CIM Magazine May 2007

Law &Money Expertise mining can’t live without

Vos February/février May • mai 2007 2006

www.cim.org

vosles activités affaires minières

Les experts

Inside: FNX Mining brings new life n

Publications Mail No. 40062547

droitset

to Sudbury n Jim Carter’s retirement interview n Highlights from this year’s CMP Conference

ne peuvent s’en passer

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Editor-in-chief Heather Ednie hednie@cim.org Assistant Editor Andrea Nichiporuk anichiporuk@cim.org Technical Editor Joan Tomiuk Publisher CIM

he Canadian minerals industry has a major impact on the national economy. Contributing $42 billion to the nation’s GDP, this industry accounts for 14 per cent of annual Canadian exports. Some 388,000 people work in this sector directly—and that number would appear incredibly larger if it included the numerous professionals whose work with mining isn’t included.

CIM membership covers a broad range of professionals of varying occupations—all the knowledge required to find, develop, operate, and close a mine operation. This issue of CIM Magazine takes a look into some of the areas covered by the legal and financial professionals serving the industry. Their roles are vast, from funding, through certification, community relations, risk management, and closure issues.

The Law and Money section, beginning on page 16, touches on some of the ways mining and exploration companies must rely on the financial and legal experts, with suggestions of how to ensure a successful endeavour. I’d like to thank Mike Paduada, a consultant in the mining industry on financial and risk management issues and sometimes contributor to CIM Magazine, for putting together the section.

Building a mine operation is an incredible project, often with huge capital requirements. The feature article on FNX Mining’s multiple operations in Sudbury demonstrates a strategic approach that minimizes start-up costs, and allows the company to flourish, based on contracts and agreements with companies such as CVRD Inco and Dynatec. The FNX Mining model allowed a junior company to ramp up three operations within four years. Turn to page 52 to learn how they did it.

On a final note, I would like to thank François Pelletier, CIM president for the past year, for being a terrific contributor to the magazine—not only was he reliable when it came to deadlines, I know I learned from his words.

T

Happy springtime, CIM! Heather Ednie Editor-in-chief

Subscriptions: Included in CIM membership ($140.00); Non-members (Canada), $171.20/yr (GST included; Quebec residents add $12.84 PST; NB, NF and NS residents add $24.00 HST); U.S. and other countries, US$180.00/yr; Single copies, $25.00.

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Law &Money Expertise mining can’t live without

Vos February/février May • mai 2007 2006

www.cim.org

droitset

vos affaires

Les experts les activités minières ne peuvent s’en passer

Inside: FNX Mining brings new life ■

Publications Mail No. 40062547

The suits of the mining industry

Published 8 times a year by CIM 855 - 3400 de Maisonneuve Blvd. West Montreal, QC, H3Z 3B8 Tel.: (514) 939-2710; Fax: (514) 939-2714 www.cim.org; Email: magazine@cim.org

■

■

to Sudbury Jim Carter’s retirement interview Highlights from this year’s CMP Conference

This month’s cover Longhole driller at McCreedy West Mine.

Layout and design by Clò Communications.

Copyright©2007. All rights reserved.

ISSN 1718-4177. Publications Mail No. 09786.

Postage paid at CPA Saint-Laurent, QC. Dépôt légal: Bibliothèque nationale du Québec.

The Institute, as a body, is not responsible for statements made or opinions advanced either in articles or in any discussion appearing in its publications.

Printed in Canada

4

CIM Magazine n Vol. 2, Nº 3

Feature 52

New wealth out of Sudbury— FNX Mining demonstrates the continuing potential of the Big Nickel by C. Hersey

News 9 Budget 2007 in review by H. Ednie 10 Carter says goodbye after 29 years by H. Ednie 12 Dancing closer—Junior miners and the financial world take a closer look at each other by M. Wunder 14 Diavik recognized for aboriginal relations 14 CMHF nomination time 15 Safer roads in Alberta

Law and Money 16 Commentary on the financial state of mining by D. Zlotnikov 20 The creation of Diavik—Keen savvy saw a junior finance a major project by D. Zlotnikov 22 Seeking effective legal council in the mining industry

by H.E. Robinson 24 Increases in mergers and acquisitions within the mining industry

by H.E. Robinson 25 Fundraising stages for junior firms by D. Zlotnikov 26 Aboriginal consultation from the courts to the ground: challenges in implementing effective engagement by H.E. Robinson 30 A brief overview of free entry by H.E. Robinson

Vos droits et vos affaires 31 Recherche de conseils légaux efficacies pour l’industrie minière 32 Les consultations avec les Autochtones : les difficultés à mettre en place des engagements efficace 33 Accroissement des fusions et des acquisitions dans l’industrie minière 34 Les étapes de collectes de fonds pour les sociétés junior 34 Le libre accès à la ressource : un bref survol 35 La naissance de Diavik : Vivacité et débrouillardise à l’origine d’un important projet de financement de junior 36 Commentaires sur la condition financière

Columns 38 39 40 42 44 46 48 49 50 82

Mining Lore by A. Nichiporuk HR Outlook by P. Hébert MAC Economic Commentary by P. Stothart Engineering Exchange by H. Weldon Standards by G. Gosson and D. McCombe Student Life by M. Jaworski Eye on Business by G. Ho Yuen and A. Enica Innovation Page by G. Winkel The Supply Side by J. Baird Voices from Industry by C. Plummer

CIM News 58 58 59 62 64 65

CIM welcomes new members Obituaries Canadian Mineral Processors Conference wrap-up MEMO 2008 Thanks to sponsors/Merci à nos commanditaires CIM Distinguished Lecturers wrap-up the 2006-07 season

May 2007

54 46 History 66 The Basalt Controversy III (Part 17) by R.J. Cathro 69 Muslim Mining in the Iberian Peninsula—Part 2 by O. Puche Riart, L.F. Mazadiego Martinez, and P. Kindelán Echevarria

Technical Section 72 This month’s contents 73 Executive summaries 78 Exploration and Mining Geology Journal—Volume 15, Nos. 3-4 preview

Departments Editor’s Message 4 President’s Observations/ Mot du président 6 Letters to the Editor 8 Calendar 61 Bookshop 80 Professional Directory 81 5

president’s observations mot du président Retrospect of the past year More often than not, the question that I am asked is “What value is there in CIM for my company, or for me as an individual?” The answer is very simple: knowledge sharing, professional development, and networking.

I take my case as an example.

When I look at the last year, I have had the opportunity to touch base with many senior representatives of our industries to discuss the upcoming convention in Montreal (networking). I have tried to share some of my experiences and learning opportunities with members through our magazine in the President’s Observations (knowledge sharing).

Through various meetings of the Institute, lunches and dinners organized by local branches, discussions with my peers in CIM, and through occasionally accessing the library of knowledge deposited in CIM, I have kept learning and developing myself as an individual (professional development).

I feel that I have progressed as an individual in the last year.

My company has and will continue benefiting from this pro-

gression. But there is no free lunch. One will only reap benefits to the extent one invests in CIM. Our industries are changing and CIM has recognized, through its strategic planning review process, that it also has to change. CIM is positioning itself to face the challenges and opportunities that will present themselves. It needs a strong volunteer base that is evolving. We are no longer an organization dominated by specialists. CIM is an organization of individuals of varied backgrounds working within varied industries. CIM recognizes this and caters to its evolving membership base. There are great opportunities for personal development awaiting volunteers who wish to grasp them.

In conclusion, given that this is the last opportunity that I have to write my observations, I would like to thank society presidents, district vice presidents, Past President Russ Hallbauer, Incoming President Jim Popowich, and the CIM staff, organization, and volunteers for having put up with me and given me this opportunity to develop myself and work with a great bunch of people.

François Pelletier President

Rétrospective de l’année écoulée Je me fais souvent demander «Que peut apporter l’ICM à ma compagnie ou quels avantages puis-je en tirer personnellement? » La réponse est bien simple : le partage des connaissances, le développement professionnel et le réseautage.

Je cite mon cas comme exemple. Lorsque je passe en revue la dernière année, je constate que j’ai pu établir des contacts avec de nombreux représentants importants de nos industries et discuter du congrès qui se tiendra bientôt à Montréal (réseautage). J’ai tenté, par le Mot du président de notre Magazine, de partager avec les membres quelquesunes de mes expériences et de mes possibilités d’apprentissage (partage des connaissances). Grâce aux diverses réunions de l’Institut, aux déjeuners et aux dîners organisés par les sections locales, aux discussions avec mes pairs de l’ICM et à l’accès occasionnel à la bibliothèque des connaissances colligées à l’ICM, j’apprends constamment et je me développe en tant qu’individu (développement professionnel).

Je constate qu’au cours de la dernière année, j’ai progressé en tant qu’individu. Ma compagnie a déjà bénéficié de ce progrès et elle continuera à en bénéficier. On récolte de l’ICM dans la mesure où on a semé.

Nos industries changent et l’ICM a reconnu, par son processus de révision de la planification stratégique, qu’il devait aussi changer. L’ICM se positionne pour faire face aux défis et saisir les possibilités qui se présenteront. Il faut une bonne base de bénévoles. Nous ne sommes plus une organisation dominée par des spécialistes. L’ICM est une organisation d’individus provenant de divers milieux travaillant dans des industries diversifiées. L’ICM le reconnaît et répond à cette diversification des membres.

6

D’excellentes possibilités de développement personnel sont offertes aux bénévoles qui veulent les saisir.

Puisqu’il s’agit de la dernière chance que j’ai de partager mes observations, j’aimerais profiter de l’occasion pour remercier les présidents des sociétés, les vice-présidents de districts, notre président sortant Russ Hallbauer, notre nouveau président Jim Popowich et le personnel de l’ICM, l’organisation et les bénévoles de m’avoir enduré et de m’avoir fourni ces possibilités de développement personnel tout en travaillant avec des gens extraordinaires.

François Pelletier Président

thank you

CIM offers a great “thank you” to François Pelletier for an incredible yearwith him at the reins.

L’ICM tient à remercier chaleureusement François Pelletier pour

une année exceptionnelle sous sa gouverne.

merci CIM Magazine n Vol. 2, N° 3

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letters

Kind words for the president

Giving back

Salutations François,

Dear François,

Partnership pays off

L'année de ta présidence se terminera sous peu, et je voudrais d'abord t'offrir mes meilleures félicitations pour la stature avec laquelle tu as occupé ce poste de prestige.

Je veux aussi t'indiquer que j'ai rarement apprécié les éditoriaux de la présidence autant que les tiens que j'ai presque tous lus avec intérêt. J'ai particulièrement aimé celui de février sur l'ADT qui est une réalité d'aujourd'hui et davantage pour les plus jeunes.

Your mandate as president is coming to an end and I would like to first congratulate you for the great presence you showed holding this prestigious position.

I also want to say that your President's Observations were so very much appreciated and I read most of them with great interest. I particularly enjoyed the February one on "ADT" (attention deficit trait), one of today's realities, especially for the younger generation.

Félicitations et meilleur souvenir, Raymond Raby, retraité

Congratulations and best wishes, Raymond Raby, Retired

Barrick Gold committed to donating US$1.3 million over five years to World Vision Canada. The funds will go towards improving the quality of life of families in communities near Barrick’s Lagunas Norte mine.

Funding sustainability initiatives Suncor committed to donating over $1 million over three years towards the launch of the Suncor Sustainability Centre at Lambton College in Sarnia, which will serve, among other things, as a student/community resource centre and house the Bluewater Sustainability Initiative. The development of an educational site for alternative energy sources will also be funded through this investment.

CIM is

evolving with you CIM is in a period of change, and you can help.

Have you attended a conference recently? Walked through the CIM Exhibition or MIS show?

Read something of interest, or made contacts at a branch event?

Let us know what you think.

Let us know how we're excelling, and how we can do better.

“I’ve retained the firm of Trench, Rockburst, Stope, Nickel, Blast, Campcook, Gold, and Rusting… they seemed to be a good choice for resolving my mining claim dispute.”

8

Email CIM Director of Marketing and Programs with all your ideas at mhemond@cim.org today!

CIM Magazine n Vol. 2, Nº 3

news

Budget 2007 in review

by Heather Ednie Following the presentation of Minister of Finance James Flaherty’s budget on March 19, the Mining Association of Canada and the Prospectors and Developers Association of Canada shared their support and their disappointment for Budget 2007.

Both welcome measures in the budget related to regulatory reform that acknowledge the federal government’s critical role in ensuring good governance in regulating appropriate development, and applaud the government’s commitment to cut in half the average time period for regulatory review of large natural resources projects, from four to two years.

“MAC enthusiastically supports the government’s attention to improving the project review process and its commitment of $60 million (over two years) to improve accountability and timeliness,” noted Gordon Peeling, president and CEO of the Mining Association of Canada. “While the resource sectors are driving economic growth in Canada, federal project review has become the most significant disincentive to future investment. This boost will ensure improved efficiency of the regulatory process, without lessening the role of environmental review.”

Other positive measures of particular interest to the Canadian minerals industry include tax incentives for the manufacturing and processing sector for investment in eligible machinery and equipment. As well, the federal government plans to work with interested provinces and territories to examine how artificial barriers to labour mobility and other impediments to internal trade might be relaxed. Using the British ColumbiaAlberta Trade, Investment and Labour Mobility Agreement as a model, the federal government plans to work with its provincial and territorial counterparts on measures to promote the free flow of people and goods within the country.

The Aboriginal Skills and Employment Partnership (ASEP) initiaMay 2007

tive, which fosters partnerships with provincial and territorial governments, aboriginal organizations, and the private sector to help aboriginal Canadians receive the skills and employment training for the workforce, will get a boost.

ASEP’s current budget of $85 million over six years supports nine projects across Canada, including training for aboriginal Canadians at the Victor diamond mine, which are expected to result in training for some 7,000 aboriginal Canadians. The new budget includes provisions for an additional $105 million for ASEP over the next five years to provide skills training to an additional 9,000 aboriginals.

The Mineral Exploration Tax Credit, commonly referred to as ‘super’ flowthrough, will be extended to March 31, 2008. With the application of the ‘lookback’ rule, funds raised up until March 31, 2008, can be spent on eligible exploration activity up until the end of 2009.

MAC, however, did express disappointment that Budget 2007 eliminates the accelerated capital cost allowance for oil sands mining. While the grandfathering of ACCA for existing projects lessens the impact of this proposed measure, it

still puts a chill on oil sands investment and development—a major economic engine of the Canadian economy.

Both associations share disappointment that Budget 2007 failed to expand its investment in geoscience. In spite of intense lobbying from the PDAC, MAC, and others, the federal government again did not fund the Cooperative Geological Mapping Strategies. This has been on the books since 2000 when all of Canada’s mines ministers made a commitment to this federal-provincialterritorial initiative and agreed that funding from the federal government ($25 million per year over ten years) would be matched by the provinces.

“Renewed investment in geoscience is long overdue and critical in addressing the looming crisis in declining base metal reserves, which is placing Canadian smelters and refineries at risk,” stated Peeling. “Successive governments have failed to address the need for re-investment in minerals science research and mapping, which is integral to creating opportunities in northern Canada as well as in maintaining Canada’s global leadership position in mining.” n

9

news Carter says goodbye after 29 years

by Heather Ednie Jim Carter, perhaps the most influential personality of the oil sands over the past 30 years, has retired from his longtime position as president and COO of Syncrude Canada Ltd. Credited as the driving force behind the success of the giant oil sands producer, Carter was instrumental in a number of the technology changes that enabled the growth of today’s major industry. With him at the helm, Syncrude has produced “over 1.3 billion barrels under my watch,” Carter said. Now, that’s something to be proud about.

A mining engineer by training, Carter has demonstrated a commitment to people and his community that matches his drive for low-cost, highproducing operations. He has been the recipient of a number of awards, and is recognized for his efforts to grow partnerships with aboriginal communities and businesses, as well as his dedicated service to the prosperity of the mining engineering program at the University of Alberta in Edmonton.

“It’s been a tremendous journey at Syncrude over the last 29 years,” Carter said. “I’m a miner by background, and the most intriguing part about the oil sands and Syncrude, in particular, has been the pioneering challenge to get such a huge operation like this to work in sync. We’re talking about the largest operations in the world here, in Fort McMurray—huge processing facilities, and so on. And it’s north of the 55th parallel, which offers its own interesting challenges. I’ve enjoyed a great deal of personal gratification from my work with Syncrude, and I foresee a real opportunity for success as Syncrude, and the oil sands, move forward.”

Looking to tomorrow, Carter said technology development will continue to be a key focus for the oil sands patch.

One area developments are expected in the near future is reduction of transportation distances in the pit—with potential developments such as at-face mining. “Remember, in the oil sands, 10

Photo courtesy of Syncrude Canada Ltd.

we mine as much waste as oil sands,” Carter said. “Systems currently being proposed will bring the operation close to face, reducing transportation distance. Overburden removal will continue to be done with truck and shovel, and much of the oil sands production as well, but these new methods demonstrate much potential for lowering costs of production.”

Carter said the oil sands industry will have some major challenges to address in the coming years. For starters, the industry needs the current government to reflect on what got the industry to its status today, “the support of past governments was necessary to unlock the potential of the oil sands,” he explained.

Another major challenge already facing the industry is the human resources capital required to undertake all the projects on the books—both construction and operations. “Syncrude’s success has lain with our highly trained, capable workforce,” Carter said. “We’ve enjoyed a low employee turnover for many years, but are undergoing a bit of a

renewal now, as retirements are becoming more common.”

Another constant challenge is the demand for feed. At a rate of 30,000 tonnes per hour of oil sands processed, with the same amount of waste to be moved, that’s a major undertaking. “We produced 11 million barrels for the month of March,” Carter added.

Having multiple owners, all successful in their own right, has meant Syncrude was able to weather the storm when crude oil prices were low. Today, the industry is looking forward to high costs, with relatively flat prices, which means the oil sands players must continue their efficiency efforts.

“We always have to remind ourselves—in the commodity business, you must be able to manage costs,” Carter said. “I’m a firm believer in technology—look what’s happened to date. I believe Syncrude will continue to find new ways to extract oil from the sands while lowering costs going forward.”

Looking back over his career, Carter said he wouldn’t have done anything different, except possibly when it comes to public outreach. “We need to have industry better understood in the broader community—I’m concerned about that. We did try, but maybe not enough.”

Having lived in Fort McMurray for almost three decades, Carter plans to move south to Edmonton now. He will continue his work with the mining engineering program at the University of Alberta, and will sit on a number of corporate boards, such as Epcor. Most importantly, he plans to spend more time with his family. Retirement is a positive move for him, but as with any change, it’s an emotional journey.

“Any time you’ve been with an organization for almost a full career, leaving it is a big step,” he explained. “I leave with a bit of sadness. But I can also look back on my career, at how involved I’ve been—and I feel very good about that.” n CIM Magazine n Vol. 2, Nº 3

*)('&%$#)"! ) )) (!) !) )

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The Syncrude Project is a joint venture operated by Syncrude Canada Ltd. and owned by Canadian Oil Sands Limited, ConocoPhillips Oilsands Partnership II, Imperial Oil Resources, Mocal Energy Limited, Murphy Oil Company Ltd., Nexen Oil Sands Partnership, and Petro-Canada Oil and Gas.

news Dancing closer Junior miners and the financial world take a closer look at each other

by Matt Wunder The slow, cautious, don’tget-too-close dance between junior exploration-mining companies and the financial world seems to be getting faster and hotter, and it’s not just due to high commodities prices. Recent trends mean that resource-based companies seeking financial backers are receiving a warmer welcome on Bay Street, Wall Street, and other places where deals are done.

These factors point to ways that individual exploration-mining companies and the industry as a whole can make sure that their request for a dance receives a nod and a smile rather than a shake of the head.

Investment risks are well-managed by the banks, pension funds, mutual funds, and other financial institutions; however, the Bre-X assay fraud of a decade ago negatively impacted the mining sector, particularly juniors, for many years after.

The Bre-X aftermath helped spark some far-reaching changes to the industry, particularly in Canada, impacting the reliability of information and reports released to the public by mineral exploration and mining companies.

Legislated changes include the requirement for exploration-mining companies and consulting firms (such as Golder Associates) to carry out quality assurance (QA). This has resulted in more early-stage oversight and due diligence to ensure adherence to proper control procedures for taking, transporting, and analyzing samples, to weed out opportunities for fraudulent behaviour.

Quality control (QC) procedures are required for all aspects of mineral exploration projects to minimize the possibility of errors. Data validation protocols must be adhered to, onsite visits must be made by a qualified person (QP), and use of accredited facilities for analysis is required – all of which are creating more reliable information than ever before.

For added control, most provinces and territories across Canada have legislated minimum high standards of education and experience for individuals practising geology. The “Professional Geoscientist” designation (P.Geo., in Ontario) allows professional geologists to act as QPs and oversee geological work performed. Additionally, the QP must have sufficient knowledge and experience beyond their professional registration to be “qualified” to author a technical report and company press releases. The QP is also required to provide certificates on the sections of technical reports they have authored, putting the QP in a position of risk that was not normally required before.

Technology QA, QC… and the QP Some of these changes have been legislated by provincial governments and implemented by the Ontario Securities Commission and Toronto Stock Exchange. Others have been industrydriven, such as the need for companies to manage in-house databases to produce high-quality presentations that utilize the latest technology.

12

Technology improvements help. This starts right at the beginning of the exploration-mining cycle, in locating and delineating mineralization, right through to mine closure.

There is increased availability and affordability of remote-sensing imagery from satellites and aircraft with higher resolution than ever before; geoscientific compilations from multiple sources,

which can be readily assembled; global positioning satellite (GPS) technology, which now supports extremely accurate surveying and has become standard throughout the industry; and reduction of data transcription errors through the collection of field data, using hand-held electronic devices.

In-hole surveying and drill orientation technologies have improved and can provide more accurate information during drilling, and assay equipment has improved, partly through the electronics revolution, so that more highquality, cost-effective analysis can be performed, with more dependable results.

Management of large volumes of geological data is easily handled by GIS software, which allows three-dimensional integration and visualization of multiple geo-referenced data sets for a more complete understanding of mineralizing systems. Processed satellite imagery, surface geological data, drill hole data, geophysics, geochemical data, etc., can be incorporated with, and draped over a 3D digital elevation model (DEM) allowing mineralizing systems to be evaluated in three dimensions, providing new targets and vectors towards better mineralization. Resource block models and resource calculations can be generated with multiple cut-off grades and directly incorporated into mine modelling software, and mine designs can be applied. The result is that resource evaluation consultants can create iterative models and perform analysis with changes to input parameters, in real time.

And let’s not forget the Internet with its World Wide Web. Now, we can do early research on all sorts of remote projects. We can find out the who, the what, and the where—quicker than ever before. We can research companies, properties, countries, commodities, people, environments, and legislation.

CIM Magazine n Vol. 2, Nº 3

news Risk–Reward Early-stage mineral exploration projects are considered high risk as the chance of discovering an ore body is low; however, if a discovery is made, the rewards can be quite significant. As a project proceeds from an early-stage discovery through to a production decision, there is a significant amount of work required to support a positive decision. This includes garnering support from the local community, stakeholders, and governing bodies, completing environmental studies, applying for and receiving government approvals and permits, metallurgical studies, mine and tailings design, geotechnical studies, and infrastructure requirements, not to mention confirmation of the resource itself. At any point along this path, the deposit may be deemed uneconomic and work can be put on hold indefinitely or until the socio-economic outlook is more positive.

If, however, a sufficient measured and indicated resource is defined in an area with manageable social-politicalenvironmental-permitting concerns, and the project’s economic model provides sufficient return on investment to meet the corporate risk requirements,

the threshold will be crossed and a production decision will be pending. Other success factors such market timing, access to financing, core business focus and strategy, etc. will impact the ultimate production decision taken.

Investors should understand that proper exploration can result in finding a deposit; however, mines are made by a multitude of steps and proper decisions along the way.

Additional considerations The experience, qualifications, and track record of the management team and board members is one of the factors to be considered when reviewing a potential investment opportunity. This is particularly important with the current sharp increase in the metals sector, where individual investors may be jumping into the momentum of the sector without properly screening the opportunities.

In addition, investors should review key company documents and project details. All mining companies are required to report information material to the company

and related projects that can help individuals make informed investment choices.

Project-specific information released by companies can be accessed on the System for Electronic Document Analysis and Retrieval (SEDAR, www.sedar.com). SEDAR is an electronic filing system and repository developed for the Canadian Securities Administrators, and hosts the electronic filing of securities information, as required by the securities regulatory agencies in Canada.

Some members of the investment community, who may have had a negative experience with junior mining companies in the past, may not be aware of these improvements. n Matt Wunder is a senior geologist with over 20 years of experience in exploration and resource evaluation, and currently works in the Mississauga, Canada, office of Golder Associates Ltd.

Achievements One of 10 green giants Suncor Energy made Fortune magazine’s Top Ten list of corporations that surpass the requirements to operate in an environmentally responsible way. Among other Top Ten achievers is Alcan.

Gratton receives Nature Canada award MAC’s Pierre Gratton received the 2007 Nature Canada’s Volunteer award. He was recognized for his contribution in time and effort. Fifteen years have passed since the two, MAC and Nature Canada, began a collaboration.

Being involved pays Ontario’s chief energy conservation officer awarded the Ontario Mining Association, CVRD Inco’s South Mine, and FNX Mining’s McCreedy West mine with certificates of recognition for their roles in Ontario Power Authority’s Sustainable Leak Protection Program.

May 2007

13

news Diavik recognized for aboriginal relations Diavik Diamond Mines Inc. was among six companies recognized as leaders in working with the aboriginal sector of the Canadian economy this past February. The Progressive Aboriginal Relations (PAR) recipients received the honour from the Canadian Council for Aboriginal Business (CCAB).

“The companies in PAR are making a significant contribution to the prosperity of aboriginal Canadians,” said CCAB President and CEO Jocelyne Soulodre. “They are showing leadership in employment, business development, individual capacity develop-

ment, and community relations—the four sectors that PAR examines.”

PAR provides a framework for businesses and organizations to self-assess their approach to the emerging aboriginal marketplace, and tools to improve their performance. PAR is a long-term process that will allow participating companies to expand their knowledge and interaction with the community.

Since the program’s inception earlier this decade, two other mining companies, Syncrude Canada Ltd. and Cameco Corporation, have both been repeat recipients of the Gold Achievement level of the program. n

Giving back CANstruction—A creative twist on fundraising As part of a food fundraiser held in Vancouver, 27 sculptures were built out of non-perishable food in a "Survivor"-style competition. AMEC’s team spent weeks conceptualizing their entry and finally built “CANzilla Strikes!”—a replica of Godzilla accidentally puncturing the BC Place Stadium roof—out of 6,212 cans.

Following the competition, the sculptures were disassembled and the food was distributed to food banks across the country.

Interested in getting your company involved in such an event? Visit the CANstruction website at www.canstruction.com for upcoming events across Canada and the United States.

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CMHF nomination time The deadline for nominations to the Canadian Mining Hall of Fame, June 1, is fast approaching. Now is the time to nominate the stellar individuals that have had a major impact on the Canadian minerals industry.

Conceived by Maurice R. Brown, retired editor and publisher of The Northern Miner, in 1988, the Canadian Mining Hall of Fame is a vehicle to recognize and honour the legendary mine finders and builders of Canada’s great industry. Currently, the CMHF has over 120 members.

Candidates for the CMHF must have demonstrated outstanding lifetime achievements to the benefit of the Canadian minerals industry in one or more of the following categories: exploration; building the corporation; technical contribution; supporting contribution; or mining in society. A “lifetime” of service will normally be evaluated after the individual has retired and has reached the age of 65 years.

CIM is a sponsoring organization, along with the Mining Association of Canada, the Prospectors and Developers Association of Canada, and The Northern Miner. To nominate someone, please contact CIM Executive Director Jean Vavrek at jvavrek@cim.org. n

Movin’ on up Fillion named director Abcourt Mines Inc. appointed Marc Fillion a director of the company. He was senior vice president, investments for mines, minerals, and materials, at SGF before becoming a consultant.

New assistant deputy minister

www.golder.com 14

Stephen Lucas was named assistant deputy minister, Minerals and Metals Sector, of Natural Resources Canada.

Lewis was formerly with Health Canada.

CIM Magazine n Vol. 2, Nº 3

news Safer roads in Alberta Alberta’s highways may be a little safer now, thanks to University of Calgary research that resulted in changes to provincial trucking laws that limit traffic on highways, due to concerns pavement is being damaged by heavy trucks.

The Alberta Road Research Initiative (ARRI) was a five-year study led by Lynne Cowe Falls, a civil engineering professor in the Schulich School of Engineering. A specialist in road design and pavement performance, Cowe Falls is using a 300-metre test road in Leduc County’s Nisku Industrial Park, south of Edmonton, to study how mobile cranes and other heavily loaded vehicles affect the pavement of highways under a variety of loads, vehicle speeds, and weather conditions.

Such loads are particularly linked to the northern Alberta oil sands projects.

The ARRI began after Syncrude Canada Ltd. took part in an initial three-month experiment in which the company was permitted to use Highway 63 north of Fort McMurray without the extra trailers and dollies normally required for vehicles weighing upwards of 100tonnes. The initiative is a public-private partnership involving the University of Calgary, Alberta Infrastructure and Transportation, Syncrude, Leduc County, Liebherr, Grove/Manitowac, Spierings, and the Canadian Oilwell Drilling Contractors.

Preliminary results show that lengthening loads by using dollies does little to reduce strain on the roads in winter, prompting the government to relax its regulations requiring mobile cranes to use dollies on February 1 this year. The change improves safety on roads that

are used to transport cranes to and from job sites, while reducing the costs associated with moving the cranes.

The study is also examining how heavy vehicle traffic impacts roads in the spring, when they are most vulnerable to excessive weight, and in the summer after they have stabilized from the spring thaws. n

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15

law&money

Commentary on the financial state of mining

by Dan Zlotnikov Take a look at the state of today’s mining industry and you will see a healthy industrial sector, set to continue growing and bringing in money. Cash flow is up, commodity prices are reaching record highs, and the analysts say this state of affairs will continue. But will investors continue to view the mining boom favourably or are there concerns about a possible bust soon to end the current boom?

Past To find the reasons for the sector’s current success, one need merely look at the business section of the daily paper.

The nation making daily headlines is China. “The Chinese are quickly becoming the largest consumers of pretty much everything metal,” said Bart Melek, senior economist, BMO Capital Markets. “You also have the emergence of India that’s playing large on the minds of investors, and you have the developing world doing well at the same time.”

But to see the cause for the sector’s difficulties, one needs to look in a different direction. The biggest problems the industry faces today are a shortage of qualified labour and a lack of major new discoveries. And the root causes of both lie in the past.

“The mining sector was suffering from chronic under-investment in exploration and development,” Melek explained, “especially following the Asian financial crisis.”

The bust part of the cycle meant companies cutting less essential programs and expenditures. Financial focus shifted from exploration and R&D to utilizing the already established deposits, using existing, proven methods and techniques. Investors were reluctant to buy into new projects unless they were clearly able to turn a profit. With commodity prices low, projects that once would have been feasible were suddenly sliding off the edge of the balance sheet.

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Nickel Prices

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Just as exploration and R&D budgets shrunk, so did the salaries for new hires and funding for mining schools. Things got so bad, according to Ferri Hassani, professor, mining, metals, and materials engineering, McGill University, that “when you look at mining schools from the last four to five years, you see in some of the schools there were no students whatsoever. Some of them were on the verge of shutting down, and there are still a couple where there’s a good possibility they will shut down.”

Present But in 2001, the interest came back, with a vengeance. Jamie Strauss, managing director for UK Equity Products, BMO Capital Markets, cites the amount of cash raised by the LSE AIM (Alternative Investment Market) alone: since 1995, the market has raised £32 billion. Of that amount, 54 per cent

was raised in the last two years. Strauss is far less concerned with the continuation of current demand for commodity metals; his worry is the continuing shortfall in their global supply.

Just how great is the demand, anyway? We’ve already mentioned high commodity prices, but to fully appreciate the scope of the situation, consider the graph from Scotiabank’s Commodity Price Index. Since the last big dip during the US recession of 2001, nickel has gone from US$2/lb to US$19/lb, a 950 per cent increase. And nickel is far from alone. “Gold is trading a couple of hundred dollars off its nominal high,” said Jeff Kowal, director of risk management, Foster-Kowal Group, ScotiaMcLeod. “Tin is at a 20year high. Even copper, which has retreated 20+ per cent since its high in May last year, is priced two to three times its historical normal.”

CIM Magazine n Vol. 2, Nº 3

law&money With prices so high, it’s no surprise “That is why,” Hassani explained, “at the everyone has a bit of cash flow right the investors are attracted to the indus- present time, our students have at least now—is to take small stakes in small try. “Last year was a great year,” said four job offers from around the world companies, for a number of reasons.

David Kaiser, senior manager, Global varying from a $75,000 and $100,000 Teck Cominco, for example, took a Resources at TSX. “Our mining compa- starting salary at 23 years old.” small stake, a few tens of millions in nies raised a total of $12.5 billion, and if But despite the hurdles, junior firms one of the diamond explorers—and you look at the number for all of 2005, are taking on these higher-risk projects, they’re not in the diamond business. it was only $7.9 billion.”

Melek said. “High prices are a good Their position is: we need the knowBut where is that money going? motivator. People are going where they how. So they can get access to that by On the one hand, previously unat- haven’t been before. Luckily, places in making a small (for them) investment tractive deposits are once again worth- Africa are also getting a bit more stable. in this diamond company. Moreover, if while. Properties that were previously Some places are, anyway.” the area turns out to be quite prolific, “high graded” are now being more Senior firms are looking for a some- they’re already in a position where they extensively developed. On the other what lower degree of risk, but are also have an equity stake and they’re not hand, however, new resource finds are actively seeking new opportunities. going to miss out on a major find.” few and come with their own new chal- “You have developments, for example, lenges. in Mongolia where seniors are getting Future The first of these challenges is involved as well,” Melek added.

So what does the future hold for political: new deposits are in volatile, At the same time, the senior firms today’s flourishing mining sector? Will high-risk countries, where political are developing “watch lists” of juniors Bay Street and its foreign counterparts climate shifts frequently. “You have who are taking on the high-risk proj- continue to view this growth in a posigovernments in resource-rich parts of ects. Kowal explained the seniors’ rea- tive light, or will they shy away, in expecthe world who increasingly subscribe soning: “One of the popular strategies tation of the bust that has previously to a sort of resource nationalism, of the big mining concerns—because always followed each mining boom? which is not always well defined, and you First Canadian Place, the Bank of Montreal tower in the heart of Toronto's financial district don’t often know what they will do next. And, of course, that increases the risk profile of investing in these places and it increases costs,” Melek said.

Another challenge is the size of new finds.

New deposits have to be of a comparable size to ones already being developed, Strauss said, to be of interest to the seniors. “And these companies are getting bigger and bigger, so they have to find bigger deposits or find more of them. And if they can’t do that, they have to merge, which in fact is what you’ve been seeing.”

The third major challenge is a continuing shortage of qualified labour, which has affected the mining industry worldwide.

May 2007

17

law&money The overall projection, said Melek, is positive. “We think [China’s] growth certainly isn’t going to be north of ten per cent for any length of time, but we think certainly six or eight per cent over a longer term is certainly within the realm of possibility. That’s not only what we think, but judging by other economies in Asia when they were in their development phase...that’s certainly feasible for a prolonged period.”

China’s sustained growth, coupled with the emergence of India and other developing countries onto the world markets, makes it highly unlikely that metal prices will decrease over the medium to long term.

Jim Fitzgerald, national manager for derivative products for ScotiaMcLeod, agreed.

“The major event affecting worldwide prices is the state of demand and growth right now in Asia, specifically China and India. It’s reasonable to assume that the prices will remain strong and possibly continue to grow, everything else remaining the same.”

But while the demand will remain strong, numerous experts have voiced concerns over the supply side of the equation, which is not growing as fast as it did in the past and is falling behind. The supply, said Melek, “is not responding to prices as quickly as in the past. Since the Asian crisis, we’ve had chronic under-investment in largescale projects in the mining industry in general, and fewer explored and discovered properties, which makes it difficult to accumulate excess reserves of base metals.” The high prices, he added, are further strengthened by the relatively small number of truly big players in the metal commodities sector and more market discipline. “You don’t have a lot of players capable of developing large projects on their own, who could bump up supply meaningfully and erode everybody’s prices.”

High prices mean that known reserves, previously exploited for their most economical ore, are once more

profitable. Such projects are attractive to investors because of their relatively low risk. In most cases, a significant portion of the capital investment has already been made during the original development, regulatory approval has been secured, and the ore body has been assayed. The ore might not be as high grade as that in a new find, but the lower investment ensures profitability.

A significant portion of the sector’s exploration budgets will most likely continue to be expended on develop-

explored, particularly in its western regions.” Despite having only been truly open to mining investment and partnerships since 2003, China is attracting more and more investor interest, and Moore believes it will continue to do so.

Nonetheless, there are a few cautions that must accompany this optimism. The demand and prices may remain high in the long term, but that does not guarantee stability of either from the day-to-day point of view.

Prices may be high, but there’s a grow-

It’s reasonable to assume that the prices will remain strong and possibly continue to grow

18

ing and expanding existing resources as a lower risk alternative to new exploration projects.

But new projects are something Jim Moore, CEO, Inter-Citic, a gold mining firm operating in China, believes firms will have to move towards. “Some of these companies’ resource requirements are so significant—and most of them already know the projects that are out there—that they’re going to have to make new discoveries in order to guarantee their growth.”

With prices high and new finds lacking, an exploration firm has excellent incentive to continue seeking out potentially higher risk ventures. The potential of high return is attracting investors today, both among the senior mining firms and on the stock exchanges. The expectation is that investor interest will remain high as long as commodity metals remain in demand.

Not all potential exploration sites come coupled with political instability, though. China, aside from being a major importer of virtually all commodity metals, is poised to become a major producer of minerals as well. According to Moore, whose company has been developing two gold projects there since 2003, China is “very much under-

ing sentiment that they are too high. “If you go back for the last five years,” agreed Strauss, “it doesn’t matter which exchange you’re looking at—TSX, AIM, or whatever—you’ve seen a significant correction each and every year at some stage, and then we go to new heights. Usually it has been a regular excuse that China is slowing down.”

But aside from the cautionary reminder that nothing in markets moves in a straight line, Strauss’ opinion of the long term matches Melek’s: things look good and, barring some sort of major, unpredictable event, will generally continue in that fashion.

The labour shortage, however, is a subject of some debate. Moore spoke very highly of his team at Inter-Citic but “in terms of the next generation? I haven’t been able to find it. I don’t see it very readily.” When asked about the future, however, he is not very worried. “I think the laws of supply and demand will work their way out. I believe as the market continues on in a cycle of high prices and demand that our universities are going to start generating more people.”

Professor Hassani disagrees strongly.

He said there is more to solving the HR shortage than high wages and job availCIM Magazine n Vol. 2, Nº 3

law&money ability. “When we ask our first year students ‘why did you choose mining,’ they say ‘because the professor came to my school and told me about it.’”

This year, McGill University used radio advertising (paid for by donations from mining companies) to promote its mining engineering program.

The results, according to Hassani, were visible almost right away. “By doing this, we increased our application numbers from last year by 25 per cent.”

Would the increased demand and higher salaries without the promotional efforts be sufficient to meet the rising demand? Hassani doesn’t believe so, “because if I don’t promote our program, I will have maybe five students.

By making an extra effort, I will have 25 students per year.”

The last major point of concern is the growing “resource nationalism,” mentioned earlier by Melek. The developing countries where many new deposits are likely to be found in the future have been attempting to claim a greater share of the proceeds from any mining done within their borders. To see an extreme example of such a situation, one need only look at Venezuela’s recent seizures of the country’s last four privately controlled oil projects.

But the issues need not be so extreme to cast doubt over the finan-

cial feasibility of a project. Rising energy costs, lack of infrastructure, environmental concerns— these are just a few examples of hurdles that can push a potentially profitable development into the red. In the end, said Fitzgerald, each potential client application reviewed by a bank—in a mining or other enterprise—is

decided on a case-by-case basis on the merits of that client. What is the one most important thing, though?

“Having a very sound financial plan, sound assets, competent management, and the ability to demonstrate continuity of cash flow year over year, irrespective of the boom-bust cycle.” n

While the industry is important at the local community level, it also generates significant prosperity for our larger cities.

Toronto is the world’s leading city for mining finance, Vancouver is home to the world’s leading cluster of exploration companies and expertise, while mining continues to be of prime importance to the transportation sector in Montreal.

C A M s t c fa

May 2007

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law&money The creation of Diavik Keen savvy saw a junior finance a major project

by Dan Zlotnikov Aber Diamond Corporation is an unusual case in the world of mining in a number of ways. First, it began its life as a junior mining firm with a significant stake in a diamond mine project.

Second, the senior partner in that mine is not De Beers. But most significantly, Aber’s success in raising funding for the mine project was exceptional, despite occurring at a low point in the mining industry.

Aber started as a staking syndicate called West Viking Syndicate, in November 1991. Shortly following the discovery of diamonds in Canada by Dia Met Minerals (acquired by BHP Billiton in 2001), West Viking staked claims near the area of discovery and, in 1992, approached Rio Tinto with a joint venture proposal. Rio Tinto accepted and provided $10 million in funding in exchange for a 60 per cent share in the project. At the same time, West Viking, a privately held company, was rolled into a shell company called Aber. Exploration efforts began and, in 1994, the first discovery of diamonds was made.

“The first $10 million didn’t go very far once the discovery had been made,” recalled Aber CEO Robert Gannicott.

“We were only halfway through the process of taking the bulk sample when Rio (Tinto) completed their expenditure of the $10 million, which had perfected their 60 per cent interest.

From then on, we had to pay $0.40 of every dollar that was being spent. So we had to go and raise money.”

Aber approached a major diamond retailer, Tiffany & Co., for the necessary funding. An agreement was reached, and Tiffany took a private placement of eight million shares in the company in exchange for $100 million. “It was me, actually, who went down [to Tiffany],” Gannicott said. “I’d become aware that the diamonds we were going to be producing at Diavik 20

had this sort of white quality, and ore was three to four times the operatbecause they were coming from ing cost, so it was going to throw off Canada, there was a certain political cash quite quickly and could therefore cleanliness to them as well. I thought support the repayment of debt.” they [Tiffany] might be interested. And But the other reason for avoiding indeed, they were.” the exchange was the comparatively This money lasted through the feasi- low share price of the company. A diability study, which was completed in mond deposit’s quality remains uncer2000, but now the mine had to be tain much longer than that of a base or built. The location of the deposit, as precious metal. The variation in the well as unique logistical and construc- gems is so great, Gannicott said, that tion challenges, meant a very expen- “you don’t have a representative samsive mine. To raise its 40 per cent of the $1.4 billion total cost, Aber used up the remainder of the $100 million from Tiffany, and sold its one-third stake in the Snap Lake diamond project to De Beers for $173 million. With that money in hand, they were able to obtain financing from a group of banks.

It was a very long, difficult process, taking two years.

“Diamonds are a very unusual commodity; they’re not exchange-traded. We didn’t have control; the control was with the 60 per cent partner. We’d never sold dia- Robert Gannicott monds before; they doubted our ability to sell diamonds in compe- ple until you’ve done a tition with DeBeers,” said Gannicott. year’s mining.”

N.M. Rothschild was the junior’s When asked for advice banking advisors and Gannicott calls for today’s juniors going them “very good, and very important.” through the same process, Rothschild brought with them expert- the CEO points to the very ise and credibility, the firm also serving beginning of the journey. If as the banking advisor to De Beers. there’s one thing he’d have CIBC served as the key technical advi- done, Gannicott said, “it is sor on the project, on whom the other to take a lot of care over the institutions relied to check the quality construction of the earlyand worth of the deposit. stage joint venture agreeThe one place Aber didn’t go for ment. And I would urge any money was the stock exchange. “We junior company that’s signdidn’t want to dilute the equity in the ing a joint venture with a company further if we could avoid it,” major, with whomever, to Gannicott explained. “The value of the take the document past a CIM Magazine n Vol. 2, Nº 3

law&money qualified banker and say, ‘are the provisions in the document going to be able to support debt financing if a mine is discovered here.’”

After the funding was secured, it took two years to build the mine and another year before the first diamond was sold. Tiffany & Co. accounted for 23 per cent of that sale, as per the offtake agreement.

Exactly a year after that first parcel of diamonds, Aber announced it had purchased a majority stake in a diamond jewelry retailer, Harry Winston.

Today, Aber owns 100 per cent of the retailer and is seeking new potential diamond mine sites.

Are there any restrictions on the potential locations? Yes, but not due to geography. “We don’t wish to be the owner of a diamond deposit in a place where abusive regimes, either political or social, are in place. The basic tenet is, we don’t want to operate anywhere where there can be a risk to the brand name of Harry Winston,” explained Gannicott.

In the meantime, Aber continues to enjoy the proceeds of its share in the

Diavik mine, and Diavik employees continue to enjoy their company-provided complimentary soft ice cream.

Gannicott offers one last insight for today’s juniors: “Take care at the beginning that the joint venture and legal agreements you make are constructed in a way that let you go the whole way.

Whether you need to or not, whether you do what Aber did and end up being in production, or sell out along the way, the strength of that agreement is going to be very important to you. You shouldn’t rush up and sign things.” n

The island-based Diavik Diamond Mine. Foreground is the A154 dyke, which allows open pit mining of the A154 South and A154 North diamond-bearing kimberlite pipes. Left is the new A418 dyke, which encircles the A418 pipe. Taken last September, this shows the A418 pool being dewatered. Clear water is pumped to Lac de Gras while silty water is pumped on-land for sedimentation and silt removal through the mine's water treatment plant. Photo by Jiri Hermann; courtesy Diavik Diamond Mines Inc.

May 2007

21

law&money Seeking effective legal council in the mining industry

by H. Eve Robinson Legal expertise is required for many different aspects of the minerals industry. Mining law tends to be viewed as just preparing agreements and doing development contracts, when in fact it involves everything. Whether it is regulatory frameworks that govern exploration, foreign risk mitigation, mergers and acquisitions, or consultation with aboriginal rights, the firms that work in the mining sector have lawyers with a wide range of specialties. These are some of the particular skills that lawyers who have worked with the industry for years recommend to seek in legal council.

It is important to establish a relationship with a firm that works in the mining sector. A minerals company is not going to be able to find one single lawyer who does all the things required and has all the experience. Industry members need to go to firms that have knowledgeable and experienced teams working in mining.

“Mining law touches on almost every aspect of the law with the possible exception of criminal and family law,” stated Brian Abraham, a partner at Fraser Milner Casgrain (FMC), who specializes in international and domestic mining matters. “Having an industry background is helpful; when you speak that ‘language,’ [a client] does not have to describe what their project looks like to you. I can read it and understand what they are trying to do, and show some genuine interest.”

Taxation and foreign exploration Having a lawyer who is knowledgeable about taxation in the mining industry is particularly useful for foreign exploration.

In different countries, there are different tax codes and different sets of rules. Some places have very large value-added taxes (VATs) that are chargeable when building mines, and chargeable on equipment being brought into the country.

Negotiations are necessary to receive the appropriate tax exemptions while your 22

company is bringing money into the country and investing in development, and then, in negotiating the right kind of tax regime in order for your organization to make a profit. Recently, countries such as Vietnam have imposed a tax on exporting commodities where there isn’t further benefit to the country. Taking raw ore out

legal systems and who speak different languages.”

Putting contracts together and doing corporate work also plays a large role in mining. In addition, people work in securities, so they are not only working on mergers but also doing financing. There is a lot of corporate

Having a lawyer who is

knowledgeable about taxation in the mining industry is particularly useful for foreign exploration of the country, when it has not been through some sort of processing, results in extra taxation when those processing facilities exist in that country. These extra taxes are not recoverable, which can affect profit significantly.

John Sabine, who specializes in business transactions in the mining sector at FMC, explained, “There is this whole cottage industry of tax law because some countries will let you take the money out and some will not. Taxation and dealing with international flow of funds is very important.”

It is also important, when you are sending workers overseas, to know that you are paying them properly, with all the necessary paperwork, so that they are not being over-taxed.

“There are all kinds of tax issues, and it becomes extremely complicated to make sure you are in compliance with a myriad of laws within each jurisdiction,” said Sabine. “For example, countries in French West Africa are all civil law jurisdictions, which is different from those countries that grew out of the British tradition who have common law. So you need to have [legal] people who are knowledgeable about different

finance work in Canada that comes out of the mining industry.

Environmental regulations One of the largest changes in legal issues within the mining sector over the past few decades has been in the environmental area. Previously, industry did not realize the implications of development on the environment; whether it was forestry, mining, or even residential development.

“The result was that the industry has had to make a lot of adaptations,” said Abraham. “British Columbia and Canada probably have some of the highest environmental standards in the world because of that. With time, we get more knowledge.”

The global mining industry is sometimes questioned by organizations concerned that mining activities are harming the environment. Their concerns can also extend to what will happen if the mine closes or is abandoned, and whether or not a company intends to develop projects that are sustainable and give wealth to the local people who are going to be left with the site after the mining company leaves.

CIM Magazine n Vol. 2, Nº 3

law&money Being able to address concerns about the environment and knowing the environmental laws, regulations, and how environmental law interacts with what you are doing in your operations is essential. This can benefit planning sustainable project developments and whether or not a portion of income is going to be devoted to social programs for local people who work in the communities.

Delays in mining projects have consequences on the market. As projects get delayed, the demand for the commodity increases as it is not being met.

The delays in bringing projects into production are affecting what is ordinarily seen in a commodity cycle.

Once you get copper and other commodities very high, marginal properties that are not really resource-rich are brought into production, and then companies scramble to sell their product in order to pay for their operation and to stay profitable.

Eventually, the expected production is delayed further because the equipment to build the mine is no longer available and companies have to struggle to maintain a workforce to build the mine. Adhering to environmental regulations and maintaining best practices within an organization can reduce negative attention and prevent delays.

May 2007

Aboriginal consultation In this industry, knowledge about aboriginal peoples is crucial. Familiarity with the principles of aboriginal rights and the duty to consult indigenous groups makes understanding the history and basic parameters of impact benefit agreements clear.

“At the end of the day,” said John Hurley, partner, FMC, whose expertise is in natural resource, environmental, and aboriginal law, “there is going to have to be some sort of modus vivendi established between the promoter and First Nations, and it is the task of the lawyer to facilitate that arrangement.”

Charles Willms of Fasken Martineau is an experienced lawyer in aboriginal matters. “There are two important steps to help project development and community partnerships go smoothly. First, build relationships with the First Nations in the area you hope to explore or develop a project. Second, maintain these relationships. There is no single precedent on how to achieve that friendship-building, because each project and each aboriginal group across the country is different.”

The ability to problem-solve is an asset in this industry. Sabine advised, “If there is a problem, what you need are problem-solvers. The key is not matching yourself up with a lawyer who is just

able to say ‘No, you can’t do that.’ You need to find someone who is capable of figuring out how to do it, or how to get around that problem.”

Having skilled lawyers on your team that are experienced in the above-mentioned aspects of the mining industry can only strengthen your project development. The regulations encompassing mining are going to continue to change to meet growing needs. Establishing a good relationship with a firm will potentially keep you prepared for unanticipated foreign policies, taxation, environmental regulations, or aboriginal consultation matters.

“At the end of the day, this is a people business,” Sabine concluded. “In the service industry, you have to understand what your client’s needs are.

Frequently we have to deal with a broad range of companies—companies whose market capital are in the billions and then companies that are start-ups. The way you get an oak tree is you plant an acorn. So too in legal relationships; if you have a good relationship with people who are out there planning to develop, acquire, and finance projects that will eventually become mines and be taken over by other mining companies, you can start at that grassroots level and be pragmatic about the way you deal with issues.” n

23

law&money Increases in mergers and acquisitions within the mining industry

by H. Eve Robinson Canada has an excited minerals industry market because everyone is consolidating. The high price of commodities has led to an upward movement in share prices. Most large mining companies have to grow, and this growth cannot rest on exploration alone. Instead, there is a need for these companies to perform in the market to demonstrate their growth.

Shareholders look to the management.

One way for an organization to experience growth is through mergers and acquisitions.

“There is a built-in expectation that mid-tiered producers in mining will be acquired by larger companies,” said Sabine. “[A company] can use stock to buy a smaller company to enhance growth prospects, as well as enhancing the return for shareholders.

Current commodity prices have made it very lucrative for companies to do acquisitions.”

Many of these companies estimate that commodity prices will be higher in the future than present values. In a recent transaction involving nickel, for

“We have a very thriving equity market in Canada for mining company stocks.”

— J. Sabine

Toronto has a sophisticated and highly developed marketplace for companies. Over 50 per cent of mining companies are listed in the city.

“We have a very thriving equity market in Canada for mining company stocks,” explained John Sabine, a partner at Fraser Milner Casgrain, with over 30 years of experience in mining and complex business transactions. “It is the most attractive place to raise equity money.”

Mergers and acquisitions have increased in recent years. In the past, it was more difficult to affect some of these mergers. Target opportunities are now based in companies that operate globally. The increased value of the commodities that are being extracted from the ground means there is a heightened appreciation, which you can use as currency to acquire from smaller producers.

24

example, acquisition of the nickel company was done at a price that was lower than prices today. So companies are taking the risk that the commodity prices are going to increase.

In addition, some companies are merging because the reserve life of the minerals they are actively extracting is short term. In order to improve their reserve life, they acquire companies that have greater reserves. This improves a company’s own operating capabilities—using the value of company stock where shareholders have been investing in order to pick up companies that have a lag in their sector.

These companies might have good properties, but they just have not been producing the shareholder returns that were expected.

The resource extraction industry has a lot of challenges. Some mining companies are based in parts of the world that

make it very difficult to operate, so they need a large amount of capital to develop. Many expectations are raised with new projects but it becomes difficult to go out and acquire the basic equipment you need to build and operate a mine.

People who are knowledgeable about the industry are also in high demand.

The mining industry has changed in the past couple of decades. A lot of people did not train to become geologists or engineers, or they did not specialize in skilled trades and the mining industry.

Sabine noted, “Another reason for people to do acquisitions is to pick up a workforce that knows how to develop, build, and run mines.”

A challenge facing mining companies is governmental rules and regulations that prevent the mining industry from development in particular countries. Places like China and India are growing very rapidly. Their demands for commodity products are high, particularly in the metals industry. A growing middle class in those jurisdictions is purchasing refrigerators, stoves, automobiles, and other things that have metal content. The industry struggles to keep up with the everincreasing need.

“What people [in the industry] are looking for is long-life reserves in reasonably politically secure regions of the world,” Sabine said.

A lot of mergers and acquisitions have been happening in the minerals industry. In the past four to five years, most of the major mergers have required a great deal of input from legal teams or firms working with companies across international borders. Canada is in a unique position as a principal player in mineral exploration investment for many of the large mining companies whose operations are global. n CIM Magazine n Vol. 2, Nº 3

law&money Fundraising stages for junior firms

by Dan Zlotnikov The beginning of an exploration firm’s life is always the riskiest point in its existence. In most cases, the company has a promising property in a previously untouched location and needs money to conduct exploratory drilling.

At this point, the management team’s experience and track record count for a lot, but even with proven veterans in the lead, the company is still a very high-risk investment.

Most firms at this point in their life turn to the stock exchange to raise initial capital. In recent years, and especially since the mining boom, the exchanges have restructured themselves to accommodate this type of young venture. The LSE AIM (London Stock Exchange Alternative Investments Market), for example, has exempted junior companies from a profitability clause, mandatory for listing on the London Stock Exchange itself. With the same goal in mind, the TSX Venture exchange gives Venturelisted firms more time to file financial statements than TSX-listed ones.

Alternatively, a junior company may seek to enter into a joint venture with a senior firm, who will fund all or part of the exploration costs in return for a direct ownership interest in the project or the junior itself.

Once initial drilling and assays are complete, and assuming the results warrant it, a company will generally seek further investment. At this stage, the deposit size and grade are usually still unclear. The ore body might be worth ten thousand or ten million dollars, and only time (and more digging) will tell.

At this stage, the firm may attract private investors willing to take on the risk

for potentially high returns. Another equity fundraising round may be undertaken at this point.

An alternative to the stock market is a private partnership, such as the one formed between Aber Diamond Corp. and the jewelry retailer Tiffany & Co.,

Jeff Kowal, director of risk management, Foster-Kowal Group at ScotiaMcLeod, “you’ll find that a lot of the expenses on the bank’s part are going to be pretty similar. So it just doesn’t make economic sense to get involved in a smaller deal, even

“It just doesn’t make

economic sense to get involved

in a smaller deal, even though the prospects of being repaid are sound— it just diverts resources from the bigger deal.”

May 2007

— J. Kowal

during the early stages of Aber’s Diavik project. Such an arrangement ensures funding and an off-take agreement for the junior firm, and provides the junior’s partner with a guaranteed supply of the mined resource, at favourable terms. The off-take agreement is vital if the junior firm later seeks bank financing.

Jim Fitzgerald, national manager for derivative products for ScotiaMcLeod, explains that for a banker, one very important consideration is to see an established market for the product once it’s out of the ground. One way to do this, Fitzgerald said, is “to be able to establish a market for [the product] by selling it forward (hedging) before it’s even out of the ground. That [hedging] is one step towards giving bankers comfort.”

Once the size and grade of the deposit have been established, the junior firm is no longer a high-risk investment. At this stage, major financial institutions may be convinced to take an interest in the company. However, a bank would only be interested in financing a project if the deposit is sufficiently large. “Whether you look at a small deposit or a big deposit,” says

though the prospects of being repaid are sound—it just diverts resources from the bigger deal.” For a major bank, a project must be worth at least $100 million, and frequently even that may prove too small.

But even if the size is sufficient to attract a bank’s interest, great importance is placed on the firm’s ability to service its debt even if the mine proves less profitable than expected. If he were a mining executive applying for financing, Fitzgerald said, he would “want to be able to demonstrate continuity of cash flow, irrespective of the boom/bust nature of the business.”

It should be mentioned that at many points along the way, the junior may prove sufficiently attractive to one of the senior firms and receive a buyout offer. “That’s often how the ecosystem works,” said Ungad Chadda, director of listed issuer services, TSX Venture Exchange. “The juniors are trying to be the prettiest gal at the dance so that the seniors come and buy them. Some will go to production, but many are hoping a major will come out and write them a cheque and take them over.” n 25

law&money Aboriginal consultation from the courts to the ground: challenges in implementing effective engagement

by H. Eve Robinson First Nation communities play an important role in mineral development in Canada. Exploration efforts are often focused in areas that overlap with aboriginal titles or land claims. In the next 15 years, up to 30 per cent of land area in Canada could either be controlled or have recognized interests by aboriginal groups. As the demand for mining exploration increases, it highlights the need for cooperation between First Nations and the minerals industry.

Changes in the legal framework responsible for governing these rela-

26

tionships are most effectively propelled by movements at the grassroots level. Industry members are encouraged to integrate participation and communication with aboriginal groups in the project development process. It is these innovative and cooperative agreements between mining companies and First Nations that demonstrate the potential for efficient and nationally applicable legislation.

This resource-rich country plays a dominant role in exploration activity.

The increasing demand for commodities offers excellent opportunities for Canada’s growing minerals exploration industry. To keep up with intense global competition, the success of mining exploration is dependent upon the discovery of new mineral deposits. Aboriginal consultation and land access are pertinent issues to mining companies seeking to explore land in Canada for these commodities.

Industry members can benefit by engaging aboriginal communities in this process in order to successfully move forward with mining exploration and development in partnership with First Nations.

When to begin the process The legislation in Canada that determines the legal steps required for mining companies to consult with aboriginal groups continues to be developed.

At present, there is some confusion for companies wondering if they should consult with First Nations, and at what point in the exploration and project development process they might begin to dialogue with these groups. There have been a number of court cases that have given impetus towards changing policy to reflect the importance of aboriginal consultation. In November 2004, the Supreme Court of Canada ruled that the government has a duty to consult with First Nations who assert aboriginal rights or title in a territory, particularly where the government is proposing a course of action that might have a negative impact on those rights. Although it is the government’s responsibility to consult with aboriginal groups, companies are still encouraged to be involved.

“It is strongly recommended good business practice to consult with the First Nations at the earliest stage possible in order to address any of their concerns and to make them aware of the potential impact of an exploration project,” said Brian Abraham, a recognized lawyer in The International Who’s Who of Mining Lawyers, and a partner at Fraser Milner Casgrain. “While there may be no legal obligation of the proponent to consult, other than when the project reaches the environmental assessment stage, it is good practice to do so.”

In 2002, the government of Quebec reached a new agreement with the Quebec Cree Nation called ‘La Paix des Braves’ (The Treaty of the Brave). This landmark agreement is not only based on a sustainable development partnerCIM Magazine n Vol. 2, Nº 3

law&money ship with the Cree Nation, but also details the value of mining and hydroelectric revenues that will be returned to the First Nations communities over the next 50 years. Under the agreement, the Cree Mineral Exploration Board was established. This regulatory corporation has already improved relationships between the minerals industry and the Cree Nation, and increased the number of deals made between the two groups.

rently conducting exploration in areas with First Nations interests?

Land claims and access Canada consists of a patchwork of treaties and land claims. The British colonists recognized First Nations had title to the land in Canada, so the Crown was only able to acquire land through treaties. In most of Canada agreements were made with First Nations, though there were differences

“It is strongly recommended good business practice to consult with the First Nations at the earliest stage possible in order to address any of their concerns and to make them aware of the potential impact of an exploration project.”

—B. Abraham

“I think these relationships between the mining industry and First Nations are in recognition of the changing landscape,” explained John Hurley, a partner at Fraser Milner Casgrain who has worked in energy and natural resources law and aboriginal law for almost 30 years. “People recognize that one cannot simply disregard First Nations in developing significant resource projects in lands subject to claims of aboriginal rights or title. If [a company] were to do so, there could be risks involved. Project proponents do not like risks; bankers do not like risks.

So it makes a good deal of sense to be proactive and go out to establish a relationship with First Nations.”

These recent decisions by the Supreme Court and groundbreaking agreements between First Nations and provincial governments show how the law is a work in progress and moving towards effective partnerships. “People will be looking at these [agreements] to see what features are common, how they can be improved, and how they should be adapted to the special circumstances of any given case,” said Hurley. While this seems promising, what does this mean for projects curMay 2007

between each province and territory. In British Columbia, for example, the province joined Confederation before resolving aboriginal titles to the land.

With the exception of Treaty 8 in northeastern British Columbia, the Nisga’a Treaty (or Modern Day Treaty), and 14 treaties on Vancouver Island, collectively called the Douglas Treaty, aboriginal rights continue to be undefined and ambiguous. Mining companies seeking to involve First Nations in the development process can face challenges identifying all the communities who feel responsible for the land, though they potentially have no legal ‘ownership.’

Land ownership is not the only complication affecting mineral exploration and aboriginal consultation.

Interestingly, in the Delgamuukw case in 1997, the Supreme Court of Canada determined that having an aboriginal title is right to the land itself. Some commentators argue that this includes ownership of mineral resources. Land accessibility for the purpose of mining is typically managed by the Crown.

The federal and provincial governments combined own 90 per cent of Canadian land, so the Crown owns and

controls a vast amount of potential mineral resources. The government can grant interested parties access to that land for the purpose of exploration. This free entry system is one of the principles upon which Canada was founded. The assertion is that mining is the best use of land, and that resource extraction is the highest priority. However, there are groups that argue societal values have changed since the free entry legislation was first passed (for more information on the free entry system, see article on p. 30).

Susan Rutherford, a lawyer with West Coast Environmental Law, explained that “there are people who are questioning free entry, asking whether it’s a system consistent with today’s values and what ought to be done with the land.”

Although the minerals industry has a legal right to access land, companies might encounter barriers within the community who view mining as a lower priority to forestry, parks, conservation land, watersheds, or other developments. In some cases, prospecting permits are not granted to potential proponents, which can frustrate industry members with unexpected land withdrawals. One of the recommendations regarding the free entry law is to modify the boundaries of available land. These boundaries could exclude lands deemed important to communities, other natural resources, and ecosystems. Although this would reduce the areas open to mining exploration, the land that remains accessible would be available in reality. This could reduce the unanticipated delays and wasted finances invested on mining exploration in lands that turn out to be restricted.

Consultation and relationship building Many areas of the world have indigenous land access and interest issues that are similar to Canada. In response to these global challenges, the World Bank has published criteria relating to community consultation that specifically includes indigenous 27

law&money population consultation. While the challenges facing aboriginal groups are similar in many countries, the legal regimes are different.

“Canada is unique,” said Charles Willms, a partner in Fasken Martineau

statutorily protected, but not constitutionally protected. Consultation is a constitutional obligation in Canada.”

Consultation can occur during any part of the mining exploration or development process. This initial step

“Canada is unique

Impact and benefits agreements

because the aboriginal rights are constitutionally protected. In other countries in the world, such as Australia, [these rights] are statutorily protected, but not constitutionally protected. Consultation is a constitutional obligation in Canada.”

—C. Willms

is often case-specific; companies can be uncertain of when it is appropriate to start meeting with an aboriginal group.

Beginning dialogue with a community too early in a project can falsely raise expectations, whereas trying to include a First Nations group too late can make building a future relationship difficult.

Opening the lines of communication can be relatively simple. For example, junior companies that lack capital resources are finding ways to dialogue and consult in meaningful Call today to find out how Luff Industries can increase ways. Represenyour conveying performance. Visit Luff at booth #1024 at tatives that attend the CIM Montreal, April 29–May 2, 2007 these discussions TOLL-FREE: 1.888.349.5833 with sincerity and recognize aboriginal groups as land owners are often more successful.

“Nothing beats the president or senior executive of LUFF INDUSTRIES Ltd. a company meeting with First 3528, 80th Avenue SE Calgary, Alberta, Canada T2C 1J3 Nations represenTOLL-FREE: 1.888.349.LUFF (5833) | www.luffindustries.com tatives as part of

DuMoulin LLP, with considerable experience in aboriginal, forestry, and mining matters, “because the aboriginal rights are constitutionally protected. In other countries in the world, such as Australia, [these rights] are

We make our competitors with envy.

28

the relationship-building process,” said Willms. Investing the time to address concerns early in the process can build trust and establish support for a project, which reduces the risks for the company.

One of the products of these unique negotiations is an impact and benefits agreement (IBA). IBAs are private contracts between a particular First Nations community and a mining company. These agreements often address the legal rights, environmental impacts of a mining development, and socioeconomic benefits. Employment often plays a large role in IBAs from both perspectives. Aboriginal workers in Canada are among the fastest growing labour pool. Abraham said in some cases currently, they represent between 30 to 40 per cent of the minerals industry workforce. In addition, the population, as a whole, is increasing and many communities are located in close vicinity to areas of mineral exploration and mine development.

It is in the mining companies’ best interest to hire locally, to reduce transportation costs of moving staff to and from sites.

In an IBA, First Nations can outline employment and contractor agreements to secure jobs. They can also negotiate equity interests, payments, training and educational programs, or upgrading medical/school facilities.

Environmental monitoring and regulatory committees are established to observe any environmental damages.

Baseline studies are necessary to quantify general ecosystem health before mining activity begins. IBAs can include the right to claim damages.

This is particularly important regarding mine closures. Drainage from abandoned sites can affect the local environment many years after operations have ceased.

Impact and benefit agreements serve to facilitate participation in the mine development process while addressing concerns, minimizing potential negative impacts, and ensuring local beneCIM Magazine n Vol. 2, Nº 3

law&money interested mining companies.

Their policy reflects their are going to be aboriginal rights and and prioritizes the decisions both are increasingly they have recognizing that it is reached regarding exploration in their best interests in their tradito be partners.” tional lands, —J. Hurley e n v i ro n m e n t a l assessments, and fits. Obviously, because these agree- impact and benefit agreements. ments are not drafted according to any uniform laws or policies, there are Resource revenue sharing potential difficulties with IBAs. Another method of encouraging Including environmental regulations in aboriginal participation is resource IBAs may potentially lower the incen- revenue sharing. This has the potentive to develop more robust regulations tial for First Nations communities to that would be applicable on a nation- become economically self-sufficient. wide scale. Also, the strength of each They would have the capacity to deal individual agreement can be dependent with mining exploration and develupon that particular community’s abil- opment companies on their own. ity to bargain, which results in a wide Junior companies, that would othervariation between contracts. wise be unable to produce enough Negotiations are often time-limited, capital to fund environmental which may not allow members of the reviews, might be able to consider community enough time to seek exter- projects that involve revenue sharnal expertise in order to make ing. In turn, more developments informed decisions. Conversely, some could become financially viable. negotiations take years to complete.

A greater recognition of aborigiFinally, unless a revenue-sharing agree- nal rights in Canada has produced a ment is included, the economic benefit changing regulatory regime. The tends to be localized within a particu- inclusion of First Nations involvelar community. ment and participation has resulted Hurley explained, “Impact and ben- in community consultation, impact efit agreements are one way for indus- benefit agreements, regulatory try and First Nations to work out how boards, and resource revenue shartheir relationship should evolve in the ing within the minerals industry. In future. It is clear that resource compa- this emerging landscape, investors nies and First Nations are going to be and project proponents are caught neighbours, and both are increasingly between the absence of legal recognizing that it is in their best inter- requirements and the expectation of ests to be partners.” aboriginal consultation. What is As an alternate and more proactive being determined in the courts may measure, the Taku River Tlingit First be difficult to enforce on the ground, Nation produced a mining policy for or it may take years to develop. potential mining proponents this Instead, the practical experiences of March. Instead of waiting for mining these new partnerships between companies to approach them with a First Nations and mining companies proposal, this community clearly out- are able to provide functional examlined their own standards, expecta- ples of where legislation will eventutions, and rules of engagement for ally follow. n

“Resource companies and First Nations

neighbours,

May 2007

29

law&money A brief overview of free entry

by H. Eve Robinson The free entry law in Canada grants the mineral industry privileged access to Crown land, and top priority is placed on resource development. This has prompted arguments from both supporters and critics, who both claim that this law provides an unfair advantage to the other side. As neither the industry, nor communities, nor the government appear to be satisfied with the ramifications of free entry, it is appropriate to look at the various issues shaping this debate.

The free entry system originates from the ‘frontier mentality’ that suggests mining is the first and best use of land.

A prospective miner only has to purchase a license to have access to almost all public and private lands, with the exception of cemeteries, agricultural land, houses, and buildings. Most land ownership, even private, does not include control over the mineral rights.

Property owners have rights over the surface of their land but, typically, mineral resources are under the jurisdiction of the Crown. Staking claims for the mineral rights can be made without the consent or knowledge of the surface property owner. This is a source of tension among landowners and mineral claim holders.

This system allows mining to prevail over other land uses, private property rights, and aboriginal rights. Essentially, almost all land under the control of the Crown is available for potential mineral exploration. Only by getting a land withdrawal is that area off limits.

Withdrawals are accomplished by ministerial order and are often for alternate uses such as parks. Otherwise, the government has no reason to deny a claim and is obliged to permit mining.

Surprisingly, if mineral claims have been staked at a land prior to its being withdrawn, the miner could be entitled to compensation.

Free entry is a non-discretionary law so that the government is unable to decide how and whether tenures should 30

be granted. This appears to give exploration companies a seemingly limitless realm in which to seek mineral deposits.

However, the mining industry defends this preferential treatment on the basis that there needs to be some incentive for mining companies to invest. The wider the area of exploration is, the better the chance of discovering mineral resources.

Some supporters reason that the free entry is necessary or mineral exploration would not be economically viable.

Canada is a principal destination for both investment and exploration in the minerals industry.

Local companies finance approximately 8,000 exploration projects and over 55 per cent of them are in Canada.

During declines in exploration expenditures, tax credits were implemented and the government introduced new incentives for exploration. Recently, almost half the total global equity financing was raised in Canada.

There has been a shift of societal values in the past centuries. Since the free entry beginnings during the gold rush, mining is no longer seen by many communities in Canada as the singular most important use of land. However, the government is limited in its ability to designate parks, protected areas, and other resource extraction such as timber if exploration is an option. In contrast, members of the mining industry have expressed frustration that adverse government actions such as land withdrawals and stringent environmental regulations are inhibiting mineral development in Canada.

One of the concerns about free entry is that this law has not been modified to account for changes in mining operations over the years. When it was first established, mines operated on a much smaller scale. Currently, mining devel-

opment is a large undertaking that is able to extract or process vast quantities of natural resources, leaving a bigger ecological footprint. Giving the minerals industry free license to the land with very few options in designating areas for alternative use can compromise environmental integrity.

The early stages of acquiring mineral rights do not have to abide by any environmental monitoring, according to the

… members of the mining industry have expressed frustration that adverse government actions… are inhibiting mineral development in Canada.

West Coast Environmental Law reports on the subject. The use of Crown land during exploration is unregulated. If damage is done, the surface property owner will be compensated. Beyond that, however, the free miner is able to move up to 1,000 tonnes of waste rock without a permit (in British Columbia).

There are many examples of sustainable and environmentally sound mining developments in Canada. One suggestion regarding the free entry law is to charge mining companies financial returns on public properties. Another suggestion is to establish some boundaries of available land for mining exploration. This would give communities the opportunity to articulate the importance of other resources, parks, or protected habitats that could be spared from mining-accessible land. Although this would limit the areas available for mining exploration, these new boundaries would reduce the occurrence of land withdrawals or other adverse governmental actions. Increased predictability in legislation for mining exploration projects could be enough to mediate the risks in searching for mineral deposits in a narrower field of exploration. n CIM Magazine n Vol. 2, Nº 3

vos droits et vos affaires Recherche de conseils juridiques efficaces pour l’industrie minière De nombreux aspects de l’industrie minérale ont besoin d’expertise juridique. On a tendance à considérer le droit minier comme l’établissement d’ententes et de contrats, mais c’est beaucoup plus. Que ce soit pour la réglementation encadrant l’exploration, l’atténuation des risques à l’étranger, les fusions et acquisitions ou les consultations quant aux droits des autochtones, les firmes œuvrant dans le secteur minier ont des avocats très spécialisés dans de nombreux domaines.

«Le droit minier touche presque tous les aspects légaux à l’exception du domaine criminel et de la famille », affirme Brian Abraham, associé chez Fraser Milner Casgrain (FMC), une firme spécialisée dans les domaines miniers nationaux et internationaux. « Une expérience industrielle est utile; lorsque vous parlez “le langage”, les clients n’ont pas besoin de décrire leurs projets. » Avoir un avocat connaissant bien la taxation minière est particulièrement utile pour l’exploration à l’étranger car les règles et les codes de taxation diffèrent entre les pays. Certains ont des taxes sur la valeur ajoutée très élevées payables lors de la construction de la mine et sur les équipements importés.

Des pays tels que le Vietnam imposent aussi une taxe sur les produits exportés.

Sortir le minerai brut du pays engendre une taxation supplémentaire, non récupérable, si le pays possède des installations de traitement.

John Sabine, spécialiste des transactions minières chez FMC, explique : « Il y a tout le côté artisanal du droit fiscal : certains pays permettront de sortir de l’argent et d’autres pas. Il existe toutes sortes de questions fiscales et il devient très compliqué d’être certain de se conformer à la multitude de lois propres à chaque juridiction. Par exemple, des pays de l’Afrique de l’Ouest francophone sont sous la juridiction du code civil, alors que d’autres sont sous la tradition May 2007

britannique du “Common Law”. Vous aurez donc besoin de personnes qui connaissent les différents systèmes légaux et qui parlent plusieurs langues. »

La production planifiée est retardée encore plus en raison de la nondisponibilité des équipements et les compagnies ont de la difficulté à garder

Avoir un

avocat connaissant bien la taxation minière est particulièrement utile pour l’exploration à l’étranger car les règles et les codes de taxation diffèrent entre les pays.

Les plus grands changements des dernières décennies dans le domaine minier a été l’aspect environnemental. « L’industrie a dû s’adapter », dit M. Abraham. « La Colombie-Britannique et le Canada ont probablement les normes environnementales les plus sévères au monde. Avec le temps, on acquiert plus de connaissances. » Les organisations craignent parfois que les activités minières soient dommageables pour l’environnement. Elles s’inquiètent aussi de ce qui arrivera si la mine ferme ou est abandonnée; elles veulent savoir si la compagnie a l’intention de développer des projets durables qui enrichiront les habitants locaux car ce sont eux qui hériteront de ce site une fois la compagnie partie. Il est essentiel de traiter ces craintes au sujet de l’environnement et de savoir comment les lois environnementales interagissent avec les exploitations.

Les délais dans les projets miniers ont des conséquences sur le marché. La demande pour le produit augmente et le cycle normal du produit est affecté.

Lorsque le prix du cuivre et d’autres produits est très élevé, des propriétés marginales qui ne sont pas tellement riches entrent en production; les compagnies se dépêchent alors à vendre leur produit afin de payer leur exploitation et demeurer rentables.

la main-d’œuvre requise pour bâtir la mine. Le respect des normes environnementales et le maintien de bonnes relations avec les organisations peuvent réduire les attentions négatives et prévenir les retards. « Il est essentiel de bien connaître les peuples autochtones et leurs droits; il faut aussi les consulter », dit John Hurley, un expert dans le domaine des lois sur l’énergie et l’environnement et sur les Autochtones. « Il faudra établir un certain modus vivendi entre le promoteur et les Premières Nations et c’est la tâche de l’avocat de faciliter cette entente. » Charles Willms, de la firme Fasken Martineau, est un avocat chevronné, spécialiste des questions autochtones. « Deux étapes importantes sont requises pour faciliter le développement du projet et le partenariat communautaire : établir un partenariat avec les Premières Nations là où vous espérez explorer ou développer un projet et ensuite maintenir cette relation. Il n’existe pas de recette unique, les communautés et les projets sont différents d’un bout à l’autre du pays. » « En bout de ligne, ce sont les gens qui comptent », conclut M. Sabine. « Dans une industrie de service, vous devez comprendre les besoins de vos clients. » n 31

vos droits et vos affaires Les consultations avec les Autochtones: les difficultés à mettre en place des engagements efficaces Les Premières Nations jouent un rôle important dans le développement minéral au Canada. L’exploration cible souvent des secteurs qui chevauchent des territoires revendiqués par les Autochtones, soulignant le besoin de coopération entre les Premières Nations et l’industrie minérale. Cette dernière est encouragée à intégrer les groupes autochtones dans le développement de projets. Les ententes innovatrices et de coopération entre les compagnies minières et les Premières Nations démontrent le potentiel pour une législation efficace applicable à travers tout le pays.

La demande croissante pour les métaux de base est à l’avantage de l’industrie de l’exploration et, pour y satisfaire, de nouveaux gisements doivent être découverts. Les consultations avec les Autochtones et l’accès aux territoires sont des enjeux clés pour les compagnies d’exploration.

La législation qui détermine les étapes légales requises des compagnies minières lors de la consultation des groupes autochtones est encore en développement. Pour le moment, certaines compagnies se demandent à quel moment elles doivent commencer à dialoguer avec les groupes des Premières Nations.

En novembre 2004, la Cour suprême du Canada a statué que le gouvernement doit consulter les Premières Nations qui revendiquent des droits ou un territoire, surtout lorsque le gouvernement propose des actions qui pourraient avoir un impact négatif sur ces droits. Bien que la consultation des groupes autochtones relève de la responsabilité du gouvernement, les compagnies minières sont encouragées à s’impliquer. « C’est une bonne habitude d’affaire, fortement recommandée, de consulter les Premières Nations le plus tôt possible afin d’aborder leurs préoccupations et leur expliquer l’impact possible d’un projet d’exploration», dit Brian Abraham, un 32

avocat reconnu dans le International Who’s Who of Mining Lawyers et un associé chez Fraser Milner Casgrain. « Bien qu’il n’existe aucune obligation légale de consulter avant que le projet n’ait atteint l’étape de l’évaluation environnementale, il s’agit là d’une bonne pratique.»

En 2002, le gouvernement du Québec a conclu une entente avec les Cris du Québec, « La Paix des Braves. » Cette entente historique est non seulement basée sur un partenariat de développement durable avec la nation crie, elle stipule aussi la valeur des retombées minières et hydroélectriques qui seront remises aux communautés des Premières Nations durant les 50 prochaines années.

L’entente prévoyait aussi la création du Conseil cri sur l’exploration minérale, confirmant ainsi la volonté commune de la nation crie et du gouvernement du Québec d’agir en faveur du développement du potentiel minier. « Les gens reconnaissent qu’il n’est plus possible d’ignorer les Premières Nations dans le développement de projets importants concernant les ressources sur des territoires touchés par des revendications de droits territoriaux. Il est bon d’être proactif et d’établir des relations avec les Premières Nations », explique John Hurley, un associé chez Fraser Milner Casgrain qui travaille dans le domaine des lois sur l’énergie, les ressources naturelles et les Autochtones depuis près de 30 ans.

Le système canadien est un ensemble de mesures disparates. Les colons britanniques reconnaissaient que les Premières Nations détenaient des droits territoriaux au Canada; les terres étaient donc acquises par des traités. Des ententes avec les Premières Nations ont été conclues dans la plupart des régions canadiennes, elles variaient cependant selon les provinces et les territoires.

Les droits fonciers ne constituent pas la seule complication touchant l’explo-

ration minérale et les consultations avec les Autochtones. En 1977, la Cour suprême du Canada a déterminé qu’un titre ancestral constitue un droit au territoire même. Selon certains, cela comprendrait aussi la propriété des ressources minérales.

En tant que propriétaire du territoire, le gouvernement peut accorder un droit d’accès à des parties intéressées, aux fins d’exploration. Selon le système d’accès à la ressource, datant du début de la colonie, l’exploitation minière représente la meilleure utilisation du terrain et l’extraction de la ressource est prioritaire. « Certaines personnes questionnent le libre accès à la ressource, se demandant si ce système est compatible avec les valeurs actuelles de la société concernant l’utilisation des terres », dit Susan Rutherford, une avocate chez West Coast Environmental Law, (pour plus d’informations sur le système de libre accès à la ressource, voir l’article à la page 34).

Bien que l’industrie minérale ait le droit d’accès légal aux terres, les compagnies peuvent rencontrer des obstacles dans les communautés qui perçoivent les mines moins prioritaires que les forêts, les parcs, les bassins versants ou d’autres développements. Une recommandation concernant le libre accès à la ressource est de modifier les limites des territoires disponibles. Ces limites pourraient exclure les territoires jugés importants aux communautés. Bien que cela réduise les secteurs ouverts à l’exploration minière, les territoires restants seraient véritablement disponibles, réduisant ainsi les délais et les investissements inutiles pour explorer dans des territoires qui s’avèrent restreints.

D’autres régions du globe ont des enjeux d’accès semblables à ceux du Canada; par contre, les régimes légaux varient. En réponse à ces défis, la Banque mondiale a publié des critères concernant les consultations communautaires.

CIM Magazine n Vol. 2, Nº 3

vos droits et vos affaires « Le Canada est unique en ce que les droits autochtones sont protégés par la constitution », dit Charles Willms, un associé chez Fasken Martineau DuMoulin. Les consultations peuvent avoir lieu à tout moment du processus d’exploration ou du développement. Les premières étapes sont jugées cas par cas : un dialogue trop tôt dans un projet peut soulever de fausses attentes et l’inclusion tardive d’un groupe des Premières Nations peut nuire aux relations futures.

Ces premiers pas peuvent être très simples. « Rien ne vaut une rencontre entre le président ou un cadre supérieur et les représentants des Premières Nations pour établir des relations », dit M. Willms. Le temps investi, tôt dans le processus, à répondre aux préoccupations établit la confiance et le support pour le projet, ce qui en retour réduit les risques pour la compagnie.

Les ententes sur les répercussions et les avantages (ERA) découlent de ces

négociations uniques. Ce sont des contrats privés entre une communauté des Premières Nations et une compagnie minière. Ces contrats couvrent souvent les droits, l’environnement, les bénéfices sociaux et les emplois; ils peuvent aussi porter sur des programmes d’éducation et de formation. Dans certains cas les travailleurs autochtones représentent de 30 à 40 % de la maind’œuvre de l’industrie minérale. C’est dans l’intérêt des compagnies minières d’embaucher localement, entre autres pour réduire les frais de relocalisation et de transport.

Les ERA peuvent aussi comprendre des clauses sur le droit de réclamer des dommages. C’est un point particulièrement important car le drainage minier acide des sites abandonnés peut affecter l’environnement local pour plusieurs années après la fermeture de la mine.

Des études de références auront quantifié la santé générale des écosystèmes avant le début des activités minières.

Ces ententes n’étant pas conçues selon des lois ou des politiques uniformes, le fait d’inclure des réglementations environnementales pourrait nuire au développement de lois plus sévères qui seraient applicables à la grandeur du pays. La portée des ententes peut être fonction de la capacité d’une communauté à négocier. Les ententes peuvent aussi être conclues trop rapidement sans que la communauté n’ait eu le temps de consulter des experts externes ou elles peuvent prendre des années d’être avant d’être ratifiées.

Comme les compagnies minières et les communautés autochtones seront voisines, il va de leurs intérêts d’être partenaires.

Une autre façon d’encourager la participation des Autochtones est par le partage des revenus; les communautés des Premières Nations pourraient alors devenir autonomes et négocier ellesmêmes avec les compagnies d’exploration et de développement. n

Accroissement des fusions et des acquisitions dans l’industrie minière L’industrie minière canadienne est des plus dynamiques en raison des nombreuses consolidations récentes. Les grandes sociétés minières doivent croître et cette croissance, en plus de l’exploration, passe par la réussite sur les marchés boursiers.

Les fusions et les acquisitions ont augmenté au cours des dernières années; les cibles sont maintenant des compagnies qui ont des exploitations à travers le monde. « C’est presque donné que les grandes compagnies acquerront les compagnies de taille moyenne », dit John Sabine, un associé chez Fraser Milner Casgrain avec plus de 30 ans d’expérience dans les transactions minières et les transactions d’affaires complexes. « Une compagnie peut utiliser des actions pour en acheter une plus petite dans le but de rehausser les perspectives de croissance et ainsi augmenter le rendement pour les actionnaires. Les cours actuels des biens rendent les acquisitions très lucratives. » May 2007

Certaines compagnies se fusionnent en raison des réserves minérales à court terme. Elles augmentent ainsi leurs réserves et par le fait même leur capacité d’extraction. Ces compagnies, seules, ont peut-être de bonnes propriétés mais elles ne produisent pas les rendements attendus par les actionnaires.

Certaines compagnies peuvent aussi se retrouver dans des régions présentant des conditions d’exploitation très difficiles où il faut beaucoup de capitaux pour se développer. Les nouveaux projets suscitent parfois de grandes attentes mais il peut être difficile d’acquérir les équipements de base requis pour construire et exploiter la mine.

Les spécialistes de l’industrie minière sont aussi fortement recherchés. « Une autre raison pour les acquisitions est d’obtenir une main-d’œuvre formée, qui sait déjà comment bâtir, exploiter et gérer des mines», dit M. Sabine.

Des pays comme la Chine et l’Inde connaissaient une croissance fulgurante et la demande pour des biens, surtout les métaux, est forte. Leur classe moyenne cherche à se procurer des biens à base de métaux, par exemple des réfrigérateurs, des cuisinières et des voitures. L’industrie a de la difficulté à répondre à la demande. « Les compagnies minières recherchent des réserves à long terme dans des pays politiquement stables », ajoute M. Sabine. Au cours des dernières années, la plupart des fusions et des acquisitions ont nécessité beaucoup d’intrants des équipes légales ou des bureaux travaillant avec des compagnies à l’extérieur du pays.

Le Canada jouit d’une position unique en tant que principal financier de projets d’exploration minérale pour de grandes compagnies exploitant dans le monde entier. n 33

vos droits et vos affaires Les étapes de collectes de fonds pour les sociétés junior Les débuts d’une compagnie d’exploration sont toujours critiques. Souvent, la compagnie possède une propriété prometteuse et a besoin d’argent pour effectuer des forages d’exploration.

L’expérience et la réputation de l’équipe comptent alors pour beaucoup mais il s’agit encore d’un investissement à très haut risque. Les compagnies se tournent donc vers les bourses pour obtenir des fonds d’établissement. Au cours des dernières années, les bourses se sont restructurées pour accommoder ce genre d’entreprise. À la Bourse de Londres, l’Alternative Investments Market exempte les sociétés junior de la clause de rentabilité pour les introduire à la cote. Le Venture Exchange de la Bourse de Toronto (TSX) donne aux compagnies inscrites plus de temps pour déposer leurs états financiers qu’à celles inscrites à la TSX. Une compagnie junior pourrait aussi conclure une entente de coentreprise avec une grande société minière qui financerait les coûts d’exploration, en totalité ou en partie, en échange d’une participation au projet ou dans la compagnie junior elle-même. À cette étape, l’étendue et la teneur sont encore indéterminées. Le gisement peut valoir dix mille ou dix millions de dollars.

Une alternative à la bourse est le partenariat privé, comme celui entre Aber Diamond et le bijoutier Tiffany, aux premiers stades du projet Diavik.

Une telle entente assure du financement et un accord d’exploitation pour la compagnie junior et garantit au partenaire des termes favorables pour la ressource.

L’accord d’exploitation est essentiel si la compagnie junior avait besoin de financement bancaire plus tard. Jim Fitzgerald, directeur national, produits dérivés, ScotiaMcLeod, explique que pour un banquier, il est important d’avoir un marché établi pour le produit.

Une façon de faire est par les opérations de couverture (hedging).

Une fois que la taille et la teneur du gisement ont été établies, la compagnie 34

junior ne constitue plus un investissement à risque élevé.

Cependant, une banque financera un projet seulement si le gisement est suffisamment gros. « Que vous ayez un petit ou un gros gisement, les dépenses encourues par la banque seront à peu près les mêmes », dit Jeff Kowal, directeur de la gestion du risque pour le Groupe Foster-Kowal, ScotiaMcLeod. « C’est contre le bon sens économique de s’impliquer dans une petite affaire, même si les perspectives de remboursement sont bonnes. Pour une grande banque, un projet doit avoir une valeur minimale de 100 millions. »

Tout au long du cheminement, la compagnie junior peut être achetée par une grande compagnie et c’est, dans le fond, ce qu’elle souhaite, selon Ungad Chadda, directeur des services émetteurs listés au TSX Venture Exchange n

Le libre accès à la ressource: un bref survol Au Canada, le libre accès à la ressource confère à l’industrie minérale un accès privilégié aux terres publiques et le développement des ressources est considéré prioritaire. Les supporters et des critiques de ce libre accès stipulent tous deux que l’autre a des avantages inéquitables. Il convient donc d’examiner les divers enjeux de ce débat.

Le principe de libre accès à la ressource découle de « l’esprit de frontière » selon lequel l’exploitation minière représente la meilleure utilisation du terrain. Avec un permis, un prospecteur a accès à presque toutes les terres publiques ou privées à l’exception des cimetières, des terres agricoles, des maisons et des immeubles. Les droits des propriétaires fonciers, même privés, ne comprennent pas les droits miniers.

Un claim peut être jalonné sans le consentement ni même la connaissance du propriétaire de la surface, d’où certaines sources de tension.

Selon ce système, l’exploitation minière prévaut sur toutes les autres utilisations du terrain. Par arrêté ministériel, un territoire peut cependant être

soustrait au jalonnement, souvent pour la création d’un parc. De plus, si des claims ont été jalonnés avant que le terrain ait été soustrait, l’exploitant pourrait avoir droit à une compensation. Ces faits semblent donner aux compagnies minières libre champ pour rechercher des minéraux.

L’industrie minière défend ce traitement préférentiel en stipulant que les compagnies minières doivent pouvoir compter sur des mesures incitatives pour investir. Durant les périodes de déclin des dépenses d’exploration, des crédits d’impôt ont été mis en place et le gouvernement a introduit de nouveaux incitatifs pour la recherche.

Les valeurs de la société ont changé avec le temps. Depuis la ruée vers l’or et les débuts du libre accès à la ressource, les communautés ne perçoivent plus l’exploitation minière comme la meilleure utilisation des terres. De son côté, l’industrie minière se trouve frustrée par des actions telles que la soustraction de territoires au jalonnement et les réglementations environnementales sévères qui, selon CIM Magazine n Vol. 2, Nº 3

vos droits et vos affaires La naissance de Diavik Vivacité et débrouillardise à l’origine d’un important projet de financement de junior Aber Diamond Corporation représente un cas inusité; cette compagnie a commencé comme minière junior avec une participation importante dans un projet de mine de diamants et le partenaire senior n’était pas DeBeers. Le succès d’Aber à lever des fonds pour le projet a été exceptionnel et, qui plus est, lors d’un ralentissement dans l’industrie minière.

Aber a commencé en 1991 comme consortium de jalonnage appelé West Viking Syndicate. Peu après la découverte de diamants au Canada par Dia Met Minerals (acquis par BHP in 2001), West Viking a jalonné des claims près de la zone de découvertes et, en 1992, a approché Rio Tinto avec une proposition de projet conjoint. Rio Tinto a accepté et

elle, nuisent au développement minéral au Canada.

Une préoccupation concernant le libre accès à la ressource est que cette loi n’a pas été modifiée pour tenir compte des changements survenus au cours des années, surtout quant à la taille des mines.

Des suggestions de modifications concernant le libre accès à la ressource comprennent des paiements par les compagnies minières pour le rendement financier sur les terres publiques ou l’établissement de limites aux territoires disponibles. Cela donnerait aux communautés la possibilité de se prononcer sur l’importance d’autres utilisations et pourrait limiter le nombre de territoires soustraits au jalonnement.

Il faudra des changements dans le système de libre accès à la ressource afin de mieux refléter les valeurs communautaires.

L’extraction des ressources est une partie importante de l’économie canadienne, mais l’exploitation minière à elle seule ne devait pas compromettre nos efforts de gestion et de protection des écosystèmes. n May 2007

a investi 10 M$ millions en échange de 60 % des parts dans le projet. Au même moment, West Viking, une compagnie privée, a été intégrée dans une société de façade appelée Aber. L’exploration a commencé et les premiers diamants ont été découverts en 1994. « Les premiers 10 millions de dollars n’ont pas fait long feu », se souvient Robert Gannicott, PDG de Aber. « L’échantillon brut n’était qu’à moitié prélevé quand Rio (Tinto) a épuisé son investissement de 10 M$, ce qui complétait leur participation de 60 %. Il fallait donc lever des fonds. » Aber a abordé Tifffany & Co et conclu une entente; la transaction consistait en huit millions de parts de la compagnie contre 100 M$. « J’ai moi-même approché Tiffany. Je m’étais rendu compte que les diamants Diavik avaient une bonne qualité de blancheur et, parce qu’ils venaient du Canada, ils avaient aussi une certaine “propreté” politique », dit M. Gannicott.

Cet argent a duré le temps de l’étude de faisabilité; il fallait ensuite construire la mine. La localisation du dépôt, les défis logistiques et de construction uniques présageaient une mine très dispendieuse. Pour recueillir les 40 % des 1,4 MM$ du coût total, Aber a utilisé la balance des 100 M$ de Tiffany et a vendu sa part du tiers du projet de la mine de diamants Snap Lake à DeBeers pour 173 M$. Avec cet argent, il a été possible d’obtenir du financement d’un groupe de banques.

Ce furent deux années très longues et difficiles. «Les diamants sont un produit très particulier, on ne peut les transiger sur la bourse. Nous n’avions pas le contrôle; le partenaire à 60 % avait le contrôle. Nous n’avions jamais vendu de diamants auparavant; les banques doutaient de notre capacité à vendre des diamants en compétition avec DeBeers…»

Les banquiers conseillers étaient N.M. Rothschild, apportant expertise et crédibilité, et CIBC a servi de conseiller

technique; les autres institutions s’y fiaient pour vérifier la qualité et la valeur du gisement.

Aber n’est pas allé vers les bourses pour amasser de l’argent. « La valeur du minerai représente de trois à quatre fois les coûts d’exploitation; les entrées de fonds se feraient rapidement et la dette pouvait être remboursée », dit M. Gannicott.

L’autre raison pour éviter le marché boursier était le bas prix des actions de la compagnie. La qualité d’un gisement de diamants demeure incertaine beaucoup plus longtemps que s’il s’agit de métaux de base ou précieux. La variation dans les gemmes est telle que « vous n’avez pas d’échantillon représentatif avant d’avoir extrait pendant un an » dit M Gannicott.

Une fois le financement assuré, il a fallu deux ans pour bâtir la mine et une autre année avant de vendre le premier diamant. Une année plus tard encore, Aber a acquis les intérêts majoritaires dans Harry Winston, une bijouterie au détail de diamants. Aujourd’hui, Aber possède la totalité du détaillant et cherche de nouveaux sites potentiels de mines de diamants.

Y-a-t-il des restrictions aux sites potentiels? Oui, mais ce n’est pas en raison de la géographie. «Nous ne désirons pas être le propriétaire d’un gisement de diamants à un endroit où des régimes politiques ou sociaux abusifs sont en place. Nous ne voulons opérer nulle part où il y a risque pour la marque de commerce Harry Winston. » Gannicott a un conseil pour les juniors d’aujourd’hui, «Assurez-vous dès le début que les ententes légales sont ainsi faites que vous pourrez aller jusqu’au bout, que vous en ayez besoin ou non, que vous fassiez ce qu’Aber a fait et vous vous retrouviez en production ou encore que vous vendiez en cours de route, la portée de l’entente sera très importante. Ne vous dépêchez pas pour signer; consultez un banquier qualifié. »n 35

vos droits et vos affaires Commentaires sur la condition financière L’industrie minière actuelle projette l’image d’un secteur industriel en santé.

Les entrées de fonds sont à la hausse et les prix des biens atteignent des sommets inégalés; de plus, les analystes prévoient la prolongation de cet état de la situation. Est-ce que les investisseurs continueront à percevoir favorablement cette période de prospérité? Sont-ils inquiets quant à une éventuelle baisse brutale de l’activité économique?

Le passé Les raisons du succès actuel se trouvent facilement dans les pages financières des journaux quotidiens. La Chine vole la vedette. «Les Chinois sont en voie de devenir les plus gros consommateurs de tout ce qui est fait de métal; les investisseurs suivent de près l’émergence de l’Inde et des pays en voie de développement», dit Bart Melek, économiste principal, BMO Marchés des capitaux.

Les difficultés se retrouvent ailleurs.

Les plus gros problèmes de l’industrie sont le manque de main-d’œuvre qualifiée et la pénurie de nouvelles découvertes. Il faut se retourner vers le passé pour trouver les causes fondamentales de ces deux problèmes. « Le secteur minier souffrait de sous-investissement chronique en exploration et en développement », explique M. Melek.

La phase de récession du cycle signifie moins de dépenses et moins de programmes essentiels; l’emphase sur l’exploration et la R&D est diminuée. Le conservatisme des méthodes et des techniques prévaut. Les investisseurs hésitent devant les nouveaux projets, à moins d’être assurés d’y trouver profit.

La réduction des budgets d’exploration et de R&D s’est effectuée en même temps que la réduction des salaires des nouvelles recrues et du financement des écoles de mines. Selon Ferri Hassani, professeur au Département des mines, des métaux et des matériaux de l’Université McGill et détenteur de la chaire Webster en génie minier, « La situation était telle que cer36

taines écoles n’avaient aucun élève; quelques-unes étaient sur le point de fermer. Cette dernière possibilité existe toujours. »

Le présent L’intérêt pour le secteur minier est revenu en force en 2001. Jamie Strauss, directeur général de UK Equity Products pour BMO Marchés des capitaux, cite les 32 milliards de livres sterling levés uniquement par l’AIM (Alternative Investment Market) de la Bourse de Londres depuis 1995.

Cinquante-quatre pour cent de cette somme a été levée au cours des deux dernières années. M. Strass s’inquiète moins de la demande actuelle que du manque d’offre.

Quelle est cette demande au juste?

Selon l’Indice du prix des marchandises de la Banque Scotia, le prix du nickel a augmenté de 950 %. « L’or se trouve aussi à quelques centaines de dollars de plus que son prix nominal; les prix de l’étain et du cuivre sont aussi très élevés », dit Jeff Kowal, directeur de la gestion du risque pour le Groupe Foster-Kowal, ScotiaMcLeod « Avec de tels prix, il n’est pas surprenant que les investisseurs soient attirés », dit David Kaiser, directeur principal de Global Resources à la bourse de Toronto. « Nos compagnies minières ont réuni des fonds pour une valeur de 12,5 milliards de dollars en 2006, comparativement à 7,9 milliards en 2005. »

vestissement est donc accru et les coûts augmentent », dit M. Melek.

Un autre défi est la taille des nouvelles découvertes. « Les compagnies grossissent et elles veulent des gisements de plus en plus gros ou plus de gisements. Si ce n’est pas possible, il s’ensuit des fusions et c’est ce que nous voyons », dit M. Strauss.

Le troisième grand défi est le manque de main-d’œuvre qualifiée; cela touche toute l’industrie minière mondiale. « C’est pourquoi nos étudiants ont au moins quatre offres d’emploi à des salaires initiaux de 75 000 $ à 100 000 $ et ils n’ont que 23 ans », dit M. Hassani.

Malgré ces difficultés, les compagnies junior prennent des projets à risques élevés et les grandes compagnies, bien que cherchant moins de risque, recherchent aussi de nouvelles occasions. Ces dernières « surveillent » les compagnies junior. M. Kowal explique leur raisonnement : « L’une des stratégies des grandes compagnies minières est d’investir des petites sommes dans des petites compagnies.

Par exemple, Teck Cominco a pris des intérêts, quelques dizaines de millions de dollars, dans une junior qui recherche des diamants. La compagnie a besoin du savoir-faire; pour un petit (pour eux) investissement, ils y ont donc accès. Si la région s’avère prolifique, ils y seront déjà et ne passeront pas à côté d’une découverte majeure. »

L’avenir Mais où va l’argent?

Des propriétés à haute teneur font l’objet de développement extensif et des gisements auparavant peu attrayants sont de nouveau intéressants. Ces nouvelles ressources comportent cependant de nouveaux défis qui leur sont propres.

Le premier défi est d’ordre politique.

«Vous avez des gouvernements qui prônent la nationalisation des ressources; ce n’est pas toujours bien défini et il est parfois difficile de savoir ce qui se passera par la suite. Le risque d’in-

Que réserve l’avenir? Les financiers considéreront-ils cette croissance de manière positive ou s’éloigneront-ils dans l’attente de la période d’effondrement qui suit toujours chaque boom minier? « Nous croyons que la croissance en Chine sera de six à huit pour cent à long terme » dit M. Melek. La croissance soutenue en Chine et l’émergence de l’Inde et d’autres pays rend très peu probable une baisse des prix des métaux à moyen ou à long terme.

Jim Fitzgerald, directeur national, proCIM Magazine n Vol. 2, Nº 3

vos droits et vos affaires duits dérivés, ScotiaMcLeod, est d’accord. « L’événement principal touchant les prix mondiaux est l’état de la demande et de la croissance, plus spécifiquement en Chine et en Inde. Il est raisonnable de penser que les prix demeureront forts et même qu’ils augmenteront. » De nombreux experts s’inquiètent toutefois du côté offre de l’équation, lequel ne croît pas aussi rapidement qu’auparavant.

Les prix élevés signifient que les réserves connues, et dont le minerai à haute teneur a déjà été exploité, seront de nouveau profitables. De tels projets sont intéressants en raison des risques moindres : les immobilisations sont en place, les approbations réglementaires ont été obtenues et le gisement a déjà été évalué.

Selon Jim Moore, PDG d’Inter-Citic, une compagnie minière exploitant en Chine, les compagnies devront trouver de nouveaux projets. « Certaines compagnies ont des exigences en ressources si importantes qu’elles doivent faire de nouvelles découvertes pour garantir leur croissance. » L’intérêt des investisseurs devait demeurer élevé tant que continuera la demande pour les métaux.

Les sites potentiels d’exploration ne sont pas tous associés à des pays politiquement instables. En plus d’importer de grandes quantités de métaux, la Chine est bien placée pour devenir un producteur majeur de minéraux.

Selon M. Moore, dont la compagnie y développe deux projets aurifères depuis 2003, la Chine est «grandement sous-explorée, surtout dans les régions occidentales. » La Chine attire de plus en plus l’intérêt des investisseurs et la tendance devrait se poursuivre.

Cet optimisme doit s’accompagner de prudence. La demande et les prix peuvent demeurer élevés mais cela ne garanti pas la stabilité. Les prix sont élevés, mais pour certains, ils sont trop élevés. « Si vous considérez les cinq dernières années, il y a eu des corrections annuelles importantes sur toutes les bourses, puis une remontée. » Mais à part ce rappel que les marchés

May 2007

n’évoluent pas en ligne droite, l’opinion de M. Strass quant au long terme rejoint celle de M. Melek : à moins d’un événement majeur imprévu, les choses devaient continuer de la même manière.

La pénurie de main-d’œuvre soulève toutefois des débats. M. Moore dit qu’il n’est pas inquiet. « Je crois que les lois de l’offre et de la demande règleront les problèmes. Dans la mesure où les marchés poursuivront leur cycle de prix élevés, les universités sortiront plus de diplômés. » Le professeur Hassani n’est pas du tout d’accord.

Selon lui, il faudra plus que des postes et des salaires élevés pour régler la pénurie de main-d’œuvre. « Lorsque nous demandons à nos étudiants de première année pourquoi ils ont choisi les mines, ils nous répondent qu’un professeur est venu leur en parler. » Cette année, l’Université McGill a passé des annonces à la radio (payées par des contributions des compagnies minières) pour promouvoir son programme de génie minier. Les résultats ont été ressentis presque immédiatement; les inscriptions ont augmenté de 25 % par rapport à l’an dernier.

La dernière préoccupation majeure concerne la « nationalisation des ressources », tel que mentionné plus haut. Les pays en voie de développement, où se trouvent plusieurs nouveaux gisements, tenteront de réclamer une plus grande part des produits de l’exploitation faite chez eux. Un exemple extrême d’une telle situation est la saisie par le Venezuela des quatre derniers projets pétroliers privés du pays.

Les enjeux ne sont pas nécessairement assez critiques pour faire subsister un doute quant à la faisabilité financière d’un projet. Les coûts croissants de l’énergie, le manque d’infrastructure et les préoccupations environnementales ne représentent que quelques exemples d’embûches qui peuvent faire échouer un développement potentiellement profitable. Selon M. Fitzgerald, chaque demande de client potentiel est révisée par une banque au cas par cas, selon le mérite du client. « Les aspects les plus importants sont un bon plan financier, des avoirs solides, des gestionnaires compétents et la capacité de démontrer la continuité des entrées de fonds année après année malgré l’alternance des périodes de croissance et des récessions. » n

37

Mining in Manitoba: the beginning

by Andrea Nichiporuk The mining industry is alive and thriving in Manitoba. It employs close to 4,000 people, as well as an additional 11,000 to 13,000 indirectly. The second largest primary resource industry in the province is mining, and its average annual production is valued at around $1 billion. Today’s facts and figures are easy to come by, but what do we really know about the origin of mining in Manitoba?

When mining actually began in Manitoba is hard to say. A safe guess is anywhere between hundreds and thousands of years ago. Not the small range you were expecting? The first to mine in the province were aboriginals, who quarried ochre/hematite and used it in body and rock painting for tribal rituals.

Jumping ahead to the early 1800s, salt was the first mineral to be commercially developed in the province. An important commodity in the fur trade, salt was extracted from brine springs on the west side of lakes Manitoba and Winnepegosis. Hudson’s Bay Company freemen began manufacturing salt in large iron kettles. And, up until 1874, over 1,000 bushels of salt were prepared annually to supply the posts and settlements on the Assiniboine, Red, and Saskatchewan rivers.

In 1830, Tyndall stone was the material of choice for workers building the bastion of Lower Fort Garry. However, it was only 55 years later that limestone was being commercially produced.

Gypsum was discovered in the Interlake area during the 1850s; the first plant opened around the end of the century.

The second half of the 19th century was significant for the mining industry in Manitoba. The Geological Survey of Canada grew increasingly interested in 38

the province’s Precambrian areas in the early 1870s.

Reconnaissance work was carried out by Bell, Cochrane, and other geologists, but it was only in the mid-1880s that Dawson, Tyrrell, and others carried out detailed investigations in the West.

Galena limestone quarry at East Selkirk. Natural Resources Canada image In 1870, the produced with permission of Natural Resources Canada. Her Majesty the province of Queen in Right of Canada.

Manitoba was created. That same year, Section 26 of the Canadian Pacific Railway to British The Manitoba Act stated that the federal Columbia. In 1887, a Manitoba Oil government would carry out and pay Company drill reached 743 feet while for a geological survey of the province. searching for petroleum on the Also, a provision in the Bill of Rights Vermillion River. A year later, the called for the appointment of a International Mining and Smelting Commissioner of Engineers who would Company further explored the Black explore and report on the newly created Island deposit and mined hematite. province’s mineral wealth within five And, in 1889, gypsum was discovered years of joining the Confederation. On northwest of Lake St. Martin. A second the flipside, joining Canada also meant producer was later discovered in that all mines, minerals, land, and royal- Amaranth. ties now belonged to the federal governApproaching the end of the century, ment. It would take Manitoba 60 years prospectors began arriving in the West to regain control of these areas.

Hawk Lake area in the southeast, as The 1880s marked a busy time for well as in the north of Manitoba. the mining industry in Manitoba. An However, interest in prospecting was iron, hematite, and limestone deposit on diminishing. In fact, the discovery of Black Island was the first to draw signifi- gold in the Klondike in 1896 led to a cant attention, and numerous compa- mass exodus of people to the nies were formed to exploit the Lake of Northwest. But, for a core group of the Woods area. The first Dominion faithful Manitobans, their belief in the Mining Regulations were created in province’s mineral resources could not 1884, a year prior to the completion of be swayed. n CIM Magazine n Vol. 2, Nº 3

HR outlook Reaching out to the future

by Paul Hébert, executive director, Mining Industry Human Resources Council

S

ome challenges call for longterm solutions. Most of Sheila Stenzel and Laura Clinton’s work is founded on that very premise.

They are among those at the forefront of efforts that will yield very important results for the Canadian minerals and metals industry – but no one will see those results for many, many years.

Sheila is the director of the Mineral Resources Education Program of BC (MREPBC), and Laura is the project coordinator for the Prospectors and Developers Association of Canada Mining Matters. Their work is the embodiment of industry’s investment in its own future. Sheila and Laura provide the resources that teachers need to inform and educate young people about the important role that our industry plays in modern society.

Children begin to formulate opinions about careers at a very early age – probably even before they begin school.

Those preconceptions are then reinforced, supplemented, or debunked once they begin along their academic journey. That’s where the MREPBC comes in.

May 2007

Founded in 1991, the MREPBC was conceived of and designed by Maureen Lipkewich, initially working with the Mining Association of British Columbia, and a group of classroom teachers who wanted to provide current and useable classroom materials that supported curricula related to minerals and mining.

Over 15 years later, the program has grown to include five comprehensive resource kits for students in kindergarten to grade 12, four educational videos, an educational website, and field trips for teachers. The work has also resulted in the involvement of students and teachers at many industry conferences. The program has assisted more than 6,800 teachers who have taught minerals, mining, and geosciences units in their classrooms to over 580,000 students.

The Mineral Resources Education Program of BC was so successful that in 1994, the Prospectors and Developers Association of Canada decided to create a similar program for the Ontario curriculum, called Mining Matters. This program initially targeted grade seven students, in both English and French.

Initially, 600 kits were distributed to teachers and school boards in Toronto and Ottawa. In order to receive the kits, the teachers had to agree to attend an inservice workshop to learn how to use the materials, and commit to use the unit for one year.

Since Mining Matters began, an estimated 400,000 teachers and students have learned about the importance of rocks, metals, minerals, mining, and Canada’s geology. The program now includes materials for grade four and seven students, and the recently launched “Discovering Diamonds,” for grade 12 students, outreach to First Nations communities, and field trip subsidies for schools.

Both the Mining Matters and MREPBC programs are funded

through contributions made by corporate and individual donors, and at fundraisers such as golf tournaments and auctions.

In March 2007, the Mining Industry Human Resources Council received $2.5 million of federal government funding for the Mining Industry Attraction, Recruitment and Retention Strategy, or MARS. One important objective of the multi-pronged MARS project is to raise awareness and understanding among Canadian youth about the mining industry and the wide variety of careers it provides.

Working in conjunction with successful education programs such as MREPBC and Mining Matters, MARS will help deliver earth sciences and mining-related curricula to students in other provinces across the country.

MiHR’s existing mining career website, www.acareerinmining.ca, will also be enhanced to provide a web-based portal on mining careers, educational resources, and training tools. The MiHR “Explore for More” career information package will continue to be distributed at career fairs and educational institutions across the country.

If we want young people to choose a career in mining, those young people first need to be aware that our industry exists, and they need to understand the important role that mining plays in our society. Before making any decision, people want to be informed. MREPBC, Mining Matters, and now MARS, are providing young people with the information they need to choose a rewarding and long-lasting career in Canada’s modern mining industry.

For more information about the MREPBC program, please contact Sheila Stenzel, at Stenzel@bcminerals.ca. For information about Mining Matters, please contact Laura Clinton, at pdacmm@pdac.ca. For information on the MARS project, contact Paul Hébert at phebert@mihr.ca. n 39

mac economic commentary China as an economic superpower— implications for the Canadian mining industry

by Paul Stothart, vice president, economic affairs, Mining Association of Canada

Impact 1 – Driver of world mineral prices

There is no shortage of printer’s ink being spilled in recent years writing about the emergence of the Chinese economy. This is, without question, one of the top global news stories of the past decade. After 15 years of double-digit annual growth, the size of the Chinese economy has now reached a state where continued double-digit growth has very meaningful implications for many industries and countries. Where 10 per cent growth in 1990 may not have had much impact on a global scale, similar growth in 2007 on a much larger economic base has reverberations throughout the global economy.

The emergence of China as a world economic power, and its continued growth, will have direct implications for the Canadian mining industry in three important areas.

40

First, China remains the prime driver of world mineral prices. China is building a domestic infrastructure for 1.3 billion people and is concurrently expanding its role as the world’s manufacturing centre for many product areas. The country simply cannot meet its own needs for copper, zinc, nickel, and other core ingredients of a transportation, power, and communications infrastructure.

In response to this growth, China now imports $100 billion worth of base metals annually. It presently buys around 25 per cent of the world’s base metals versus a 5 per cent share in the 1980s. As one specific example, where China accounted for 10 per cent of world zinc consumption in 1996 (onethird of Europe’s share), a decade later it accounted for 28 per cent (versus 25 per cent for Europe). The US and Japanese shares have fallen from 16 to 10 per cent and from 10 to 6 per cent, respectively, during this period.

With the emergence of India in the near future—perhaps on a scale comparable to China—and with a constrained availability of new global reserves, the supply and demand conditions are such that many forecasters feel the world’s mining industry will enjoy an extended commodity price boom. It is worth noting, for example, that while China is now the world’s largest consumer of all major metals, its metal consumption per person is still low in comparison with developed Asian economies.

Drawing on these fundamentals, metal prices have increased very strongly in recent years. During 2005, copper prices grew 50 per cent, gold 20 per cent, silver 31 per cent, and zinc 46 per cent. In 2006, these prices grew by a further 48, 30, 55, and 118 per cent, respectively, while nickel prices increased 142 per cent.

This price growth, in turn, translates into record company profits, large executive compensation packages, and multi-billion dollar mergers and acquisitions. The takeovers of Inco and Falconbridge by CVRD and Xstrata were each driven, in no small part, by views on how best to take advantage of the Chinese reality.

Impact 2 – Canadian trade and investment partner A secondary impact on the Canadian mining industry relates to the simple fact that Canada and China have an active trade and investment relationship that will likely become more significant in the future.

Most Canadian trade with China is one way—Canada’s trade deficit has risen from $1 billion in 1995 to some $15 billion a decade later. The ports, highways, and railroads of Canada are strained to capacity with containers carrying east-bound Chinese-made electronics, machinery, clothing, and toys.

Containers moving in the other direction are often empty or half-filled with resource-related products. Mining products, pulp, other forest products, wheat, fertilizer, and chemical products are noteworthy Canadian exports to China.

The Canadian mining and metals industry exported some $60 billion worth of metals and nonmetals worldwide in 2005, including around $13 billion in iron and steel, $4 billion in each of gold, copper, and nickel, and $2 billion in both uranium and iron ore. The United States is the main destination for Canadian mining products, receiving 70 per cent, although China is an important destination for mineral products such as iron and steel, nickel, copper, potash, and sulphur.

Canada supplies an estimated 17 per cent of China’s nickel requirements.

While important, it is nonetheless possible that the trade relationship will CIM Magazine n Vol. 2, Nº 3

become secondary to the investment relationship over the coming years. The Canadian mining industry has historically had a significant global investment reach. As of 2005, Canadian mining companies had $50 billion invested abroad—aimed primarily towards the United States and South America. Investment in China could increase as the country continues to modernize, particularly if downstream investment policies are liberalized.

It is also possible, if not probable, that Chinese investment in Canada’s mining industry will grow over the coming years. China presently holds US$1 trillion in foreign exchange reserves. While investment abroad was discouraged by Chinese authorities until only a few years ago, this is no longer the case—China is investing actively in Africa and is increasingly seeking opportunities in Western countries. A Chinese company has made a modest investment in a Canadian oil sands project and more investment may be on the horizon. Given the prospect of increased investment flows, the governments of Canada and China are presently negotiating a Foreign Investment Protection Agreement.

Impact 3 – Potential source of future disputes In line with its emerging position as a world economic super-power, it is likely that China will also emerge as a potential source of future global disputes, in areas such as trade, investment, and the environment.

The existence of a $200 billion trade surplus with the United States has already raised concerns in Congress and a dispute over the valuation of China’s currency raises the possibility of US countervailing duties. The US may have limited leverage on these issues, given the influence that China exerts on the value of the US dollar. However, it is worth noting that a first formal panel against China under the World Trade Organization has been struck—by the US, Europe, and Canada—challenging Chinese auto parts tariff policies.

With respect to mining, many economic observers believe China is becoming increasingly protective of its raw material supply. For example, China has a permit system for copper concentrate and an export duty applied on unwrought copper—both of these policies are aimed at protecting critically important raw material supplies for domestic use. The effect is to keep these raw material flows out of the global trading system. A similar effort is being seen in energy. Countries such as Germany and Japan are themselves reliant upon raw material supply to feed large domestic manufacturing needs and are increasingly concerned about this practice. The OECD has recently agreed to study this general issue in greater detail.

Other disputes will likely emerge in other areas, such as the environment and climate change. This theme will be the subject of a future column. n May 2007

Knowledge you can take everywhere Bulletin

Technical Papers February 2006 to January 2007

Peer-reviewed technical papers published by the Canadian Institute of Mining, Metallurgy and Petroleum

To order, contact Anne Brosseau 3400 de Maisonneuve Blvd. W. Suite 855 Montreal, Quebec H3Z 3B8 Tel 514.939.2710, ext. 1313 Email abrosseau@cim.org Fax 514.939.2714

41

engineering exchange Engineering for a safe environment

by Haidee Weldon Golder Associates, founded by Hugh Golder, first put down roots in Toronto in 1960. Since then, the company has quickly expanded, with more than 140 offices worldwide, boasting a skilled and experienced workforce 5,300 strong.

The Montreal Golder office, including their subsidiary Golder Associates Innovative Applications (GAIA), has recently expanded to take up an entire building, giving everybody a little more elbow room as they go about their busy days. The Montreal group is made up of a young, vibrant workforce that enthusiastically takes on new projects around the world as well as in their own backyard.

One of the keys to Golder’s success is its access to an international pool of talent. “We have the ability to pull in experts,” from all areas of engineering, earth and environmental sciences, and computer sciences, stated Veronique Falmagne, associate. These experts may be located either in Montreal or in Golder offices in Canada and around the world, depending on the needs of the project. Collaborations with universities and participation in research groups provide additional avenues for accessing the necessary talent.

The geo-engineering group in Montreal is busy working on a wide variety of exciting projects. In 1995, Golder Associates was retained by Barrick Gold Corporation to provide consulting services for the closure of Les Terrains Aurifères tailings facility in northern Quebec. The project required a significant amount of R&D investment on the part of Barrick. “They were very keen,” Mayana Kissiova, associate with Golder, said, “and enthusiastic on undertaking a project of this magnitude in a way that had never been done before.”

Les Terrains Aurifères, or LTA, was originally an old non-acid-generating tailings pond when Barrick added on 42

Work on the Beaufort project

their own tailings, which proved to be acid generating. Golder took on the challenge of the closure and developed the first multi-layer oxygen barrier soil cover done on such a large scale. The cover was constructed over the winter of 1996. The first layer, 50 centimetres of thick sand, keeps moisture from escaping from the overlaying layer by the capillary barrier effect. Layer two is 80 centimetres of non-acid-generating tailings, which are fine low-permeability materials with good water retention capacity.

These two layers are capped with a compacted layer of sand and gravel acting as an erosion protection layer.

Golder collaborated with École Polytechnique Professor Michel Aubertin in the design of the cover layout, and Université du Québec en Abitbi-Témiscamingue (UQAT) is responsible for continuous monitoring of the site. The multi-layer design

proved to be a success and has reduced the tailings oxidation rate by an average of 95 per cent over a period of five years. Others are now applying the same technology and using this type of rehabilitation at other sites.

In 2000, Golder was retained by Aurizon Mines Ltd. to conduct a geotechnical and geomechanical investigation of the crown pillars of near surface stopes at the Beaufor mine, Val d’Or, Quebec. The old Beaufor mine had recently been reopened but the discovery of thinner than expected crown pillars in the old area of the mine triggered a detailed investigation. The stope crown pillars were assessed and instrumented.

Risk was further mitigated by diverting a creek flowing over one of the targeted areas and by backfilling some of the old stopes. Golder conducted an inventory of aquatic species and, with government CIM Magazine n Vol. 2, Nº 3

engineering exchange approval, was able to redirect the creek away from the mine, with minimal impact on the native fish and other aquatic life. For the mine itself, bulkheads were constructed in drifts and around the mine shaft.

Innovative technologies, such as energy-absorbing barriers, were installed to further protect the shaft against potential mud flows that could be associated with failure of a crown pillar located below liquefiable soils. An advanced monitoring system was designed with extensometers and adjacent TDR cable installations throughout the mine.

The system can detect movement and/or displacement in critical zones.

For their assessment and remediation measures at the Beaufor mine, Golder was nominated for the Grands Prix du genie-conseil québecois.

Golder Montreal has been engaged with IAMGOLD’s Mine Doyon for a number of years in areas of rock mechanics and tailings management.

The mine experienced ground control difficulties in 2004 associated with rock mass degradation and rockbursting.

Golder is providing ongoing geomechanics expertise and assistance with ground support design and mining strategy in order to help the mine continue to operate safely during the late stages of extraction in some critical areas.

Golder was involved with Hydro Québec’s Eastmain 1 project in James Bay, Quebec. Golder engineering personnel with experience in dyke construction assisted the Cree Construction and Development Company Ltd. (CCDC) on the project.

Nine dykes were constructed by CCDC, with a cumulative length of 2.6 kilometres, as part of a larger network of dykes to create a 600 square kilometre artificial lake. The main challenge of the project was building the dams on the bedrock base. “The rock was faulted and fissured, which required cleaning and grouting the base to reduce permeability,” said Michel Lemieux, an associate with Golder.

These operations are similar to those May 2007

used for tailings ponds, so the same basic technology can be applied.

Golder Montreal is made up of three main groups: geo-engineering, which accounts for the bulk of mining

Their motto is

implementation. People from the three areas coalesce and together are capable of taking on mining projects from the feasibility stage straight through to closure and reclamation. “Utilizing tools such as sophisticated numerical models and 3D modelling tools like GOCAD, coupled with solid engineering experience, allows Golder to be one of the top engineering consulting firms in mining and industry around the world,” Falmagne stated.

Their motto is “Glocal.” Think globally, act locally. No matter where Golder lands, they hire locally and carry out their work with utmost respect of the people and community. n

“Glocal.”

Think globally, act locally. engineering, geomechanics, and geotechnical engineering; geoscience, with expertise in contaminated sites, clean up, and groundwater; and the environmental management team, who takes care of EIA, audits, and ISO 14000

Dyke construction with CCDC 43

standards Making sense of consents

by Greg Gosson, technical director, geology and geostatistics, AMEC Americas Ltd., and Deborah McCombe, chief mining consultant, Ontario Securities Commission

Under Canadian Securities law, qualified persons (QPs) are called upon to provide their written consent to the scientific and technical content in disclosure documents being filed by public mining and exploration companies. Most often the consent is provided by the qualified persons that prepared a technical report under NI 43101 Standards of Disclosure for Mineral Projects. In this article, we explain the different triggers for consents under securities law, the timing for filing, and the required content of the consent. We also provide our views on the purpose of requiring mining companies to obtain a QP’s consent to their disclosure, and the importance of written consents under the civil liability provisions of securities law.

When a technical report is filed with the Canadian Securities Commissions, the written consent of each qualified person responsible for preparing the technical report must be filed as required by section 8.3 of NI 43-101. It is the company’s responsibility to obtain the consent from each QP and file it with each of the Canadian Securities Commissions. The NI 43101 consent requires the QP to: • consent to the public filing (on SEDAR) of their technical report; • consent to extracts from, or a summary of, their technical report in a 44

specific disclosure document filed by the company; • confirm that the QP has read that particular document; and • confirm that the document fairly and accurately represents the information in the technical report that supports the disclosure.

A consent filed with a technical report supporting a news release disclosing, for example, a new mineral resource estimate, should reference the news release that triggered the technical report. The QP must consent to the scientific and technical information in the news release that is extracted or summarized from their technical report. The QP must confirm that they read the news release and that it fairly and accurately represents the information in their technical report. To avoid problems with obtaining the QP’s consent, the company should involve the QP in the drafting of the content of the news release that is based on their technical report.

In the case of a prospectus, it is the preliminary prospectus that triggers the technical report and the QP must consent to the scientific and technical information in the preliminary prospectus that is supported by their technical report. CSA Staff Notice 43306 clarified that NI 43-101 requires the technical report, certificates of QPs,

and the consents of the QPs to be filed on SEDAR at the same time as the preliminary prospectus.

In the case of the filing of a final prospectus, a different consent is required from the QPs. Both the Long Form and Short Form prospectus rules require consents of experts with the filing of the final prospectus. The required statements from the experts are different from the NI 43-101 consents. For the final prospectus, the QPs must: • consent to being named in the prospectus; • state the name and date of their report; • consent to the use of their report in the prospectus; • confirm that they have read the prospectus; and • confirm that they have no reason to believe that there are any misrepresentations in the information in the prospectus that are derived from their technical report.

QPs should be careful when confirming the last bullet. A misrepresentation can be the omission of a material fact that must be stated to make the information not misleading. QPs should perform their due diligence to ensure there has been no material change on the property since they completed their technical report. They may be correct in confirming in the NI 43-101 consent that the prospectus fairly and accurately represents the information in the technical report.

However, if there has been significant new work on the property since they completed their technical report, the omission of the new scientific and technical information, in itself, could be a misrepresentation.

Canadian securities law encourages officers and directors of public companies to have experts prepare information for public disclosure. It does this CIM Magazine n Vol. 2, Nº 3

standards by providing a defence to management and the company against civil liability if there is a misrepresentation in the disclosure based on the report or opinion of the expert. However, one of the requirements for the defence to be available is that the expert’s written consent to the disclosure was obtained.

QPs providing written consents should be aware that Canadian securities law provides a statutory right of action to investors if there has been a misrepresentation in certain disclosure documents and they have suffered damages. Under certain circumstances, investors have a right of action for damages against an expert who has provided their written consent to the content of disclosure documents.

There are checks and balances in the civil liability regime, and securities law provides defences against civil liability

for the expert as well. For example, the expert has a defence if they conducted a reasonable investigation to provide reasonable grounds for a belief that there had been no misrepresentation in their report or opinion.

There are also written consent requirements for Canadian mining companies that file forms with the United State Securities and Exchange Commission (SEC). For example, the SEC may require the written consent of engineering companies and QPs that are referenced in a Form 40F (annual report by Canadian incorporated companies). The consent requirement is under General Instruction D (9) to Form 40F, which requires the QP and their engineering firm to consent to being named, and to the use of their report in the registration statement.

Finally, the TSX Venture Exchange requires written confirmation from mining companies that the QP responsible for the information read and approved the scientific and technical disclosure (Section 5.2 of Appendix 3F – Mining Standards Guidelines).

Securities regulators have recognized the importance of having QPs review and consent to scientific and technical disclosure before it is disseminated to the public. In this way, QPs will apply their professional standards and ethical responsibilities when determining whether they can consent to the disclosure by mining and exploration companies. This should improve the quality of the scientific and technical disclosure and credibility of the capital markets serving the mining industry. n

Cooperation agreement on valuation of mineral properties signed with China This past March, in Toronto, CIM, through its Special Committee on Valuation of Mineral Properties (CIMVal), signed a cooperation agreement with the Chinese Ministry of Lands and Resources through its agency, the Chinese Association of Mineral Resources Appraisers (CAMRA).

Chinese Vice Minister of The Ministry of Lands and Resources Wang Min, CIMVal Co-chairs Keith N. Spence and William E. Roscoe, together with CIM Executive Director Jean Vavrek were signatories to the agreement. Other attendees included Zhao Xian Liang, Deputy Director General, and Siguang Wang, Vice Secretary General of CAMRA. The agreement was the culmination of over two years of developing relationships with the relevant Chinese parties.

The CIMVal Canadian Standards and Guidelines for the Valuation of Mineral Properties were adopted by CIM in February 2003. The CIMVal Standards and Guidelines form part of “APPENDIX G” to Policy 5.4 of the TSX Venture Exchange (TSX-V), and are recomMay 2007

mended for use by the mining industry.

The agreement calls for CIMVal and CAMRA to cooperate in the following areas: • Standards and Guidelines for the valuation of mineral rights and properties • Methods and techniques for mineral property valuation • Exchanges, meetings, seminars, exchange of Left to right: William E. Roscoe, CIMVal Co-chair; Keith N. Spence, information, con- CIMVal Co-chair; Wang Min, Vice Minister of The Ministry of Lands and Resources, China; and Jean Vavrek, CIM Executive Director tinuing education, and workshops • Organize conferences on mineral CIMVal is among the various CIM property valuation both in China and initiatives where it continues to be a Canada leader in developing and disseminating • Exchange publications and papers mining standards and guidelines in on mineral property valuation.

Canada. n 45

student life 2007 Canadian Mining Games

by Maria Jaworski, mining engineering student, McGill, and chair, 2007 Canadian Mining Games and the pivotal mine design competiThe first night proved to be a sort of tion. McGill University hosted 150 initiation, with the GijimaAST students, the largest Mining Games Americas Inc. boat race competition participation in the competition’s 17- taking place at a local pub. After much year history. Participating universities revelry and catching up with old included the University of Alberta, friends, the late night soon turned into University of British Columbia, an early morning as the Boart Longyear Dalhousie University, Laurentian jackleg competitors travelled to the University, Université Laval, McGill Lafarge quarry in Boisbriand, Quebec.

University, École Polytechnique, The rest of the students headed to the Queen’s University, University of McGill campus for the first day of Saskatchewan, and the University of events: equipment selection, blasting (sponsored by Dyno Nobel Inc.), mysToronto.

The Opening Banquet, sponsored by tery event I (stick welding), mineral the Rio Tinto Group, played host to the separation, AutoCAD design, rock seminar competition, where a member from goes to all each team had one hour of the sponsors that made this year’s preparation and eight minGames a smashing success utes to discuss how The 17th Annual Canadian Mining employers can make the PLATINUM Games took place at McGill communities in which they operate Barrick Gold Dyno Nobel University in Montreal, Quebec, from more attractive and discuss what GijimaAst Americas Inc. employers are overlooking in the February 15 to 18, 2007. The event Golder Associates recruitment process.

Each team looked drew competitors from ten universiKinross Gold Corporation especially sharp, wearing team unities across Canada. The three-day Northgate Minerals Corportation forms of custom-made hockey jerseys, competition consisted of numerous Petro Canada – Oil Sands physical and practical events includ- matching sport coats, rugby jerseys, Suncor Energy ing materials handling, mine rescue, and the like.

Teck Cominco The Rio Tinto Group - Diavik, IOC, QIT and QMP Xstrata Zinc Canada GOLD Agnico-Eagle Boart Longyear Elk Valley Coal Goldcorp Canada J.S. Redpath Thyssen SILVER CIM Montreal Branch CIM Toronto Branch Hewitt Kiewit McGill Mining Department Met-Chem BRONZE AMQ (Association minière du Québec) Hatch & Associates Molson A student keeps his eye on the prize during the Games

Great appreciation

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CIM Magazine n Vol. 2, Nº 3

student life

Jackleg drilling event

mechanics (sponsored by Golder Associates Ltd.), and mineral identification. Any spare time was spent working on the GijimaAST Americas Inc. mine design event as participants scrambled to investigate the possibility of extending the life of an open pit gold mine. Sponsor Appreciation Night was held that evening at the Molson Brewery Banquet Hall where participants and sponsors alike were impressed with the venue, as well as the food and beverages. With one day of competition under their belts, and first-day nerves subsided, all attendees were able to enjoy the night life that Montreal has to offer.

Day two involved more hands-on events as Kiewit Construction hosted the materials handling and remote equipment handling events. Back at McGill, the surveying event was met with mixed reactions as participants had to measure one angle using a transit from the 1920s. Scattered throughout the day were the environmental, mineral economics, and ventilation events as well as the lengthy problem set. The mine rescue event was held in one of the school’s tunnels and overseen by representatives from Elk Valley Coal and Suncor Energy Inc. The two May 2007

most crowd-pleasing events took place simultaneously: mechanical design, where student had to design a functional skip and frame out of popsicle sticks; and mystery event II—padded sumo wrestling.

With the competition over, the participants returned to the host hotel with a sense of accomplishment. The mining games were over, but all were still looking forward to the evening’s final banquet and awards ceremony.

Golder Associates hosted a superb closing reception, followed by the Teck Cominco Closing Banquet & Awards

Presentation at the prestigious Omni Hotel in downtown Montreal. As the individual event winners were announced, the overall champion could not be predicted as each team won at least one event and five schools won as many as three. The intensity of this year’s competition was seen with the top three placing universities finishing within three percentage points of each other. The 2007 Canadian Mining Games Championship went to the University of Alberta, followed by repeat second place finishers Queen’s University, and Laurentian University in third place. The evening concluded with Suncor Energy Inc. and Teck Cominco announcing their commitment to be sustaining sponsors for all ten teams for the next three and five years, respectively. This gives all the universities a head start for the 2008 Games, especially next year’s host, the University of British Columbia, who are already taking pride in bringing the Games back to the West after three consecutive years in the East.

Industry support this year was phenomenal and many company representatives made the voyage to Montreal to witness the Games first-hand. Thank you to the devoted 2007 Canadian Mining Games sponsors, as well as the McGill Mining Faculty and this year’s organizers. Please visit www.mininggames.com for a complete listing of sponsors and their involvement as well as complete results. n

DID YOU SCORE GOLD? Were you a participant in the University Mining Games back in your school days?

Share your memories— let’s see how the event has evolved and shaped lives.

Contact the editor at hednie@cim.org

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eye on business The TSX and AIM—the investment landscape for Canadian exploration companies

by Gregory Ho Yuen, Fasken Martineau DuMoulin LLP, Toronto and Anca Enica, Fasken Martineau Stringer Saul LLP, London Toronto is currently the largest mining finance marketplace in the world. The statistics for the Toronto Stock Exchange (TSX) and the TSX Venture Exchange (TSX-V) over the first half of 2006 were impressive Gregory Ho Yuen with approximately 1,200 listed mining issuers and 53 per cent (US$6 billion) of the mining equity capital raised globally.

Concurrently, the Alternative Investment Market (AIM) of the London Stock Exchange (LSE) enjoyed a year of remarkable progress in 2006.

Over 2,500 companies were admitted to AIM and a significant number were non-UK companies. Liquidity on AIM increased, with market turnover in 2006 of £58 billion and average funds raised at £21.5 million.

Obtaining a listing TSX and TSX-V An application for a TSX or TSX-V listing is made by completing the prescribed form or, if in conjunction with a prospectus filing, the prospectus serves as the basis for the application. The application is reviewed and considered by the exchange, which applies criteria such as the stage of development, working capital, proposed work programs, and the experience and background of the applicant’s directors and management. Sponsorship by a broker-dealer is a significant factor considered by staff and is mandatory for all but the most senior of applicants. Technical reports, 48

prepared in accordance with National Instrument 43-101, and title opinions are required to supplement the application for listing. A management-prepared 18-month projection of sources and uses of funds must also be submitted.

An applicant must be able to satisfy certain minimum requirements relating to the number of shares held by the public and number of shareholders, typically not less than 300, each holding at least one board lot (100 shares).

tion, a mining company must also provide a Competent Person’s Report (CPR) on its assets and liabilities.

If the company’s business has not been independent and earning revenue for at least two years, AIM rules require that all related parties enter into “lockin” agreements pursuant to which they agree not to dispose of any interest in their shares of the company for one year after the company’s date of admission to AIM.

AIM On the other hand, AIM is simple to join as there are no prescribed minimum criteria. There is no requirement for a minimum trading record, number of shares in public hands or market capitalization, and no shareholders’ approval is required, apart from major acquisitions and disposals. An AIM admission normally takes around 12 to 24 weeks, and a fast-track route is also available for companies who have a listing record on other international markets such as the TSX, for at least 18 months prior to the AIM application.

A successful flotation on AIM is achieved with the help of an expert team of advisors. The team usually consists of a nominated adviser (NOMAD), solicitors, brokers, auditors, and reporting accountants. The NOMAD will act as an intermediary between the applicant and the LSE, advising and guiding the company through the application process, but also ensuring that the company is commercially viable to join the market.

AIM-listed shares must be freely transferable and, unlike the TSX and TSX-V, eligible for electronic settlement.

A set of documents will need to be prepared including an admission document, long and short form accounts, and a working capital review. In addi-

Ongoing obligations Once a company has obtained a listing on the TSX/TSX-V or AIM, it has an ongoing obligation to make accurate and timely disclosure of all material developments, whether financial, geological, or of another nature. TSX/ TSX-V-listed companies are required to notify the regulator responsible for market surveillance and provide it with a copy of any proposed announcement prior to dissemination. AIM-listed companies are required to retain a NOMAD throughout the term of their AIM listing and keep the market up-todate with all significant developments in its business.

The TSX and TSX-V have benefited from Canada’s long history in mining and finance and have become the most mature stock exchanges in the world for mining companies.

However, in the 12 years since its formation, AIM has evolved into a viable alternative, which offers access to deep capital pools in London and an investor base that seems to demonstrate a greater interest in mining projects. As AIM investors increase their appetite for mining companies and trading liquidity on AIM improves, we anticipate that AIM may quickly close the gap on its Canadian counterparts. n CIM Magazine n Vol. 2, Nº 3

innovation page Benchmarking and mining Supporting continuous improvement

by Gord Winkel, vice president, Aurora Bitumen Production, Syncrude Canada Ltd.

Across the globe, industries have completed a lot of work to define standardized key performance indicators to benchmark their relative performance.

It’s an objective way to gauge your company’s progress in key dimensions as compared to leaders in your industry.

Over time, industry sectors like refining and utilities operations have used benchmarking to promote innovation and kindle continuous improvement efforts. Benchmarking provides a perspective on what’s possible when best practices are applied to successfully boost performance.

In the past few years, surface mining has also been making inroads into benchmarking. With the support of the Surface Mining Association for Research and Technology (SMART), an organization with some 25 mining firms worldwide and four universities participating, benchmarking was seen as an opportunity to improve overall mining industry performance. Mining has continued to employ ever more advanced technologies in increasingly complex and integrated operations that define new levels of performance achievement and best practice. For each participating mining firm, benchmarking supports learning about best practice achievement in a performance dimension as a means to augment those dimensions where best-in-class performance has already been achieved.

May 2007

The SMART Benchmarking Project mine their relative standings and was initiated in 2003 with three oil explore opportunities to achieve betsands surface mining firms from north- ter performance. Provision has been ern Alberta, Canada. The vision for this made within the benchmarking frameinitial effort was to provide a means for work for firms to network with each low-cost continuous benchmarking that other in areas of interest. would expand to include all types of This benchmarking has really surface mining operations. taken off. The current database now The first step in this process was to has nine participating mines repreengage a third party consulting firm with senting operations in iron ore, gold, mine engineering and mine planning diamonds, coal, and oil sands. The experience to manage the benchmarking database now regularly reports on the data and confidentiality of information performance of approximately 300 for the participants. This firm operates haul trucks and 70 shovels across the in North America and Australia. mining industry.

To support a sustainable benchmarkThe figure shows a newly designed ing effort that would easily accommo- web-based reporting format, where date new mining participants over time, member companies can compare their an innovative approach was devised. performance data to others.

The project development is designed in As can be seen in this article, surface a staged format, so that new mining mining has now entered the benchfirms can join the already participating marking field with a sustainable process mining firms at any time. This has kept that supports continuous improvement. costs to a minimum and enabled ongo- Benchmarking data raises the bar on ing expansion of the program capability what’s possible when mining firms to ensure viability for all participants. across the world continue with their So how does the benchmarking innovative efforts. actually work? Every quarter, particiBenchmarking can also provide your pating mining firms submit monthly company with the means to leverage mining information related to produc- best practices in mining. For more tion, availability, utilization, and other information visit http://www.smarttime-based metrics as determined by mines.com/. n the participants.

This incoming Comparison of Mine Equipment data for trucks, Performance Data shovels, and supMy Location vs. Avg. My Location vs. Hi & Lo port equipment is normalized based on agreed-to common definitions for key performance parameters.

The information is summarized and reported quarterly, to enable particiShowing a metric for an equipment fleet or class over a time frame pants to deter49

the supply side What is a brand and what is branding?

A page for and about the supply side of the Canadian mining industry

by Jon Baird, managing director, CAMESE

The terms ‘brand’ and ‘branding’ are becoming more and more popular; however, I believe that they are often misused or misunderstood. These concepts are not something reserved for big companies; they are the key to the success of any organization.

Your brand is everything that you are.

It is your product, your service, and your company, all rolled into one. I would say that, given the competitive nature of the mining supply business, most Canadian firms in our sector have strong brands in that the products and services that they offer are high quality, reliable, and competitively priced. In general, they offer a satisfying experience to those that purchase them.

Branding really is part of marketing.

It is the communications program that is used to define and build the brand.

Successful brands are well defined and are understood and supported by everyone in the company. Begin by deciding how you want to be seen by your customers. Decide what your key values are. For example, these may include innovation, safety, dependability, onestop shopping, fast service, high value for money, low price, and more.

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Prioritize those values that are really strong, the ones that clearly differentiate you from your competitors. Now you have defined your brand.

To support the brand, make a list of the qualities that you, your employees, and your premises must display to customers in order to portray the image.

For example, if safety is primary, your shop had better be neat and tidy. If fast delivery is key, the phones need to be answered promptly, quotes issued immediately, and inventory properly kept. If precision is your game, think about how people dress, answer the phone, and communicate in writing.

Some people think that their unique selling proposition (USP, otherwise known as ‘value statement’ or ‘company slogan’) is their brand. While a good USP may assist in conveying the brand, it is only a part of your branding strategy. Other people place much importance on developing a corporate logo, believing that attractive art will cover over whatever other weaknesses there may be in the brand or the branding

Did you know

program. The best designer will do you no good if your service is sloppy or your product is not up to the competition.

If you have a USP or logo, ask yourself and your employees what it stands for. If they cannot relate them to some key values that your company espouses, you likely do not have much of a branding program.

Remember, your brand is built and conveyed with every action you take, with every product or service you deliver, your every communication.

While branding may be seen by some as something that major companies hire specialists to do, it should be an integral part of the life of small- and medium-sized firms that want to prosper and grow. While it is a good idea to hire specialists to help you with facets of your branding program, such as website, brochure, logo, and exhibit design, their efforts will not be optimized if the corporate brand is not developed, understood, and supported by everyone in the company, particularly top management. n

MAC s t fac

…

Canada ranks first in the world in exploration expenditures hosting 19 per cent of world spending, followed by Australia at 13 per cent and the United States at 8 per cent.

…

The Toronto Stock Exchange (TSX) lists 60 per cent of the world’s public mining companies.

…

As of the end of 2005, there were 1,192 mining companies listed in Toronto, 484 in Australia, 183 in London, 55 on the American Stock Exchange, and 50 in Japan.

CIM Magazine n Vol. 2, Nº 3

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Longhole drilling rig operating at the McCreedy West Mine

Sometimes, you just get lucky.

It’s all a matter of timing, and FNX Mining couldn’t have struck while the iron was hotter—or in this case, nickel. They have recently been exploring the long-established Sudbury Basin and, in their case, a little curiosity has come a long way.

FNX Mining (originally named Fort Knox Gold Resources) began in 1983 as a syndicate. In 1997, Terry MacGibbon retired from some 30 years as geologist and director of international exploration at Inco, and was appointed president and CEO of Fort Knox Gold. His strategy was to find non-core assets owned by major companies because he thought he’d get the most value out of them—turns out he was right. In 2001, Inco had no plans to bring any new deposits into Sudbury, so they announced that they were auctioning off five of their current Sudbury properties (Levack, McCreedy West, Podolsky, Kirkwood, and Victoria—all former producing properties) because of low nickel prices at the time. Inco would hand over the properties to someone else who would in turn explore, develop, and bring them into production, providing Inco with additional ore for their mill. That someone turned out to be Terry MacGibbon, along with FNX Mining, and they’ve been reaping the rewards since. Two of their five properties are already in production, with another to produce ore next year.

Podolsky mine, on the other hand, was a different situation entirely. Named after Terry Podolsky, who was vice president of exploration for Inco, the property was an open pit with absolutely no underground infrastructure. When FNX discovered the 2000 Deposit in 2002, which is a mix between a footwall and an offset deposit, it was nothing but an array of surface roads, leaving the workers to start from scratch. Not wanting to impose a new footprint on top of the previous open pit mine, FNX moved to the other side of the hill in a completely different drainage area and sunk their own vertical commercial shaft to about 2,700 feet, which was completed in August of last year. The work didn’t stop there—they’ve also had to install skips and cages, establish underground ore-handling systems, crosscut across on two levels, put up ventilation systems in the second escape way, and ore passes between the levels. After all the hard work, Podolsky is expected to produce some pre-production material by the last quarter of this year, eventually reaching about 1,250 tons a day later in 2008.

The Podolsky mine is being developed on the watershed that flows into the Wahnipitae Lake (one of the main sources of water for the Sudbury area). It is occupied by the Wahnipitae First Nations. In 2005, FNX signed a Memorandum of Understanding

MEET THE PROPERTIES The McCreedy West property, which began production in 2003, is now producing about 2,000 tons a day— 1,000 tons of nickel ore, and another 1,000 from the PM (footwall) deposit. Luckily, much of the infrastructure, was already in place when FNX arrived on the scene— hundreds of millions of dollars worth of infrastructure actually. In McCreedy West’s case, all that was needed was a little refurbishing of the mine access ramp and infrastructure, re-establishing surface facilities, and building a new ramp for the newly discovered (by FNX) Inter Main Deposit.

The Levack mine property, which is adjacent to the McCreedy West mine, was up and running from 1920 until 1999 when it was closed down. Levack began producing again in December of 2006 and now has what Inco used to call the “Levack Complex” in production again. Over 74 million tons of nickel-bearing ore was mined from the Levack and McCreedy West mines before FNX acquired them. The Levack mine property is a contact (nickel and copper) deposit, and FNX plans to steadily increase production this year up to about 1,500 tons a day, with an expected 15-year mine life. In 2005, they made a discovery of a footwall deposit below the mine. They are presently accessing it from underground from both Xstrata Nickel’s Craig mine and from their Levack mine. The high-grade Levack footwall deposit is located midway between the two; it still remains open and they continue to drill it off. As with the McCreedy West mine, there was a lot of infrastructure already in place at the Levack mine, in this case leaving only the No. 2 shaft hoisting plant, ore handling facilities, and six mine levels to be reconditioned to 2,900 feet, and new offices to be built on surface.

GIS technician surveying the ore bin at Levack Mine

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CIM Magazine n Vol. 2, Nº 3

with the Wahnipitae First Nation, one of the conditions being that an Impact and Benefits Agreement is prepared for the Podolsky mine. It outlines what opportunities and cooperations between the mine and First Nations people (including things like identifying contracts and employment opportunities) would be available through the mine for the Wahnipitae people.

THE FNX MODEL Home to all these properties, the Sudbury Basin wasn’t always pulsing with mining activity. It had been active for over 100 years, but before FNX came along, the basin wasn’t seeing much new development; Inco (CVRD Inco) and Falconbridge (Xstrata Nickel) operations were well-established and the companies had other project priorities outside of Sudbury, and the area seemed to be facing a decline in mineral wealth. When FNX started out, they had one employee (Terry MacGibbon) and $300,000 in the bank. From this, they built their own exploration team. Drilling started on April 1, 2002, and by June of the same year, they had made their first discovery and began production by the following spring.

The main advantage for FNX is that all properties were former producing mines. Extensive infrastructure was already in place (both surface and underground), including ramps, shafts, and mine levels, eagerly awaiting a fresh start. Normally, mining companies go through a certain process before seeing progress. They go out and explore, hope to discover something, and if they’re lucky enough to hit pay dirt, they’ll take years to drill it off, study it, raise the money for it, and then start the construction. They’ll construct a mine and a mill complex, providing all the necessary

May 2007

In 2001, Inco had no plans to bring any new deposits into Sudbury, so they announced that they were auctioning off five of their current Sudbury properties… because of low nickel prices at the time. licences are in place. Greenfields mine operations are massive undertakings.

The FNX model is different—they recycle old mines. And in this day and age where recycling’s all the rage, they couldn’t have jumped on the bandwagon sooner. The best place to explore for new deposits is right beside an existing one—or even underneath it. The footprint is already there. They own the mineral rights, and the surface rights belong to CVRD Inco. FNX is only responsible for their own footprint, which is designed to be a walk-away solution.

The FNX model is simple and efficient; they explore deposits that CVRD Inco already had in the area or find new deposits and extensions, drill them off, develop them from the existing underground and surface workings, mine them, and then ship the ore off to CVRD Inco for milling, smelting, and refining. A little teamwork goes a long way, and this is a great partnership. FNX explores, finds, and mines the ores; CVRD Inco processes it to extract the metal and then sells it in the marketplace. This method lowers the exploration risk because they’re exploring in areas that are known-producing properties.

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“There are things to consider as a good neighbour… we all drink the same water and we all breathe the same air.”

— T. Makuch

FNX originally partnered with Dynatec to mine the deposits, although they now have their own mining team, further lowering their risks and costs. There are also no long-term environmental liabilities because all the waste material resides with CVRD Inco. All in all, it is a low-risk approach, with shortened time and capital expenditures needed to bring the mines into production, while avoiding long-term environmental liabilities. And no, there is no catch.

RESPONSIBLE MINING With all their progress, you’d think FNX would have let their success go to their heads, but the mining company has stayed true to their Sudbury community. As COO for FNX Tony Makuch puts it, “there are things to consider as a good neighbour… we all drink the same water and we all breathe the same air.” Once a year a community meeting is held where people are free to voice any concerns, and FNX shares their plans for the coming year.

Being a very mine-oriented area, there hasn’t been any major resistance to a new company setting up shop in Sudbury. The main

Twin boom jumbo drilling nickel ore at McCreedy West Mine

issues involved noise and dust, both of which have been addressed.

There are restricted crushing hours agreed to by both FNX and the community in Levack, crushing equipment has been moved indoors to insulated buildings, and workers are careful to avoid loud machinery early on Saturday mornings. FNX has also developed a dust collection system, and they make sure that no powder delivery trucks are running during school hours. They support local charities in the community and support the people that work for them. FNX is otherwise just occupying the existing footprint.

With so much invested in the area, you can bet that FNX is committed to a strong environmental performance, as is detailed in the closure plans prepared for each property.

An example can be found at the Podolsky mine site, from which water is released into a system that drains into drinking water. Rather than just meeting discharge requirements set by the Ministry of the Environment, Podolsky releases water that meets Ontario’s drinking water quality standards. They do this using a specially designed water treatment plant, constructed by FNX. Safety is a primary focus of any good mining company.

Everybody wants to go home after work, and the FNX team in Sudbury has proven that they are firm believers in mining safety. The FNX exploration team just received the first PDAC Exploration 56

CIM Magazine n Vol. 2, Nº 3

Safety Award at the PDAC (Prospectors and Developers Association of Canada) conference this winter for having approximately 350,000 hours without a lost workday accident. FNX revolves around the ideal that the success of a company is based on the people who work there. No matter how rich a deposit, the workers are the driving force behind FNX’s progress.

RICH DEPOSITS WITH RICH HISTORY The basin also has an interesting little background story. Here’s a lesson in history: the basin itself is actually a meteorite impact crater; it hit about 1.85 billion years ago and vapourized a hole in the ground (the rock that was there vapourized as well because of the intense heat). The impact shattered everything down to the earth’s core and magma flowed to the opening, coating the inside of the basin (including the metals that are now mined). The metals, being heavier, settled down to the bottom as the magma was cooling.

Originally, they were rich in copper, nickel, platinum, palladium, gold, and cobalt. Over time, the copper, some of the nickel, and all of the platinum, palladium, and gold became mobile and moved down into the sponge rock (Sudbury breccia), creating what is called a footwall type of deposit. No one knew at the time, but the footwall deposits were very high grade and appear to lie behind the main nickel-rich deposits of the Sudbury Basin.

There are only three known types of deposits in Sudbury, two of which have been known for over 100 years. The first type, contact deposits, are found at the bottom of the basin. They’ve been mined for about 120 years. These are rich in nickel, with minor amounts of copper and cobalt. The second type, offset deposits, are rich in copper, nickel, platinum, paladium, and gold. Offset dykes are a distinct type of dykes that radiate outward from the main basin. The third type of deposit is known as a footwall, whose development is mentioned above. This type of deposit has only been known to man for about 25 years.

FNX believes that, potentially, behind every nickel mine in Sudbury, they can now go back and look for footwall deposits. Footwalls are very rich in copper, contain a significant amount of nickel, and are very high in platinum, palladium, and gold. These deposits were first brought into production in Sudbury around 1988. The cash operating margin for a footwall deposit is about $1,000 per ton of ore—an incredible asset for any mining company. The deposit size is usually between six to eight million tons, which translates to about $6 to $8 billion in operating margins—a decent profit for any lucky miner who happens to find one.

TSX : FNX

Measures of Our Success..... .....Profits, Growth and Successful Exploration Profits (for the full year 2006) R R R R

Net earnings of $68.7 million or $0.82/share Cash flows of $81.8 million and EBITDA of $97.1 million Average cash cost per lb of nickel sold - US$0.77 Average operating margin per ton of ore - $167

Growth R R R R

Levack Mine startup announced in Q4-2006 Podolsky Mine on schedule for Q4-2007 startup Initiated access to Levack Footwall Deposit By 2010, nickel production forecast to triple, copper production increase tenfold and PGE metals production grow by a factor of six

Successful Exploration R Expended more than $80 million on exploration from 2002-2006 R Announced the discovery of the high grade Levack Footwall Deposit in February 2005 R Increased our Sudbury area land position eightfold through the acquisition of Aurora Platinum R Discovered Main Depths Deposit at Levack Mine in early 2007

STRENGTH IN NUMBERS Since FNX’s arrival, Sudbury has been buzzing with business.

Obviously, there’s been an increase in employment opportunities.

The company has approximately 704 people as direct employees, plus 22 additional contractors working on site, and for every one person working, another three indirect jobs are created. FNX’s total payroll is about $60 million a year. Their total annual expenditures weigh in at $230 million, half of which is labour-related and goes towards workers, the other half towards supplies, sourced mostly in Sudbury. From 2002 to the end of 2006, they spent over $80 million in exploration, and drilled over 1.5 million feet of core in the Sudbury Basin.

Currently, FNX Mining is the third major operating company in the Sudbury Basin, and the only Canadian-owned one. Sudbury is one of the largest base metal mining camps in the world and has a total mining value of about $2 billion a year. Not bad—for a crater. n May 2007

FNX Mining Company Inc. 55 University Ave., Ste. 700, Toronto, Ont, Canada M5J 2H7 Tel: (416) 628-5929 Fax: (416) 360-0550 E-mail: info@fnxmining.com Website: www.fnxmining.com

Terry MacGibbon President and CEO

David Constable Vice President Investor Relations and Corporate Secretary

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cim news CIM welcomes new members Antonioli, Chris, Alberta Bachelder, Clinton, Alberta Bailey, Kirk, Alberta Ballard, Paul, Ontario Bamsey, Nathan, Ontario Banks, Murray, Alberta Beaton, Danny, Alberta Bell, Maxime, Québec Bell, Trent, Saskatchewan Bergey, Keith, Alberta Bertoli, Christine, Ontario Bertrand, Marc, Québec Blake, Scott, Nova Scotia Bouliane, Nicolas, Alberta Bray, Neil, Alberta Byrne, Greg, Alberta Cairns, Brian, Saskatchewan Campellone, Stephan, Québec Carey, Robert, Saskatchewan Chausse, Robert, Ontario Chisholm, Colin, Nova Scotia Clark, Benjamin, USA Clelland, Josh, Ontario Courtorielle, Leni, Alberta Culleton, Michael, Alberta Deng, Xiaohui, Alberta Doll, Michael, Alberta Donnelly, Nichole, Saskatchewan Doucette, Neil, Alberta Doucette, Tim, Alberta Duhaime, Mario, Québec Duyzer, Ben, British Columbia Erixon, Trevor, Alberta Fauquier, Robin, Alberta Flaherty, Ken, Alberta Fuhr, Greg, Alberta

Furzer, Jeremy, Alberta Goodfellow, Ryan, Québec Gould, Daniel, Nova Scotia Granson, Vince, Alberta Hall, Leanne, Ontario Hansen, Erik, USA Hannah, Tedford W., Alberta Harder, Lee, Alberta Harrington, Charles, Nova Scotia Hayman, Chris, Alberta Henke, Leonard, Alberta Hudson, Brian, Alberta Hughes, Elizabeth, Alberta Humphrey, Sebastian, Québec Huse, Gene, Alberta Hutson, Rick, Ontario Hynes, Lana, Ontario Ivanov, Rosen, Québec Jalil, Muhanad (Ned) Abdel, Ontario Jeffrey, Dean, Alberta Karlsson, Stefan, USA Khan, Muhammad S., Ontario Klingbeil, George, Ontario Klironomos, Theodore C., Québec Lane, Greg, Australia Laplante, Marc, Alberta Lavallée, Chris, British Columbia Linden, Christine, USA Lizee, Maurice, Alberta MacDonald, Wayne, Saskatchewan Madsen, Erik, Northwest Territories Mady, Bob, Alberta Mallen, Richard, Alberta Mann, Ryan, Nova Scotia Mark, Gordon, Alberta Mattos, Rodrigo, Ontario

Obituaries CIM expresses its sincere condolences to the families and friends of the following members: Robert William Bruce joined CIM in 1966 and became a life member in 1990.

He passed away on November 6, 2006.

James Sutherland Drake first joined CIM in 1974. He passed away on October 22, 2006.

Wyatt Hegler became a member of CIM in 1937, and in 1976, he attained life member status. He passed away on February 2, 2007.

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McClure, Robert, USA McGaw, Devon, Alberta McJunkin, Dennis, British Columbia McManaman, Terry, Alberta McNeil, Stanley, Alberta Mehta, Rajiv, Québec Milstead, David, Ontario Mitchell, Lynda, Alberta Mohr, Patricia, Ontario Morrison, Daniel, Ontario Mueller, Kevin, Alberta Murray, Brett, Ontario O’Keefe, Christian, USA Parent, Ron, British Columbia Parodi, Renzo, Ontario Patel, Anish M, Québec Penswick, David, Ontario Powell, Grant, Saskatchewan Pratt, Gerald, Alberta Rennick, Paul M., New Brunswick Richardson, David, Alberta Ridley, Rodney, Alberta Sammut, John, United Kingdom Sandhu, Parminder, British Columbia Scherbiuski, Ed, Alberta Schmale, Dave, British Columbia Schwarz, Richard, Ontario Slater, Ian P., British Columbia Smith, James R., Alberta Smith, Kevin, Alberta Steedsman, Dave, Alberta Steen, Todd, Ontario Stoklossa, Martin, Alberta Teymouri, Shervin, British Columbia Triginer, Keith, Alberta Trombley, Brian, Saskatchewan Walker, David, PEI Walliser, Greg, Saskatchewan Wallster, Ashley, Saskatchewan Wang, Qian, Ontario Watkins, Craig, Ontario Welyhorsky, Rick, Ontario Wenaus, Carter, Saskatchewan Yarmuch, Matthew, Alberta Yeung, Steven, Ontario Yu, Tao (Tony), Ontario

Corporate Members Boulons et Forge Industriels

Emgold Mining Corporation Garier Richwood CIM Magazine n Vol. 2, Nº 3

cim news Canadian Mineral Processors Conference wrap-up The Canadian Mineral Processors 39th Annual Operators’ Conference was held in Ottawa, January 23 to 25, 2007.

Chairman Colin Hardie welcomed 416 delegates from 13 countries, another record attendance.

The technical program, organized

by John Folinsbee, featured 36 presentations, including CIM Distinguished Lecturer and this year’s plenary lecturer Paul Hébert, executive director, Mining Industry Human Resources Council, who spoke on “Prospecting the Future: Meeting Human Resources Challenges in the Canadian Minerals and Metals Industry.”

The rest of the technical program was separated into six main sections.

Under New Projects and Operating Improvements, papers on the Voisey’s Bay mill, grinding mill design for the Tenke Project, the Paracatu gold mine, ore characterization of the Aqqaluk deposit at Red Dog, and the improvement of circuit performance at BHPBilliton’s Minera Escondida were shared.

The next section, Comminution, covered grinding circuit modelling and design, SAG mill operation at Cortez, matching motor to mill torque, interactions between slurry density and grinding media size, replacement of diatomaceous earth filter aid with alpha-cellulose at the Laronde Refinery, and the Turbo Pulp Lifter (TPLTM).

The Precious Metals section hosted papers on reduction of free gold losses at the Kemess mine, lead nitrate control in cyanidation, effect of operating variables in Knelson concentrators, Kelsey centrifugal jig, Gekko’s gold ore treatment plants, and the gravity recoverable gold test. Next, in the Process Applications I section, underground milling of uranium ores, infrared recognition of high sulphide and carbonaceous rocks after microwave heating, iron control in mineral processing, frother analysis, development of new May 2007

frothers, the Derrick Stack Sizer™, and application of passive sonar was covered.

The Process Modelling and Mineralogy section included papers on validation of high-fidelity simulation wear, the use of computational fluid dynamics and discrete element flotation circuit design for Adanac Moly Corp., mineralogical evaluation of AuSb-As mineralization from the AD-MW zones, Clarence Stream Property, New Brunswick, and principal components analysis of ToF-SIMS data and MLA. The final section, Process Applications II, offered papers on the El Mochito mine, developments and new applications for biogenic sulphide reagent in hydrometallurgy and mineral processing, analytical surface chemistry, and improvement of mass and value balance data from the statistical benchmark model.

As is tradition at the CMP Operators’ Conference, the 7th East/West Hockey Challenge was held, with the Kilborn Cup going to the East.

On the final evening, the Annual Reception and Awards Banquet celebrated the accomplishments of a number of excelling professionals in mineral processing, including the CMP Mineral Processor of the Year Award going to Ron Colquhoun, vice presi-

dent technical services, Centerra Gold Inc. The CMP would like to thank the following sponsors that helped make the conference a success: Barrick Gold Canadian Process Technologies Inc. CANMET (NRCan) CIBA Specialty Chemicals Canada Inc. CVRD Inco Cytec FFE Minerals G&T Metallurgical Services Ltd. GE Water Technologies GL & V Dorr-Oliver Eimco Heath & Sherwood (1964) Ltd. Lochhead Haggerty Eng. & Manufacturing Kinross Gold Corporation Magotteaux Canada Metso Minerals Minerals Engineering International Molycop Multotec Canada Norcast Outokumpu Technology Quadra SGS Shell Canada SNF Canada Ltd. Starkey & Associates Univar Canada Westin Hotel

A look back in time 35 YEARS AGO… • The Petroleum Society of CIM held their 23rd Annual Technical Meeting.

• Gardner-Denver Canada was looking to reward a few students with $1,000 scholarships.

• Seeding programs were underway at some of Placer Development Ltd.’s mines, in areas no longer in use.

• A charcoal sample taken from primitive mine workings in Swaziland carbon-dated at 41,250 BC, making it the earliest ever obtained for an actual mine.

The above was taken from the May 1972 issue of CIM Bulletin.

59

CIM Conference and Exhibition Congrès et Salon commercial de l’ICM

2008

Edmonton, Alberta May 4 to 7, 2008 — du 4 au 7 mai

excellence in mining, covering the major focuses today to build best practices and make the leap in performance improvement.

Technical program of

Un programme technique axé

l’excellence en exploitation minière, couvrant les principaux enjeux d’aujourd’hui afin de développer les meilleures pratiques et d’améliorer le rendement. sur

CIM Exhibition 2008: Canada’s premier mining event!

Booth space is going fast, so book your spot today.

Salon commercial de l’ICM : le principal événement minier au Canada !

Les espaces s’envolent, réservez le vôtre sans tarder.

www.cim.org/edmonton2008

Tournoi de golf de la section Harricana le 2 juin Val d’Or, Québec Contact: Francine Fontaine Tél. : 819.825.4274 Fax : 819.824.1514 Courriel : francine.fontaine@genivar.com First Annual PDAC Mining Matters Diamond in the Rough Golf Classic In conjunction with Ontario Mining Association, CIM Toronto Branch, Mining Association of Canada, Ontario Stone and Gravel Association June 7 Newmarket, Ontario Contact: Martin Harding Tel.: 416.258.1670 Email: tournamentofdreams@rogers.com Website: www.pdac.ca The 46th Conference of Metallurgists (COM 2007) and the 6th International Copper/Cobre Conference (Cu2007) August 26-29 Toronto, Ontario Contact: Brigitte Farah, MetSoc of CIM Tel.: 514.939.2710, ext. 1329 Fax: 514.939.9160 Email: metsoc@cim.org World Gold 2007 In conjunction with AusIMM and SAIMM October 22-24 Cairns, Australia Contact: Alison McKenzie, AusIMM Tel.: +61.3.9662.3166 Fax: +61.3.9662.3662 Email: conference@ausimm.com.au Website: www.ausimm.com CMP 40th Annual Canadian Mineral Processors Operators’ Conference/40e Conférence des minéralurgistes du Canada January 22-24, 2008 Ottawa, Ontario Contact: Janice Zinck Tel.: 613.995.4221 Fax: 613.996.9041 Email: jzinck@nrcan.gc.ca Website: www.c-m-p.on.ca MEMO Maintenence Engineering-Mine Operators’ Conference/ Colloque sur l’ingénierie de maintenance et les exploitations minières February 24-28, 2008 Val d’Or, Québec Contact: Chantal Murphy, CIM Tel.: 514.939.2710, ext. 1309 Fax: 514.939.2714 Email: cmurphy@cim.org CIM Conference and Exhibition—Edmonton 2008 May 4-7, 2008 Edmonton, Alberta Contact: Chantal Murphy, CIM Tel.: 514.939.2710, ext. 1309 Fax: 514.939.2714 Email: cmurphy@cim.org May 2007

AROUND THE WORLD Planetary & Terrestrial Sciences Symposium June 10-13 Sudbury, Ontario Contact: Dale Boucher Tel.: 705.521.8324, ext. 202 Fax: 705.521.1040 Email: dboucher@norcat.org Website: www.ptmss.com/images/Header01.gif GIFA—METEC—THERMOPROCESS—NEWCAST June 12-16, 2007 Düsseldorf, Germany Contact: Stefan Egge Tel.: 416.598.1524 Fax: 416.598.1840 Email: messeduesseldorf@germanchamber.ca 23rd International Applied Geochemistry Symposium (IAGS) June 14-19 Oviedo, Spain Contact: Jorge Laredo Email: jloredo@correo.uniovi.es Website: www.appliedgeochemists.org 9th SGA Biennial Meeting August 20-24 Dublin, Ireland Contact: Gerry Stanley Tel.: +353.1.6677188 Email: gerrystanley@gsi.ie Discrete Element Methods ‘07 August 27-29 Brisbane, Australia Contact: B.A. Wills Tel.: +44.7768.234121 Fax: +44.1326.318352 Email: bwills@min-eng.com Website: www.min-eng.com/conferences Equator Principles & IFC Performance Standards Impacts on Mining Projects & Finance August 29 London, United Kingdom Contact: Mehrdad Nazari Tel.: 715.355.0141 Email: mehrdad@prizmasolutions.com Precious Metals ‘07 August 30 Brisbane, Australia Contact: B.A. Wills Tel.: +44.7768.234121 Fax: +44.1326.318352 Email: bwills@min-eng.com Website: www.min-eng.com/conferences Modular Course in Structure, Tectonics, and Mineral Exploration (field-based) September 1-15 Sudbury, Ontario Contact: Bruno Lafrance Tel.: 705.675.1151, ext. 2264 Fax: 705.675.4898 Email: blafrance@laurentian.ca

CALENDAR

CIM EVENTS

61

February 24 to 27, 2008 | Val-d’Or, Québec | du 24 au 27 février 2008

Technical Program |

A full slate of technical sessions will be held Monday, February 25, through Wednesday, February 27, offering insight into potential solutions for efficiency improvements and cost savings. Technical tours to Quebec mine sites will be offered.

Contacts: Sylvie Poirier sypoirie@nrcan.gc.com and Denis Gourde denis_gourde@iamgold.com

Trade Show |

A trade show at the main venue will showcase the latest technologies, equipment, and services for mine operations on the market today. It provides the opportunity to renew established contacts and make new ones while exploring the booths.

Contacts: Marie-Claude Bruneau mbruneau@gazmetro.com and Jean-Marc Demers jmdemers@cim.org

Social Events |

MEMO is an ideal environment to relax and have fun with colleaugues and friends. Social events include: • The Welcoming Reception in the Trade Show, February 24 • The Gala Dinner, February 25 Companies are invited to participate in the official evening for hospitality suites on February 26, mainly at the Forestel (819.825.5660, www.forestel.ca)

Contacts: Francine Fontaine Francine.fontaine@genivar.com and Johanne Voyer jvoyer@deloitte.ca

Sponsorship |

A wide variety of corporate sponsorships are available.

Contacts: Carol Plummer carol.plummer@agnico-eagle.com and Paul-Henri Girard paul-henri.gerard@agnico-eagle.com

www.cim.

2020 2020

Working together towards Travailler ensemble vers

Hosted by the Harricana Branch, the Metal Mining Society, and the Maintenance and Engineering Society of CIM Organisé par la section Harricana, la société des Mines et métaux et la société de l’ingénierie et de l’entretien de l’ICM

Programme technique |

Toute une série de présentations techniques s’échelonneront du lundi 25 février au mercredi 27 février, offrant des pistes solides vers des solutions possibles visant à améliorer l’efficacité et à réduire les coûts. Des visites de sites miniers au Québec seront également offertes.

Contacts : Sylvie Poirier sypoirie@nrcan.gc.com et Denis Gourde denis_gourde@iamgold.com

Salon commercial |

Un salon commercial se tiendra sur le site et présentera les dernières technologies en matière d’équipements et de services pour l’exploitation des mines d’aujourd’hui. Il offre la possibilité de renouer contact et d’en établir de nouveaux tout en visitant les stands.

Contacts : Marie-Claude Bruneau mbruneau@gazmetro.com et Jean-Marc Demers jmdemers@cim.org

Programme social |

Le colloque MEMO constitue un environnement idéal pour relaxer et avoir du plaisir entre collègues et amis. Les activités sociales comprennent : • La réception d’ouverture dans le salon commercial le 24 février • Le dîner gala le 25 février Les entreprises sont invitées à participer à la soirée des salons d’accueil le 26 février dont la plupart sont situés à l’hôtel forestel (819.825.5660, www.forestel.ca)

Contacts : Francine Fontaine Francine.fontaine@genivar.com et Johanne Voyer jvoyer@deloitte.ca

Commandites |

Un vaste éventail de commandites corporatives est offert.

Contacts : Carol Plummer carol.plummer@agnico-eagle.com et Paul-Henri Girard paul-henri.gerard@agnico-eagle.com

org/memo

Thanks to our Sponsors! Merci aux commanditaires!

CIM Conference and Exhibition 2007 Congrès et Salon commercial de l’ICM 2007 PREMIER SPONSORS | COMMANDITAIRES NIVEAU PREMIER

DIAMOND SPONSORS | COMMANDITAIRES NIVEAU DIAMANT

GOLD SPONSORS | COMMANDITAIRES NIVEAU OR

SILVER SPONSORS | COMMANDITAIRES NIVEAU ARGENT

COPPER SPONSORS | COMMANDITAIRES NIVEAU CUIVRE

Canadian Royalites Inc.

FRIENDS SPONSORS | COMMANDITAIRES NIVEAU AMI

MINING IN SOCIETY SPONSORS | COMMANDITAIRES LES MINES DANS LA SOCIÉTÉ Partner/Partenaire:

Media Partner/ Partenaire média: TURNING DATA INTO GOLD

Arthur Foley Canadian Mining and Metallurgical Foundation

64

CIM Magazine n Vol. 2, Nº 3

cim news CIM Distinguished Lecturers wrap up the 2006–07 season Each year’s new slate of CIM Distinguished Lecturers is announced at the awards gala of the CIM Conference and Exhibition, so this May marks the passing of the torch. The Distinguished Lecturers of the past year represented a broad range of expertise from industry— from geology to human resources, these presenters offered a wealth of information.

Many CIM branches and societies took advantage of the program, hosting Distinguished Lecturer talks at their events. Both Thompson and Red Lake branches deserve special recognition— their members had the opportunity to listen to every Lecturer this year.

Being a CIM Distinguished Lecturer requires a commitment of time that is difficult to manage in these busy days.

But thank goodness people are willing

to take it on—this program is a strong venue for knowledge sharing, part of CIM’s mandate, and of absolute importance to industry.

The program also requires funding.

Some is provided by certain participants’ companies. But it is the generosity of Atlas Copco and the Canadian Mining and Metallurgical Foundation, who sponsor the program, that make it possible.

Thank you to the CIM Distinguished Lecturers 2006–07 for a wonderful season. We appreciate it.

Douglas Boyd Queen’s University

Mimoun Elboujdaini Resources naturelles Canada

Paul Hébert Mining Industry Human Resources Council (MiHR)

Ryan Montpellier Mining Industry Human Resources Council (MiHR)

Wulf Mueller Université du Québec à Chicoutimi

G. Ward Wilson University of British Columbia

Sponsored by:

Canadian Mining and Metallurgical Foundation May 2007

65

history THE BASALT CONTROVERSY III (Part 17)

by R.J. “Bob” Cathro, Chemainus, British Columbia

Except where noted, the information that follows on Werner and Hutton is from Adams (1938), Dean (1998), and Repcheck (2003).

Most geologists are unaware that Edinburgh played a major role in the history of economic geology. The last of Werner’s disciples to carry the Neptunist flame was a Scot, Robert Jameson (1774-1854), who joined the University of Edinburgh in 1804, two years after studying under Werner for a year, and became Regius Professor of Natural History and Keeper of the Museum until his death.

While many professors have managed to drive outstanding students into other fields of study, none can equal the influence of Jameson. One scientist recalled that he had attended Jameson’s lectures on geology and zoology in 1826, at the age of 17, and found them so dull that he determined “never as long as I lived to read a book on geology or in anyway to study the science.” He was also present on a field trip to Salisbury Crags (on the edge of Edinburgh), when the professor showed them “a trap-dyke, with amygdaloidal margins and the strata indurated on each side, with volcanic rocks all around us, and (declared) that it was a fissure filled with sediment from above, adding with a sneer that there were men who maintained that it had been injected from beneath in a molten condition. When I think of this lecture, I do not wonder that I determined never to attend to geology.”

Unfortunately for Jameson’s reputation, the student’s name was Charles Darwin, who recalled these events in his autobiography (1887). Fortunately for geology, Darwin went on to make many valuable contributions and even considered himself a geologist (Herbert, 2005). Jameson’s sneer was directed at James Hutton (1726-1797), often referred to as ‘the father of modern geology,’ who laid the scientific foundations of Plutonism. It led to the demise of the Neptunist theory, several years after Hutton’s death, and also resulted in recognition that volcanic and plutonic rocks, and hydrothermal fluids were generated by the melting of rock from the upper crust.

Since both Hutton and Werner were Deists who believed in a God who created the universe and then abandoned it, assuming no control over life and exerting no influence on natural phenomena, their disagreement was not religious. One of the few traits they had in common was that neither was a prolific writer, although Werner’s students disseminated his ideas widely. Otherwise, their scientific careers and personalities could not have been more different. Even though he taught field techniques, Werner did little fieldwork himself because of health problems. He was an expert mineralogist whose experience was limited to the mining districts of Erzgebirge and Harz in Saxony. Hutton, on the other hand, thrived on fieldwork and travelled widely throughout Great Britain, but had no knowledge of mining. Living for much of his life in Edinburgh, which is built on basalt, and being a frequent visitor to Salisbury Crags, Hutton was much more aware of volcanic rocks and had a more worldly view because of his close contact with leading scientists and philosophers. Whereas Werner was an influential professor who spent his career in an academic setting, Hutton Fragments of limestone floating in whinstone (the Scottish word for used his scientific training to become a self-taught geologist. basalt) at ‘Hutton’s section,’ a famous geological exposure along Hutton was born in Edinburgh, enrolled at the university at the Salisbury Crags, on the edge of Edinburgh (Cunningham, 1838; the age of 14, and apprenticed for a year in a law office after Ashworth, 2004). Reproduced with permission of the Linda Hall Library graduating in 1743. When he realized that he wasn’t suited for of Science, Engineering & Technology.

“Having, in the natural history of this earth, seen a succession of worlds, we may from this conclude that there is a system in nature; in like manner as, from seeing revolutions of the planets, it is concluded, that there is a system by which they are intended to continue those revolutions … . The result, therefore, of our present enquiry is, that we find no vestige of a beginning, no prospect of an end.”

(Hutton, 1788, p 304).

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CIM Magazine n Vol. 2, Nº 3

economic geology office work, he decided to study ‘Scottish Enlightenment’ that was medicine because it was the centred around the university. It only field that offered to satisfy included the philosopher David his growing interest in chemHume, the economist Adam istry. Receiving his degree in Smith, the sociologist Adam 1749, following a year in Paris Ferguson, the historian William and three more at Leiden Robertson, the chemist Joseph University in Holland, he Black, and the inventor James returned to England and, with a Watt, as well as the polymath partner, James Davie, perfected Benjamin Franklin and the writa method for manufacturing the ers Robbie Burns and Sir Walter metalworking-flux sal ammoScott. This circle, which was niac (NH4Cl) from chimney more creative than any group in soot. This proved so successful Salisbury Crags with Edinburgh in the background England at the time, was the that it provided him with the moving force behind the financial security to switch his interest in 1752 to a farm he creation of the Royal Society had inherited from his father, located in Berwickshire, 65 of Edinburgh in 1783. kilometres southeast of Edinburgh.

By 1785, Hutton had synIn order to become knowledgeable about animal husthesized his 30 years of bandry, he lived for two years on a farm in Norfolk and travobservations into a theory elled widely, during which time he began to recognize the about the history of the significance of erosion in the formation of soil and the depearth. His two-part paper osition of sediments. This interest continued to grow after titled Concerning the System he returned to the family farm and he gradually emerged as of the Earth, Its Duration, a leading Scottish geologist. After touring the diverse geoland Stability was delivered ogy, rugged topography, and abundant outcrop in the to the Royal Society in Highlands in 1764, he began to think seriously about the March and April of that origin of different types of rock. That led him to put his year. Joseph Black, who is thoughts on paper in an unpublished essay titled Natural recognized as one of the James Hutton, the father of modern geology (1726-1797) History of the Earth. It focused on two key observations, neifounders of modern chemther of which was original—that most rocks are composed istry because he isolated of eroded materials and that all surface exposures are subcarbon dioxide and showed that the atmosphere is actually jected to constant erosion. It was linking the two into a a mixture of several gases, read the first lecture because cycle that made Hutton’s ideas important. He was beginning Hutton was sick. It described erosion and the formation of to recognize that the earth must be very ancient. strata, while the second paper discussed the elevation of This was an unorthodox, even dangerous, position to strata from below sea level to form new land, with internal take at a time when the age of the earth was generally heat and upwelling molten rock and mineral veins postuacknowledged to be about 6,000 years. Using the lated as the cause. The conclusion that he left with his audigenealogical chronology laid out in the Bible, Martin ence was “this world has neither a beginning nor an end.”

Luther had calculated in 1541 that creation had occurred In other words, the world was ancient, of immeasurable in 3961 BC. By 1650, the calculation had been refined by age, which was a direct challenge to the teachings of the Bishop James Ussher to give a date of October 23, 4004, Christian church. which was generally supported by Sir Isaac Newton The 1785 lectures generated strong criticism, largely for before his death in 1727. A proposal by Georges-Louis religious reasons, that was led by the Irish chemist and minLeclerc, Compte de Buffon, in 1749, that the earth was eralogist, Richard Kirwan. Deciding that he needed more 75,000 years old aroused little interest. While Hutton field evidence to support his theory and answer his critics, accepted the conventional estimate as the age of humanHutton embarked on a series of field trips between 1785 and ity, he felt that the earth itself must be much older. To be 1788. Starting at Glen Tilt, a stream northwest of Edinburgh taken seriously, Hutton would have to overcome the near Blair Athol, he observed many sill-like fingers of redaccepted wisdom that the earth was quite young, an enordish granite intruding along the bedding of black micaceous mously difficult challenge. quartzite. The following year, at the age of 60, he went to Having turned the farm into a model operation, Hutton Galloway, on the west coast south of Glasgow, and found moved back to Edinburgh in 1767, at a time when it was more granitic dykes cutting older sediments. In 1787, he visemerging as the ‘Athens of the North,’ and became part of a ited the Isle of Arran, in the Firth of Clyde, southwest of circle of Scottish scientists and intellectuals called the Glasgow, where he collected a 270-kilogram specimen from May 2007

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economic geology time worst writer among the great thinkers” (Gould, 1987, p.

64). He had been in great pain with kidney disease during its preparation, which may have contributed to the problem. It was not translated into other languages until 1815, and Hutton’s ideas were not widely available in Europe for years because of the French Revolution and the Napoleonic wars.

Although Hutton’s last book was published at almost the same time as Werner’s main publication, neither referred to the other and they never met or corresponded.

Several of Hutton’s influential champions, notably Archibald Geikie and Charles Lyell, spread the myth that his theories were the result of empirical study and observation. However, the truth is that he formulated most of his important ideas based on general observations and only confirmed them with his field work after the presentation of his 1785 paper (Gould, 1987). n Hutton's famous unconformity at Siccar Point, Scotland.

Photo credit: Dr. Clifford E. Ford.

a similar intrusive contact. He also found a poorly exposed unconformity at Loch Ranza, at the north end of the island.

Later in the year, he observed another example in the Tweed Basin, on the east coast near the English border.

The most important trip was made by boat in 1788 along the coast southeast of Edinburgh, accompanied by two sceptical friends, John Playfair, a university professor who specialized in Euclidian geometry, and Sir James Hall, a young chemist. At Siccar Point, he found what he was looking for, an excellent exposure showing the unconformity between vertical Silurian greywacke and overlying flat beds of Devonian Old Red Sandstone. He believed that this represented a gap in time separating two cycles of deposition.

This was clear evidence that the earth had been elevated, a crucial step in proving his theory.

He had concluded from his field mapping that basalt was derived from volcanoes and granite from magma, that the mechanical and chemical weathering of rocks produced sedimentary particles, and that these were transported by wind, water, and gravity and deposited on the sea floor as sediment in essentially horizontal attitudes. Also, he interpreted steeply inclined beds as evidence of uplift through crustal movement, and suggested that mineral deposits were formed by crystallization from comparatively dry melts. Inexplicably, he still believed that there was a distinction between basalt and lava.

When the 1789 publication of his 1785 lectures failed to stop the criticism, Hutton began to write a more detailed expansion of his theory, including the field evidence collected in the interim. Although he was a great conversationalist, the two-volume, 1,000-page, rambling book published in 1795, two years before his death, has been roundly criticized as virtually unreadable and dense, with endless quotations in French (a third volume was unfinished in manuscript form). It left Hutton with the reputation as “the all68

REFERENCES Adams, F.D. (1938). The Birth and Development of the Geological Sciences. Baltimore: Williams & Wilkins.

Ashworth, W.B. Jr. (2004). Vulcan’s Forge and Fingal’s Cave: Volcanoes, Basalt, and the Discovery of Geological Time.

Catalogue for an exhibition of rare books from the collections of the Linda Hall Library of Science, Engineering and Technology, Kansas City, Missouri, 95 p. available at www.lindahall.org/events_exhib/exhibit/exhibits/vulcan/a bout.shtml.

Cunningham, R.J.H. (1838). Essay on the Geology of the Lothians. Edinburgh: Neill & Company.

Darwin, C. (1887). Autobiography. John Murray, London, F. Darwin (Ed.). Reprinted in 1958 by W.W. Norton & Co., London, 253 p., N. Barlow (Ed.).

Dean, D.R. (1998). Plutonists, Neptunists, Vulcanists. In Sciences of the Earth: an encyclopedia of events, people, and phenomena. New York: Garland Publishing, Inc. Gould, S.J. (1987). James Hutton’s theory of the earth: a machine without a history. In Time’s Arrow, Time’s Cycle: myth and metaphor in the discovery of geological time.

Cambridge: Harvard University Press.

Herbert, S. (2005). Charles Darwin, Geologist. Ithica: Cornell University Press.

Hutton, J. (1788). Theory of the earth, or an investigation of the laws observable in the composition, dissolution and restoration of land upon the globe. Transactions of the Royal Society of Edinburgh, 1, 209-304.

Hutton, J. (1795). Theory of the Earth, with Proofs and Illustrations (2 Volumes). Edinburgh: William Creek.

Repcheck, J. (2003). The Man who Found Time: James Hutton and the Discovery of the Earth’s Antiquity.

CIM Magazine n Vol. 2, Nº 3

metallurgy Muslim Mining in the Iberian Peninsula (Part II)

by O. Puche Riart, L.F. Mazadiego Martínez, and P. Kindelán Echevarria, Mining Engineering School, Universidad Politécnica de Madrid

METAL PRODUCTION IN IBERIA Gold Gold was obtained in the alluvial deposits of rivers scattered through the Iberian Peninsula. Rivers like Segre (Lerida), Darro (Granada), and Tajo (near Lisbon), as mentioned by the chronicler Ahmed Arrazi, the geographer Al Edrisi, and the poet Ibn Hazim. Surface mining was also found in the area of Elvira (Granada) and probably in the village of Navas de Ricomalillo (Toledo), as can be inferred from its closeness to the Muslim mining area of Los Vascos where mining tools were discovered. In addition, gold was imported from Africa and was shipped to Malaga, which was the commercial centre of gold. According to a book on Lapidary, translated from Arabic to Spanish at the time of Alfonso X, we know that borax was used as flux in gold metallurgy. The metal obtained was employed in jewelry, gilding, and textiles, as well as to mint the so-called “dinares” in the Spanish Muslim period. According to Ibn Hawqual, minting—by virtue of its monopoly—was one of the main sources of income for the State.

lead mining were abundant in Spain. There were mining works near Cabra, Hornachuelos, and Los Pedroches (Cordova), Baza (Granada), Bellmunt (Tarragona), Sierra de Cartagena (Murcia), among others. According to Vallvé Bermejo (1996), Daysam Ben Ishaq from Murcia extracted a thousand cavalry charges from his mines annually. This lead was used for piping, roofing, and in pottery. Finely ground galena was used as makeup for women, taking advantage of its dark colour.

Mercury Mercury was principally mined in Almaden in Ciudad Real, although there were also mines in other places such as Ovejo (Cordova) and Las Alpujarras (Granada).

Silver

According to the geographer Al Xabeca mercury recovery furnace as illusSilver was obtained from mines located in the area of HorEdrisi, in the 12th trated in Arte de los Metales (1640) nachuelos-Posadas (Cordova), Herrerias (Almeria), Loja y century, Almaden’s Pechina (Granada), Almaden de la Plata y Guadalcanal mining site had about 250 webs (420 metres), which most (Sevilla), and also in the Muslim provinces (‘kuras’) of Beja probably made it the deepest mine at that time. A labour and Ocsonoba (Portugal), among others. According to Vallvé force of more than a thousand men was employed in mining, Bermejo, at the time of emir mine water drainage, metallurgy, Abd Allah in the ninth and wood collecting, pot manufactenth centuries, silver mines turing, and as master builders (alarifes). Mercury was produced near the coast of Tudmir in from cinnabar in a xabeca (proMurcia produced 30 pounds of nounced shabeka, an Arabic metallic silver per day. This word) which is a furnace metal was used in jewelry, decodescribed by Alvaro Alonso rations, crockery, and also to Barba in his book Arte de los Metmint money. ales, published in Madrid in Lead 1640. Ceramic pots were filled with cinnabar, sealed with clay, Lead mining is often related then placed in the holes in the to the exploitation of silverupper part of the furnace where bearing galenas. According to they were heated from below. A Ibn Hawqal, iron, mercury, and A model of an xabeca furnace on display at the Almadén Mines model of this furnace is on disMay 2007

69

metallurgy play at the Almadén Mines.

Mercury was used in gilding by amalgamation, and also in medicine. Ground cinnabar or vermilion was employed as a pigment.

Mercury and vermilion were exported to the Mediterranean countries.

Zinc

Iron

Copper

Iron, a necessity in the manufacture of swords and agricultural implements, screws, etc., was exploited in the mountains of the northern valley of the River Guadalquivir, around the areas of Constantina and Cerro del Hierro (Seville), as well as in Alquife (Granada), Sierra Filabres and Sierra Almagrera (Almeria), Clay pots, sealed at the top, in which Otero de Herreros mercury is recovered from cinnabar (Segovia), Montes de Toledo, and in many other places. We have not heard of the existence of hydraulic forges, introduced in the Christian territories of northern Spain by Europeans in the 12th century. However, we know about the existence of low furnaces, sometimes half buried, where several layers of iron oxide ores were mixed with charcoal and flux. A natural draft in the mountain, or artificial ventilation, was created by means of bellows. The doughy mass obtained was beaten out (by manual hammering) to remove the iron slag. The iron could then undergo some type of treatment (annealing, quenching, cementing, etc.) to get the desired product.

In his encyclopedia of Natural Sciences and Geography, Ancari Katobi mentions the mineral ‘calamines’ in Salobrena (Granada). We do not know if this archaeological site coincides with that of Cerro del Toro mine in Motril, Granada.

Brass and other alloys like azofar and ceni were obtained by alloying zinc (atutia) with copper. Brass was probably manufactured near the mines of Riopar (Albacete).

In 1318, the geographer Al Dimashqui wrote about Spanish copper in El Cairo. Copper was obtained near Rio Tinto (Huelva), Cerro Muriano (Cordova), as well as in Granada, Almeria, the Toledo’s mountains, Aljustrel (Portugal), and others. Copper sulphate (blue vitriol, known as ‘aceche’ by Muslims) and other sulphates, such as ‘jebe’ (alum = aluminium-potassium sulphate) were also exploited in the Iberian Pyritic Belt. Copper was obtained by smelting oxidized ores in Castilian furnaces, and was used for boiler forge, alloys (brass and bronze, known as wash copper), and manufacturing verdigris for painting. Aceche or blue vitriol had important applications in agriculture.

Other Metals Tin needed to manufacture bronze came from the Hercynian Massif, the mines of the province of Ocsobona (Portugal), and other mines in Extremadura and Lumbrales

... we know about the existence of low furnaces, sometimes half buried, where several layers of iron oxide ores were mixed with charcoal and flux…

The doughy mass obtained was beaten out (by manual hammering) to remove the iron slag.

According to the geographer Az Zuhri, there were Indian steel factories called ‘alhinde’ in Seville, Spain, that exported this metal all over the world. In the 12th century, Al Idrisi also points to the island of Saltes, near Huelva, as the place where an important iron and copper factory was found. There was also an important armaments industry in Huesca and a siderurgy factory in Malaga, though the most valued steel came from Damascus.

70

(Salamanca) in Spain. According to Arie (1984), Al Andalus exported a great deal of tin and especially copper.

On the other hand, high-quality antimony and alum were imported from Morocco. Antimony was exploited in the Muslim province of Lisbon, and according to the geographer Katobi, there was also an antimony mine in Jaén (Spain). n CIM Magazine n Vol. 2, Nº 3

metallurgy Suggested Readings Lévi Provenzal (1950). Histoire de l’Epagne musulmana.

París (Spanish translation by E. García Gómez, 1950). In R. Menéndez Pidal (Ed.), Historia de España. Espasa-Calpe, Madrid, T. IV. Lévi Provenzal (1953). La description de l’Espagne d’Ahmad Al-Razzi. Al Andalus, 18, 51-108.

Martínez San Pedro, M.D., & García Pardo, M. (1996). La riqueza minera en la Almería medieval. Proceedings of I Jornadas sobre Minería y Tecnología en la Edad Media Peninsular (pp. 274-281). León: Fundación Hullera Vasco-Leonesa.

Molina López, E. (1981). La cora de Tudmir según Al-Udri (s. XI). Aportaciones al estudio geográfico descriptivo del SE peninsular. Cuadernos de Historia del Islam.

Vallvé Bermejo, J. (1996). La minería en Al-Andalus. Proceedings of I Jornadas sobre Minería y Tecnología en la Edad Media Peninsular (pp. 50-64). León: Fundación Hullera Vasco-Leonesa.

Vallvé Bermejo, J. (1980). La industria en Al-Andalus. AlQantara, 1, 209-241.

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Arlé, R. (1982). España musulmana, s. VIII-XV. In M. Tuñón de Lara (Ed.), Historia de España. Barcelona, T.III. Carbonell Y Trillo-Figuerola, A. (1929). La minería y la metalurgia entre los mususlmanes en España. Revista Minera, Metalúrgica y de la Ingeniería, 80, 193-196, 217-220, 231-234, 254-257, 277-279.

Cossin Corral, Y. (1996). Un ejemplo de minería islámica: La ciudad hispano musulmana de Los Vascos (Navalmoralejo, Toledo). In B. Calvo, J.C. Guisado, & M.J. Bernáldez (Eds.), Arqueología e Historia de la Minería y de la Metalurgia Escuela de Ingenieros de Minas, (pp. 107-119), Madrid.

Cressier, P. (1998). Observaciones sobre fortificación y minería en la Almería islámica. In A. Malpica (Ed.), Castillos y territorio en Al-Andalus. Granada: Athos-Pérgamos.

Fagnan, E. (1924). Extraits inédits relatifs au Magreb. Géografie e Histoire. Argel.

Fuentes Guerra, L. (1957). La metalurgia andaluza.

Resumen histórico. Industria Minera, 99, 29-44.

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TO INDUSTRY KNOWLEDGE Peer reviewed by leaders in their fields

Physical and mechanical behaviour of various combinations of minefill materials F.P. Hassani, M.R. Nokken, and A. Annor Estimating haul truck dutymeters using operational data C.K. Mechefske and C. Campbell Environmental impact of blast-emitted noise and air overpressure: prediction and control measures R.K. Singh, C. Sawmliana, and P. Pal Roy Air overpressure and noise vis-à-vis detonating fuse S.K. Mandal, M.M. Singh, and S. Dasgupta Online monitoring system for mining shovels focused on vibration analysis P.N. Saavedra and C.J. Molina Vicuña

Complete papers are posted in the CIM Bulletin section of the online Technical Paper Library

www.cim.org 72

CIM Magazine n Vol. 2, N° 3

executive summaries Physical and mechanical behaviour of various combinations of minefill materials

For blended tailings/sand systems, the addition of sand did not consistently improve the mechanical properties. The finer sand gave no additional strength to the backfill and should only be considered for use if the sand is at hand and is not suitable for other applications. Sand with larger size particles gave increased strength with increased sand additions.

The specimen size used for the determination of unconfined compressive strength was found to give varied results.

Research to date indicates that the strength is expected to decrease as the specimen size increases. In this study, the straight tailings and rockfill specimens clearly showed this trend. However, for the blended tailings/sand samples and the composite-aggregate samples (tailings and waste aggregate), the trend was not as apparent. The blended tailings exhibited an increase in strength up to a size of 152 mm, but subsequently decrease.

E N G I N E E R I N G

Both full-plant and classified tailings pastefills were investigated, as well as sand and blended tailings/sand mixtures. In addition, mixtures utilizing rockfill with and without the addition of tailings were studied. All mixtures contained binders, most with Portland cement. Selected tailings were studied with alternative binders including a 50% Portland, 50% Class C fly ash (with and without anhydrite) and one of two proprietary binder blends. Test variables included the amount and type of binder, the quantity of sand in the blended tailings, and the specimen size.

of anhydrite to Portland/fly ash blends gave increased strength at lower binder contents, but may not be beneficial at higher binder contents. The two special binder blends gave substantial strength increases compared to other types of binder when compared at the same binder content. Further research in the development of alternate binder systems for use in backfill is warranted.

R O C K

This paper presents the results of a laboratory study on factors influencing the strength of backfill. Strength is vitally important to the design of backfill mixtures for mining applications. The strength developed in the backfill will ultimately affect the remaining stope sequencing and the recovery of ore in the areas adjacent to backfill. Many factors influence the strength of backfill mixtures. Mining backfill is generally produced by a mixture of a number of components. In this study, the amount and composition of binder, the amount of sand in blended tailings/sand backfill systems, and the influence of specimen geometry were examined. Tailings, sand, and waste rock were used in various proportions with Portland cement or other binders to form a structurally competent material.

Originally, the term compost fill was used in the late 1980s in a study of the tight filling of Kidd Creek mine rockfill stopes,

by Hassani and Farsangi.

As expected, increases in binder amount increased unconfined compressive strength, regardless of the type of backfill. For the Portland cement mixtures, the amount of binder required to achieve a specified target strength was found to be primarily dependent on the constituent materials of the backfill. Of the mixtures investigated, those containing classified base metal mine tailings exhibited higher strengths than other backfill types at similar binder compositions. It was also determined that mixtures containing a high percentage of fine sand gave relatively low strength. Regarding the binder composition, the use of 50% fly ash as a replacement for Portland cement generally gave strengths exceeding that of Portland used alone when tested at 28 days. The addition

F.P. Hassani, Department of Mining, Metals and Materials Engineering, McGill University, Montreal, Quebec, M.R. Nokken, Building, Civil and Environmental Engineering, Concordia University, Montreal, Quebec, and A. Annor, former manager of CANMET lab, Sudbury, Ontario (deceased) May 2007

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executive summaries

M A I N T E N A N C E

A N D

E N G I N E E R I N G

Estimating haul truck dutymeters using operational data Even within the bounds of normal machinery operation and with ideal maintenance practices, it is inevitable that mechanical devices will eventually fail. The consequences of failure include the physical cost of repairing the failure, the cost of additional machine damage incurred during the failure, and lost production revenue. The magnitude of these expenses over a given period of time can be minimized through the implementation of careful machinery operation and effective maintenance programs. However, mining environments present a unique problem. A large amount of the critical mining production equipment is mobile in nature, and these machines operate almost continuously.

An efficient maintenance program for machines critical to production ensures availability by performing all appropriate maintenance activities, including replacing components before they fail, thereby avoiding the high costs of excessive lost production and secondary damage induced by the initial failure.

This is accomplished by estimating the component condition, based on observable indicators or following predefined preventative replacements. The replacement intervals or ‘benchmarks’ are defined based on knowledge of typical machine wear, manufacturer recommendations, and experience. Machine wear typically occurs at a gradual rate, which continues over time to a point at which the accumulated wear causes a failure. This assumes that the accumulated wear is a function of time or that the rate of wear is constant with respect to time. This is not the case when considering the operation and loading of mobile mining equipment. The majority of mobile mining equipment is subjected to widely varying and sometimes unpredictable operating conditions. Loading variations, operator practices, ore properties, and environmental factors all have a significant effect on machine reliability.

Many critical mobile mining equipment components are replaced when they reach the specified time-based replacement benchmark. When a reliable component reaches this replacement benchmark, it is replaced, regardless of condition, which may be unnecessary considering the effects of duty. Premature maintenance can in fact increase the probability of failure with the installation of potentially defective

C.K. Mechefske and C. Campbell, Department of Mechanical and Materials Engineering, Queen’s University, Kingston, Ontario

74

components and the introduction of faults during the maintenance process. Preventative component replacement decisions should consider the effect of machine duty on component life, not only the hours of service.

The development of a dutymeter that relates the severity of operational loading history to component reliability could supplement component replacement decisions with an additional measure of condition. This would allow components approaching a preventative replacement benchmark to be evaluated for the possibility of continued utilization, thereby reducing replacements and maintenance expense. It would not function as a failure prediction tool, but as an indicator of increased or decreased risk of failure. An effective dutymeter would also highlight which particular aspects of machine loading or overloading have the greatest effect on component life.

This would provide a better understanding of the relationship between loading practices, driven by production requirements, and the corresponding associated maintenance costs.

Haul truck payload data obtained from an onboard data collection system was used to describe unique duty histories.

The payload data was used to determine which operational loading parameters were related to component reliability by comparing machine operational data and component reliability histories. The average ‘percent overload’ for unreliable (failed before preventative replacement) hoist cylinders with at least 5,000 hours of operation was 14.4%, compared with an average ‘percent overload’ of 12.7% for cylinders replaced by preventative maintenance. This suggests that cylinders that were overloaded more than about 14% of the time were historically less reliable. Reliable final drives had an average ‘percentage overload’ of 16.2%, while unreliable final drives averaged 20.7%. This indicates that final drives that were overloaded more than about 19% of the time were less likely to be reliable.

In summary, it was found that ‘percent overload’ was strongly related to the reliability of both the hoist cylinders and final drives. This suggests that the number of times a truck is overloaded is more significant than the amount of the overload. The intended application of this method is to determine the feasibility of reliably extending component replacement benchmarks for lightly loaded components. This would have the effect of reducing maintenance operations while maintaining an acceptable risk of failure. Trustworthy dutymeters could also help quantify the incremental damage, and the associated maintenance expense, caused as a result of increased haul truck loading practices.

CIM Magazine n Vol. 2, N° 3

executive summaries Environmental impact of blast-emitted noise and air overpressure: prediction and control measures

This paper discusses case studies at three different coal mines in India: Parej (East) Opencast Project, Central Coalfields Limited; Chandan Opencast Project, Sudamdih, Bharat Coking Coal Limited; and South-East (SE) Quarry, West Bokaro, Tata Iron and Steel Company Limited. Fifteen experimental blasts were performed with varying design parameters and charging patterns at Parej (East) OCP, and 34 sets of AOP data were recorded at different distances from the blasting site. At the Chandan Opencast Project, 11 experimental blasts were performed and 28 sets of AOP data were recorded,

(

)

D AOP = 191.73 ––––––– –––– 3Q \ max

/

M I N I N G

Noise/air overpressure control has become one of the major concerns for opencast projects near the sensitive environment where a blasting operation is inevitable. The initial planning phase of a mining project should recognize the potential for adverse impacts due to noise and airblast emissions. The construction and operational staging of the project should be designed and managed to best minimize these impacts. The extent of noise and airblast emissions should be quantified during the execution phase of the project. Predictions of the levels of noise and air overpressure at potentially sensitive locations form the basis on which the project design may be modified to mitigate any impacts to within acceptable limits.

whereas at SE Quarry, 11 experimental trials with 33 sets of AOP data were recorded. The blast-induced noise/air overpressure levels were monitored at various distances from the blasting site. These distances varied between 25 to 365 m at Parej (East) OCP, 30 to110 m at Chandan OCP, and 75 to 275 m at SE Quarry. The maximum explosive weight per delay varied between 50 to150 kg, 25 to 62.5 kg, and 120 to 508 kg at Parej, Chandan, and SE projects, respectively. The AOP data generated were analyzed to form a generalized predictor equation. Cube root scaling of maximum charge per delay to the distance of measurement was adopted for predicting the level of air overpressure. In total, 95 data sets were combined to form the following generalized predictor equation:

M E T A L

Blast-emitted noise and air overpressure (AOP) often affect the peace of the surrounding environment. Air overpressure is the energy transmitted from the blast site within the atmosphere, in the form of a series of pressure waves. The various factors affecting generation of noise/air overpressure include blast design parameters; topographical and meteorological conditions, such as direction and speed of wind, temperature, cloud cover, and humidity; use of detonating cord; weight of explosive charge per delay; total quantity of explosive used in a round of blast; etc.

–0.146

Correlation coefficient = 67.1 % The regression plot of AOP data with respect to the cube root scaled distance is depicted in the figure.The measured values of air overpressure at different mines and that predicted by the generalized predictor equation at respective scaled distances were also compared.

Minimizing air overpressure at source such that, even under unfavourable weather conditions, all such energy is within acceptable criteria at distance, is the best practicable approach. The case studies of three different coal mines concluded that the levels of noise and air overpressure can be significantly controlled by taking proper care and attention while designing the blast and the judicious implementation of it. The level of air overpressure can be predicted by the predictor equation. Although the correlation coefficient of the equation is not very high, it can provide a guideline to mine owners to modify their mining activities, to minimize the adverse impact of noise and air blast.

R.K. Singh, C. Sawmliana, and P. Pal Roy, Central Mining Research Institute, Dhanbad, Jharkhand, India Regression plot of AOP data of all three mines

May 2007

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executive summaries

M E T A L

M I N I N G

Air overpressure and noise vis-à-vis detonating fuse The word “noise” is generally used to convey a negative response or attitude towards a sound. A person’s response to a noise depends upon position, age, education, and condition of involvement with source. In general, high-magnitude blastinduced air overpressure (AOP) and audible noise, along with ground motion, intensifies people’s response and becomes the main cause for complaint by those residing around excavation work. Considering the measured magnitude of AOP from plaster shooting and different methods of initiation viz. detonating cord and the NONEL system of initiation, the paper illustrates that plaster shooting generates a very high magnitude of AOP. As well, the magnitude of AOP generated from plaster shooting can be reduced by detonating the same quantity of explosive in different delays. In comparing the difference between a magnitude of AOP generated by a NONEL tube and a detonating cord system of initiation, the paper experimentally and mathematically illustrates that mud-capping of a trunk line detonating cord can effectively reduce the magnitude of AOP. In general, the horizontal component of an external force is responsible for the amplification in magnitude of vibration. The magnitude also increases with an increase in the height of the structure. Air overpressure, travelling by rarefaction and compression waves, acts horizontally on structures and may cause damage to them. Unnatural to the impact of ground vibration, AOP magnitude affects only the windward side of a structure; the magnitude increases with an increase in exposed surface area. The impact depends upon the surface area exposed to AOP and is equal to PBH and pPDH/2 for planar and circular wall structures, respectively (P is pressure due to AOP, KPa; B and D are width and diameter of wall, m; H is the height of wall, m). The differential force generated between two structural members causes strain in the structure and damages it when the magnitude exceeds the strength of the members. Hence, to minimize the impact of AOP, the structures should be of low height with smooth and circular or angular shape towards the windward direction of AOP. For plaster shooting, the magnitude of AOP/noise diminished from 0.229 KPa to 0.103 KPa when the explosive quantity was altered from 100 kg to 25 kg. Similarly, for the same total charge fired in delay and varying charge per delay (total

S.K. Mandal, M.M. Singh, Central Mining Research Institute, Barwa Road, Dhanbad, India, and S. Dasgupta, Director, Technical Education, West Bengal, India 76

charge 50 kg; explosive per delay 50 kg and 25 kg), the magnitude of AOP diminished by about 24 dB(L) at a distance of 1 km. The magnitude of AOP/noise for the NONEL system was always observed to be less than the conventional uncovered detonating cord system. However, the detonation of a covered trunk line detonating cord reduced the magnitude of AOP/noise. It was observed that covering the trunk line detonating cord (10 gm/m) with clay reduced the magnitude of AOP/noise by 2.685 KPa and 18 dB(L), when measured at a distance of 300 m and 175 m, respectively.

Detonating cord consisting of a high-performance explosive (1.5 to 120 g/m) and a high velocity of detonation (6,000 m/s) produces a higher magnitude of AOP, with respect to NONEL tubes comprising ~20 mg/m of explosive having a VOD of ~2,000 m/s. Therefore, to avoid confrontation between mine management and people residing around a mine, blasting operations in heavily populated areas should be carried out using the NONEL system. When covered with sand or moist clay, low-charge trunk line detonating (1.5 to 5 g/m) can be effectively used as a suitable initiation system, as it produces a lower magnitude of AOP. On detonation of a shielded cord, more than a million small minute particles collide with each other and reduce the magnitude of AOP prior to the release of energy (pressure or impulsive force) into the environment. The reduction in AOP magnitude due to collision of millions of particles, also termed as coefficient of elasticity of restitution or resilience (e), can be determined with the help of the following equation: (Pa)1 – (Pa)2 e = ——————— (Pa)1

(1)

(Pa)1 = pressure before covering detonating cord, Pa (Pa)2 = pressure after covering detonating cord, Pa The fundamental characteristics of structural response are the parameter of mass, spring stiffness constant, and the characteristics of damping or energy dissipation. The impact of AOP, travelling by compression and rarefaction, has a profound influence on structures, and can be reduced by orienting the construction in such a manner that it experiences minimal impact, minimizing the exposed surface area or strengthening the structure by reinforcing it in both the dimensions exposed to AOP, ie. in horizontal and vertical directions or by placing brick and cement layers in such a manner that the hade joint does not continue in the same level and is interfered by brick structures at intervals.

CIM Magazine n Vol. 2, N° 3

executive summaries Online monitoring system for mining shovels focused on vibration analysis

SiAMFlex-shovel is a multi-channel system that can simultaneously monitor vibrations measured on the main transmission gears, bearing temperatures, strain on critical points of the frame, angular speed and angular acceleration of the motors, and operational variables. The system consists of two principal modules: surveillance and analysis modules.

The surveillance module consists of an industrial computer, signal conditioning devices, analogue-to-digital converters, and SiAMFlex-surveillance software. This software performs shovel monitoring, manages the recorded data, warns the shovel’s operator when any of the parameters under monitoring surpass the pre-established values, and transmits data via wireless to the central computer in the predictive maintenance office.

The development of a flexible online monitoring system for mining shovels is presented. With this system, measurements are taken during the normal operation of the shovel, by which several disadvantages of using the common measuring practice are overcome. This system uses the OSA and ROT techniques, among others, which are appropriate and necessary techniques for diagnosis on machines that work under variable speed and/or load conditions.

E N G I N E E R I N G

SiAMFlex is an online monitoring system customized for a specific type of machine that considers its own peculiarities.

Unlike other commercially available systems that have been developed for general rotating machines, the shovel version of SiAMFlex is the first monitoring system specially designed for mining shovels.

The paper also presents two case histories. In the first one, the analysis of one bearing fault detected in the hoist transmission of a Bucyrus 395 BIII shovel is presented. The common practice of taking measurements during the changeof-cables periods of the transmissions is analyzed, and through real data, it is shown that the only way to detect these kinds of problems at an early stage is by taking measurements during the working cycles of the shovel and at high rotational speed of the motors. In the second case history, the continuous strain monitoring capability of the SiAMFlexshovel system is presented. The purpose of the monitoring was to determine the real stresses and loads acting on the shovel structure in order to validate a finite elements model (FEM). Thus, the continuously and simultaneously monitored parameters were the strains and rotational speeds of the hoist, crowd, and swing transmission motors. The analysis of the complete load cycle of the shovel is presented and the maximum strains are determined.

A N D

This paper analyzes some new vibration techniques that offer tools for the analysis of signals measured under transient conditions—the order spectrum analysis (OSA) and the revolution-order transform (ROT).

In the central computer, the vibratory data can be analyzed in the analysis module using some of the following techniques: Fast Fourier Transform amplitude spectrum (FFT spectrum), OSA, cascade spectra, waveform, extended time waveform, and ROT. This data can be correlated with the rotational speed of transmissions during the measured time.

M A I N T E N A N C E

Online condition monitoring of machines through vibration and complementary magnitude analysis has been used in many industries for monitoring critical machines. Most on-line vibration-monitoring systems are based on conventional processing techniques, which work very well on machines that operate under conditions of constant speed and load. However, these systems are not useful for online monitoring of mining shovels that operate under transient conditions with variable load and speed. Reliable early fault detection on these large and complex systems remains problematic. This paper describes an online monitoring and diagnosis system, SiAMFlex, which is capable of solving these problems.

Through a case study, it is demonstrated that the identification of a bearing fault at an early stage requires the acquisition of the signal under working conditions of the shovel and at high rotational speed of the motors.

P.N. Saavedra and C.J. Molina Vicuña, Concepción University, Concepción, Chile

May 2007

77

emg abstracts

Exploration and Mining Geology Journal Volume 15—Numbers 3 and 4 The Brunswick No. 6 Massive Sulfide Deposit, Bathurst Mining Camp, Northern New Brunswick, Canada: A Synopsis of the Geology and Hydrothermal Alteration System D.R. Lentz, Department of Geology, University of New Brunswick, and S.R. McCutcheon, New Brunswick Department of Natural Resources, Geological Surveys Branch The 12.1 Mt Brunswick No. 6 Zn-Pb-Cu-Ag massive sulfide deposit (New Brunswick, Canada) lies between two subaqueous felsic volcanic formations near the base of the Middle Ordovician Tetagouche Group. The Brunswick No. 6 deposit is a proximal autochthonous deposit with a wellzoned massive sulfide body and a basal Cu zone that, at depth, develops into a stockwork stringer sulfide (feeder) system. The massive sulfides are capped sharply by a layered magnetite-chert unit that extends regionally beyond the deposit. The (Fe2O3T+MgO)/(Na2O+K2O) and base metal alteration indices are the best practical lithogeochemical vectoring tools at this deposit.

Chemostratigraphy at the Brunswick No. 6 Volcanic-Sediment-Hosted Massive Sulfide Deposit, New Brunswick: Resolving Geometry from Drill Core in Deformed Felsic Volcanic Rocks A.O. Wills, D.R. Lentz, Department of Geology, University of New Brunswick, and G. Roy, Xstrata Zinc plc., Exploration Diamond-drill hole DDH-B357, located 1.5 km north of the Brunswick No. 6 Zn-Pb- Cu-Ag volcanic-sediment-hosted massive sulfide (VSHMS) deposit, intersects three exhalative horizons within variably altered felsic volcanic rocks of the Nepisiguit Falls and Flat Landing Brook formations. Iron formation geochemistry and felsic volcanic rock chemostratigraphy from drill core sampling can provide an effective mineral exploration tool for the structurally complex rocks of the Bathurst Mining Camp.

Petrology, Geochemistry, and Genesis of the Copper zone at the Brunswick No. 6 Volcanogenic Massive Sulfide Deposit, Bathurst Mining Camp, New Brunswick, Canada K.L. MacLellan, D.R. Lentz, and S.H. McClenaghan, Department of Geology, University of New Brunswick A Cu-rich pyrrhotite-pyrite zone that occurs at the base of the Brunswick No. 6 Pb-Zn massivesulfide lens is part of a south-plunging synclinal sheath fold. Pyrite, pyrrhotite, chalcopyrite, sphalerite, and magnetite are the major opaque minerals. The interpreted zone refining is consistent with: (1) the relatively high pyrrhotite-to-pyrite abundance and the higher abundance of chalcopyrite; (2) lower sphalerite, galena, tetrahedrite-tennantite, arsenopyrite, and cassiterite abundances in the Cu zone; and (3) the low S/Se ratio typical of other Cu-rich zones. This interpretation is consistent with the similarity of ‰34S values for the Cu and Pb-Zn zones.

A Physical Volcanological, Chemostratigraphic, and Petrogenetic Analysis of the Little Falls Member, Tetagouche Group, Bathurst Mining Camp, New Brunswick W.S. Downey, Department of Geology, University of New Brunswick, S.R. McCutcheon, New Brunswick Department of Natural Resources, Geological Surveys Branch, and D.R. Lentz, Department of Geology, University of New Brunswick The Little Falls member of the Nepisiguit Falls Formation is situated in the northern part of the Brunswick Belt of the Bathurst Mining Camp and has been interpreted as the distal equivalent of proximal tuffaceous rocks that host the stratiform Brunswick No. 12 and No. 6 Pb-Zn massive sulfide deposits. The relationship of volcanic facies within the Nepisiguit Falls Formation and the geochemistry of these facies indicate strongly that fine grained, Excerpts taken from abstracts in EMG, Vol. 15, Nos. 3 and 4. reworked tuffaceous rocks are not associated with the Subscribe—www.cim.org/geosoc/indexEMG.cfm major ore-bearing horizons of the Bathurst Mining Camp.

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CIM Magazine n Vol. 2, N° 3

2007 Seminar Series PROFESSIONAL DEVELOPMENT

STRATEGIC RISK QUANTIFICATION and MANAGEMENT for ORE RESERVES and MINE PLANNING

For information please contact: Delores LaPratt Department of Mining, Metals and Materials Engineering McGill University, Montreal, QC Email: admcrc.mining@mcgill.ca Phone: 514.398.4755, ext. 089638 Fax: 514.398.7099 Website: www.cim.org For registration please contact: Chantal Murphy Meetings Coordinator, CIM Suite 855, 3400 de Maisonneuve Blvd., W Montreal, QC H3Z 3B8 Email: cmurphy@cim.org Phone: 514.939.2710, ext. 1309 Fax: 514.939.2714 Website: www.cim.org

Upcoming 2007 Seminars

• Applied risk assessment for ore reserves and mine planning: conditional simulation for the mining industry May 16-18, Montreal Roussos Dimitrakopoulos, McGill University, Canada This three-day course presents a new generation of applied conditional simulation technologies for assessing orebody uncertainty and effects on risk analysis and cash flow considerations. Emphasis is placed on the downstream practices pertinent to the feasibility, design, development, and planning stages of mining ventures, as well as in the financial optimization of relevant aspects of operations and production.

• Strategic risk management and applied optimization in mine design May 23-25, Montreal David Whittle, BHP Billiton, Australia; Roussos Dimitrakopoulos, McGill University, Canada; and Manuel Arre, Gemcom Software Int., Canada Learn how you can have a significant, positive impact on your company’s bottom line by utilizing strategic mine planning methodologies and software: – Find out how mining professionals minimize risks and produce optimal pit designs by using strategic mine planning processes, next generation optimization methods, and Whittle software.

– Discover how new developments in multi-pit optimization and stockpiling will help you capture the “upside potential” in mine designs and minimize “downside risks” through a better understanding of the effect of the mining sequence on optimal pit limits.

Upcoming 2007 Seminars • Computer simulation and animation for the mining industry: mine design, mine planning, and equipment selection June 6-8, Montreal John Sturgul, University of Idaho, USA • Geostatistical mineral resource/ore reserve estimation and meeting the new regulatory environment: step-by-step from sampling to grade control September 24-28, Montreal Michel Dagbert, Geostat Systems International, Canada; Jean-Michel Rendu, Consultant, USA; and Roussos Dimitrakopoulos, McGill University, Canada • Theory and practice of sampling particulate materials October 1-3, Montreal Dominique François-Bongarçon, AGORATEK, USA

Upcoming 2008 Seminars

Mining Engineering

• Mineral project evaluation techniques and applications: from conventional methods to real options April 24-27, Montreal Michel Bilodeau, McGill University, Canada, and Michael Samis, AMEC, Canada

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Get ready for summer with CIM The June/July issue of CIM Magazine will include the official program of the Conference of Metallurgists, COM2007, and Cu2007, the world’s top cop-

per conference being held in conjunction with COM. Browse the enormous technical program and set your conference schedule—be sure to register on time!

There’s more—Canadian companies are active the world over. Find out what you need to know to

maximize your potential for international operations and exporting. From case studies to how-to’s, the Exporting and the Global Industry section will have what you need.

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voices from industry

Continuing the mining tradition

by Carol Plummer, mine manager, Lapa Division, Agnico-Eagle Ltd. CIM recently asked Carol Plummer what drew her to a career in mining, and how her gender has had an impact on her career development. We felt Carol’s response had to be shared—she represents the passion for this industry and the strength of character common throughout industry’s leaders.

I have always known that I would work in the mining industry. My family has been in mining for generations and mining was part of discussions around the dinner table for as long as I can remember.

The first time I visited underground with my father I was 10 years old. I loved the noise, the equipment, and even the smell of diesel. The visit just reinforced my conviction that I would work underground. My parents have the attitude that if you want to do something badly enough you will work hard enough to make it happen. Thus, I never heard “you can’t do that - you’re a girl” growing up. I suppose that has largely contributed to my “can do” attitude and my career success to date.

Throughout my life, I have witnessed examples of triumph over barriers and the power of determination. To me, the will to take on challenges and strive towards a goal was simply part of life, and the ability to think outside the box—to embrace change—an asset. For example, when we were living in northern Manitoba in the 1970s, the company my father worked for was opening a new mine in a nearby town. They wanted to mine an open pit while developing the shaft. They didn’t have enough workers available and solved the problem by recruiting the miner’s wives. These ladies worked alongside their men and brought the mine into production. Most of them chose not to transfer underground, but for a short period, the percentage of female employees was much higher than the national average.

Throughout my career, I have worked with great people that allowed me to develop as an engineer and a leader. When I went underground as a supervisor at Brunswick Mines in 1989, the person who was training me as his replacement was quite a joker. The crew decided to play a joke on him shortly into the training. They refused to listen to him, claiming he was no longer their boss - I was. He huffed and argued but they pretended he didn’t exist in order to pull his leg. In addition, they would follow any instruction I gave them immediately and to the letter. This went on for a couple of days and by the time they tired of the joke, they had become accustomed to having me as a boss and everything went smoothly from there.

Any new worker in the mining industry, male or female, will succeed and be happier if they can approach their day with a sense of humour. Afterall we all have “one of those days” sometimes. Occasionally, a tough skin is necessary until people start to see what you can do instead of your gender. I think that my positive attitude has helped me along the way.

If I had one piece of advice, it would be for women who are already in the industry and welcoming in others. Just because you had to be “better” in order to be accepted doesn’t mean that you should apply an unreasonably high standard to newcomers.

Sometimes it pays to sit back and ask yourself if you would have the same expectations of a new male employee. Be patient, lend a hand, and be supportive. Afterall, 50 per cent of the world’s available workforce is female. n Carol Plummer is chair of the Women in Mining Forum at the CIM Conference and Exhibition—the first such session encouraging women to exchanges ideas and share strategies with the minerals industry HR personnel and leaders to help foster a growing number of female workers in mining.

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CIM Magazine n Vol. 2, N° 3

FirST IN MAKING TIRES LAST.

/52 #/--)4-%.4 '/%3 &524(%2 4(!. -!+).' 15!,)49 4)2%3 7E RE THERE LONG AFTER THE SALE TO MAKE SURE YOU GET THE MOST FROM YOUR INVESTMENT 3EE HOW FAR OUR COMMITMENT WILL TAKE YOU AT WWW BFOR COM

7ESTERN #ANADA OR %ASTERN #ANADA

TEAMWORK MOVES MINING

When you work with the Cat Global Mining team, you get more than quality products and services; you get a team solely focused on the mining business.

Recently, when the global tire shortage threatened mining operations all over the world, Cat Global Mining, Cat Global Purchasing and our Dealer Network worked closely with suppliers and customers to develop alternatives—like bias tires instead of radial, alternate tire sizes, retread options and bringing on new suppliers.

Together, we also developed ways to extend tire life—like adjusting loads, improving haul roads and training drivers on how their driving can decrease wear. Through these practices, mine sites documented up to 15% improvements in tire life.

Teamwork provides results. Teamwork keeps the mining industry moving forward.

CAT GLOBAL MINING www.cat.com

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