Companies face new cyber security threats during pandemic

Hudbay’s plan for Lalor will increased the mine’s life by one year and double annual production.

Hudbay aims to double gold production at Lalor mine

Hudbay Minerals’ operations in Manitoba have received a boost to their reserves and production, according to an update released by the company on Mar. 31.

Hudbay’s operational focus in Canada is in the Snow Lake region of Manitoba, home to the company’s Lalor gold-zinccopper-silver mine, the New Britannia mill acquired by the company in 2015, as well as several satellite deposits. In February 2019, the company announced the first phase of its strategy to increase production at Lalor following the refurbishing of the New Britannia mill.

For the second phase of the plan, executed over the past 12 months, the company has focused on “extensive infill and exploration drilling at Lalor and advancing engineering studies on the regional deposits in Snow Lake.” According to Hudbay, the total Snow Lake gold reserves have increased 35 per cent to 2.2 million ounces based on 15 million tonnes with a grade of 4.16 grams per tonne.

This anticipates an increase of Lalor’s life-of-mine gold production by 41 per cent compared to the previous plan, and now stands at 1,501,000 ounces over the next 10 years compared to 1,134,000 from February 2019. Once the New Britannia mill is refurbished in 2022, gold production is expected to average 150,000 ounces per year over the first eightyears, which is more than double the mine’s current annual gold production, according to Hudbay. After the first 10 years, the Lalor feed will be replaced by ore from the WIM and 3 Zone deposits for the remaining eight years.

The company also announced the third phase of its strategy for Snow Lake. This includes using Lalor’s 4.4 million tonnes of inferred mineral resources to potentially extend its life past the next 10 years, as well as additional drilling at the company’s New Britannia, Birch, 1901, Watts and Pen II deposits in the region.

According to Hudbay president and CEO Peter Kukielski, the company is “extremely pleased with our exploration success over the past 12 months in Manitoba where we’ve doubled the mine life in Snow Lake and more than doubled Lalor’s annual gold production from cur-

rent levels.” – Matthew Parizot

Companies face new cyber security risks during pandemic

Remote working and lax cyber security could pose significant threats to companies’ bottom lines and employee safety

By Matthew Parizot

The COVID-19 pandemic has forced companies to pay special attention to matters of safety and security to keep their employees healthy and avoid the possible spread of the virus on-site. This has led many companies to having their employees work from home whenever possible, as well as drastically reducing the number of workers present on-site to a bare minimum.

The physical distancing of employees, while addressing concerns of their physical health, has created complications in a completely different aspect of safety: cybersecurity. With employees working from home on their personal computers, the possible angles of attack for cyber criminals has increased.

“Absolutely, companies are more exposed at this time,” Andrew Brewer, CEO of CMS Consulting – a Canadian firm specializing in cybersecurity – told CIM Magazine. “Every remote worker is now a separate risk to the company. Each home environment is different, and with so many of them and [the pandemic] happening so suddenly it’s like a perfect storm for companies, not to mention a free-for-all for the bad guys. I don’t envy companies that did not plan ahead.”

For an industry as traditionally analog as mining, cybersecurity might not sound like an issue worth being concerned about, especially during a global health crisis. However, according to Brewer, gaps in a company’s cybersecurity can result in significant financial damage and can even compromise the safety of its workers.

Employees working from home increase the risk of entry by cyber criminals.

“The mining industry is unique in its complexity, the value of its data, the type of equipment, the scale of the operations and the nature of the environment that is being operated in,” Brewer said. “The data that a mining company has is very expensive with respect to money and time to obtain and of great value to the company moving forward. Losing this data to a cyber spy could mean serious financial damage to the company and its shareholders.”

“Another point is that when you are underground moving large objects through small spaces, you require complex critical communication infrastructure to ensure everything runs efficiently and most of all safely,” he continued. “If a threat actor got control of that, it would create a very dangerous environment for those working underground.”

With the rise of automated machinery and Internet-connected mines, mining companies have already increased their risk of cyber-attack. With what Brewer refers to as the “threat surface” increasing even more with employees working remotely, the danger is even greater.

In a newsletter sent out to its members, Global Mining Guidelines Group (GMG) referred to the novel coronavirus as “possibly the largest cyber security threat of all time.” GMG recommended that its members “step up their cyber hygiene standards” by ensuring their modems and devices are digitally and physically protected by invasion and by teaching employees to avoid clicking on suspicious emails and links, how to patch and update their systems and to avoid working outside any official channels or devices if possible.

GMG also recommended that companies implement a business continuity plan (BCP), a contingency plan in the event of the emergency, if they have not already done so. Additionally, companies will need to learn how to “stratify, prioritize and outsource information security operations” during this time of remote working and tighter budgets.

For Brewer, cyber security must be managed from several different aspects of a company’s culture.

“First off, you need to know where you stand,” Brewer said. “Assess your current posture holistically from a security perspective. This has to include policy, process, people, technology and physical environment in which infrastructure is housed. [Once] you know what you are missing, get it fixed, follow best practices and have someone monitor for you.”

Additionally, says Brewer, it’s important that that “someone” be qualified to properly protect the company’s systems.

“There is a real talent shortage out there and assigning your IT team, or in some cases your ‘computer guy,’ to these tasks is just plain… Well, let’s just say I doubt any court would find it to be reasonable that someone who has so much at stake would believe something as complex and ever-changing as cyber security could be handled properly by people who are not experts.” CIM

Husky cuts capital spending as U.S. oil prices fall below zero

On April 20, the price of a barrel of Western Texas Intermediate (WTI) crude oil became negative for the first time in history. With contracts for May delivery set to expire the next day, trade pressure led the global benchmark for oil prices to fall to -US$38.76.

The same day, Husky Energy further reduced its 2020 capital expenditures to between $1.6 to $1.8 billion, down 50 per cent from the $3.2 to $3.4 billion originally announced in December 2019. The company also announced it was increasing its liquidity by $500 million for a total of $5.2 billion and reducing production of its Integrated Corridor upstream operations in Saskatchewan and Alberta by more than 80,000 barrels per day.

The announcement comes more than a month after Husky Energy first announced cuts to its 2020 spending by $1 billion and lowered its capital investment guidance to $2.3 to $2.5 billion in 2020. Later the same month, Suncor Energy revised its 2020 guidance and lowered its expected capital spending by 26 per cent to a range of $3.9 billion to $4.5 billion.

The drastic price drop of WTI is a result of dwindling demand for oil as many around the world are under some form of stay-at-home orders due to the COVID-19 pandemic. Oil prices are determined by futures contracts, which are agreements to buy and sell a certain amount of oil at a stated price at a future time. Futures represent how much a buyer would pay to have said oil delivered to them at a future date. With May contracts for WTI being finalized on April 21, it would mean anyone holding a future would agree to physically acquire the oil.

The price of Western Canadian Select (WCS) oil, Canada’s major oil benchmark, similarly decreased and reached a low of $3.96. Despite staying positive, Canadian oil companies have been significantly impacted by the falling oil prices.

Oil prices have been falling significantly since March when major global restrictions to try and curb the spread of COVID-19 were introduced, causing a drop in demand. A price war between Saudi Arabia and Russia resulted in a further saturation of oil on the market.

Husky is reducing its capital expenditure guidance to between $1.6 and $1.8 billion in 2020.

Although the Organization of the Petroleum Exporting Countries recently reached a deal with Russia, the U.S. and G20 to cut production by approximately 10 per cent, this only momentarily stalled the price drop, as reported by the CBC.

While May contracts plummeted, June WTI contracts stayed above zero, ending the day at a value of US$20.43 a barrel. According to the Financial Post, the US$60.76 spread between the May and June values of WTI was the widest in history for the two closest monthly contracts. – Tijana Mitrovic

Marathon Gold releases pre-feasibility study for Valentine project

On April 6, Marathon Gold reported the results of a recent pre-feasibility study for its flagship Valentine gold project in Newfoundland which, according to the company, could support a low capital cost and high rate of return open pit mine.

“We have taken the approach of identifying the optimum starting point for mining at Valentine, emphasizing highest rate of return and lowest risk, while recognizing that the large resource inventory and extensive exploration potential along strike and at depth offers plenty of opportunity for mine life extension,” Marathon president and CEO Matt Manson said.

Highlights from the study include an initial capital cost of $272 million with an after-tax payback of 1.8 years and expected capital costs for the life-ofmine coming in at $545 million. The project will have average life-of-mine total cash costs of US$633 per ounce and allin-sustaining costs of US$739 per ounce.

Current proven and probable reserves total 1.87 million ounces from 41.05 million tonnes grading at 1.41 grams per tonne. Expected average annual production comes in at 175,000 ounces of gold per year for the first nine years of its 12-year life, according to the company, producing 54,000 ounces per year from years 10-12.

The project will include a mill and tailings management facility, as well as a 300-person accommodation camp, a wastewater treatment plant, ditching and sedimentation ponds for water management and site roads. The mill is expected to process 2.5 million tonnes per year, followed by four million tonnes per year following a mill expansion.

“The Valentine project is expected to be Atlantic Canada’s largest gold producer,” Manson said. “Notwithstanding the current COVID-19 challenges, it represents the future of responsible resource development in Central Newfoundland.”

According to the study, the current timeline for the project sees the completion of a feasibility study in the first half of 2021. Site construction is scheduled to begin on Jan. 1, 2022, with the first gold being produced by mid-2023.

– Matthew Parizot

Silvercorp to buy Guyana Goldfields for $105 million

China-focused silver producer Silvercorp Metals has entered into an agreement to acquire Guyana Goldfields in a deal valued at $0.60 per share for a total of $105 million.

The combination of those companies might seem odd. Silvercorp has seven operating mines located within the Henan and Guandong provinces of China, which produce primarily silver and zinc. Guyana Goldfields focuses primarily on its flagship Aurora gold mine across the ocean in the South American country of Guyana.

According to Silvercorp, the combined companies will lead to the creation of a leading precious metals producer and “greater diversification.” The acquisition of Guyana Goldfields would add to the company’s gold project portfolio, which is currently made up of the BYP gold mine in Hunan Province, which suspended operations in 2014.

“This transaction will create a new globally diversified precious metals

producer with the addition of Aurora to our growing asset portfolio,” Silvercorp chairman and CEO Rui Feng said. “We look forward to partnering with the government of Guyana to make a successful entry into the region, leveraging Guyana Goldfield’s existing team and relationships to ensure a smooth transition and continued development that benefits all stakeholders.”

Silvercorp’s pitch to Guyana’s shareholders included reduced development risk, thanks to the company’s lengthy track record of operation, as well as a US$15 million loan agreement to be used to proceed with the transition to underground operations at Aurora. The Aurora mine has had significant issues with production in the past, which Guyana’s former CEO Patrick Sheridan blamed on the operations “resource model.”

“This transaction provides our shareholders with an immediate and significant upfront premium and exposure to a geographically diverse mid-tier precious metal company,” Guyana Goldfields president and CEO Alan Pangbourne said. “With a strong operating history, solid balance sheet and significant underground experience, Silvercorp’s management team is well-positioned to fund and continue to advance the underground project at Aurora.”

The purchase will be subject to a vote by Guyana Goldfield shareholders at their special meeting, expected to be held by the end of June.

– Matthew Parizot Teck purchased SunMine, a solar energy facility on one of its former mine sites from the City of Kimberley, earlier this year.

Teck releases 2019 sustainability report

On Mar. 12, Teck Resources released its 2019 sustainability report, announcing plans to reduce its carbon production by 33 per cent by 2030. The report highlights the company’s updated sustainability strategy that focuses on eight themes including climate change, responsible production and biodiversity and reclamation.

Part of the strategy’s climate changespecific goals include adopting the equivalent of 1,000 standard-emission vehicles with zero-emissions transportation alternatives by 2025 and using clean energy for 50 and 100 per cent of electricity demands for its Chilean operations by 2025 and 2030, respectively. These measures feed into the broader goal announced by Teck in February to be carbon neutral by 2050.

The report also highlights the company’s achievements, including using renewable resources for 26 per cent of its energy requirements, recycling and reusing water an average of three times during operations and reducing greenhouse gas emissions by 297,000 tonnes since 2011.

According to president and CEO Don Lindsay, the new goals for carbon reduction, water use and more represent the company’s commitment to improving mining practices. “At Teck, we are always challenging ourselves to improve sustainability performance, so we can be sure we are providing the mining products needed for a cleaner future in the most responsible way possible,” said Lindsay in a press release.

Teck’s 2019 report builds on previous sustainability initiatives announced earlier this year, such as its continued commitment to using renewable energy resources. In January, Teck purchased SunMine, a solar energy facility on one of its former mine sites from the City of Kimberley in British Columbia. Currently 82 per cent of Teck’s electricity is sourced from renewable energy.

The decision follows the company’s decision to rescind its Frontier project application. In a letter to the federal Minister of the Environment and Climate Change, Jonathan Wilkinson, Lindsay cited increased federal and global scrutiny on climate change and emissions as part of the reasons for its decision. The Frontier mine would have produced an estimated four million tonnes of greenhouses each year of its 40-year mine life. – Tijana Mitrovic