADIAN
MINING JOURNAL
positions, and training can be offered. Women from these communities can suffer from increased vulnerability, which can be worsened by heavy family responsibilities and little opportunity and capacity to obtain an income. Family obligations A women’s role as primary caregiver can be a barrier to working at a mine site. Mine locations are often remote and transport time is added to long days of work. Where fly-in fly-out schedules are required, the difficulty for workers to be present for their families is further increased. ILO conventions require that companies provide workers with maternity leave, flexibility allowing the mother to breastfeed, and reasonable period of leave for family reasons. However, these standards can lack legal or actual protection in the national system where the company operates. Companies that are committed to international standards must keep this in mind when thinking about HR policies. Female workers from vulnerable communities also often occupy support positions, cooking or cleaning. Discrimination regarding access to training that is necessary to move up the ladder is often reported, as these training opportunities can open the door to more skilled jobs (e.g. machine operators or technicians), which are more typically seen as “male” positions and are often better paid. Workplace harassment and grievance mechanisms Many companies have made an effort to ensure women are included in local consultations and have access to effective grievance mechanisms. This must be true for employees as well. When women are involved in workplace harassment, they can feel strong peer pressure to avoid reporting complaints, especially in cases of sexual harassment or gender-based violence. Furthermore, when women feel that their employment may be jeopardized by filing complaints, they can be inclined to avoid reporting – a behaviour that was noted in the MiHR survey. The “gendered” workplace culture in the mining industry can make it easy for infringements on women’s rights to happen, and difficult for the victims to speak out. For these reasons, companies need to provide empowering tools for women to express complaints and effective early warning systems. Proper safeguards against any form of retaliation or secondary victimization must also be put in place by the company. Mining companies have to recognize the impacts of the workwww.canadianminingjournal.com
place culture and policies on women’s rights and assess them adequately.
Guidance and good practice on gender inclusion
Protecting women’s rights benefits everyone Changing mentalities in mining requires training and awareness raising, but there are many organizations that are leading the charge and several guidance documents and tools that can support gender-inclusion. With rising scrutiny of Canadian companies’ operations abroad, changing attitudes about women’s rights should be seen as an opportunity to protect the company from claims which can have legal, financial and reputational effects. It is also the opportunity to improve workplace culture, access a wider pool of candidates, and retain talent. Respecting female workers’ rights is also a way to provide benefits to communities and facilitate a relationship of trust between company and communities. For example, De Beers Group notes that investing in women and girls has an exponential impact on community development due to their tendency to reinvest around 90% of their income into their families and communities. With mining companies trying to demonstrate the value they bring to local communities, this is an important achievement. CMJ
w PDAC Gender Diversity and Inclusion: A Guide for Explorers:
ISABELLE GILLES is a human rights lawyer from Montreal, working with the firm LKL International Consulting Inc. She works on human rights impact assessments and specializes on the rights of women and other vulnerable groups.
w Women in Mining Canada has various gender inclusion
www.pdac.ca under “Responsible Exploration”
w MiHR Gender in Mining Works program (GEM Works): Companies such as Agnico Eagle, Hatch, and Mosaic Co. have implemented GEM Works to identify change agents within their companies, and find and address systemic barriers in their policies: www.mihr.ca/certification-training-standards/training-programstools/gender-equity-in-mining-works
w UN Global Compact Women’s Empowerment Principles: www.unglobalcompact.org/take-action/action/womens-principles
w DeBeers Group partnered with UN Women and became a HeForShe Thematic Champion: www.debeersgroup.com/building-forever
w IFC Unlocking Opportunities for Women and Business – A toolkit of actions and strategies for oil, gas and mining companies: www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_ corporate_site/gender+at+ifc/resources/
initiatives: https://wimcanada.org/
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ConstruCtion AnD Mining serviCes
SEPTEMBER 2019
CANADIAN MINING JOURNAL |
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LAW
Federal government enacts changes to EA processes By Martin Ignasiak, Sander Duncanson, Richard J. King and Justin Fontaine
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n June 21, 2019, the federal government passed Bill C-69, new legislation that will materially reform the federal environmental assessment regime in Canada. The reforms will see the National Energy Board (NEB) replaced by the Canadian Energy Regulator (CER) and the Canadian Environmental Assessment Act, 2012 (CEAA 2012) replaced by a new Impact Assessment Act (IAA). Bill C-69 was subject to a review by the Standing Senate Committee on Energy, the Environment and Natural Resources. On June 5, 2019, after hearing from interested parties across the country, including members of Osler’s Regulatory, Environment, Aboriginal and Land Group, the full Senate passed a suite of close to 190 amendments to Bill C-69. Canada agreed to accept roughly half of these, but largely rejected the proposed amendments put forward by Conservative senators as well as several amendments proposed by independent (formerly Liberal) senators that would have improved the Bill. Although the final amended version of Bill C-69 can be considered an improvement over the original draft, the new legislation introduces considerable uncertainty into the federal environmental assessment processes, and key issues that plagued Bill C-69 from the outset remain. Bill C-69 will exacerbate the ongoing issues of regulatory uncertainty and protracted timelines that currently exist under CEAA 2012, which are seriously impairing Canada’s ability to attract investment. Environmental assessments under the IAA will continue to take longer than necessary and will provide Canada with the opportunity to repeatedly “stop the clock,” thereby raising the spectre of indefinite delays. In addition, Bill C-69 allows for a degree of public participation that will not serve to provide the Impact Assessment Agency of Canada (Agency) or CER with the best available, relevant evidence. Rather, all interested persons, many of whom may have no connection to the project being reviewed, will be allowed to opine on and object to the project on unrelated grounds that may be completely outside the proponent’s control. Overall, the process has become increasingly politicized and represents a shift away from decision-making by expert quasi-judicial bodies. Further, while Bill C-69 attempts to address perceived public concerns with the current regulatory regime, in our view it will likely serve 8 | CANADIAN
MINING JOURNAL
Bill C-69 will exacerbate the ongoing issues of regulatory uncertainty and protracted timelines that currently exist under CEAA 2012, which are seriously impairing Canada’s ability to attract investment. Environmental assessments under the IAA will continue to take longer than necessary and provide Canada with the opportunity to repeatedly “stop the clock.” to make the process less efficient and will not improve the environmental outcomes of the regulatory process. Summary of amendments The following summarizes some of the noteworthy amendments to the original version of Bill C-69 that were included in the final version of the bill that was passed into law, including some of the few amendments that improve the bill relative to its earlier version: w In many places, ministerial discretion has been replaced with discretion of the new Agency (which will replace the Canadian Environmental Assessment Agency). These changes are in response to concerns that the federal Minister of Environment and Climate Change had too much power under the IAA to interfere with impact assessments but replacing ministerial discretion with the Agency’s discretion simply creates new concerns. For example, the Agency now has the ability to suspend time limits established under the IAA that are intended to make the Agency more efficient. In our view, allowing the Agency to suspend time limits if it fails to carry out its functions within the legislated time period undermines the purpose of the time limits in the first place. www.canadianminingjournal.com
w The Agency will now be determining the scope of the factors to be considered in an environmental assessment in the notice of commencement, which is issued at the outset of the process. This should provide the proponent with a degree of certainty about the scope of the assessment prior to carrying out its assessment studies, thereby allowing the proponent to appropriately focus its studies on the relevant issues for the project. w When considering regional and strategic assessments, the IAA now expressly allows the Agency or review panel to consider the weight to be given to that assessment, including the relevance of the assessment to the project and the strength of evidence behind it. This amendment reduces the risk that regional or strategic assessments would be finalized and the Agency and review panels would then treat those assessments as binding, regardless of the strength of evidence behind them. w The “significance” threshold has been reinserted into the IAA as the key threshold for measuring adverse effects in assessment reports. In our view, this threshold helps to provide focus for the assessment and distinguish between material and immaterial impacts. The test for project approval, however, is still the “public interest,” including consideration of the project’s “contribution to sustainability,” consistent with the first version of Bill C-69. w The Agency is now tasked with reviewing reports issued by review panels and submitting recommendations to the Minister regarding the conditions that should be imposed on the project. This is problematic for three reasons. First, it is not clear why the Agency is being asked to perform this function, and it will likely result in unnecessary duplication of efforts and costs. Second, there is no time limit for the Agency’s recommendations and the ultimate decision by the Governor in Council will not be made until 90 days have passed after the Agency’s recommendations have been received. The Agency’s role in this process will therefore likely result in delays. Third, and perhaps most importantly, the Agency will not necessarily attend the review panel hearings
but will be essentially second-guessing the review panel without the benefit of hearing the evidence. This creates concerns regarding procedural fairness if the Agency is recommending conditions on a project that the proponent has not had an opportunity to review and respond to. The Project List and transitional provisions create uncertainty Bill C-69 will come into force on a date to be proclaimed by the government, which is currently unknown. Before the bill comes into force, however, the key regulation under the IAA (the regulations designating physical activities, or “Project List,” which sets out the types of projects that will be subject to the IAA) will likely need to be finalized. Canada has released a Consultation Paper On Approach to Revising The Project List to seek public comment on revising the current Project List. Notably for industry, once Bill C-69 comes into effect, not all projects currently being assessed under the existing CEAA 2012 will be grandfathered by this new legislation. For example, environmental assessments that are currently being conducted by the NEB or the Canadian Nuclear Safety Commission, and for which the Agency considers that the proponent has not collected the information or undertaken the studies required, may be transitioned to the new process once the IAA comes into force. As such, the transitional provisions of the IAA create considerable uncertainty for ongoing projects. The ultimate impact of Bill C-69 on environmental assessments in Canada will be influenced by the details contained in the regulations once passed, who gets appointed to lead the Agency and serve as CER commissioners, and how those individuals implement the new legislation. Until the details of the new regime are well understood and have been tested through actual project assessments and litigation, we expect regulatory uncertainty will continue to be a major barrier to investment in CMJ Canada. MARTIN IGNASIAK, SANDER DUNCANSON and RICHARD J. KING are partners in Osler’s regulatory, environmental, Aboriginal and land practice; JUSTIN FONTAINE is an associate based in Calgary.
A ‘Best for Project’ approach to studies and construction management www.meritconsultants.net
SEPTEMBER 2019
CANADIAN MINING JOURNAL |
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FAST NEWS • EQUIPMENT |
Updates from across the mining ecosytem
Hitachi unveils new EX3600-7 excavator
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itachi has unveiled the EX3600-7 mining excavator, which delivers increased efficiency, reliability and durability for customers in North and South America. The new model is the fourth machine in Hitachi’s new EX-7 Series lineup, following the recent launch of the EX5600-7, EX2600-7 and EX1200-7. Available in a backhoe or shovel configuration, the new EX3600-7 features fuel consumption optimization (FCO) technologies that reduce consumption costs while achieving superior productivity and enhancing sustainability. Customers can choose a Cummins or MTU EPA Final Tier 4 engine option and hydraulic system improvements that reduce fuel consumption by 4% to 7% compared to the previous model (the EX3600-6 with Cummins engine configuration). The EX3600-7 is loaded with intelligent features to minimize downtime and optimize machine longevity. A new auto-lubrication system with a large capacity grease tank, new grease pump, in-line grease filter with breather and grease level indicator in the cab helps reduce downtime. A larger hydraulic oil cooler with variable speed reduces energy demand to create a more reliable hydraulic system
• ORE SORTER |
and effectively reduce temperatures to improve maintainability. Likewise, the cab riser now features a pressurizer system to reduce dust infiltration and extend the service life of electronic components within. The EX3600-7 design was created for optimal durability to withstand tough jobs and menacing terrains. The mainframe is now stronger than previous models because stress is more evenly dispersed across the sturdy, slanted frame. This exclusive centre track frame delivers optimal stress dispersion through specially designed forged steel parts that reduce the chance of failure in critical high-stress areas. The EX3600-7 provides maximum cab comfort and safety for operators with a pressurized cab, air conditioning, and a seat that automatically adjusts the suspension to the operator’s weight. More new features and options that contribute to safety include: an on-board inclinometer with two levels of alerts; anti-slip walkways; improved handrails; and Aerial Angle, a 360° vision system.
Tomra’s Green Counter displays CO2 reductions from its technology
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omra’s advanced sensor-based sorting technologies offer mining operations the dual benefits of energy efficiency and the ability to recover valuable ore even from subeconomic deposits or dumps. This has become increasingly relevant as the mining industry – a very large consumer of energy – shifts towards a green mining approach. Tomra offers smart technologies for sorting and separating a variety of valuable substances. The sensor-based sorting technology by Tomra not only significantly reduces the amount of energy and water required compared to more traditional methods such as grinding and DMS (dense media separation), but also maximizes the efficiency and quality recovery of valuable ores. Pre-concentration techniques like sensor-based sorting have been proven to reduce energy consumption by about 10 | CANADIAN
The EX3600-7 also features connection to Hitachi’s Global e-Service. This online machine management system provides access to each on-site machine from a PC. With on-board sensors, diagnostic tools, real-time data and intelligent software, the EX3600-7 can reach its full potential. The EX3600-7 will be available to those in the U.S., Canada, Latin America and Brazil. The machine is also available as an electric powered shovel in the U.S. and Latin America. CMJ
MINING JOURNAL
half, resulting in a considerable reduction of the carbon dioxide footprint and providing a highly cost-effective solution. Tomra has created a Green Counter that displays on its website the total amount of carbon dioxide reduced through the use of Tomra’s sorting machines in real time. It uses the smart technology within the equipment, which records the amount of rock sorted and eliminated, as well as throughput and total hours of operation. With this data, Tomra and mining companies are able to calculate the energy in kilowatt hours saved by not treating the waste which has been removed by the sorters. The amount of energy saved is converted into carbon dioxide equivalents, which in turn are converted into CO2 tonnes. Through the use of Tomra sorting machines, client companies have saved 123,696 tonnes of carbon dioxide in 2018 alone. CMJ www.canadianminingjournal.com
ERIEZ_W
• EXPANSION |
MacLean puts down roots in Nevada
M
acLean Engineering, headquartered in Collingwood, Ont., is investing in growth in the United States, with the appointment of Dan Millette as U.S. sales manager and his relocation to Elko. This initial, keystone step in the company’s growth plan will be followed by the securing of a local parts depot as well as the hiring of a local employee base of MacLean-certified field service technicians. “Elko is the heart of the Nevada mining industry with its geographic positioning in the Carlin gold trend, one the world’s top gold-producing regions, so it makes sense to have people on the ground to provide local support to our customers,” says Adam Howse, business development manager for western North America. “We are committed to putting the expertise and infrastructure in place to support and grow our U.S. client base over the long term in Nevada as well as Utah, Arizona and Montana.” “What’s drawing us to make these ongoing investments in our U.S. support footprint is the scale and global importance of production in this part of the hard rock mining world, as well as the breadth of underground innovation being actively pursued by U.S. producers,” notes MacLean president Kevin MacLean. “We want to support these new technology integration efforts and at the same time, fine tune our innovation offer by establishing ourselves above ground where this important work is being done under-
ERIEZ_WetDrumAd_CMJ_9_19.qxp_Layout 1 8/9/19 11:33 AM Page 1
MacLean Engineering equipment in action at a Quebec mine. CREDIT: MACLEAN ENGINEERING
ground, around improving safety and productivity.” Millette has been with MacLean for the past two years as product manager for the company’s shotcrete product line, leading the development of the next generation of MacLean sprayer as well as process and technology improvements to the current line of MacLean sprayers. He brings a wealth of professional experience, with some 40 years of working in the shotcrete industry. CMJ
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11
PRECIOUS METALS
Alexco ADVANCES KENO HILL
PFS outlines 8 years of high-grade production in historic silver district
Above: Alexco Resource’s Keno Hill project, in the Yukon. Right: Inside the processing plant, which was built in 2010. CREDIT: ALEXCO RESOURCE
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www.canadianminingjournal.com
By Alisha Hiyate
A
lexco Resource first put its Bellekeno mine, in the Yukon’s historic Keno Hill silver mining district, in production in 2011. But after nearly three years of operation, the company put Bellekeno and its Keno District mill into care and maintenance in late 2013. As single, low-tonnage mine with high operating and fixed costs, the operation was vulnerable when the silver price dropped dramatically from a peak of nearly US$48.50 per oz. in 2011 to around US$20 per oz. in 2013. Since that time, however, Alexco has worked to prove up reserves and resources at several high-grade, narrow-vein deposits at Keno Hill, and in March, the company released a new prefeasibility study for the project that Alexco believes will be more robust and sustainable. Brad Thrall, president of Alexco, says that the big difference between the company’s first operation at Keno Hill and the operation outlined in its new study is tonnage, as well as grade. “When we started to put this district back into production in 2010 and ’11, it was on the back of a little mine called Bellekeno, and that mine was only capable of running 250 tonnes per day,” Thrall said in an interview with CMJ in August. “With this district, like a lot of small, narrow-vein operations, there are a lot of fixed costs – probably 75% of our
SEPTEMBER 2019
costs are fixed. So whether you’re operating at 250 tonnes per day or 400 tonnes per day, it makes a huge difference.” Alexco’s current prefeasibility involves four mines, with two feeding ore to the mill at almost all times. The reserves are also larger and the silver grades, higher. The new plan will see throughput rise from 400 t/d at the start to 550 t/d in year three and onwards. The study forecasts average production of 4 million oz. silver in concentrate per year from Keno Hill over a mine life of eight years. With the existing infrastructure in place, including a 400-t/d mill and much of the underground development work already completed, the project’s preproduction capex is only $23.2 million. As for the economics, the prefeasibility study projects an after-tax internal rate of return of 74.2% and a net present value of $101.3 million. The other difference this time around is that the company has been able to amend its existing streaming arrangement with Wheaton Precious Metals to be more flexible at lower silver prices. “Wheaton put up US$50 million back in 2008 to build this district out and they have been great partners,” Thrall explains. “We have since renegotiated that stream so it’s much more accommodating in today’s price environment than it was when we originally started.”
The prefeasibility study used a silver price of US$15.75 per oz., increasing to US$18.25 in year four and beyond. Allin-sustaining costs are projected at US$11.98 per oz. silver. The project is also economic at lower silver prices, however. At US$15.46 per oz. silver (the spot price at the time of the study), the after-tax IRR would be $79.9 million and the NPV would be 57%. Mining will be done by cut-and-fill predominantly, with longhole drift-andfill used in thicker sections of the deposit. Total probable reserves at Keno Hill’s four deposits – Bellekeno, Lucky Queen, Bermingham, and Flame & Moth – are 1.2 million tonnes at a diluted grade of 804 g/t silver, 2.98% lead, 4.13% zinc and 0.34 g/t gold for 30.5 million contained oz. silver. Just two of the deposits contribute the majority of the ore in the mine plan, with Flame & Moth representing 60% and Bermingham 30%. In a recent conference call, the company noted that 90% of the ore in the plan was discovered in just the past five years. In January, Alexco’s vice-president of exploration, Al McOnie, district exploration manager Seymour Iles and senior geologist Jared Chipman were awarded the 2018 H.H. “Spud” Huestis Award for Excellence in Prospecting and Mineral CONTINUED ON PAGE 14
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PRECIOUS METALS
Alexco Resource’s Keno Hill project. CREDIT: ALEXCO RESOURCE
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Exploration from the Association for Mineral Exploration (AME BC). The team was recognized for their work on the discovery and delineation of more than 60 million oz. of silver in the Flame & Moth and Bermingham deposits. ‘Right-sized’ Keno Hill is located in central Yukon, about 350 km north of Whitehorse in the traditional territory of the First Nation of Na-Cho Nyak Dun. Only about 40 km northeast of Mayo, the site enjoys yearround road and highway access and is connected to the power grid. Thrall describes the prefeasibility as “right-sized” for Alexco, with a focus on reducing the upfront capital and having the highest NSR (net smelter return) tonnes at the front end of the mine plan. He adds that the plan only includes about 30% of the resource at Bermingham, illustrating the opportunity for an extended mine life. Indicated resources at Keno Hill (inclusive of reserves) come to 3.9 million tonnes grading 594 g/t silver, 2% lead, www.canadianminingjournal.com
5.3% zinc and 0.34 g/t gold for 74 million contained oz. silver. Inferred resources add another 24 million oz. silver in 1.7 million tonnes grading 455 g/t silver, 1.6% lead, 3.7% zinc and 0.2 g/t gold. As the project is a brownfields project with a low capex, the company will proceed based on the prefeasibility. Thrall says much of the work in the study is already feasibility level, including tight drill spacing of 10-12 metres for the first two years of mining on the Bermingham deposit. And with a modest capital requirement, a healthy balance sheet, an undrawn debt facility with Sprott for US$15 million and a recent equity financing of US$6.5 million, plus earnings from the company’s environmental business (Alexco Environmental Group or AEG), Thrall doesn’t anticipate the need for significantly more financing other than potential lease agreements with OEMs and a potential offtake agreement for concentrate. “Our concentrate will be somewhere in the range of 55-60% lead with over 15,000 grams of silver within that con-
The big difference between the company’s first operation at Keno Hill and the operation outlined in its new prefeasibility study is tonnage, as well as grade. centrate. We aren’t aware of another product like that in the world,” Thrall says, noting that only Pan American Silver’s now suspended Escobal mine, in Guatemala, produced anything similar. “We’ve had a lot of interest from off-takers to get their hands on that type of a product because of the amount of silver in the concentrate.” About 75% of the revenue from Keno Hill will be from silver. While all the pieces are coming into place at Keno Hill, Alexco is still waiting on an amended water licence before it makes a production decision, now expected in the fourth quarter.
The company says it should achieve cash flow within four to six months of its production decision. While Alexco awaits the water licence, it’s derisking the project by completing surface work that includes a new water treatment pond, a coarse ore storage pad, and the portal at Bermingham, all of which will be done in the early fall. A second phase of work, which will consist of resuming underground development plus mill commissioning, will start when the timing of the water licence is clearer. “We completed 1,000 metres of development already in the last one and half years at both Flame & Moth and Bermingham – so all the underground infrastructure is in place,” Thrall says. “We’ve gone as far as we need to right now so Phase 2 would be continuing the development to reach the ore, and really pulling the trigger in terms of advancing underground development.” At Bermingham, workings have advanced to within 90 metres of ore. CONTINUED ON PAGE 16
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PRECIOUS METALS Historic silver district Keno Hill has a long mining history, generating more than 200 million oz. of high grade silver (44 oz/t) between 1913 and 1989. “It’s really truly one of the more prolific and highest-grade silver districts in the world,” Thrall notes. Historic mining left behind dangerous mine adits and shafts that need to be filled and tailings impoundments that need to be cleaned up. In 2005, the federal government, which had taken over care and maintenance and environmental liabilities, decided there was still opportunity in the district and auctioned it off. Alexco, which also has an environmental services arm (AEG), put in the winning bid. That bid gave it both the mineral rights and the responsibility for environmental remediation in the district. “Our business model is not only mine exploration, development and operations, we also had and still have expertise in environmental management, environmental consulting and remediation – so we brought those two skill sets together,” Thrall explains. “We recognized that part of what comes with Keno Hill is the responsibility to clean this district up. We have a contract with Canada to do that – they are paying the cost to do that, but we also share in some of those costs, we posted $10 million essentially to buy this district – that money’s in a trust fund that eventually goes to the cleanup.”
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Our concentrate will be somewhere in the range of 55-60% lead with over 15,000 grams of silver within that concentrate. We aren’t aware of another product like that in the world. – BRAD THRALL, PRESIDENT OF ALEXCO
The $100-million cleanup plan for the district’s 50-plus individual mine sites has been approved by the federal government and is now going through the environmental approval process in the Yukon under the Yukon Environmental and Socio-economic Assessment Board (YESAB). That is expected to be complete within the next couple of months, and then Alexco can apply for an amended water licence, which would likely be granted in 2020. The company anticipates the real work – building new water treatment plants and cleaning up historic mine sites and tailings impoundments – will start in 2021, well after the Keno Hill mine is up and running. Active reclamation work is expected to last five years. At presstime, the federal government announced funding for the Keno Hill site (and seven other abandoned in the territories) through the new Northern Abandoned Mine Reclamation program. Notably, Alexco’s original Bellekeno mine as well as its plans for its expanded operations involve dry-stack tailings disposal instead of tailings ponds. Thrall says given the district’s history, the topography and the size of the operation, the company made a conscious decision to go low-impact on the environment from the beginning. “That definitely helped with permitting and really, the social licence as well,” he says. Yukon While there has been some delay with the water permit at Keno Hill, Thrall says Alexco is comfortable with the regulatory process in the Yukon, although there are opportunities to improve permitting timelines. “Right now, we’re estimating a water licence in the fourth quarter, which has been delayed, but at the end of the day it still will coincide with our ultimate production decision,” he says. The company will have to go through the permitting process again to amend its quartz mining licence in order to operate at 550 t/d starting in year three, as outlined in the prefeasibility. “That’s part of the reason we’re giving ourselves plenty of time on the front end in terms of our restart – a couple of years operating at 400 tonnes per day – in order to re-permit that mill for higher throughput.” Thrall says the company doesn’t foresee needing another amendment to the water licence. Ultimately, he says the Yukon is a “great place to be” – both in terms of geology and the regulatory environment. “We certainly support the process there and we know it well. I think we have a good relationship with the bureaucracy and regulators and the political level to collectively improve the CMJ system.” www.canadianminingjournal.com
PRECIOUS METALS
Can gold miners say
CSIRO and Clean Mining’s demonstration plant in Western Australia.
‘sayonara’
CREDIT: CLEAN MINING
to cyanide? A look at some of the alternatives in development
By Alisha Hiyate
W
hile cyanide is a very efficient and effective reagent in gold processing, in particular for oxide ores, there’s been a long search for alternatives. A highly toxic chemical that can be dangerous to humans and wildlife, cyanide use at gold mining operations provokes concern in many jurisdictions. In fact, it was in response to a damaging spill from a tailings pond in Romania in 2000 that released SEPTEMBER 2019
100,000 cubic metres of cyanide contaminated water into the Somes River, that the Cyanide Code – a voluntary code that governs the manufacture, transport and use of cyanide in gold mining – was created. Despite the code, which has been implemented in 54 countries, as well as mandatory regulations around cyanide use, there CONTINUED ON PAGE 18
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PRECIOUS METALS CSIRO has continued to work to advance thiosulphate as an alternative reagent, developing its own process, which is substantially different than Barrick’s. Earlier this year, it A ring made with licenced the process to Clean “clean gold” produced Mining, a subsidiary of Eco without the use of cyanide. CREDIT: CLEAN MINING Minerals Research, which is now working to commercialize the technology. The technology has been proven to work at an industrial scale, with the first gold produced at Eco Minerals’ gold processing plant in Menzies, Western Australia in a trial last August. The demonstration plant has a 50 t/d capacity and is in the process of being upgraded to a capacity of 20 tonnes per hour, says Jeff McCulloch, Clean Mining’s managing director. In an emailed response to questions, McCulloch explained how the technology works. “The thiosulphate based reagent is made from an inorganic compound (a salt) that can dissolve Clean Mining’s managing director Jeff McCulloch. Brian Howlett, president and gold, but unlike cyanide and other CREDIT: CLEAN MINING CEO of Dundee Sustainable reagents, (thiosulphate) doesn’t Technologies. require the addition of acids, lime, simple chemistry,” says Rob Raponi, an independent metallur- oxygen, chlorine, high temperature or pressure vessels,” he says. The Clean Mining process works on more than just refracgical consultant specializing in gold metallurgy and recovery. “The alternates have more complex chemistry and tend to be tory ore, and it has the potential to be much lower impact than much less robust. Typically, cyanide leaching provides the high- traditional technology, McCulloch adds. “If miners choose to include our dewatering process option est recoveries where side by side tests have been performed.” But there are alternatives to cyanide that are being developed in their plant design, the chemicals and water reclaimed from by companies that are working with gold mining companies to the leach tailings are all recyclable in the leach process,” and dry stack tailings are produced. commercialize their technologies. McCulloch says Clean Mining is in negotiations with several Raponi says the most advanced alternatives are processes involving thiosulphate, a benign chemical used in fertilizers, miners to build plants in Australia and Asia. and those that use halides (chlorine-chloride bromine, iodide). Dundee’s CLEVR Several companies are advancing gold recovery processes using Thiosulphate Australia’s national science agency CSIRO (Commonwealth halides, including Dundee Sustainable Technologies (DST), Scientific and Industrial Research Organisation) worked with Enviroleach, Neomet and Intec. Raponi says Dundee, which Barrick Gold at its Goldstrike mine in Nevada to develop a has a 15 t/d demonstration plant, is the furthest along in develniche thiosulphate process for the project’s double refractory opment. Based in Montreal, DST has been working on its chlorinaore. The difficult-to-process ore has very high levels of carbonaceous, “preg-robbing” material which competes with acti- tion process since the early 2000s. Originally developed to recover nickel from tailings when the price of nickel was convated carbon in the cyanidation process to capture the gold. Barrick’s thiosulphate processing plant poured its first gold siderably higher, the company switched its focus to gold recovat the end of 2014, but the plant has underperformed on recov- ery in 2009, and recently rebranded it as the CLEVR process, which stands for chlorine leach vat reactor. eries, Raponi notes. are some jurisdictions around the world that have banned cyanide in heap-leach applications at gold mines, as well as in processing plant applications. Bans or restrictions have been implemented or are planned in jurisdictions in Argentina, Eastern Europe, Central America and the United States. But because sodium cyanide is so effective at dissolving gold, is well understood and relatively inexpensive, competing technologies need to offer compelling recoveries and economics to compete. “Cyanide leaching is very easy, robust and has
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www.canadianminingjournal.com
While every project is different, DST president and CEO Brian Howlett says the process starts with gold ore which is mixed in a vat with sodium hypochlorite in acidic conditions to put the gold into solution. Contact time is short – one to two hours – and the process operates in a closed loop. The gold-bearing brine is then filtered and deposited onto silica as opposed to activated carbon. Howlett says the CLEVR process works well on different types of ore – although some ores will require an oxidation pretreatment step. The company completed two trials at its demonstration plant in early 2017 with positive results. “We tested two different ores – one was a very refractory pyrite concentrate from Eastern Europe and the second was a high-mercury copper-gold concentrate from Chile,” he said. The CLEVR process achieved gold extraction yields of up to 90% in tests with the refractory pyrite, and 97% with the Chilean concentrate. “The concentrate we got from Chile had a very high mercury content, about 700 ppm of mercury and we were able to remove 99% of that and extract it so it doesn’t end up in the tailings.” That said, the CLEVR process is not a solution for every mine. “The process is really not going to work at an existing mine, it has to be a new build to be really compelling,” Howlett says, as CLEVR is chemically very different from existing approaches. In addition, it wouldn’t be used on low-grade oxide ores, which are easily treated with a cyanide heap-leach circuit. “Where you’ve got a higher-grade concentrate – and many, many operations are like that – that’s where we compete,” he adds. The company has been working with several well-known gold miners for the last 2.5 years to advance the technology. Dundee is also working with a private Chinese gold miner operating in Shandong province. Despite having a cyanide plant already, the company is interested in CLEVR. “They weren’t getting the recoveries they need and we’re offering a much higher recovery,” Howlett says. “And cyanide is becoming more problematic in China – they’re respecting the environment a lot more these days so they’re interested in new technologies.” DST has completed testing for the company, which will be SEPTEMBER 2019
Inside Dundee Sustainable Technologies’ demonstration plant, which uses the cyanide-free CLEVR process to recover gold. CREDIT: DUNDEE SUSTAINABLE TECHNOLOGIES
visiting DST’s facilities soon to review the results and decide whether to move to the engineering phase, which would take about 6-8 months. “We’re also working with one Canadian gold miner to look at how we can move forward with them. The Chinese just seem much faster and much more open to creative solutions.”
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CANADIAN MINING JOURNAL |
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PRECIOUS METALS Cost Costing information for these technologies won’t be available until they advance in the commercialization process, but Raponi notes cyanide will be tough to beat. “Typically on head to head (comparisons), cyanide outperforms in terms of recovery. The leach time might be the same, but costs are going to be lower with cyanide so it’s a really big hurdle to overcome just on an economics basis,” he says. Clean Mining, however, believes that its process will prove to be less expensive. “For smaller miners that simply can’t afford a cyanide-based plant, Clean Mining’s solution provides a processing option with a lower entry cost that is also safer to operate,” McCulloch wrote in an email. “Our leaching plant is smaller in scale than an entry-level CIP/CIL plant that uses cyanide, which means it has a lower capital cost. It can also be made in modular components and be mobile.” The company is targeting small to medium scale miners that can’t afford a conventional cyanide plant or want to avoid using cyanide. According to CSIRO, the cost of a typical cyanide-based processing plant is around $30 million, but the new technology, which is scalable, can cost as little as $2-2.5 million. “For larger miners, the costs of cyanide compliance are so embedded in their cost structures that it is a very complex process to do a (life-of-mine) cost comparison,” McCulloch notes. “However, Clean Mining is gathering this information and we remain confident that the conclusion will be cyanide is a more expensive process.” Dundee’s Howlett says costs vary depending on project location, type of ore, energy costs and many other factors. The company recently looked at two projects being advanced by a Canadian miner. “In one, CLEVR was quite competitive and actually cheaper” than a conventional cyanide plant, Howlett
says, while in the other, traditional technology won out. Environmental footprint In addition to eliminating the use of cyanide, these technologies have the potential for other environmental benefits, such as reducing the footprint of mines, and potentially eliminating the need for tailings ponds and lined tailings facilities. “One of the big risks in a mining operation is the handling and treatment of the cyanide bearing process waters via tailings ponds,” Howlett says. “With our technology, we do everything in plant – we recycle all of our reagents and we have no risk of a liquid tailings dam fail. That’s one of our key benefits, we put out a dry stack tailing.” He adds: “The other major benefit we can provide is because we work in a chlorine-based environment, we can use seawater if you’re closer to the ocean as opposed to fresh water.” Clean Mining says its technology, too, can be configured with dry stack tailings so a tailings dam is not necessary. Other technologies One more early stage technology that Raponi believes could be promising is a glycine-based leaching process being developed by CSIRO. “From what I’ve read, it has supposedly simple chemistry, it’s very inert outside of what it’s being used for, and some of the early talk is about using it for in situ leaching of gold.” The drivers to look at alternatives to cyanide are not going away, but it may be some time until these technologies are ready to be deployed. The other barrier is that even though miners are interested in change in theory, they tend to be a cautious bunch. “Adoption of new mining technologies in the business is very slow,” says Dundee’s Howlett. “That’s probably our number CMJ one challenge.”
Alexco Resource Corp. w Moving Keno Hill, Canada’s only primary silver mine, back into production w High grade silver in a safe jurisdiction w Low capital and short runway to production w De-risked, existing infrastructure in place w Robust project economics w Exploration and operational upside
www.alexcoresource.com 20 | CANADIAN
MINING JOURNAL
www.canadianminingjournal.com
PRECIOUS METALS
Rubicon Minerals’ Phoenix gold project, in Ontario. CREDIT: RUBICON MINERALS
RUBICON RISING?
Four years after its trial mining failure, a new PEA shows a path to revival for Phoenix By Virginia Heffernan
B
adly burned shareholders may not be interested in its turnaround story, but Rubicon Minerals’ Phoenix deposit in the Red Lake gold camp in Ontario is showing signs of rising from the ashes as its mythical name suggested it would. Phoenix triggered a destruction of wealth and jobs when the deposit failed to meet expectations after reaching production in 2015. Investors saw a dramatic decline in the value of their shares after trial mining revealed that the geological interpretation of the deposit in the company’s preliminary economic assessment (PEA) didn’t match what was actually there. The mine was put on care and maintenance. New management is proceeding carefully. The main difference, said president and CEO George Ogilvie in an interview with CMJ, is that Rubicon is using orientated diamond drilling so that when core is removed from the barrel, the company’s geoscientists know exactly how it is positioned in three-dimensional space. SEPTEMBER 2019
“Because we know how the core is orientated in 3-D space, when the geologists are logging the quartz veins and sulphides that carry the gold, they can project where the gold could be at other elevations in the mine. And if we pick up similar structures as we drill, we can join the dots,” he said. “More importantly, we’ve identified three distinct orientations that allow us to model gold back into the geological structural model.” Ogilvie, formerly president of Kirkland Lake Gold, joined the company in 2017 along with director of projects Michael Willett, a professional engineer with 32 years of experience, including as general manager of Hudbay Minerals’ Snow Lake operations in Manitoba. In August, Rubicon released an updated PEA for Phoenix. The PEA estimates the mine can be built at an initial capital cost of $101.2 million for an internal rate of return of 40.2% and a net present value of $135.2 million, both after taxes. Assuming a gold price of US$1,325 per oz., the payback period CONTINUED ON PAGE 22
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The mine plan and all the costs associated with it (in the new PEA) are not conceptual, they are based on five years of real, hard data. – RU BI C O N MINE RALS ’ PR ES IDENT AND CEO, GEOR GE OGILVIE
would be 3.9 years. Phoenix is expected to produce 79,610 oz. per year over a life of six years at an all-in sustaining cost of US$882 per oz. The market reaction to the new PEA was moderately positive in the broader context of a gold bull market. The value of Rubicon’s shares had reached almost $1 by the end of August, up from a 52-week low of 61¢ in early July. Late last year, Rubicon extracted a 35,000-tonne bulk sample from Phoenix that reconciled what the new geological model had predicted. Rubicon also achieved mill throughput of 1,540 tonnes per day with recoveries of 95% (43% of gold recovered from gravity). The more conservative approach to development begins with Rubicon’s choice of consultants. Ogilvie said Rubicon hired Golder Associates in 2017 because of its reputation for prudence and a strong structural team that could understand Phoenix’s complex geology. The company also took the unusual step of hiring T. Maunula & Associates, which has worked extensively for Kinross Gold, to conduct peer reviews on all of Golder’s work. 22 | CANADIAN
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In early 2019, Rubicon announced a 110% increase in measured and indicated resources using a cut-off grade of 3 g/t gold. The measured resource, based on an average drill density of 15 metres, is 442,000 tonnes grading 6.99 g/t gold while the indicated resource, based on an average drill density of 30 metres, is 2.49 million tonnes grading 6.13 g/t for a total of 589,000 oz. gold. The inferred resource (average drill density 60 metres) is 2.57 million tonnes grading 6.53 g/t, adding another 540,000 potential oz. gold. www.canadianminingjournal.com
Existing infrastructure at Rubicon Minerals’ Phoenix gold project, near Red Lake, Ont. CREDIT: RUBICON MINERALS
Golder devised the drill densities to better reflect the deposit’s complex geology and the gold’s nuggety nature. The 15-60 metre range for measured to inferred resources compares to the 50-70 metre range used for indicated to inferred resources by the old Rubicon (there were no measured resources in Phoenix’s original PEA, which should have been a red flag in itself.) Now Rubicon is working on an internal resource update SEPTEMBER 2019
based on 13,000 metres of added drilling up to the end of the May to see if it can expand and upgrade the inferred resource. Another 2,000 metres of drilling between May and September would trigger a new NI 43-101 report by early 2020 and a feasibility study after that. Rubicon raised $5.3 million in a non-brokered private placement at 77¢ per share in late July that boosted the treasury to $8.7 million and will fully fund the company’s activities until then. The company had current liabilities of $4.7 million at the end of 2018. “Our primary objective at the moment is to move as much inferred to measured and indicated resources so that we have enough reserves in the feasibility study to show economics that would justify taking the deposit to commercial production,” Ogilvie said. Rubicon benefits from the fact that 95% of the mine has been built. Phoenix has a working hoist, a 1,800-tonne per day processing mill, earthworks, a water treatment plant, and an electrical substation. There are 14,000 metres of underground workings, including an operational shaft to 730 metres below surface. CONTINUED ON PAGE 24 CANADIAN MINING JOURNAL |
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Underground at Phoenix. CREDIT: RUBICON MINERALS
Another advantage is that Rubicon, after coming out of bankruptcy protection, is eligible for $690 million in tax loss pools from mill and surface construction and underground exploration and development. The tax loss effectively adds 1-2 grams per tonne to the resource grade because the company won’t pay tax on any profits, Ogilvie said. There’s also the higher level of confidence that comes from collecting advanced exploration and development data for several years, including the costs of materials such as diesel and explosives, and the results of running 100,000 tonnes of ore through the mill.
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“The mine plan and all the costs associated with it (in the new PEA) are not conceptual, they are based on five years of real, hard data,” Ogilvie said ahead of the study’s release. “I would put my hand on a bible and say that this PEA is a strong feasibility study other than it uses inferred resources in the mine plan (which a feasibility study cannot do).” The PEA proposes longhole sublevel vertical retreat with 30-metre sublevels as the principal mining method. Other methods Rubicon is investigating are longhole upper retreat that would access ore from below and a more selective technique used in the Hemlo gold camp to mine mineralized veins less than one metre wide. Mechanized cut and fill would be used in high-grade areas with good continuity. Exploration by the old Rubicon probed as deep as 1,600 metres below surface. Based on this and other drilling, Golder has estimated a non-compliant (“explore”) resource category, using a 100-metre drill density, of 900,000-1.1 million tonnes grading 7-9 g/t gold. Ogilvie said Rubicon would take the opportunity to move this resource into the inferred category next year. Although Rubicon controls more than 280 sq. km of exploration ground in the Red Lake camp, regional exploration has taken a back seat to de-risking Phoenix lately. There are five separate targets within 2 km of the processing facility that warrant follow up once Phoenix is on steadier footing. Assuming a positive feasibility study, commercial production is anticipated for the second half of 2021. Outstanding requirements to receive final permits for production include an ammonia reactor for the water treatment plant and impact and benefits agreements (IBAs) with the two First Nations groups in the area. Ogilvie is confident the company can achieve these goals in the time remaining. “Wouldn’t it be great for the Canadian gold mining industry if we could turn around Phoenix and make it into a commercially viable mine generating profits and free cash flow?” said Ogilvie, noting that the gold price has increased recently. “Timing is everything and it appears we may be starting to CMJ enter a boom after seven years of a gold bear market.”
www.canadianminingjournal.com
HEAVY EQUIPMENT
THE ROADMAP TO IMPLEMENTING
BEVs
Retrofitting Kirkland Lake Gold’s 86-year-old Macassa mine Gold pour at Kirkland Lake Gold’s Macassa mine in northern Ontario. CREDIT: KIRKLAND LAKE GOLD
SEPTEMBER 2019
CONTINUED ON PAGE 26
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HEAVY EQUIPMENT By Kate Burns
T
he stars are aligning for battery-electric equipment manufacturers in the Canadian mining industry – emissions restrictions are tightening, carbon tax schemes have been implemented, Canadians are putting pressure on the industry to conduct cleaner operations, and the mining community universally recognizes the safety benefits that the technology can offer their workforce. Moving towards the use of battery-electric vehicles (BEVs) offers mining companies a number of key benefits, including the redistribution of their energy mix to cleaner sources, lower energy costs, and a reduction in the environmental impact of their operations in terms of greenhouse gas emissions. But if BEVs are the way of the future for underground mining, why haven’t more mines in Canada implemented them? BEVs increasingly look like the way of the future in underground mining. However, it is clearly early days, as traditionally risk-averse miners work to fully understand the technology and the expected implications for their operations. Resistance to change and lack of trust or credibility shadow the first few years of most new technologies, and when you combine that with the conservative nature of mining companies, you can see how the industry might be slow to adopt new solutions. While adoption has been slow so far, interest is high. Evan Pelletier, general mine manager of Kirkland Lake Gold’s Macassa mine, says that on average, they receive one to two requests per week for tours and information about battery equipment at Macassa. The mine purchased its first battery-powered scoop in 2012 and now has over six years’ experience working with the technology. “The initial plan was to commission a conveyor system underground to move muck,” Pelletier says. However, the mine soon determined that the conveyor system would not be feasible and instead chose to retrofit the mine with BEVs. “Battery equipment allows us to operate and develop in areas that would be very
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challenging and costly with traditional diesel equipment.” The story at Macassa is one that is becoming more common throughout the industry – targets are increasingly identified at deeper depths, and heat and ventilation restrictions represent challenges that much be overcome. Kirkland Lake Gold made the bold decision to retrofit their mine with BEVs, enabling mining in areas that would not otherwise be accessible. “We are generating one-third of the amount of heat with battery equipment as we would be with traditional diesel equipment,” Pelletier says. “We were able to reduce our greenhouse gas emissions and (diesel particulate matter).” The decision has had a positive impact on working conditions and has contributed to the mine’s strong operating performance and solid track record in
achieving its key production targets. The Macassa mine, which has been in production for 86 years, is embarking on a new shaft development project that will ultimately extend to a depth of approximately 7,000 ft. The new shaft will enable the mine to grow production from the 2019 target of 240,000 – 250,000 oz. gold to well over 400,000 oz. of gold per year. Pelletier expects that the mine’s decision in 2012 to retrofit the mine with BEVs will return further benefits for the shaft construction project. “Using battery equipment will allow us to develop faster as the restrictions on ventilation will be lessened,” Pelletier explains. “With this, we can begin operations from the new shaft sooner while not having to wait for ventilation developments, which was a bottleneck in the past.” Pelletier has been in the mining industry for 28 years and has extensive experi-
Left and opposite: The head frame at the #4 shaft at Kirkland Lake Gold’s Macassa mine. CREDIT: KIRKLAND LAKE GOLD
Below: The Artisan battery-electric vehicle line for underground mining. Artisan was acquired by Sandvik in early 2019. CREDIT: SANDVIK
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ence with underground equipment. “Battery powered equipment technology (has) improved tremendously in a relatively short time,” he says. “The new (Artisan Z40) truck… has many improved options compared to the first-generation model… including a self-ejecting battery and the battery cooling systems, along with improved battery regeneration.” He adds: “The self-ejecting batteries have reduced the amount of development required because we can change batteries in smaller spaces, and they allow us to change batteries faster and more safely, largely eliminating pinch points.” Macassa mine was the first in the world to introduce the new generation Artisan Z40 truck. “Establishing a good relationship with the original equipment manufacturers (OEMs) early in the process and keeping them engaged throughout will be a factor
in any mine’s successful implementation of battery vehicles,” Pelletier says. Kirkland Lake Gold has stayed highly engaged with their OEMs throughout the product development process to ensure the equipment fits their unique needs and to encourage OEMs to develop equipment that will facilitate growth in the BEV space in underground mining. “Macassa is now on the map as the first retrofitted battery-electric mine in Canada, and we are carving the path for others to follow,” Pelletier says. Macassa mine is just one example that battery technology is not a short-term solution. “It works,” Pelletier says, “And it will benefit (the operation) over the long run.” To execute the transition well, mines need to observe Macassa’s example – “be prepared to review and potentially modify the design, based on your facility and needs,” Pelletier advises, and “commit to good training for your operators – these are new and novel pieces of equipment, and training will prevent potential breakdowns or issues in the future.” Kirkland Lake Gold has even started working with the Northern College to develop a common core module on battery equipment to foster more interest in battery technology in mining in the community. Prepping for BEVs According to Dale Rakochy, Sandvik Canada’s business line manager for load and haul equipment, there are some steps a mine can take to prepare for the transition to the cleaner-powered equipment. “Develop a thorough understanding of the equipment tasks,” he says. “Through simulations, the productivity and cycles can be well predicted, and the performance can generally exceed that of a typical diesel equivalent.” Rakochy agrees with Pelletier that a close working relationship with the OEM will be beneficial. “The OEM can help the mine to understand the job and optimize charger locations to ensure a maximum number of cycles between battery charges,” Rakochy says. “Wherever possible, I recommend that the mine take advantage of gravity by hauling down-
SEPTEMBER 2019
grade, allowing the potential energy to provide regenerative braking to charge the batteries – even back haulage down the ramp will help improve duty cycles and battery longevity.” Involving operators and maintenance teams in the transition and introduction process is also beneficial. Rakochy says that in his experience, “once they get over the change hump, we have found that they prefer the new electric equipment over traditional diesel.” Implementing battery and electric equipment can help mining companies in many ways, and it is not only an option exclusively for greenfields projects. Retrofitting mines and brownfields projects with BEVs is possible, and Pelletier challenges those who believe the myth that BEVs are only for greenfields projects: “If Macassa mine, an operation that has been running for 86 years can convert over to BEV, anyone can.” CMJ – Kate Burns is the marketing, intelligence, and strategy manager for Sandvik Canada.
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HEAVY EQUIPMENT
Advice from Epiroc on developing a business case for a digitalization platform
BRINGING THE DIGITAL
underground 28 | CANADIAN
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www.canadianminingjournal.com
By Ken Schroeder
W
ith respect to implementing a digital platform in an underground mine, justification can seem straightforward, including: • Enhanced communication using cell phone or VOIP phone; • Ability to track asset and personnel position in real time; and • Telemetric data from equipment, including engine hours, alarm conditions, production related metrics.
Monitoring autonomous and digital mining operations from Epiroc’s control room in Sweden. CREDIT: EPIROC
That being said, cost and associated payback can vary widely and depends upon the needs of the operation and how the data generated will be used. Pending the maturity of the operation on the technology curve and ability to use the data generated, all that may be needed for an immature site is basic communication (radio via leaky feeder) and, say, the ability to find equipment and people relatively easily. That can be done inexpensively. Other operations that are larger in scope and that have a sound technology infrastructure and personnel to use the data, can make use of a more sophisticated digital roll-out, including: • Wi-Fi or LTE infrastructure; • Asset and personnel positioning in real time. For example, Mobilaris Mining Intelligence (MMI); • Electronic scheduling to monitor planned vs. actual performance and correction to schedule. For example, Deswick Operations; • Cellphone and related app usage; • Equipment telemetrics (equipment related information plus production related data). For example, the Certiq platform from Epiroc; and • Tablet usage for Short Interval Control (SIC) related activities. Taken at surface value, justification for a digital platform can seem selfevident; better communication, automatic data generation, real-time positioning of assets and people, etc. However, sometimes not enough thought is given to what data is actually required and how it will be used. As such, excessive cost can be incurred for various products for reduced payback if a solid business case is not developed first. In many cases, mines collect all kinds of data, ranging from equipment reliability information to production data, but analyzing the data can be a low priority. In many cases, resources are not assigned or dedicated to look at this data. At best, only bits of the data collected is used to do a retrospective analysis in case of an incident, for historical analysis on occasion for CONTINUED ON PAGE 30
SEPTEMBER 2019
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HEAVY EQUIPMENT nation with telemetry data (if available). Does deviation in production, or finding equipment In many cases, mines it make sense? Do they tell similar stories? and personnel. Data is most powerful when we collect all kinds of data, Determine how much bucket count is influuse it to analyze the past and make predictions ranging from equipment enced by engine hours. Understand and valifor future performance. Predictions of future reliability information date what can be physically improved/changed performance act as a guide when it comes to to improve bucket count. operational planning. For example, data to production data, but gleaned from an intelligent production drill can analyzing the data can tell us that if we drill for X amount of hours, we be a low priority. In Make a Hypothesis. Your hypothesis could can expect Y metres. From this perspective, the many cases, resources be: I can increase scoop engine hours by problem can be reframed: not how do we gain are not assigned or reducing time to find equipment, fueling, and Y metres, but how do we make the process reducing congestion on the ramp. This will be dedicated to look at more efficient to gain more hours. We cannot done via monitoring equipment in real time this data. control metres, but we can control hours. (i.e. digital platform) such that activities that As noted above, we can put in a digital platnegatively impact mucking are readily addressed form and associated communications infra(e.g. finding equipment, making fueling and structure, and not use it to its full potential. Therefore, return on scoop maintenance a priority, keeping ramps free for truck traffic). investment is not optimal. As such, it is important to plan for the types of data that can be accessed and how it can be used for Conduct an Experiment. Install an underground communicaimprovement, as this will improve return on investment. tions infrastructure (Wi-Fi of LTE) with a digital management Return on investment for a digital infrastructure can be done system (e.g. MMI) to readily collect equipment position and on a pilot scale, just like other new investments, to prove its worth telemetry data. This can be done on a pilot scale to justify the and gain learnings for a larger roll-out. Pending upon scale and installation of a larger roll-out. Develop standards for mucking to products chosen, data generated from the pilot can be used to gain targeted mucking hours – have mucking operations run to justify a larger roll-out – i.e. develop the business case. Developing these standards. Develop a management structure (control and a business case for digitalization can be a straightforward process response plan) to execute the experiment. to show how the data generated can be used to make an improvement. In order to make the best use of data collected from a pilot Analyze the Data. Use data from the digital platform (plus mandigitalization roll-out, we need to have an improvement process in ual data collection) and associated analysis to validate the place: the scientific method: hypothesis: Did I increase average scoop engine hours from 7.5 to • Ask a question; 8.5 hours, and if so, did I increase associated bucket count? Look • Do research; for effects (both anticipated and unanticipated) where digitaliza• Make a hypothesis; tion affected operations. Use graphical and statistical data as well • Conduct an experiment; as interviews with stakeholders in the experiment to quantify. • Analyze the data; and • Accept or reject the hypothesis. Accept or Reject the Hypothesis. If in fact a desirable outcome was achieved, how large was the improvement – was it cost This method is independent of how we collect data, whether by effective? Does it justify a larger scale roll-out of the digital plathand or by a digital infrastructure. However, combining both form? What are the related benefits of having a digital platform methods is the best as one method validates the other method, that may not be directly tied to improved performance? and tells you if the information collected passes the “smell test” (i.e. information makes sense as I have personally observed and As shown in the above example, we can quantify the return of worked with it). installing a digital platform. Use of the scientific method in comThe following is an example of utilizing the scientific method bination with the data a digital platform provides gives us an to make an improvement, and subsequently support the business improvement methodology to improve operations – either case for digitalization: through small, rapid improvements, or larger, more complex improvements. The key is to measure first to understand your Ask a Question. If I increase my average scoop engine hours per problem, implement the desired solution, and measure again to shift from 7.5 hours to 8.5 hours, can I correspondingly verify impact. Related improvement methodologies like Lean increase my buckets per shift by the same percentage? Manufacturing or 6Sigma applied to the underground can have a more significant impact when underpinned by a digital infraDo Research. Collect historical data to check for correlation structure. CMJ between scoop engine hours and buckets. Measure current mucking performance through manual data collection, in combi- – Ken Schroeder is digitalization project manager with Epiroc.
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PROJECT MANAGEMENT
Why B complex mining projects fail, time and again By Wilson Ramirez SEPTEMBER 2019
ecause mining is a complex industry, and projects are expensive and risky, every mining organization needs strong project management skills. This is the case whether the project is a new capital investment or operating/sustaining investment, and whether it’s site-specific, areaspecific, or enterprise-wide. Projects often fail or underperform because companies drastically underestimate their complexity, or because the complexity does not match the existing capabilities of staff or contractors. Due to this misfit, mining projects are often set up for failure or underperformance from the get-go. Companies often try to compensate for the unexpected complexity of a project by hiring more technical experts instead of filling gaps in management expertise. This over-reliance on solely technical expertise is a critical miss. From a management point of view, projects need simultaneous attention to many dimensions at once – people, time, cost, scheduling, leadership, etc. – yet the technical expertise of the typical vertical expert is often insufficient to handle such diverse details effectively. Evidently, there is a lack of recognition that technical and management expertise are two separate fields of competence, and both are critical for mining project success. Strong management competencies – i.e. the ability to prioritize, gather necessary information and make the right decisions – can be developed. Technical expertise is not enough. CONTINUED ON PAGE 32
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PROJECT MANAGEMENT
It’s extremely common that the wrong people are doing the wrong jobs – meaning that their competencies do not match the complexity of the initiative. This applies to both internal and external hires. A simple capability assessment can reveal the magnitude of this problem. Addressing this critical need As a management consulting firm that specializes in helping mining companies improve their project management practices, it is no surprise to us at Project Advisor that difficult and complex projects, whether capital or sustaining, easily go from a good idea on paper to an overwhelmed and reactive execution in practice. We see this often leading to impulsive or even chaotic management practices, which easily spiral down into crises. To mitigate this possibility, there is a need for deliberate, structured, systematic and effective project management practices to be built in by design and implemented effectively. This is not at all out of reach. Engaging management experts as a complement to technical experts, and utilizing them deliberately to increase the capability at the ground level goes a long way to foster the needed competences. What needs to change, then, so that senior management gets the assurance they need that project decisions are timely, conscientious and effective; that key risks are addressed and mitigated; that people are engaged; that sustainable growth is facilitated and that, ultimately, shareholder and stakeholder value is added? What needs to change is a drastic increase in the manager’s ability to design, develop, execute and control complex initiatives in a systematic and deliberate way. This, in contrast to fire-fighting, reactive or just intuitive management. First, let’s define what effective project management looks like. Effective project management is the ability to deliver a project on time, within budget, at the quality expected. All this, in a transparent manner, where key stakeholders are made 32 | CANADIAN
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proactively aware of status, risks, issues and progress, and are never caught off guard. When in place, this effectiveness enables leaders to make timely and impactful decisions based on the right information, and the impact and disruption to other areas of the organization is minimized. In our experience, we have found three core factors that are essential in building this management capability in mining companies: 1 A top-down commitment to management effectiveness as a distinct discipline. 2 Recognition and acceptance that management effectiveness is a people-centric problem as opposed to a technical, procedural, process-driven or technology-centric problem. The solution must be, therefore, focused on people’s capabilities. 3 Prioritizing the development of management capabilities in the organization, particularly those related to bringing discipline to complex and risky initiatives. This is even more urgent with the imminent intergenerational shift already happening in the workforce. Unless action is taken, there will be less and less experienced management talent to run these initiatives in the years to come. In one example that we were involved with, a global mining company was having issues with the closure of a tailings dam. The closure was already many years behind schedule, risking not only their timeline, but jeopardizing effective reclamation, the company’s relationship with the community, and its social licence to operate. Analyzing the situation on the
ground, we found that the organization’s staff did not have the skills necessary to define, rein-in and integrate relevant project definition, planning and management work. An over-reliance on technical internal and external experts, was evident – each advocating for more and more details (and work) in their specific areas of expertise. The frustration was high. Through a well thought-out intervention, the situation was turned around by driving simple but effective project definition and control management processes and a deliberate increase in scoping, assurance and reporting management capabilities. Years later, the project had become a shining example of how to effectively close a tailings dam. We helped turn the situation around by working with senior executive and operational management and getting them to commit to a disciplined approach to management. This took more than just the intention of doing so, but rather the implementation of swift and pragmatic practices such as definition, planning, assurance, control and reporting — in a way that was easy to assimilate at site, as everyone was operating at capacity. Discipline management doesn’t have to mean complex or bureaucratic processes. A deliberate focus on people, rather than process, was applied. We focused on an intentional increase in the competence and capability of the accountable staff so that they could manage the initiative autonomously but with the right support. We focused exclusively on what was needed, based on the specific realities, as opposed to what the theoretical best practices might suggest. Over the years, this focus on management competence resulted in multiple operational benefits extending well beyond the original need. The takeaway is that effective implementation of appropriate and fit-for-purpose management practices and a deliberate increase of the core staff’s capability completely turned this situation around. Time and again, we’ve seen examples of this in all areas of operations: whether corporate, regional or site-specific; in operations, technical services, environment, CSR, safety or health; in extractwww.canadianminingjournal.com
ing, hauling, crushing, processing or tailings; in new capital projects or decommissioning of operations. First steps As the landscape changes for miners, commitment, competence, discipline, judgment, quality management, experience, structure and effective assurance mechanisms to properly design and deploy complex initiatives becomes more important. Many elements must come together at once – and that won’t happen just because the top-of-the-house says so. They must be enabled; but how? It all starts with having an honest look in the mirror. As a starting point, it is essential to determine the current problem and identify the underlying root cause. This typically boils down to people’s capabilities. Once those deficiencies are pinpointed, resources can then be invested accordingly, in a targeted and calculated man-
ner. It’s extremely common that the wrong people are doing the wrong jobs – meaning that their competencies do not match the complexity of the initiative. This applies to both internal and external hires. A simple capability assessment can reveal the magnitude of this problem. A more competent workforce with the ability to drive complex capital and sustainment projects will enable the operation’s sustained success. When projects are managed effectively, senior executives have access to high quality information, making the big-picture decision-making process more informed, effective and efficient. This minimizes the guessing game. It also helps assure that the key decisions and their impact are clearly understood by the right people, who are therefore able to gain awareness of, and minimize any negative impacts to other areas of the business. This requires deliberate intent. Throughout the process, it is critical that
companies have access to expert management foresight and judgment to guide them. The larger, riskier and more complex an initiative or a transformation is, the more judgment it requires. Judgment, however, is only borne out of experience. The increasing disruption, volatility, complexity and risk faced by the mining industry makes project management effectiveness a necessity that senior management cannot afford to ignore. CMJ – Wilson Ramirez is the founder and principal of ProjectAdvisor.com, a Toronto-based specialty management consulting firm specialized in large/complex mining industry project and operational effectiveness. Their expertise includes project and operational design, assurance and capability improvement, enterprise maturity, risk management, cost-savings, innovation and safety, environment, CSR & sustainability governance. For more information, contact Wilson at wilson.ramirez@projectadvisor.com or 416-569-1002.
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