CIM Magazine May 2013 by CIM-ICM Publications

TECHNOLOGIES THAT ARE TAILORED FOR YOUR OPERATION

© 2013 Caterpillar. All Rights Reser ved. CAT, CA ATERPILLAR, T their respective logos, “Caterpillar Yellow,” the “Power Edge” trade dress as well as corporate and product identity used herein, are trademarks of Caterpillar and may not be used without permission.

Chromium Management for the Mining Industry

Workshop Facilitators:

Operations & Maintenance Best Practices – Underground Mining Challenges in Saskatchewan

Presenters:

- Jim Higgins, Senior Executive Consultant, Stantec - Angus McGrath, Principal Geochemist, Stantec - Al Mattes, Sub-consultant, Stantec

- Brian Mashford, Director, Engineering, Stantec - Timo Tikka, Senior Consultant, Stantec

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- Design and construction of the world’s tallest structural steel headframe for ground-mounted mine hoists Operations & Maintenance Best Practices – Underground Mining Innovations that are changing the way we mine

Chair: Mike Wilson, Senior Consultant, Stantec

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CONTENTS|CONTENU CIM MAGAZINE | MAY 2013 | MAI 2013

TOOLS OF THE TRADE 16

The best in new technology Compiled by H. Mathisen

NEWS 22 32

Industry at a glance Is perception reality? Examining the methodology

and usefulness of the Fraser Institute’s mining survey by V. Heffernan

34 36 38 40

The North comes of age Federal and territorial government initiatives to increase northerners’ say in resource development by V. Danielson A new plant in the Prairies Saskatchewan Research Council rolls out pilot processing plant and QEMSCAN service by D. Neary A taxing budget for miners Extension and elimination of tax incentives for mining loom large in Canada’s budget by H. Mathisen Redevances : on se prépare pour la tempête Le gouvernement du Québec propose d’augmenter le taux d’imposition du secteur minier par P. Diekmeyer

Quebec proposes raising royalty rates Industry braces for impacts of further mining tax increases by P. Diekmeyer

COLUMNS 44 46 48 50 52

MAC Economic Commentary Mining and Canada’s North: build it and they will come by B. Marshall Eye on Business Contemplating competitor collaborations by M. Katz HR Outlook Mining sector must build and cultivate talent pool by R. Montpellier Finance Enterprise value and new mining projects by M. Chiesa Standards Introducing the CIM Definition Standards Consultation project by P. Bankes

UPFRONT Award-winners and HR Leaders 54 56 58 62

Canada’s first Carlin-type gold discovery How ATAC’s team located “no-seeum” deposits in Yukon’s Rackla gold belt by G. Chandler The right people at the right time Goldcorp establishes a new graduate program by S. Rees First place Finnish Finland has excellent geology and business culture – but do not go in poor by E. Moore

King of the mountain Copper Mountain CEO and recent hall of fame inductee Jim O’Rourke on his life in mining by E. Moore

54 6 | CIM Magazine | Vol. 8, No. 3

www.fortiscorporation.com

Success Through Innovation Fortis is a Saskatoon-based company that provides mining, engineering and manufacturing services to the mining and construction industries. The company has a global focus and offers contracting, subcontracting and consulting services to a wide range of customers. Fortis is able to provide services that meet or exceed the customersâ&#x20AC;&#x2122; delivery, safety and quality requirements by utilizing a highly skilled work force.

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TECHNOLOGY Shafts & Hoists 83

Lifeline of the mine Innovations in wire rope construction and monitoring improve performance and availability for deep mines by E. Moore

CIM COMMUNITY 86

It takes two in Toronto CIM Branches thrive in Canada’s premier mining metropolis by A. Lopez-Pacheco

FEATURE | ARTICLE VEDETTE 66

No illusions In tough times, focusing on project definition and scoping is essential for

moving operations forward by I. Ewing Aucune illusion Lorsque les temps sont durs, il faut bien définir les projets et leur portée pour développer vos activités par I. Ewing

66 90

Exploring a world of new opportunities Incoming president Robert Schafer brings his professional and volunteer know-how to CIM by K. Lagowski Explorer de nouvelles possibilités Le nouveau président Robert Schafer mettra son savoir-faire professionel et ses connaissances acquises à titre de bénévole au service de l’ICM par K. Lagowski Welcoming francophone Africa Canada signs investment agreements with Cameroon and Zambia at CIM-hosted Franco-Mine 2013 by K. Korducki

Souhaitons la bienvenue à l’Afrique francophone Le Canada conclut des APIE

PROJECT PROFILE | PROJET EN VEDETTE 76

avec le Cameroun et la Zambie à l’événement Franco-Mine 2013 organisé par l’ICM par K. Korducki

Tungsten trailblazer Northcliff Resources intends to capture more value at its Sisson project in New Brunswick by upgrading tungsten to marketable ammonium paratungstate – a Canadian first by G. Chandler

TECHNICAL ABSTRACTS

Les pionniers du tungstène Northcliff Resources compte accroître la valeur de son

projet Sisson au Nouveau-Brunswick en transformant le tungstène en paratungstate d'ammonium – une première au Canada par G. Chandler

8 | CIM Magazine | Vol. 8, No. 3

CIM Journal

IN EVERY ISSUE 12 14 92 97 97 98

Editor’s letter President’s notes | Mot du président Calendar Innovation showcase Professional directory Mining lore by C. Baldwin

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Editor-in-chief Ryan Bergen, rbergen@cim.org Executive editor Angela Hamlyn, ahamlyn@cim.org Managing editor Andrea Nichiporuk, anichiporuk@cim.org

editor’s letter

A teachable moment

Section editors News and Tools of the Trade:

Peter Braul, pbraul@cim.org Herb Mathisen, hmathisen@cim.org Columns and CIM Community:

nvestors’ faith in mining operations is not what it was even a year ago. Nor is their willingness to forgive ill-conceived projects, production delays and cost escalation. The “production at any cost” mentality of a few years back now haunts operators, as mines and plants, rushed through the planning stage, have oversights and missed opportunities built into them. But the bright side of this is that many lessons have been learned and are now being applied. In “No Illusions,” (p. 66) the feature for this issue, Ian Ewing details some of these instances – both for projects that have already been built and those that are still in the planning stage. Careful scoping and definition, and an unwavering focus on cash flow, he reports, must be the foundation if a project or a series of them is to pay off. With these ideas in mind, it is a nice coincidence to be able to report in “No detours for Detour” (p. 24) that Detour Gold recently poured its first gold bars and brought its second production line into operation. The thorough, measured approach the company described to CIM Magazine in an article last August seems to be proving itself for the new producer. This issue also corresponds with a changing of the guard as Robert (Bob) Schafer assumes the mantle of CIM president from Terence Bowles at the annual convention in Toronto. I would like to thank Terry for his thoughtful contributions to CIM Magazine ’s “President’s notes,” as well as for the vision, leadership and engagement he has brought to CIM. For those of you who may not have crossed paths with Bob – an energetic volunteer in the industry who has worked alongside hall of fame miners and made some storied finds himself – I would encourage you to read our profile of him, “Exploring a world of new opportunities” (p. 88). As I write this, the CIM National Office is vibrating with activity in the lead-up to our annual convention. And beyond this office tower, many of you have been volunteering your own time, expertise and energy to organize and contribute to our flagship event, not to mention the many other events, activities and outreach that take place on behalf of CIM. Enormous thanks are due to all of you, as well.

Ryan Bergen, Editor-in-chief editor@cim.org @Ryan_at_CIM_Mag

Herb Mathisen, hmathisen@cim.org Feature and Upfront: Peter Braul, pbraul@cim.org Project Profile and Technology: Ryan Bergen, rbergen@cim.org Technical Section: Andrea Nichiporuk, anichiporuk@cim.org Copy editor/Communications coordinator Zoë Koulouris, zkoulouris@cim.org Web editor Nathan Hall, nhall@cim.org Editorial intern Maria Olaguera, molaguera@cim.org Contributors Correy Baldwin, Paul Bankes, Graham Chandler, Mauro Chiesa, Vivian Danielson, Peter Diekmeyer, Ian Ewing, Virginia Heffernan, Mark Katz, Kelli Korducki, Krystyna Lagowski, Alexandra Lopez-Pacheco, Brendan Marshall, Ryan Montpellier, Eavan Moore, Derek Neary, Simon Rees Translations SDL and Erik Stout Published 9 times a year by the Canadian Institute of Mining, Metallurgy and Petroleum 1250 – 3500 de Maisonneuve Blvd. West Westmount, QC, H3Z 3C1 Tel.: 514.939.2710; Fax: 514.939.2714 www.cim.org; Email: magazine@cim.org Subscriptions Included in CIM membership ($170.00); Non-members (Canada), $220.00/yr (PE, MB, SK, AB, NT, NU, YT add $11.00 GST, BC add $26.40 HST, ON, NB, NL add $28.60 HST, QC add $32.95 GST + PST, NS add $33.00 HST) Non-Members USA and International: US$240.00/year. Single copies, $25.00. Advertising Sales Dovetail Communications Inc. 30 East Beaver Creek Rd., Ste. 202 Richmond Hill, Ontario L4B 1J2 Tel.: 905.886.6640; Fax: 905.886.6615; www.dvtail.com National Account Executives 905.886.6641 Janet Jeffery, jjeffery@dvtail.com, ext. 329 Neal Young, nyoung@dvtail.com, ext. 325

This issue’s cover Exploration planning at Antofagasta Minerals’ operations in Chile Courtesy of Antofagasta Minerals Layout and design by Clò Communications Inc. www.clocommunications.com Copyright©2013. 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 12 | CIM Magazine | Vol. 8, No. 3

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president’s notes | mot du président

A growing community How time flies! Once the latest CIM Convention concludes this May, so too does my term as president. As for the highlights of the past year, the financial results for 2012 are very positive, driven by increased event and advertising revenues. We had a very successful annual conference in Edmonton and are looking forward to Toronto 2013. Membership in CIM has reached a record level of 14,400 members and, over the last two years, membership revenues have risen by 40 per cent. CIM continues to grow after more than 115 years of existence. We continue to extend our international reach, accompanying Canadian mining companies and CIM members seeking opportunities abroad. For example, the Franco-Mine event, which was organized in collaboration with the Trade Commissioner Service of the Government of Canada, as well as the Government of Quebec’s Ministry of Natural Resources, attracted a capacity crowd of more than 150 representatives from business, financial institutions and

government, including mine ministers from Burkina Faso, Gabon, Mali and Niger. Speakers at the event included Ed Fast, Canada’s minister of international trade, who highlighted CIM’s collaborative efforts with Canada’s foreign affairs and trade commissioner network in West Africa and the opening of CIM’s first African branch in Dakar, Senegal. Martine Ouellet, minister of natural resources of Quebec, also presented with regard to Quebec’s mining development model. The past year has provided me the opportunity to appreciate the diversity and strength of the mining industry in Canada, and the role that CIM plays as the premier technical society for mining industry professionals, especially as they navigate these turbulent and changing times. Our past and ongoing success comes from our dedicated volunteers serving in branches and societies, and on council, as well as our dynamic national office staff in Montreal. I thank you all. It has been an honour and a privilege serving as CIM president, and I am looking forward to seeing many of you at Toronto 2013.

Terence Bowles, CIM President

Une communauté en expansion Comme le temps passe vite! À la clôture du congrès de l’ICM, en mai, mon mandat de président se terminera aussi. Pour ce qui est des points saillants de la dernière année, nous pouvons dire que les résultats financiers de 2012 sont excellents, grâce notamment à l’accroissement des revenus des événements et des recettes publicitaires. Le congrès annuel à Edmonton a été un grand succès, et nous avons hâte à celui de Toronto en 2013. L’effectif de l’ICM a atteint le nombre record de 14 400 membres et, depuis deux ans, les revenus tirés de cette source ont augmenté de 40 %. L’ICM continue de croître après plus de 115 ans d’existence. Nous continuons d’étendre notre portée sur la scène internationale, en accompagnant les sociétés minières canadiennes et les membres de l’ICM à la recherche d’occasions à l’étranger. L’événement, organisé en collaboration avec le Service des délégués commerciaux du gouvernement du Canada et le ministère des Ressources naturelles du Québec, a rempli ses salles avec plus de 150 représentants du milieu des affaires, d’institutions financières et de gouvernements, y compris les ministres responsables des mines du Burkina Faso, du Gabon, du Mali et du Niger. Parmi les conférenciers à l’événement, mentionnons Ed Fast, le ministre du Commerce international du Canada, qui a souligné la collaboration de l’ICM avec le réseau des délégués aux affaires étrangères et des délégués commerciaux en Afrique occidentale; et

14 | CIM Magazine | Vol. 8, No. 3

l’ouverture de la première section africaine de l’ICM à Dakar, au Sénégal. Martine Ouellet, ministre des Ressources naturelles du Québec, a également fait une présentation sur le modèle de développement minier du Québec. La dernière année m’a donné l’occasion d’apprécier la diversité et la vigueur du secteur minier du Canada et le rôle que l’ICM y joue en tant que société technique de première importance pour les professionnels de l’industrie minière, en particulier en ces temps houleux et changeants. Nous devons notre réussite passée, présente et future à nos bénévoles dévoués dans les sections et les sociétés et au conseil d’administration, de même qu’au personnel dynamique de notre bureau national à Montréal. Je vous remercie tous. Je suis honoré et privilégié d’avoir servi comme président de l’ICM, et je suis impatient de voir bon nombre d’entre vous au congrès 2013 à Toronto.

Terence Bowles, Président de l’ICM

TECHNOLOGY

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OF TOOLS THE TRADE

the best in new technology

The Explosion-Proof Dual Function Headlight, designed by Larson Electronics, is setting itself up to become the next generation in headlamps. The light-weight headlights are class 1-, division 1-approved, meaning they are certified for use in explosive environments. “It’s small enough that you can actually roll it up and shove it in your pocket when you’re done,” says Rob Bresnahan, co-owner of Larson Electronics. The lights run on AAA-batteries and have a runtime of between 13.5 and 18 hours, eliminating the battery pack and cable required with traditional halogen bulb headlamps. The LED headlight requires no maintenance, and it has a total expected life of 50,000 hours. The light can also be adjusted from 120 lumens to 70 lumens, depending on the environment where work is taking place. This is particularly useful, says Bresnahan, when working around panel boxes or other reflective material. “You don’t get so much reflection in your face, so it makes it easier to work.”

Courtesy of Larson Electronics

Courtesy of Mintec Inc.

◢ Light headed

Geologists can save valuable time when building mineral deposit models or grade shells by using Mintec Inc.’s new MineSight Implicit Modeler. Mark Gabbitus, business development manager, says geologists typically load their drill hole data in two-dimensional (2D) sections before beginning this task. “They work in a 2D section and they make their own interpretation around the drill holes of where they think the ore body is, or where the geology is, and then they link those sections together to make it solid,” he explains. “It’s a very time-consuming process.” While Gabbitus says his company’s product does not reduce the role of, or expertise required from, an experienced geologist, it eliminates much of the manual work. “What the Implicit Modeler does is it uses a mathematical function – a radial basis function – and that takes the raw data and builds a surface in three dimensions directly from the drill holes and some user points,” he says. “It can save a geologist months of time.” During exploration work, companies conducting widespaced drilling programs can also use the program to determine where to drill next.

16 | CIM Magazine | Vol. 8, No. 3

◢ More breathing room ABC Industries Inc.’s new TruOval MineVent ducting has been designed to increase headroom and reduce failure points for underground mining ventilation systems. Unlike many other ducting systems on the market, the company does not use solid centre panels to hold the oval lay-flat blower ducting open. Will Linnemeier, vice-president of sales, says panels cause air turbulence within ducts and create potential for rips. “We actually use a cable system so that there are no failure points with our product,” he notes. “The entire inside of the duct is open, so you don’t restrict the airflow and you’ve got better air movement throughout the length of the duct. The fittings are a lot smaller and easier to handle as well.” The Indiana-based company can configure its duct diameter sizes from 18 inches up to 66 inches. The ducting, used in development tunnels and stopes, is made of a high-strength PVC fabric that the company manufactures itself. The product is already in use at hard rock mines in Nevada. Courtesy of ABC Industries

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OF TOOLS THE TRADE

the best in new technology

Courtesy of Two Rivers Marketing

Launched in March, Boart Longyear’s LF120A Surface Drill Rig allows operators to handle rods remotely from a control panel as far as 15 feet away. Rod handling usually means manually placing rods in a chuck, says Sid Gaitonde, global product manager for surface coring drills. “There are a lot of moving parts around and inevitably somebody gets hurt. We wanted to get away from that.” Boart Longyear’s new system also has a PC-controlled drill monitor with an LCD touch screen that will alert operators if a valve is not operating properly, making troubleshooting easy. And it lets supervisors plug in minimum and maximum RPM and torque parameters to guide inexperienced drillers. This optimizes drilling and, consequently, saves fuel. “It really adjusts to the drilling conditions, so the engine is not always running at high RPMs, pumping the maximum horsepower,” says Gaitonde. The LF120A can drill to dry depths of 1,200 metres and since the engine is completely enclosed, noise is reduced to 76 decibels from conventional drilling levels of 93 decibels.

Courtesy of Volts Energies

◢ Hands-free drilling

◢ Remote energy Volts Energies wants to help exploration companies that operate off the grid reduce their fuel costs. The Quebec-based company has been building custom generators for exploration companies so they can recoup and reuse the heat generators emit. This co-generation captures energy typically lost from a generator to heat a building or water. “Usually a generator is around 34-per-cent efficient and we can get up to over 80 per cent efficiency,” says Sébastien Caron, company president. The company does energy efficiency audits to monitor how a client uses energy and also to gauge its needs. Caron says they specialize in off-grid hybrid systems by using renewable energy like windmills and photovoltaic panels to produce electricity, along with diesel generators. He says their hybrid model is fairly unique, since most energy consultants side either with generators or renewables. “One says, ‘Do not use generators, they pollute too much,’ and the other says, ‘Solar power is not good enough, it won’t give you enough energy.’ The best thing to do is to combine both.”

Geovia released its InSite 4.3 software in mid-March, giving geologists, engineers and management the ability to monitor operations and processing productivity. This latest version has enhanced variance analysis, letting customers discover what is causing actual production to deviate from planned targets. “A large part of our focus recently has been related to the variance analysis,” says Marni Rabassó, vice-president of product management. When companies understand where differences between goals and reality occur, they can reconcile them, and Rabassó adds the program can cut reconciliation work down from weeks to mere days. “What you want to do with that information is update your plans to make them more realistic or more optimal,” she says. “You can use the information about what’s happened in the past to plan or 18 | CIM Magazine | Vol. 8, No. 3

Courtesy of Geovia

◢ Productivity monitors

to improve the production planning so that you get more predictive plans, so you can actually hit your production targets the next go around.” InSite 4.3’s user-interface runs through a web browser and can connect to automated fleet dispatch systems for data collection. Mines without such systems can still use InSite 4.3, as it also allows for manual data entry.

OF TOOLS THE TRADE

the best in new technology

By using Spectro’s new portable Spectroscout XRF Analyzer, exploration geologists are able to acquire laboratory-grade mineral analysis while they work in remote locations. This avoids the weeks-long task of sending samples to a lab for analysis. The portable XRF analyzer gives geologists sample results in 10 seconds and can measure for elements ranging from sodium to uranium on the periodic table. In the field, the device can reveal elements that are typically present in certain concentrations around coveted deposits. The analyzer, which weighs roughly 12 kilograms and can be carried with a shoulder strap, has a battery life of five to six hours and can even be powered using a vehicle’s 12-volt power outlet. It has a weather-resistant, rugged design and is fully contained with no external computers or other devices required. The company also makes an analyzer focused on examining soil compositions, which is useful for remediation work.

Designed in Spain by Xcentric Ripper, the product of the same name uses a patented impact vibration accumulation technology to break rock at a single point of contact. The ripper is attached to the end of an excavator, allowing workers to use it to break rock on steep slopes. “It vibrates through to the tip of the unit and basically allows it to penetrate and then shake apart any of the surrounding areas,” says Tyler Schell, territory manager with Shearforce Equipment – the product’s North American distributor. The ripper is used at a gold mine near Kamloops, B.C., where it breaks extremely hard frost and glacial till material. Schell says before using the Xcentric Ripper, the company tried to break the material with an excavator dig bucket and it could barely scratch the surface. The ripper is a closed system that uses bio-rated fuels and, because it does not leak or weep oil, it can run under water.

Courtesy of Shearforce Equipment

◢ Rock ripper

Courtesy of Spectro

◢ Field laboratory

Superior Industries’ revamped Swing Axle Telestacker Conveyor can cut down set-up times associated with transporting or moving stacker conveyors by as much as 80 per cent. Traditionally, converting a conveyor for transport meant installing multiple sprockets and power travel chains – steps that could take as long as 30 minutes to complete. Superior Industries has eliminated the use of chains and sprockets, and power travel can now be engaged by simply using a pre-installed t-handle mechanism. “We updated the design to eliminate more than 45 minutes from the set-up of this style of radial stacker,” says Corey Poppe, marketing manager. Some companies, Poppe says, move their conveyors on a monthly or a weekly basis and the improved design lets them do this in just five to 10

Courtesy of Superior Indutries

◢ Stacking up the time savings

minutes. It also allows customers to align their tires more effectively, which reduces scuffing.

Compiled by Herb Mathisen 20 | CIM Magazine | Vol. 8, No. 3

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news | industry at a glance Courtesy of Imperial Oil

be accommodated in the existing pipeline system and the blended bitumen market,” said Pius Rolheiser, an Imperial Oil spokesperson. “However, volumes from Kearl will be subject to the same forces currently constraining other bitumen volumes. Imperial and ExxonMobil’s own refineries in North America provide us an additional degree of flexibility and options not available to – Herb Mathisen all producers.”

A tale of two surveys Imperial Oil and ExxonMobil Canada’s $12.9-billion joint venture Kearl oil sands mine near Fort McMurry had produced bitumen froth by early April.

Kearl starts up The massive $12.9-billion Kearl oil sands mine produced its first bitumen froth in early April and, as production trains started up, was expected to produce its first diluted bitumen soon after. The project, located 70 kilometres

north of Fort McMurray, is a joint venture of Imperial Oil and ExxonMobil Canada, and is expected to produce 110,000 barrels per day (bpd) during its initial development stage, and 345,000 bpd by 2020. “We continue to believe volumes from the Kearl initial development can

Because you can’t afford to spill a single drop, there’s Westeel.

Leading up to the Quebec government’s mining royalties forum in March (see Quebec proposes raising royalty rates, p. 42), surveys from two different organizations painted contradicting pictures of Quebecers’ willingness to increase mining royalties. La Fédération des Chambres de Commerce du Québec (FCCQ) released survey results in late February, reporting that 80 per cent of Quebec respondents opposed increases to mining royalties,

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with 57 per cent believing the industry paid its fair share. A week later, the Canadian Boreal Initiative (CBI) released results from its own survey that showed little support for the province’s mining industry, with 55 per cent of respondents indicating that the current royalty regime was too weak. On closer inspection, FCCQ’s survey employed a mutually exclusive option, giving respondents a choice between government spending money more carefully or raising taxes on all businesses and mining companies in particular. CBI, on the other hand, cited in a preamble to its question the fact that in 2010 and 2011, $14.9 billion worth of materials were extracted in Quebec and $667 million was paid in taxes and royalties by mining companies. It also explained that companies pay royalties on profits after deductions, before asking respondents if they thought the regime was fair, too weak or too strong. – H.M.

Courtesy of Detour Gold

news | industry at a glance

A newly poured gold bar from the Detour Lake mine

No detours for Detour There is no getting around the progress being made at the Detour Lake gold mine. After pouring its first four gold bars in mid-February, Detour Gold was in the process of commissioning its second production line last month, putting it on course to begin commercial

production by the third quarter of 2013. “We are very excited about what we have accomplished in six years, from completing the acquisition of the property on January 31, 2007, to our first gold pour,” stated Gerald Panneton,

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news | industry at a glance The Brunswick Mine will close its doors for good this month after operating for 49 years.

Courtesy of Terry MacDonald, Brunswick mine/Xstrata

Detour Gold president and CEO, in a release. â&#x20AC;&#x153;We are looking forward to the future as we move closer to becoming Canadaâ&#x20AC;&#x2122;s leading intermediate gold producer.â&#x20AC;? Located roughly 260 kilometres northeast of Timmins, Ontario, the Detour Lake operation is poised to become Canadaâ&#x20AC;&#x2122;s largest operating gold mine, according to the company. While it expects to produce between 350,000 to 400,000 ounces of gold this year, the company aims to produce 657,000 ounces per year once the mine reaches full-scale production. The mine life is projected for 21.5 years, with open pit mineral reserves of 15.6 million ounces â&#x20AC;&#x201C; H.M. of gold.

opened in 1964 and, over its 49 years, operators mined 136 million tonnes from the no. 12 ore body and produced 148 million tonnes of zinc from its mill. The mine has outlived expectations. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve been able to stay productive Brunswick mine and cost-effective in mining essentially to close in May low-grade ore that was left behind and was never part of any of the mining After nearly 50 years of operation, plans,â&#x20AC;? said James Cormier, superintenXstrataâ&#x20AC;&#x2122;s Brunswick mine near Bathurst, New Brunswick, has put the last of its dant for the environment and community affairs. The mine is currently ore through the mill. The zinc mine first working through its transition plan, hoisting all of its underground cable operated equipment to the surface for recycling and re-use. A third-party company will be demolishing the mineâ&#x20AC;&#x2122;s infrastructure and the tailings basin will be secured. â&#x20AC;&#x153;All in all, itâ&#x20AC;&#x2122;s a five-year project for the reclamation of the site, which then basically puts us into a care-andmaintenance mode that will go Broken Cable Detection into perpetuity,â&#x20AC;? Models Available v )3/ 2EGISTERED said Cormier. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a big loss,â&#x20AC;? Wrrite or Call today for fo More Information! said Yvon Godin, CONVEYOR COMP PONENTS COMP PANY A NDP member of 3%,4:%2 2$ s 0 / "/8 s #2/37%,, -) nÂŁĂ¤Â°Ă&#x2C6;Ă&#x2021;Â&#x2122;Â°{Ă&#x201C;ÂŁÂŁĂ&#x160;UĂ&#x160;nĂ¤Ă¤Â°Ă&#x201C;Ă&#x17D;Ă&#x17D;Â°Ă&#x17D;Ă&#x201C;Ă&#x17D;Ă&#x17D;Ă&#x160;UĂ&#x160; 8Ă&#x160;nÂŁĂ¤Â°Ă&#x2C6;Ă&#x2021;Â&#x2122;Â°{xÂŁĂ¤ parliament for www.conveyorcomponents.com Acadie-Bathurst info@conveyorcomponents.com and a former Brunswick mine

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miner. â&#x20AC;&#x153;It was one of the biggest zinc mines in the world. At one point in time, it was employing 1,700 workers.â&#x20AC;? â&#x20AC;&#x201C; H.M.

Suncor grounds Voyageur In late March, Calgaryâ&#x20AC;&#x2122;s Suncor Energy announced its intention to scrap the construction of its planned Voyageur upgrading plant near Fort McMurray. The project, with a 2008 price tag of about $11 billion, was a joint venture between Suncor (51 per cent) and Franceâ&#x20AC;&#x2122;s Total SA (49 per cent). It proposed to upgrade product from Suncorâ&#x20AC;&#x2122;s mines at a rate of 200,000 barrels per day into premium synthetic crude, ultra-low sulphur diesel and low sulphur diluent. â&#x20AC;&#x153;The global market has shifted,â&#x20AC;? said Sneh Seetal, spokesperson for Suncor. â&#x20AC;&#x153;A rise of tight oil has increased competition for light sweet refining capacity and margins are decreasing.â&#x20AC;? Suncor took a writedown of $1.48 billion on the project last February. â&#x20AC;&#x153;We considered our commitment to allocate capital according to our priorities of funding the base business, developing higher-return growth projects and accelerating the return of cash to shareholders through dividends and share buybacks,â&#x20AC;? said Seetal. â&#x20AC;&#x201C; H.M.

Vote for mining in B.C. To prepare for British Columbiaâ&#x20AC;&#x2122;s May 14 election, mining organizations in the province have teamed up to raise voter awareness about mining issues. The Mining Association of BC (MABC), the Association for Mineral Exploration BC, Mining Suppliers Association of BC and the Coal Association of Canada are behind the VoteMining.ca website, a resource where residents can access facts and information about the importance of a thriving mining industry to the province and its economy. â&#x20AC;&#x153;This is not intended to support the election of a particular party,â&#x20AC;? said ZoĂŤ Younger, MABC vice-president of corporate affairs. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s intended to be entirely non-partisan but focused on the objective of supporting the industry.â&#x20AC;? Younger added the election will feature many first-time candidates and the website can inform those new candidates about the mining industry. It will

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news | industry at a glance provide party leaders with a collaborative list of the mining industry’s key issues and priorities. The group will be active on Twitter and other social media platforms to engage voters and to dispel murky perceptions about mining. “It’s really about trying to help inform the discussion and the thinking about our industry,” Younger said. “We’re not always looking for a positive response to some of our proposed projects, but we certainly want a wellinformed, fact-based decision when we get to one.” – H.M.

Canadian mineral production value drops After reaching record heights in 2011, the overall value of Canada’s mineral production fell last year due mainly to weakened demand and lower commodity prices brought on by the pervading uncertainty in global markets. In new numbers released by Natural Resources Canada (NRCan), mineral

28 | CIM Magazine | Vol. 8, No. 3

production values in Canada fell 7.9 per cent last year, from $50.9 billion in 2011 to $46.9 billion in 2012, even though production decreases were far less significant. Values for metals and non-metals fell 7.7 and 5.9 per cent, respectively. Coal was hit hard, with its value declining 14.5 per cent year-on-year due to a drop in prices. Overall nickel production value fell 28.6 per cent, diamonds dropped 20.1 per cent and uranium shrank 20.4 per cent in 2012. Gold value, however, gained 9.3 per cent, as overall production rose 1.7 per cent from 2011. Potash remained Canada’s top commodity in terms of production value, reaching $6.98 billion in 2012. – H.M.

Polish copper miners rescued An earthquake near the Rudna copper mine in Poland caused an underground collapse, stranding 19 miners for nearly nine hours. When the tremor hit at 10:09 p.m., 42 miners were in the G-3 Rudna Central mine; 23 of the miners were able to evacuate the area and get to safety. According to KGHM, the company that owns the mine, one of those who escaped was injured, with a cut to the head. For the next seven hours, mine rescue workers tried to reach the trapped miners, who were cut off from communications. Finally, at 5 a.m., the rescue workers made a breakthrough and by 7 a.m., nine hours after the

tremor, all 19 stranded miners were accounted for on the surface; only one of them was injured. The mine, located roughly 400 kilometres southwest of Warsaw, has been in operation since 1974. The company has set up a commission to look into the collapse. – H.M.

Uranium decision bad news for Strateco Quebec uranium exploration company Strateco came out swinging after the province decided to call for a public environmental review on uranium mining this fall. The process – known in Quebec as a BAPE, or bureau d’audiences publique sur l’environment – will put permitting on hold until it is completed. Strateco is no stranger to governmental delays. In January, the company took legal action against Quebec’s Environment Ministry, arguing it had been waiting since August 2011 for a decision on whether it could proceed with its underground Matoush exploration project. Guy Hébert, president and CEO of Strateco, said the government’s latest announcement, timed just prior to the four-day Easter holiday, came as a surprise. “We are still working with our lawyers regarding our legal options,” he said in early April. To date, Strateco said it has invested $120 million into its project. The Matoush project has faced opposition from the Eeyou Istchee Cree, who have called for a moratorium on uranium mining in the region. Strateco’s share price dropped from $0.12 to $0.04 after the announcement, rebounding to $0.06 by the end of that week. – H.M.

Western Potash gets provincial thumbs up The Milestone Solution Potash project, located 30 kilometres southeast of Regina, has cleared another hurdle after Saskatchewan’s Ministry of Environment approved owner Western Potash Corp.’s environmental assessment. “It’s the culmination of two and a half years of work,” said Dean Pekeski, the company’s executive vice-president. In early

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tonnes over 40 years – has been completed, he added. Pekeski said the initial capital required to build the project is $2.9 billion. “In today’s economic times and the state of the world economically, large capital projects like this can be a little bit challenging,” he said, adding the company was talking to various groups from around the world about different financing scenarios. “It’s taking some

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time to do that, but ultimately we’re satisfied with the progress we’re making. We feel that when we do get financing in place, our project is going to be very robust,” he said. Pekeski added that the payback period on the mine is estimated at 5.6 years, saying the project construction period would be roughly 3.5 years. A best-case scenario would see production begin by the fourth quarter of 2016. – H.M.

Injured Canadian mine worker wins record settlement It is probably not the way he wanted to make history, but 14 years after being injured at work, Luciano Branco, 62, has finally been compensated for his injuries in what legal firm Fasken Martineau said is the largest punitive award against an insurance company ever in Canada. In 1999, Branco was working as a welding supervisor at the then Cameco Corporation-owned Kumtor gold mine in Kyrgyzstan, when a large steel plate fell and landed on his foot. According to court documents, Branco was concerned his toes may have been chopped off, but he finished his shift and when he removed his boot, he found “his foot was still intact.” Branco has had difficulty walking ever since and has also developed reflex sympathetic dystrophy, said Alex Kotkas, a Fasken Martineau lawyer, who represented Branco during the trial. Kotkas said the insurance companies received many medical reports indicating that Branco was disabled – including reports from their own doctors – but they just refused to pay him. Branco sued the two companies: AIG and Zurich Life Insurance Company Ltd. “After he sued, one of the insurance companies [AIG] started to pay, but only periodically, and then they would keep cutting off his benefits for reasons that made no sense. Finally, they just stopped paying him altogether,” said Kotkas. “Zurich just never paid him.” In early April, the Court of Queen’s Bench for Saskatchewan ordered AIG to pay Branco $1.5 million and Zurich Life Insurance to pay him $3 million. – H.M.

news

Is perception reality? Examining the methodology and utility of the Fraser Instituteâ&#x20AC;&#x2122;s annual mining jurisdictions survey by Virginia Heffernan The Fraser Instituteâ&#x20AC;&#x2122;s annual survey of mining companies was released in March, lauding Finland as the best and naming Indonesia the worst of examined jurisdictions for mining investment. Since the first survey was released in 1997, the document has become essential reading for investors, policy-makers and regulators interested in gauging the risk miners take when they operate in a chosen jurisdiction. But just how reliable is a research report based solely on perception? In evaluating the overall attractiveness of mining investment in a jurisdiction, respondents to the survey consider taxation, the quality of its geological database, and uncertainty

over regulations and protected areas, among other factors. In the latest edition, the institute contacted 4,100 industry representatives directly, and several organizations distributed the survey among their members. From that pool, there were 742 respondents, most of whom are company presidents or vice-presidents. The results have, at times, drawn the ire of some regional organizations. Following the release of the survey in 2011, Association for Mineral Exploration British Columbia chair Michael McPhie challenged the institute to adapt the survey to implement â&#x20AC;&#x153;real facts and dataâ&#x20AC;? in order to reflect the policies and investment environment in each jurisdiction.

B.C. currently ranks 31st out of 96 jurisdictions â&#x20AC;&#x201C; still in the top third but considerably lower than other Canadian regions outside of Nunavut (37th) and the Northwest Territories (29th), despite a 50 per cent increase in exploration spending to $600 million in 2012. â&#x20AC;&#x153;This is a perception-based survey and more facts and figures would be useful,â&#x20AC;? said Rich Coleman, B.C.â&#x20AC;&#x2122;s minister of energy, mines and natural gas. In the last year, the province has invested $7 million to improve the permitting process for mining projects. â&#x20AC;&#x153;The fact that we are seeing huge investments in mining and mineral exploration in B.C. seems to be inconsistent with the survey result,â&#x20AC;? he said.

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In an ideal world, the survey would incorporate more direct measures of policy impacts on mining investment, agreed Alana Wilson, a co-author of the survey and a policy analyst at the Fraser Instituteâ&#x20AC;&#x2122;s Centre for Energy and Natural Resource Studies. But the lag time between policy changes and shifts in investment, and the paucity of investment data makes that goal difficult, if not impossible, to achieve. â&#x20AC;&#x153;It is, however, possible to capture changes in sentiment among mining company executives in a timely manner, which is what our survey strives to do,â&#x20AC;? Wilson said. â&#x20AC;&#x153;And based on feedback we receive from those in the mining sector, the extensive citation of our findings in the media as well as in academic journals, and the attention that is paid to our survey by mining regulators, we believe that the survey does accurately capture the influence of various policy factors.â&#x20AC;? Robert Bassett, mining team leader for Colorado-based Holland & Hart, said that for the most part, the survey is an accurate reflection of what the mining law community experiences in practice. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a reasonably reliable measure of perception, and perception is reality a lot of the time.â&#x20AC;? He said the survey is just one of many documents he advises his clients to investigate before they consider investing in a region. Government data and research, such as the U.S. State Departmentâ&#x20AC;&#x2122;s country commercial guides or the World Economic Forumâ&#x20AC;&#x2122;s global competitiveness report, are also invaluable resources. Another source is the Behre Dolbear Group, which produces annual rankings similar to the Fraser Institute survey based on confidential sources, public databases and political risk assessments of key players in the industry. The main difference is that only 25 countries are represented compared to the Fraser Instituteâ&#x20AC;&#x2122;s 96 jurisdictions. But, broadly speaking, the conclusions of the two groups align. In the Behre Dolbear rankings, Canada, Australia and Chile come out on top. Although the Fraser Institute survey evaluates the provinces and territories of Canada and the states of Australia as distinct jurisdictions, almost all of these regions rank in the top 40, and Canada has three (Alberta, New Brunswick and Yukon) in the top 10. Chile is ranked 23rd. At or close to the bottom of the pack in both surveys are Russia, Bolivia and the Democratic Republic of the Congo. CIM

In this yearâ&#x20AC;&#x2122;s Fraser Institute survey, Finland topped the charts, up from number two last year. For more on Finlandâ&#x20AC;&#x2122;s mining investment climate, see â&#x20AC;&#x153;First place Finnish,â&#x20AC;? p. 58. May 2013 | 33

news

The North comes of age Federal and territorial government initiatives to increase northerners’ say in resource development by Vivian Danielson New legislation and a major power transfer agreement are set to transform the investment climate in Canada’s North. In March, after decades of negotiations, the Northwest Territories came to an agreement with the federal government to set devolution day for April 1, 2014. The deal effectively transfers management of land, water and resources to the territory, more than a decade after Yukon welcomed devolution and greater control of its land and resources in 2003. Nunavut has also hired a negotiator to begin its devolution process. At the same time, Bill C-47, the Northern Jobs and Growth Act, has passed Canada’s House of Commons and is poised for Senate approval, setting the stage for northerners to control their own economic destiny. Tom Hoefer, executive director of the NWT & Nunavut Chamber of Mines, said Bill C-47 is one of several initiatives targeted to improve northern regulatory regimes. “It also fulfills outstanding government obligations under land claims and that’s a good thing,” he added. Along with amendments to Yukon’s Surface Rights Board Act, Bill C-47 creates the new Nunavut Planning and Project Assessment Act (NUPPAA) and the Northwest Territories Surface Rights Board Act. The Nunavut Planning Commission will serve as the single entry point into a more streamlined regulatory process. In the N.W.T., the new surface rights board should help resolve contentious land-access disputes. The new legislation is a necessary step as the federal government devolves non-renewable resources and land management to northern jurisdictions, said Hoefer, adding that there is more work to be done. Both the Northwest Territories and Nunavut are viewed less favourably by industry than Yukon – which has gone from no mines to three since devolution and has experienced an exploration boom - due to less perceived 34 | CIM Magazine | Vol. 8, No. 3

risk associated with regulatory and permitting processes. Chris Hanks, vice-president of environmental affairs for Newmont Mining Ltd., was involved in industry consultation for Bill C-47 and views it as a major step forward. “None of us got everything we liked, but Canada listened to our concerns,” he remarked. Hanks worked most recently in Nunavut at the Doris gold project near Cambridge Bay. The NWT & Nunavut Chamber of Mines and the Prospectors and Developers Association of Canada support Bill C-47 with six proposed amendments: ensuring assessments are completed within 24 months; defining types of work exempt from screening; choosing a flexible approach to deal with minor variances; deleting offences under land-use plan provisions since they are more appropriate in permit issuing stages; clearing up how existing licences or permits are grandfathered into the new system; and the planning of a five-year review of NUPPAA. Ensuring clear timelines is essential, said Hanks, as northern projects face high costs and logistical and weatherrelated challenges that require diligent scheduling. “If you’re getting ready to mobilize and miss the schedule even by a few weeks, it could cost several million dollars and a year of time,” he explained. Hanks also said the offences provision should be resolved as existing regulations already provide penalties and remedies for environmental offences. “We could not find another jurisdiction where it is an offence to be in violation of a land use plan.” With C-47 in place, Hoefer said amendments to modernize the Mackenzie Valley Resource Management Act (MVRMA) are needed to improve the N.W.T.’s investment climate. “It’s the missing piece, but it’s in process, and we’re anxious to see it improved.” Currently, four regional

boards grant permits to resource companies, all under MVRMA. Smaller panels tied to land claim settlements also exist, and the number of panels could grow as unresolved land claims are settled. (Nunavut, in contrast, has a single land claim settled years ago). Aboriginal Affairs and Northern Development Canada proposes to consolidate the regional boards into one large allencompassing board, although some N.W.T. Aboriginal groups are resistant. Hoefer believes that regulatory reforms are necessary to sustain mining as the largest private sector contributor to the northern economy, and the largest employer of Aboriginal Peoples. Meadowbank, Nunavut’s only mine, contributes 15 per cent of GDP, while mines in the N.W.T. contribute 30 per cent of GDP (or 50 per cent indirectly). Since 1998, diamond mines alone have contributed $8.5 billion to northern and aboriginal businesses. “But people see these mines coming to an end,” Hoefer said, noting that the first closure, the Ekati diamond mine, is set for 2019. “They understand why we need to look to the future.” CIM ACHIEVEMENT WIM’s Trailblazer Award for Espley Women in Mining presented the second annual Trailblazer Award to Samantha Espley for her tireless efforts in advancing the careers of women in the mining industry. Over the last 25 years, Espley has been instrumental in clearing a path for herself and for other women to excel in senior management roles in mining. She received the award at the WIM International reception, held at the Prospectors and Developers Association of Canada International Convention, Trade Show & Investors Exchange in Toronto, in early March.

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news

A new plant in the Prairies Saskatchewan Research Council rolls out pilot processing plant and QEMSCAN service

Adding to its robust mining facilities in Saskatoon, the Saskatchewan Research Council (SRC) launched a $2.2-million mineral processing pilot plant and a $1.4-million QEMSCAN service in April. The latter is an electron microscope that scans minerals and creates data packages based on the ore sample’s chemistry and mineralogy, said Craig Murray, vice-president of SRC’s mining and minerals division. Up to this point, mining and exploration companies had to send samples to either British Columbia or Ontario for a QEMSCAN analysis, making for a longer and potentially costly wait for results. “We’ve had several of our existing clients ask for it,” said Murray. “It helps mineral processing engineers and scien-

Courtesy of SRC

by Derek Neary

Jack Zhang, senior process engineer with the Saskatchewan Research Council, operates a multi-stage mineral flotation machine at the new mineral processing pilot plant in Saskatoon.

tists understand what’s in the sample and, more importantly, how it’s distributed and what else is in there. That pro-

vides some valuable information when they’re developing the process flow sheets and testing the process that

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they’re going to use to extract the mineral. That will give them a leg-up in terms of knowing what process is going to work the best, which one to try first or what things need to be tweaked.” Bags of core samples from the QEMSCAN building are taken to the mineral processing pilot plant, a 10-minute drive away. The plant occupies 2,000 square feet (186 square metres), sharing space with an existing diamond lab and pipe-flow technology centre. A portion of the cavernous room is filled with flotation cells, metallic mixers and tubes feeding chemicals and water into the process. The plant will let companies fine-tune and test methods to process extracted minerals, and customers can use the pilot plant services independent of whether they use the QEMSCAN service. “The mineral processing pilot plant is used to scale up the processes determined in the laboratory to simulate the processes to be used in an industrial processing plant,” said Bryan Schreiner, SRC minerals manager. “Modifications to the processes may be made to improve recovery and plant performance.” The pilot plant’s throughput varies, but it averages around 100 kilograms per hour and can accommodate a wide range of metals and minerals, such as potash, uranium, gold, base metals, diamonds, coal, oil sands and rare earth metals. Switching from one commodity to another involves cleaning and inspections that require a few days to a week, Murray said. The first trial for the pilot plant was small scale, but the SRC began a more ambitious project involving rare earth metals in March. Demand will fluctuate, Murray acknowledges, but it is expected to be substantial and could involve international clients. “We anticipate that it will go up and down a little bit with the mining cycle, but there was an unfulfilled need for both [the processing pilot plant and QEMSCAN], so we anticipate that they’ll be quite busy,” he explained. “We’ve already got quite a few interested companies lined up to use the processing plant and that, in turn, drives some work for the QEMSCAN as well.” “We try to respond quickly to evolving industry demand,” Murray said. “QEMSCAN is a fairly new set of technologies and it’s really just getting a foothold in the industry, and people are starting to see the benefit of it.” The services are available to industry at competitive rates designed to cover costs and leave enough to reinvest and stay on top of industry trends, according to Murray. It took $930,000 of SRC’s funds supplemented by the provincial and federal governments to make the pilot processing plant a reality. “We’re not trying to be predatory or undercut the industry in any way,” he pointed out. With these two latest additions, SRC, owned by the provincial government, now offers a range of services that can guide industry from early days of exploration through to mineral processing. CIM

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news

A taxing budget for miners Elimination of tax incentives for mining loom large in Canada’s budget by Herb Mathisen Described as a snoozer by some national media outlets, Canada’s federal budget was anything but for the mining sector. While the mineral exploration tax credit was extended, and steps were taken to address skills shortages affecting the mining industry, two tax changes might have negative consequences on companies looking to open additional mines or to expand their existing operations. The budget eliminated the accelerated capital cost allowance (ACCA) and reclassified Canadian Exploration Expense (CEE) within the Canadian Development Expense (CDE) pool. “This is the second budget in a row where they’ve moved to take away some mining-specific tax measures that have been there for

many years to incentivize mining investment,” said Pierre Gratton, president and CEO of the Mining Association of Canada. Last year’s budget got rid of the 10 per cent investment tax credit for pre-production mining expenditures. By recategorizing CEE into CDE, the deduction rate for development expenses like shaft-sinking or overburden removal and stripping during preproduction drops from 100 per cent – the year the expense is incurred – to 30 per cent on a declining balance basis over a number of years. This change will be phased in until fully implemented in 2018. Also, the phasing out of ACCA means that companies can no longer fully deduct mining equipment and

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38 | CIM Magazine | Vol. 8, No. 3

machinery purchased during pre-production. Only 25 per cent of these costs will be deductible. The budget, however, extended ACCA for the slumping manufacturing sector and created tax incentives for the biomass and clean energy sectors. “In the budget, the government was saying it was taking these steps on mining to make the tax system more neutral,” said Gratton, “but it’s rather selective neutrality.” John Gravelle, national mining leader with PricewaterhouseCoopers, said the government gets a failing grade from the mining sector for this budget. “The companies that it affects the most are the ones that already have existing mines in Canada that are profitable and are then taking their earnings and

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putting them into developing a second, or third, or fourth mine in Canada,” said Gravelle. “I would have thought you would have wanted to motivate those companies to repeat rather than rethink.” In today’s difficult market, he continued, miners are pursuing alternative sources of financing that can be expensive. “Because they are going to have to pay taxes sooner rather than later, they are going to leave these high costs of financing outstanding longer, so that is going to hurt their balance sheets,” he explained. “And some of the projects are going to be made uneconomical. It’s going to impact the net asset value of the projects, so some of them that were making the grade, on a return on investment perspective, are not going to meet that anymore.” The budget was not all bad news, however. While Gratton said he did not have high expectations for infrastructure investments, as the federal government is facing a deficit, the budget did address skills shortages in the mining sector. “It was largely a skills and training budget,” he said. Finance Minister Jim Flaherty announced the government would provide added support for apprenticeships and agreed to partner with provinces and territories to subsidize training for in-demand positions. One bright spot for the junior sector was the extension of the Mineral Exploration Tax Credit for another year. “It’s very important to the sector,” said Ross Gallinger, executive director of the Prospectors and Developers Association of Canada. While this measure costs the federal government roughly $80 to $100 million in net revenue, Gallinger said, studies have shown the tax credit raises about $800 million annually for miners. “That’s a pretty substantial piece of capital raised for the sector and it affords keeping exploration in Canada,” he pointed out. “It’s really to

get exploration in remote parts of Canada, and jobs and opportunities for northern remote Canadian communities, as well as for First Nations people.”

Gallinger said he also remains hopeful about an extension of the Geomapping for Energy and Minerals program, as an announcement was absent in the budget. CIM

Power projects

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May 2013 | 39

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Redevances : on se prépare pour la tempête Québec propose d’augmenter le taux d’imposition du secteur minier

Les membres de l’industrie minière québécoise ont sonné l’alarme sur une proposition d’augmentation des redevances touchant le secteur lors de deux forums distincts tenus à Montréal en mars dernier. Le Parti Québécois a fait campagne sur la promesse d’une augmentation des redevances sur le secteur minier lors des élections de l’automne dernier. Le parti maintenant au pouvoir a lancé deux grandes propositions au cours des semaines précédant le Forum sur les Redevances Minières, tenu à l’école des Hautes études commerciales (HEC) de Montréal le 15 mars. Des travailleurs au projet de mine d’or Éléonore de Goldcorp au Québec La première option consiste à imposer une redevance en pourcentage de la valeur totale organisé par la Fédération des chambres de production, le taux suggéré étant de de commerce du Québec et les firmes cinq pour cent. La seconde proposition de conseil KPMG Secor et Fasken Marest de créer un impôt supplémentaire, tineau quelques jours avant l’événement progressif ou imposé à partir d’un cerdu gouvernement, pour discuter tain seuil de bénéfices, pour refléter la publiquement des conséquences des hausse de valeur des ressources. changements proposés au système. Actuellement, les sociétés minières du « Créer de nouvelles taxes de cette Québec paient 16 pour cent d’impôts manière n’est pas une bonne idée sur leurs bénéfices. indique, Chuck Jeannes, président et « Les régimes d’imposition et de chef de la direction de Goldcorp, qui est redevances du secteur minier sont en en plein développement de son projet réévaluation partout, indique Yvan d’extraction d’or Éléonore près de la Allaire, président de l’Institut de gouverBaie James. Un geste comme celui-là nance des organisations privées et causerait du tort aux intérêts de la publiques et conseiller de la province province à long terme, car les entresur la question. (Le défi) consiste à trouprises réévalueraient leurs décisions ver le point d’équilibre entre le niveau d’expansion de mines et reverraient maximal de revenus fiscaux et d’avanleurs évaluations comparatives de l’atages économiques durables pour les vantage concurrentiel de différentes citoyens et l’état, et le droit des entrerégions. » prises à un retour équitable. » « Les nouveaux impôts envisagés La réaction de l’industrie aux propoferaient du Québec l’endroit le plus sitions est négative presque partout. Les imposé où nous sommes en activité, joueurs du secteur minier se sont réunis bien avant l’Ontario, le Mexique et à l’occasion de leur propre forum public, même l’Argentine, ajoute Jeannes. Je 40 | CIM Magazine | Vol. 8, No. 3

Gracieuseté de Goldcorp

par Peter Diekmeyer

dirais ceci au gouvernement : “Ne tuez pas le prochain projet Éléonore.” » Nochane Rousseau, expert fiscal chez Pricewaterhouse Coopers, ajoute qu’il est difficile de comparer le fardeau fiscal des sociétés minières au Québec à celui d’autres juridictions car les sociétés doivent aussi payer les impôts fédéral et provincial ainsi que d’autres charges comme l’impôt sur les salaires. Il ajoute cependant que les nouvelles mesures pourraient nuire à l’investissement. « Nous nous retrouverons certainement dans les derniers échelons, et les investisseurs exigeront des primes de risque de plus en plus élevées. » Bryan Coates, vice-président des finances chez Osisko, qui opère la mine d’or Canadian Malartic en AbitibiTémiscamingue au Québec, ajoute que l’augmentation des redevances pourrait avoir des conséquences imprévues. « Les gouvernements doivent faire attention avec de tels changements, car s’ils vont de l’avant, ils pourraient en fait perdre des revenus, conseille Coates.

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Les redevances ne représentent qu’une petite portion de ce que Québec récolte des sociétés minières : il faut aussi compter d’importantes sommes en impôts des sociétés et sur les salaires. Et si le gouvernement s’accapare une trop grande part d’un côté, il pourrait nuire à l’investissement et perdre bien plus globalement. » Le gouvernement espère conclure une entente à long terme avec l’industrie mais, ironiquement, ce n’est pas la première fois que les règles du jeu changent. En 2010, le gouvernement Charest a fait passer les redevances sur l’exploitation minière des sociétés québécoises de 12 pour cent à 16 pour cent des bénéfices. Selon les Faits et chiffres 2012 de l’Association minière du Canada, cela a eu pour effet de faire passer le Québec du plus petit fardeau fiscal au troisième plus grand au Canada en 2011. Le fait que le gouvernement revienne à la charge si rapidement ajoute à l’incertitude, la principale bête noire des investisseurs. Les augmentations d’impôt proposées arrivent au mauvais moment. Les mineurs subissent beaucoup de pression actuellement. Il est difficile pour les petites sociétés notamment d’obtenir du capital. Cela dit, la plupart des participants au forum étaient plutôt optimistes quant au résultat des propositions du gouvernement et ont rappelé qu’il est essentiel de sensibiliser le public. Par exemple, si une part de la société croit que le gouvernement peut hausser les impôts à l’infini, les représentants officiels qui ont participé au forum de l’industrie ont souligné que même quand l’infrastructure minière est développée et payée, il n’y a aucune garantie qu’elle sera utilisée au mieux. Agrandir les gisements de minerai exige un apport constant d’investissement, mais les règles en constante évolution compliquent l’évaluation de leur rentabilité. Un autre défi important mentionné lors du forum de l’industrie consiste à expliquer la structure fiscale actuelle. Peu de gens réalisent que l’impôt de 16 pour cent sur les bénéfices des sociétés minières s’ajoute aux impôts fédéraux et provinciaux que toutes les entreprises doivent payer. En plus, cet impôt est calculé pour chaque mine de manière distincte. Ainsi, si une société perd de l’argent lors des stades de développement initiaux d’une mine, mais génère des profits sur une autre, elle ne peut pas utiliser la perte du premier projet pour réduire ses bénéfices sur le second. En conséquence, les sociétés qui exploitent des mines peuvent devoir payer des impôts même si elles affichent des pertes. Le gouvernement devrait décider d’un système de redevances au printemps, au moment de la publication de l’ébauche de loi sur les mines. ICM Traduit par SDL

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May 2013 | 41

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Quebec proposes raising royalty rates Industry braces for impacts of further mining tax increases by Peter Diekmeyer Members of Quebec’s mining industry raised the alarm over proposed royalty increases for the sector at two separate mining forums in Montreal this past March. The Parti Québécois campaigned on the promise of raising mining royalties in last fall’s election. Now in power, the party floated two main proposals in the weeks leading up to its Forum sur les Redevances Minières, held at Hautes études commerciales (HEC) Montreal on March 15. The first option is a royalty based on a percentage of total production value, with five per cent as the suggested rate. The second is a supplemental tax, which would either be progressive or kick in once a certain profit threshold was reached and would reflect rising resource

values. Currently, mining companies in Quebec pay 16 per cent on profits. “Mining royalty and tax regimes are being reviewed everywhere,” said Yvan Allaire, chair of the Institute for Governance of Private and Public Organizations and advisor to the province on this issue. “[The challenge] is balancing maximization of fiscal receipts and durable economic benefits for citizens and the state with the right of companies to a fair return.” Industry reaction to the proposed changes has been almost uniformly negative. Players in the mining sector gathered at their own public forum, organized by La Fédération des chambres de commerce du Québec, and law firms KPMG Secor and Fasken Mar-

tineau, days before the province’s event to publically discuss the impacts of proposed changes to the system. “Adding new taxes in this way is not a good idea,” said Chuck Jeannes, president and CEO of Goldcorp, which is in the midst of developing its Éléonore gold project near James Bay. “Such a move would harm the province’s interests over time, as businesses reassess mine expansion decisions and make new comparisons regarding competitive investment locales.” “The proposed new taxes would make Quebec the highest tax place that we do business, ahead of Ontario, Mexico and even Argentina,” added Jeannes. “My message to the government would be: ‘Don’t kill the next Éléonore project.’”

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42 | CIM Magazine | Vol. 8, No. 3

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Nochane Rousseau, a tax expert at PricewaterhouseCoopers, said ranking Quebec minersâ&#x20AC;&#x2122; tax burden in comparison with those in other jurisdictions is difficult because companies also pay federal and provincial corporate taxes, along with other levies like payroll taxes. He added that new measures could hamper investment, however. â&#x20AC;&#x153;We are definitely heading into the higher end, where investors will be demanding increasingly significant risk premiums.â&#x20AC;? Bryan Coates, vice-president of finance at Osisko, which operates the Canadian Malartic gold mine in the AbitibiTĂŠmiscamingue region of Quebec, said increasing royalties could have unintended consequences. â&#x20AC;&#x153;Governments need to be careful about making changes, because if they do, they could actually lose revenues,â&#x20AC;? said Coates. â&#x20AC;&#x153;Royalties are just a small percentage of what Quebec collects from mining companies, which also includes significant payroll and corporate taxes. However, if they grab too much on one end, they could end up hampering investment, thus losing even more overall.â&#x20AC;? Ironically, as the government calls for a long-term deal with industry, this is not the first time that the rules of the game have been changed. In 2010, the Charest government raised the mining royalties tax that Quebec mining companies pay from 12 per cent to 16 per cent of profits. According to the Mining Association of Canadaâ&#x20AC;&#x2122;s Facts and Figures 2012, this change moved Quebec from the least to the third-most burdensome jurisdiction in Canada in 2011. The fact that the government is returning so soon to the trough creates additional uncertainty, which many investors cite as a key bugbear. The proposed tax increases come at a bad time. Miners have been under considerable pressure lately, with juniors in particular experiencing capital access challenges. That said, most forum participants were sanguine about how the governmentâ&#x20AC;&#x2122;s propositions will play out, noting that increased public education is key. For example, while a certain percentage of the public clearly believes that government can levy taxes ad infinitum, officials at the industry forum pointed out that even when mining infrastructure has been set up and paid for, there is no guarantee that it will be optimized. Extending ore bodies requires consistent new investments; however, ever-changing rules make it hard to gauge how profitable they will be. Another key challenge, highlighted at the industry forum, is explaining the existing taxation structure. Few realize that the 16 per cent tax that companies pay on mining profits comes on top of existing federal and provincial taxes that all companies pay. Furthermore, this tax is calculated on a mine-by-mine basis. That means if a company is losing money in the initial development stages of one mine but making money on another, it cannot use the loss from the first to offset

profits from the second. Therefore, mine operators can be losing money but still be forced to pay taxes. The government is expected to decide on a royalty system this spring, when it releases its draft mining law. CIM GIVING BACK Vale supports United Way Centraide campaign Vale, in cooperation with the United Steelworkers Union, supported the 2012 United Way Centraide Sudbury campaign by contributing $700,000. The company matched donations offered by employees and pensioners on a dollar-for-dollar basis. â&#x20AC;&#x153;The United Way is a long-standing tradition at Vale,â&#x20AC;? said Kelly Strong, Valeâ&#x20AC;&#x2122;s vice-president of operations for Canada and the U.K. â&#x20AC;&#x153;The success of this campaign speaks to the incredible generosity of our employees and of their commitment to making our community a better place to live.â&#x20AC;? The community raised over $1.9 million for the 2012 United Way campaign in the steel town.

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M A C E C O N O M I C C O M M E N TA R Y

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Mining and Canada’s North: build it and they will come BY BRENDAN MARSHALL

ur three northern territories are often touted as Canada’s mining frontier, and the key to unlocking their largely unrealized mineral potential is to address the region’s limited infrastructure. To date, government investment in infrastructure has been modest, and changes to the mining taxation regime in the federal government’s most recent budget introduce further challenges for miners with projects in this region. Nunavut’s only operational mine, Agnico-Eagle’s Meadowbank, required significant infrastructure investments. A floating dock system was installed in Baker Lake to receive supplies. A tank farm, with an annual resupply capacity of 60 million litres of diesel fuel for power generation and mining fleet supply, was built, along with a 110-kilometre all-weather road (including bridges) – by far the longest road in the territory. Other investments include the construction and maintenance of a 1,500-metre air strip and the acquisition of six large diesel generators. The lack of energy infrastructure – and resulting $70- to $80-million fuel bill for the company’s operations – has helped drive the price of electricity to $0.30KWh. There are also costs for shipping, local transportation and storage of the fuel on site. For Meadowbank, the scale and the quality of the deposit merited the investment. That is not always the case, however, and the lack of infrastructure is the determining factor that renders the development of some high-quality deposits marginal, or economically unviable. Targeted and strategic infrastructure investment by the federal government could reverse this, bringing employment benefits to northern communities and royalty revenues to Canada. Infrastructure spending would increase the economic viability of a host of mining projects and reduce the costs for existing operations. For example, building a seasonal overland route for the southernmost 156 kilometres of the N.W.T. winter road to its three diamond operations would lengthen the trucking season and provide more security against changing climate conditions. In Nunavut, the Bathurst Inlet Port and Road project would connect the Arctic coast at Bathurst Inlet to numerous precious and base metal projects, like Xstrata’s Hackett River and MMG’s Izok Corridor, moving toward development. Already, mining is the largest private sector contributor in the North, contributing 30 per cent of GDP in the N.W.T. and 15 per cent in Nunavut. Other sectors, like real estate, construction and transportation, also benefit from the mining industry, through the purchase of land, the construction and maintenance of roads, and the development of mine sites. These investments translate into significant business and community benefits, including huge growth in aboriginal business and employment, enhancing the overall quality of life for those living in northern communities.

44 | CIM Magazine | Vol. 8, No. 3

MAC research has identified more than $8 billion in potential projects that could be developed over the next decade. This number is poised to grow due to the global exploration interest in the region. Given the virtually undeveloped terrain, mining companies have largely built, and continue to maintain, much of the infrastructure required to operate. In the Northwest Territories, for example, mining has made valuable and long-lasting infrastructure contributions to the territory’s only railway, all three of its hydroelectric power facilities, and all-weather roads – such infrastructure is simply not factored into capital and operational costs when determining the economic viability of many non-remote mining projects elsewhere in the country.

“Mining companies have largely built, and continue to maintain, much of the infrastructure required to operate.” Some taxation measures had incentivized northern infrastructure development. However, the 2013 budget phases out the mining industry’s eligibility for the Accelerated Capital Cost Allowance (ACCA) and changes the eligibility of mining activities for the Canadian Exploration Expense (CEE) and Canadian Development Expense (CDE) programs. These reforms make the development of certain projects more difficult. Shifting the eligibility of expenses for “clearing, removing overburden, stripping, sinking a mine shaft or constructing an adit or other underground entry” from CEE to the CDE program will reduce the tax deductibility of these expensive activities from 100 per cent to 30 per cent, costing miners an estimated $45 million each year. ACCA enables miners to deduct income for a taxation year of up to 100 per cent of the remaining cost of eligible assets acquired for use in a new mine or a new mine expansion. Although the program was extended for manufacturers for two years, the mining sector’s ACCA will be eliminated, beginning in 2017. Both of these measures will make it more expensive for the development and construction of new mines, pushing potential opportunities for growth, partnership and northern economic development further away. CIM

Brendan Marshall is director of economic affairs at MAC. He works to advance the mining industry’s interests and understanding of key economic issues such as taxation, transportation, innovation, international trade and investment, and energy and climate change.

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EYE ON BUSINESS

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Contemplating competitor collaborations BY MARK KATZ

oint ventures are very popular business arrangements, as they offer participants the potential to share the risks in developing and commercializing new products, to facilitate expansion into new markets and to generate synergies in production and distribution. In the mining industry, joint venture arrangements can involve sharing the significant financial and operating risks in exploring and developing mining properties. However, joint venture arrangements can raise serious competition issues – and potentially lead to costly problems – when the collaborations are between industry competitors. It is critical, therefore, that any prospective joint venture involving competing entities be vetted for potential antitrust concerns as part of the planning and development process.

sulphuric acid. The Canadian and U.S. companies countered that the arrangement would actually reduce prices for U.S. customers, because it would allow the parties to take advantage of the Canadian mining companies’ lower production costs and the U.S. producers’ distribution networks in the United States. Much of the case revolved around the appropriate legal standard against which the plaintiffs’s and defendants’ competing claims should be judged. What is important is that the judges in the case – both at first instance and on appeal – agreed that there was at least a plausible argument that the arrangement would “increase competition” and promote “enterprise and productivity.” Indeed, the judge who wrote the appeals opinion observed that the law should not be used to discourage new and innovative ways of doing business. Although some slight differences exist, the situation in Canada is very similar to that of the United “It is very important that prospective joint States. Under Canada’s Competition Act, joint venventure partners carefully evaluate tures between competitors can be prosecuted as offences if they involve conduct such as any potential competition issues before criminal price-fixing or market allocation. Plaintiffs also proceeding with an arrangement.” have the right to sue parties for damages. On the other hand, Canadian law also recognizes the potential benefit of joint ventures and thus provides for an Joint ventures between competitors may yield anti-competitive alternative civil review process where there is scope to defend results if, for example, they reduce the ability or incentive of these arrangements, if challenged, on the basis of their prothe joint venture partners to compete against each other outside of the arrangement, or involve information exchanges and competitive effects. As in the United States, the difficult issue other practices that could facilitate price-fixing and other types is where to draw the line between illegal and pro-competitive arrangements. of collusion. Because of the serious risks involved, it is very important Since competitor collaborations can be both pro-competitive and anti-competitive, they present especially thorny challenges that prospective joint venture partners carefully evaluate any for antitrust enforcement authorities and the courts. If too potential competition issues before proceeding with an lenient an approach is taken by authorities, the joint venture arrangement. The first questions that should be asked in making this could restrain competition in the relevant industry; if the approach is too strict, a beneficial economic arrangement may assessment are: what is the purpose of the joint venture, and what are the business justifications for any restraint on compebe stifled or chilled. A recent U.S. case, In re Sulfuric Acid Antitrust Litigation, is a tition it may involve? This is a key threshold consideration, and perfect illustration of the conundrum represented by competi- coming up with a superficial explanation for what otherwise tor collaborations. would appear to be anti-competitive conduct will not suffice. Two Canadian mining companies that produce sulphuric acid Care should also be taken to reflect the legitimate and proas a byproduct of their operations entered into an arrangement competitive justifications in internal company documents so as with several U.S. producers of sulphuric acid whereby the U.S. not to undercut the positive defence you may have to make. Taking the time to address competition issues upfront can companies would stop producing and selling their own sulphuric acid in the United States and instead serve as the exclusive help avoid potential – and costly – problems down the road for your joint venture or other collaborative arrangement. CIM U.S. distributors of the Canadian companies’ sulphuric acid. A group of industrial customers in the United States sued the parties, alleging that their “shutdown agreements” would eliminate Mark Katz is a partner in the Toronto office of Davies Ward Phillips & Vineberg competition between the Canadian mining companies and the LLP, practising in the firm’s Competition and Foreign Investment Review group. provides domestic and international clients with advice regarding the U.S. producers, reduce the total amount of sulphuric acid available He application of the Investment Canada Act and all aspects of Canadian in the United States and drive up the U.S. market price for competition law. He can be reached at mkatz@dwpv.com.

46 | CIM Magazine | Vol. 8, No. 3

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HR OUTLOOK

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Mining sector must build and cultivate talent pool BY RYAN MONTPELLIER

he recent federal budget highlighted the pressing need to address future skills shortages – jobs without people and people without jobs – and the huge employment gap that eligible retirees will soon create. The Mining Industry Human Resource (MiHR) Council’s 2013 labour market report, released in May, found that over the next 10 years, the mining industry will need to fill more than 145,000 jobs. (An economic upswing sees this number rise to 200,000 workers, while a contraction brings it down to 120,000 workers.) A large portion of this future workforce will not fill “new jobs” but will be replacements for forecasted retirements. By industry request, this year the MiHR labour market model added available talent and labour supply estimates for 66 key occupations in mining. Having this new supply side information has made gap analyses for each of these 66 occupations possible, and will subsequently enable companies to create targeted strategies specific to their hiring requirements. Three underlying trends emerged from MiHR’s gap analysis. For certain occupations, a large talent pool is available but the mining industry’s ability to attract new recruits falls short of projected needs. For example, mining has traditionally attracted only 4.6 per cent of technical occupations like land surveyors, civil engineers or chemical technologists – our industry will need to nearly double this number. The mining industry must attract talent away from other sectors where the labour pool exists but workers are not choosing mining jobs. For other occupations, the projected talent pool will not be large enough to meet the forecasted need. Many of these occupations are mining-specific and require highly skilled individuals with training and experience in the industry. Addressing this issue requires a long-term talent attraction strategy, as well as coordination with educators, training institutions, immigration services and other sectors to grow the labour pool and to attract new talent. The third trend revealed conditions where there will be just enough available talent to meet the industry’s need for certain

ACHIEVEMENT Xstrata’s Dionne honoured Dominique Dionne, vice-president of corporate affairs for Xstrata Nickel, was recognized as a leading businesswoman in Canada, receiving a Royal Bank of Canada Champions Award in the 2012 Canada’s Most Powerful Women: Top 100 program for her support of Xstrata’s plans to increase opportunities for women in the industry. Dionne’s influence has helped shape the next generation of female leaders.

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occupations. But this gap assumes “status quo” economic and labour market conditions, and it will become increasingly difficult to attract workers if the labour market heats up and other sectors start competing for the same talent. The mining industry will have to do more than rely on lucrative wages to secure its future workforce. Addressing these impending skills challenges will require employers to retain and support leaders through leadership development and succession planning. It will be important to acknowledge not only the loss of workers, but the knowledge and experience they take with them. The retention of aging workers will be necessary, as they provide younger employees with the mentorship and development support they need to be successful. The new generation of leaders across the mining industry will need to embrace strategies that encourage the hiring of diverse, yet largely untapped, groups such as women, immigrants and Aboriginal Peoples. Women are broadly underrepresented in Canadian mining, at just 16 per cent of the workforce, falling short of other resource industries such as forestry, utilities, and oil and gas. In areas where the talent pool is too shallow to fulfill hiring needs, and talent attraction does not secure employees in the short term, the industry must look to immigration. Attracting immigrants to remote locations and recognizing foreign credentials will be important in such cases. Finally, Aboriginal Peoples have the potential to become a significant source of future labour for the industry. While mining in Canada generally outperforms other industries in terms of employing Aboriginal Peoples, they are predominantly hired in entry-level and support roles. Employers must encourage and promote aboriginal employees to obtain mid- to high-level positions within their organizations. Doing so will ensure sound socio-economic development for aboriginal communities and help manage gaps in knowledge worker roles. Demand for workers will be widespread, but some occupations will face greater supply issues than others. MiHR’s HR forecast helps quantify these issues, so that employers, educators and governments can develop targeted strategies. As noted above, a combination of approaches is the key to the future sustainability and success of the Canadian mining industry. CIM For more information or to access MiHR’s HR Forecasts Report, please visit www.mihr.ca or email akennedy@mihr.ca.

Ryan Montpellier is the executive director of the Mining Industry Human Resources Council (MiHR) in Canada. Among his accomplishments, he has been a recipient of the Canadian Institute of Mining Bedford Young Leadership Award, which recognized his achievements in addressing the industry’s human resources and labour market challenges.

FINANCE

Enterprise value and new mining projects BY MAURO CHIESA

oards of mining companies today are often perplexed by the loss of shareholder value under their watch. To address this issue, one must review the fundamental components of shareholder value, or enterprise value (EV): capital outlays, capital inflows and their relevant discount rate. Shareholders are well-armed with analysts and historical figures but seldom understand the changes that are occurring – often beyond management’s control. In order to protect shareholder value in the future, it will be essential to understand the following new drivers, as they appear to be medium-term, if not long-term.

the public sector on infrastructure, tax flow-throughs, and energy and training subsidies. Also, new projects have consistently lower mineral grades and are situated in more remote locations that require more infrastructure and have higher energy cost exposures. These projects may face a longer permitting process as well, thus compounding the inflationary impact on the capital budget outlay and the timing uncertainty of future cash inflows from a project. As new greenfield operations come on-stream, the perceived costs appear to climb, and the shareholder challenges management on its cost controls.

Asset replacement costs

The new public sector

Financial statements generally reflect current metal market prices and historical fixed asset costs. These fixed assets may have been discounted due to past bear metal market prices (19952005) and the resulting asset sales, and then subsequently restated upwards because of the recent rise in metal prices. Even restated, however, the development costs of older assets have remained attractive, relative to those of greenfield assets. Many older assets come with cost-sharing supports from

The industry is now profitable, while the public sector faces mounting deficits due to higher social financial obligations and weaker revenue bases. This is the reverse of a generation ago and it leads to less cost-sharing capacity from the public sector. As already noted, governments have more complex permitting processes and a need for increased taxes and/or royalties. The financing of restitution costs reduces the anticipated long-term cash inflows from a mining asset. Lastly,

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columns with many new projects being developed in emerging economies with evolving policies, governments will be demanding and securing back-in equity rights that may or may not come with capital infusions into the projects. The net effect is a higher up-front capital burden on companies and a lower cash inflow from the asset during the operating years.

The circular capital market The capital markets are fragmented; they are pulled apart by quantitative easing policies, the American fiscal cliff and ongoing eurozone issues. In tandem with pension funds looking for lower-risk investments and income rather than value growth on returns and the cost of financing increases on two fronts. First, as investors become risk-averse, the appetite for mining risk fades and the share prices fall, thus raising the cost of capital as the price-to-earnings ratio drops. Such risk-aversion also impacts the bank lenders who have been hit by the bailouts and are reducing commitments to riskier project financings. The second is the cost of the search for capital. What was once a twostop shopping process (first securing aggressive equity and then the project-recourse bank debt for completion financing) now involves multiple continents and capital markets, including the traditional sources and the limited-scope capital such as joint venture capital, export credit agencies, supplier credit financing,

international financial institutions and metal stream financiers. Each source has its own agenda and requires time to assemble and close. The net effects are delays and the resulting capex inflation, higher process costs and a higher cost of capital (and a higher discount rate applied to cash flows) for calculating EV. Given the circular nature of the relationship between cost of capital and shareholder value, even established mining companies must now consider financing themselves first â&#x20AC;&#x201C; be it with cash from existing operations or from asset sales of non-strategic existing assets â&#x20AC;&#x201C; before addressing the more difficult markets. In summary, these higher cost uncertainties, public sector deficits and ambiguous capital markets translates to more upfront capital required, greater timing uncertainty, lower cash inflow streams and a higher discount rate applicable to those streams. Their aggregate effect will require operational and strategic adjustments by all companies to better manage their existing and prospective assets and their capital budgets. Many companies will have to overhaul their capital budgets and to reassess their asset risk management practices and personnel. CIM Mauro Chiesa has over 33 years of experience in financing and advising extractive and infrastructure projects around the world. He has worked with multinational banks, the World Bank Group and EDC. Chiesa will chair a panel discussing the shifting aspects of shareholder value at the 2013 CIM Convention in Toronto on May 7.

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S TA N D A R D S

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Introducing the CIM Definition Standards Consultation Project BY PAUL BANKES

Since it was created in August 2000, the CIM Standing Committee on Mineral Reserve and Mineral Resource Definitions has maintained all of the CIM definitions referenced by National Instrument 43-101 Standards of Disclosure for Mineral Projects. The committee represents CIM on the Committee for Mineral Reserve International Reporting Standards (CRIRSCO). With more international exposure, CRIRSCO members have agreed, as much as possible, to standardize the organization’s 15 core definitions and to have them adopted by all CRIRSCO member codes and standards. However, a need for additional national codes or guidance for each definition was recognized.

Summary of key changes In most cases, the proposed changes recommended by the committee are restricted to minor revisions in wording and syntax to harmonize Canadian definitions with those of other CRIRSCO members. This section describes significant changes introduced by the committee to reflect industry, Canadian Securities Administrators (CSA) and international requests for clarification and guidance. Mineral Resource: The 2005 and 2010 CIM Definition for Mineral Resource has historically differed from other CRIRSCO members due to two key phrases: “solid material” and “reasonable prospects for eventual economic extraction.” The Canadian definition has always included the word “solid” that was not included by other CRIRSCO member codes. In 2012, all CRISCO members agreed to include the phrase “solid material” in their respective codes. In a similar fashion, the CIM definition has historically excluded the word “eventual,” which has been adopted by all other CRIRSCO members. The committee has added the word “eventual” to the Canadian definition and provided guidance to clarify its meaning. Inferred Mineral Resource: Since inception in 2001, NI 43-101 has allowed Inferred Mineral Resources to be included in a Preliminary Assessment (PA). On June 30, 2011, CSA changed the name of a PA to a Preliminary Economic Assessment (PEA). PEA allows Inferred Mineral Resources to be included in a mine plan, production schedule and financial analysis. However, CSA has extended the prohibition against disclosing the results of a prefeasibility study, a feasibility study, or life of mine plan at a developed mine, which includes Inferred Mineral Resources in the mine plan, production schedule and financial analysis. While CSA’s decision did not materially impact the previous CIM definition, it does contradict the 2005 and 2010 CIM definition guidance that minimized the 52 | CIM Magazine | Vol. 8, No. 3

confidence associated with an Inferred Mineral Resource and that discouraged the use of Inferred Mineral Resources to “evaluate economic validity worthy of public disclosure.” The committee has added the phrase, “It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration” to the definition, and has modified the definition guidance to include: “Inferred mineral resources can only be used in economic studies as provided under NI 43-101.” The committee has provided additional guidance to the Qualified Person when classifying Inferred Resources. Mineral Reserves: In 2012, the United Nations Expert Group on Resource Classification noted the CRIRSCO template and member definitions did not identify the “reference point” where a Mineral Reserve is reported. This issue is particularly important when Mineral Reserves are reported as a product, such as clean coal, rather than as feed to a plant or concentrator. The following text has been included in the CRIRSCO and CIM definition: “…the reference point at which Mineral Reserves are defined, usually the point where the ore is delivered to the processing plant, must be stated. It is important that, in all situations where the reference point is different, such as for a saleable product, a clarifying statement is included…” Feasibility Study: In 2010, CIM added a definition for feasibility study to the CIM Definition Standards. CIM has since received several notifications of industry concerns that the term “proponent” within the definition was not adequately defined. The committee has added the following paragraph to the proposed definition: “The term proponent captures issuers who may finance a project without using traditional financial institutions. In these cases, the technical and economic confidence of the Feasibility Study is equivalent to that required by a financial institution.”

Call for comments The standing committee has begun a 90-day consultation period with industry and CIM members. To participate, please read the definitions displayed online (http://definitions.cim.org) and compare the proposed changes to the current definitions. Leave a comment if you feel inclined, and it will be forwarded to our moderator, who will review the contents, strip out your personal information and post the suggestion online. The committee will request CIM council approval of final definitions in late-2013. CIM Paul Bankes is a geologist with over 30 years of domestic and international experience in project development, mine operations, geostatistics, mine design and business development. He chairs the CIM Standing Committee on Mineral Reserve and Mineral Resource Definitions and represents CIM on CRIRSCO and on the United Nations Experts Committee on Resource Classification.

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Canada’s first Carlin-type gold discovery How ATAC’s team located “no-seeum” deposits in Yukon’s Rackla gold belt by Graham Chandler

Courtesy of ATAC Resources

award, says Ed Kimura, chair of the awards committee. “The other is geoscience excellence and this group exemplified that. They knew about a prospect that was showing way out in no-man’s land northeast of Mayo. They went out and found it, and identified that very interesting mineralization. We call it boots-on-theground type of exploration.”

Bringing data to life Carne, Wengzynowski and Eaton had been partners in the past at Archer, Cathro & Associates (1981) Limited, a geological consulting firm that has long been a leading force in northern B.C. and Yukon exploration successes. The three maintain a close working relationship. Wengzynowski is now a consultant to ATAC and Eaton is a principal at Archer Cathro. In 2006, Eaton recognized that the ATAC Resources’ president Rob Carne (above) won the H.H. “Spud” Huestis Award for Excellence in Prospecting western edge of the Rackla belt had and Mineral Exploration from the Association for Mineral Exploration British Columbia with colleagues Bill Wengzynowski and Doug Eaton. significant gold and tungsten geochemical anomalies in the governt was the summer of 2010 and geologist Bill Wengzynowski ment database. Exploration over the next four years led to the was fresh from a mine tour hosted by the Geological delineation of the Tiger zone, a limestone-hosted replacementSociety of Nevada, where he observed the vivid oranges style gold deposit. While conducting reconnaissance geoand yellows of realgar and orpiment. The two minerals, chemical surveys there three years later, though, the team both sulphides of arsenic, are associated with Nevada’s recognized they were standing on a narrow band of largely Carlin-Trend gold deposits. But this day, he was thousands of Paleozoic carbonate rock: shelf margin rocks that extended kilometres north of there, in the eastern end of Yukon’s Rackla some distance to the east. So, guided by a Geological Survey of gold belt, following up on a hunch from colleague Rob Carne. Canada (GSC) interpretation that those rocks were similar to “He found realgar within hours of stepping out of the hel- northeastern Nevada, and that all the creeks sampled by the icopter,” says Carne, president of Vancouver’s ATAC Resources, GSC were anomalous for arsenic 100 kilometres to the east, in which has the area staked. “By the end of the day, he had fol- another isolated mountain range, they were soon looking east. “It didn’t discourage us that there were no gold anomalies in lowed it up to a cliff face that became the Osiris zone.” Gold grains in Carlin-type deposits are extremely fine and those creeks because we knew Carlin-type gold is typically so found in sedimentary rocks. Popularly dubbed “no-seeum” fine-grained it was going to continue to move downstream,” gold, they are named after the Carlin Trend, which has pro- says Carne. They were confident that if they sampled further duced over 70 million ounces since the mid-1960s. While upstream, they would find the source of the GSC’s arsenic similar deposits occur in China, Serbia and Macedonia, none anomalies. had been found in Canada until the ATAC discovery. In 2009, Carne, Wengzynowski and geologist Sara The team’s work has earned them accolades. In January, Dreschler re-sampled three of those eastern drainages. “They Carne, Wengzynowski and Doug Eaton were awarded the all came back anomalous for arsenic and gold,” says Carne. H.H. “Spud” Huestis Award for Excellence in Prospecting and The headwaters of the creek sampled by Dreschler have shown Mineral Exploration from the Association for Mineral Explo- a new discovery called Anubis, where a first drill hole last year ration British Columbia. Discovery is one key criterion for the returned a high-grade intersection of 8.51 metres at 19.85

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grams of gold per tonne. “The one I sampled became our Osiris zone and the one Bill [Wengzynowski] sampled became the Conrad zone.” The next year, after Wengzynowski’s surface finds of realgar and orpiment showed fairly definitive Carlin-type mineralization, they had to move quickly to stake. “We embarked on an ambitious staking program,” recalls Carne. “We outlined a large block of claims around the Osiris discovery showing and then proceeded to connect between the Tiger and the Osiris zones, a 100-kilometre strike length by a width of about four kilometres – that was a lot of staking.” Word was already leaking out. They’d staked to the east, but by the time they had about 8,500 claims, a prospector was staking towards them. “We kind of met about 30 kilometres east of the Osiris. He subsequently optioned that package to a Chinese company called Anthill Resources.” Last year, Anthill made a significant discovery of Carlin-type gold on those claims.

Claims spur cash flow The discovery’s significance was quickly recognized by the investment community. In June 2010, shortly after Wengzynowski’s spotting of realgar and orpiment, Michael Gray, senior vice-president of mining equity research at Macquarie Capital Markets Canada Ltd., visited the site and subsequently initiated coverage in September. He focused on the Osiris gold target. “It’s the most similar geological setting to Nevada of any other Carlin-type system in the world,” he says. “And that’s not a surprise because they are located on the same North American continental margin. You’ve got a similar large-scale geological setting with a similar style of mineralization – sedimentary host rocks and importantly the same geochemical pathfinders.” Gray reckons the finds are potential new mineral provinces, not just districts. Moreover, “they are finding things right on the surface.” Gray says there is still a long way to go before commercial viability can be established, but “it would impress any of the Nevada guys.” Macquarie has managed public offerings of securities for ATAC over the past year. Carne says these Canadian Carlin-type finds are significant because they are large. “The northern Carlin trend is, I think, only 40 kilometres long and has in various estimates between 100 million and 200 million ounces of gold – both produced and defined,” he says. “Now it’s not a given that because it’s the same type of deposit that we are going to find that much gold. But because we are in the same geological environment and possibly the same age of mineralization, that invites the comparison that potentially, maybe there is that endowment.” Carne adds that since the first Carlin find in Nevada 60 years ago, most of it has only been discovered in the last 25 years: “And effectively, if you add up all of our days of exploration, it’s only 359 days so we are still very early in this story.” With a mid-March private placement injecting $13 million into ATAC by Agnico-Eagle Mines, together with about $14 million on hand, the company can forge ahead with a 2013 drilling program. Some will be at a Carlin-type discovery close to Osiris called Sunrise, different from Osiris in that it is a feeder fault system.

As for production prospects, Gray figures the crucial next steps will be determining where the best concentrations are, and whether or not they are continuous. “They’ve got some good flashes of mineralization and some spectacular holes, but the continuity is not there yet,” he points out. “At the Conrad situation, they’ve drilled that off systematically and they haven’t announced a resource, but what we published in Macquarie Equities Research Reports is somewhere between three-quarters of a million ounces and one million ounces.” However, Gray says, there is probably more at depth and despite having some very high grades, the Conrad zone probably averages close to six to eight grams per tonne. “For that part of the world, that’s not anywhere near critical mass [to justify developing a mine] – you would need a larger resource to justify infrastructure costs and want high open pit and underground grades to provide a high margin.” Should economic factors materialize to justify building a mine, infrastructure considerations would of course be critical. The Tiger gold deposit is 48 kilometres from the highway and it is another 100 kilometres to the Osiris zone. “So it’s 150 kilometres to the Carlin-type mineralization,” says Carne. “We fully recognize that, and what we are trying to demonstrate with our program is that the ounces are there to justify that sort of infrastructure investment.” CIM

Dalhousie University Department of Civil and Resource Engineering Assistant Professor – Mineral Resource Engineering Program

The Department of Civil and Resource Engineering invites applications for an Assistant Professor in the general area of Mineral Resource Engineering. The appointment will be made at the rank of Assistant Professor (probationary tenure-track) with a starting date for the appointment of July 1, 2013, or later. S/he will possess a PhD, in mining, geological or civil engineering. The candidate would also be expected to be eligible for professional engineering registration in the province of Nova Scotia. The successful candidate would be expected to have research strength in mineral processing, mine operations, mine planning, mine water treatment, mine waste remediation, rock mechanics or geotechnics. Interested individuals should submit a single PDF ﬁle containing a letter of Application, a CV and a statement of teaching and research interests to: Chair of the Search Committee, Department of Civil and Resource Engineering – email: civil.ofﬁce@dal.ca. Three letters of reference should be sent directly by referees to the same e-mail address. The review process will commence on 1 May 2013 and continue until a candidate has been selected. Complete information regarding this position can be found at: http://civilandresource.engineering.dal.ca/Files/Job_AD_March_13.pdf

May 2013 | 55

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The right people at the right time Goldcorp establishes new graduate hiring program

Courtesy of Goldcorp

by Simon Rees

As the company expands, Goldcorp has hired the first in a series of cohorts of recent graduates in order to create a consistent business culture. The company is projecting a 70-per-cent increase in gold production in the next five years, as projects like Éléonore (above) come online.

oldcorp is on a major growth trajectory,” says Jenine Ellefson, director of recruitment and talent management for the company. “We’re expected to grow production over the next five years and, as a result, we need to monitor our talent pipeline.” The inflow of talent will be essential for the company to reach its goal of increasing production from 2.39 million ounces of gold in 2012 to about four million ounces by 2017. To make sure this happens in a coordinated way, Goldcorp has designed a new graduate recruitment program to develop groups of young professionals together. Beginning in June, a cohort of around 20 carefully vetted engineering, metallurgy and geology graduates from Canada and the U.S., will begin two years of skills development within the company. Paul Farrow, the company’s senior vice-president of people and safety, explains, “The individuals will either be placed at one of our operations or in one of the regional offices, depending on where the need is. As a group, they will have a common, baseline introduction to Goldcorp.” He hopes the change away from hiring one at a time will help maintain a more coherent workforce as the company expands. Graduates will be brought together twice over the two-year period to take part in workshops and to discuss in detail various aspects of Goldcorp’s business. This includes the mining

“G

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industry in general, company values and strategies, career development, systems-thinking, and in-depth work on safety. According to Farrow, the yearly get-togethers will give the recruits a forum to ask questions and bring fresh ideas to the company. He says he is hoping “to listen very clearly to what they have to say – not just about their experience in the program, but about opportunities for Goldcorp to grow, things like operating for excellence and continuous improvement activities.”

University alliances “We partnered with universities that offer programs relevant to our industry and with universities located close to our mine sites,” Ellefson says. Goldcorp attended nine career fairs in Canada and five in the U.S., and also accepted resumes from students at other Canadian and U.S. universities. Candidates have now been chosen and are finishing their studies before starting work. “We start the program by first identifying the technical experience a new graduate will need in whatever stream they are in,” says Ellefson. “For engineers and geologists, this will help them progress towards their professional designation.” After the first year, the graduates will have the opportunity to rotate to a different work environment. “They will have the

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chance to either physically relocate to another geography or otherwise rotate within a large operation to a completely different department,” says Farrow. But just like any other employee, Ellefson notes, “There is no guarantee of travel. This must be earned and make business sense.” While at their respective operations, graduates will bolster their experience by performing several different roles and a variety of tasks. “We want graduates to gain exposure to different areas within their specialist field over the course of the program,” says Ellefson. “This will help them decide what role they want to pursue with the company after the program ends.” Ellefson expects the company will have its own learning curve: “The first year will be a test in a sense. We are committed to the program, but I imagine we will make some tweaks after we receive feedback from the first year of the process.” Farrow is taking the long view and anticipates the program will only begin to truly flourish once the first cohort has had the chance to report their experiences back to their respective alma maters. “It’ll take probably the second cycle before people start talking about the program and spread the word through alumni associations in universities,” he says. “And then that will be when the excitement starts.” The company will likely see the biggest gains after a decade. “As they grow in the company, in perhaps 10 years, the graduates will begin to become managers or even progress higher,” Farrow explains. “And we are looking for that next wave of leaders to come up through the organization. Our leadership team is interesting if you look at it currently; the people know each other from previous job experiences. With a program like this, we’re increasing the odds of having that in the future.”

these programs and their value. They take time and effort, so you won’t see rapid results; yet it’s important to maintain momentum in order to ensure a company has the skills and the talent available when needed in the future. As an industry we all know there’s a skills shortage, especially in technical areas. This is an industry-wide issue and we all need to do our bit in training people.” “The program starts in Canada and the U.S. first,” explains Ellefson, “although we hope to expand this to all the regions in which we operate.” And as the program grows, specifically into Mexico and South America in the near future, Goldcorp’s yearly crop of the best and brightest will increase in size to fuel their business. For now, the hiring has been limited to engineering, metallurgy and geology grads, but according to Farrow, that will change. “We need finance people, we need people with HR backgrounds, we need people with corporate social responsibility backgrounds, safety, all the usual disciplines you need for a company will eventually come into this graduate program,” he says. “It’s okay to hire one at a time, but the long-term impact of bringing on board a group of like-minded, ambitious, talented individuals at the same time with the opportunity to work together as a team is exciting. One of these individuals has a great chance of being a future CEO or senior executive at one of the best mining companies in the world.” CIM

IDLERS | PULLEYS | IMPACT BEDS | ACCESSORIES

Leading the next leaders Goldcorps’ graduate program was tailored to emphasize leadership. To develop and facilitate this, the company has engaged the assistance of The Refinery Leadership Partners Inc., a consultancy firm headquartered in Vancouver, B.C., and with offices in the U.S., Mexico and Chile. “This will be the first opportunity for many participants to consider aspects of leadership and, while they won’t start their career leading a team, it will be an opportunity for them to consider their leadership skills while they are contributing to a team,” explains Refinery consultant Stephanie Ryan. “We begin with a four-day workshop at the start of July that is followed up with 10 missions,” Ryan says. “These missions are opportunities for the graduates to practise the leadership skills presented in the workshop. We want them to apply the knowledge acquired in their day-to-day working lives. For example, if there is a mission on how to give or receive feedback effectively, it won’t simply be a role-play situation – it will be about engaging in a meaningful, real-life conversation.” Ellefson highlights the need for mining companies to maintain their graduate programs throughout the economic cycle. “The mining industry is cyclical, and these types of programs tend to be backed when the sector is doing well,” she says. “But companies should ensure they have a long-term view of

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First place Finnish Finland has excellent geology and business culture – but do not go in poor

Courtesy of Mawson Resources Ltd.

by Eavan Moore

Geologists for Mawson Resources Ltd. check drill core in the snow.

hen Michael Hudson began his Nordic explorations 12 years ago, Finland and neighbouring Scandinavian countries were not widely known for their mining. “I used to spend a lot of time telling people that these were mining countries, that they had been mining countries for hundreds of years, and it was more than just ABBA, IKEA and Nokia,” says Hudson, now president of Mawson Resources Ltd. The rest of the world appears to have caught on. Finland placed first in the Fraser Institute’s 2012-13 survey of mining companies, as the world’s most investment-friendly mining jurisdiction. Its resource base, infrastructure, and clear-cut policies won praise from the 50 or so companies operating there, even as authorities struggle to accommodate both burgeoning mineral development and a newly heated debate over miners’ social licence to operate.

Ancient history In a market especially wary of risk, Finland is a calming destination. Its university-educated, English-speaking workforce makes hiring a relatively simple affair. Mining taxes remain low, government officials make themselves accessible, and there is no sovereign risk. Technology firms and equipment suppliers like Outotec, Metso, Sandvik and Atlas Copco 58 | CIM Magazine | Vol. 8, No. 3

are easily accessible. Even highlatitude sites have road access and mobile phone reception. The Geological Survey of Finland provides exceptional maps and data. This list goes on and on, but what puts Finland over the top is that it possesses a rich geology that invites comparison to Canada and Australia. Gold is today’s top target; in particular, the Proterozoic greenstone of Lapland hosts abundant gold and nickel deposits, according to Krister Sundblad, professor of geology at the University of Turku. On that greenstone belt, Agnico-Eagle’s seven-million-ounce Kittila mine has the largest gold resource in Europe. But the mines operating in the Finnish sections of the Fennoscandian Shield extract numerous minerals, including iron, nickel, copper, chromium, uranium, and platinum group metals. Sundblad’s recent work has explored indium deposits. Although Finland’s mining history goes back 500 years, it still has some attributes of an emerging jurisdiction. “In Canada and Australia,” says Hudson, “we’re looking under 200 metres of cover these days for the next generation of deposits, whereas projects like ours [in northern Finland] are being found at surface.”

Playing catch up One reason for this is that, prior to 1994, when an amendment to the mining act lifted a ban on majority foreign ownership, only a few state-owned companies operated in the country. The consequences of legislative changes only became apparent relatively recently, when a spike in exploration projects driven by rising metal prices compelled the government to revisit its mineral policies in 2006. “They weren’t that prepared for foreign investment, particularly in things like mining,” explains David Pym, CEO of nickel and gold miner Belvedere Resources Ltd. “So their mining law was a little bit untested.” The country’s response to its mining boom has been productive, if rocky. The Ministry of Employment and the Economy introduced a public consultation mandate and began

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Martin Rotta

mining and dismayed by a 2012 waste taking a closer, longer look at permit water pond leak at the Talvivaara applications. The amended mining nickel-uranium mine has put pressure act, crafted over several years and put on environmental regulators and mininto force in 2011, added numerous ers to tread cautiously. Those opposed safeguards for people and the envito mining projects – mainly for ronment; for example, exploration tourism, conservation or health reapermitting functions were split off sons – increasingly take the opportufrom the pro-mining Ministry of nity to appeal development, adding Employment and the Economy, and further time to the approval process. reassigned to the Finnish Safety and Government data show that exploChemicals Agency. ration permits take an average of about Unfortunately, the reorganization three years to make their way through meant that 15 new employees, as the system. well as mining companies and the The government’s goal is to cut public at large, had to be brought up down the wait to six months by midto speed on a brand new permitting 2014. But for now this pileup of delays process in short order. Meanwhile, a has a significant impact on junior backlog of exploration permit appliDuring a course he led, Krister Sundblad (right) explains the explorers, Hudson says. “It’s almost cations had grown since 2006. “It geological setting of in-bearing veins his research team impossible to come in to Finland today has been a very, very challenging discovered in southern Finland. and establish yourself if you haven’t time,” says Riikka Aaltonen, senior adviser of mineral policy at the Ministry of Employment and already got a foothold or the money to wait.” His company, while it can afford to wait, has been affected. “We’ve had a very the Economy. Corporate social responsibility and environmental issues exciting gold discovery [at Rompas-Rajapalot],” he says. “It’s became hot topics in the country. A public newly aware of been getting a lot of attention, and of course we’ve been wanting

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to move on this project. It because the end result will took us three years to get onto mean that we will learn from the ground to drill, and we’re each other,” he adds. While still not through. A majority of the national government our better target areas are still and local communities tend subject to environmental perto support mining operamitting to allow a drill rig.” tions, according to Haga, the Delays also hit Belvedere’s people of southern Finland Hitura nickel mine, which know less about the indusonly recently received a mintry and are more inclined to ing lease extension to cover a distrust it. tailings expansion, after applying for it four years ago. Pragmatic people Larger companies have Agnico-Eagle represents navigated the process more one of the larger firms opersmoothly. Ingmar Haga, ating in Finland; surprisingly vice-president for Europe few major mining companies at Canadian gold miner have landed there. Pym of Agnico-Eagle, reported that Belvedere Resources thinks A piece of nickel ore, fallen from the mucker at the Hitura mine, on the drift floor with the company’s Kittila project drainage water flowing around it the claim system deters waited at most three years for majors from operating over its mining permits, and had the large land tenures they secured every permit for which it applied. He notes, how- would prefer. A company staking claims must notify and pay a ever, that mining companies are now more focused on com- steep fee to every individual out of perhaps hundreds or thoumunicating why mining is important. “I think that it’s good sands of landowners. “It’s quite time-consuming and expensive to stake large areas of land in Finland, and that tends to keep the majors out,” he comments. “Anglo-American’s really the only major that’s stuck in Finland and had big, consistent Visit us in Booth 0504 at the CIM Show exploration.” Haga explains that, in the Finnish view, staking off large tracts of land without working them misuses the resource. The Finnish model encourages companies to do their work quickly and move on, making exploration more efficient. As a national characteristic, that tendency to get on with things is a major source of the optimism felt by foreigners operating there, who expect that Finns, focused on problemsolving, will find ways to untie their administrative knots. “Finland is a country with a very pragmatic approach to things,” explains Casper Herler, an attorney at Finnish firm Borenius Ltd. He points out that the current government is a functioning six-party coalition: “It’s possible to do things in the name of the general interest.” Legislators are, therefore, unlikely to make rapid policy shifts, according to Herler. The new mining law has room for discretion on the details but it remains generally mining-friendly. A proposed mining tax, put aside for at least the next two years, would be passed with caution. Despite his frustration, Hudson believes Finland is the answer to soaring capital costs and an ever-riskier resource base. “What the world really needs is high-grade, permittable deposits in good jurisdictions,” he says. “I think Finland has almost come into its own.” CIM

For more on the Fraser Institute’s survey of mining companies, see “Is perception reality?” on p. 32. 60 | CIM Magazine | Vol. 8, No. 3

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King of the mountain Copper Mountain CEO Jim O’Rourke on his life in the business

Courtesy of Copper Mountain Mining Corporation

by Eavan Moore

etting his start at Placer Development in 1962, engineer Jim O’Rourke went on to help build a string of successful mines, including many of the best-known operations in his native British Columbia. As president of Princeton Mining Corporation, O’Rourke led the development of the Cassiar underground block cave mine, purchased and operated by the Similco Mine, and formed an early Japanese partnership to finance the Huckleberry copper project. O’Rourke tried retirement for a while but was unable to resist the pull of old friends and an industry he finds as rewarding socially as professionally. His latest endeavour, the Copper Mountain Mining Corporation, started production in the summer of 2011. In recognition of his considerable accomplishments and overall contribution to Canada, he was recently inducted into the Canadian Mining Hall of Fame.

ships, I think you have to be honest. And I think you have to understand that everyone involved has to benefit, whether it be the community, aboriginal groups, suppliers, or in our case, our partner, Mitsubishi Materials Corporation.

CIM: You have focused on starting up and reviving mines. What interests you about this work, and mining in general? O’Rourke: I find it exciting. Things happen extremely quickly, and there are lots of decisions to be made in a short period of time. It’s just a very exciting time in the mining business. You get to meet a lot of people from a lot of different disciplines and communities. Whether you are in exploration, development or whatever, you’re completely reliant on people, including all your suppliers. You have to build relationships. And to build relation-

CIM: Junior companies all have high ambitions for their given deposits. What is the key to dreaming big yet staying realistic about the resource you have? O’Rourke: If you are a junior company with one project and you have good geologists, it’s going to depend on what they’re seeing in the drill results. You may have results with only a sniff of mineralization, but if the rock types and everything indicate it’s part of a major porphyry system, you may have to keep moving forward. But it’s going to be a decision based on the geological interpretation.

62 | CIM Magazine | Vol. 8, No. 3

CIM: You are a pioneer of partnerships with companies in the Pacific Rim. What do you think the influx of investors from China, Korea and Japan means to projects in Canada? O’Rourke: I think it’s a great opportunity for Canadian companies – particularly the more junior companies – that potentially have a good project but need financing and can partner up with somebody who is willing to help. I think it’s a win-win situation. Now more than ever, companies have been seeking alternative means of funding and, in many cases, have been successful. These sources include looking oversees for strategic partnerships.

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CIM: As a CEO, how do you balance between taking risks, making long-term investments into your company and playing it safe so that you have a quarterly or an annual profit to show your investors? O’Rourke: I believe that if you’re running a company, you have an obligation to clearly specify your objectives – where you see the company going in the future – and provide a clear picture of the current focus. If you’re stepping out and taking a lot of risky leaps for potentially high gains, you’re going to attract a different group of investors. In terms of our own company, Copper Mountain, our first priorities were to put the mine into production on schedule and on budget, which we did, and then to bring it up to its design capacity, which we’re in the process of doing. Unfortunately, we have hit some stumbling blocks there, but we believe it’s well in hand now. We’ve said that we want to demonstrate profitability and then look for accretive opportunities that will add value to the company. CIM: Why is Copper Mountain considering a secondary crusher now, with the current dour economic conditions at play? O’Rourke: The tests and all the technical data to date indicate that, with a secondary crusher, we would be assured of more steady operations, less fluctuation in ore variability from different areas of the mine and, as a consequence, better performance in the flotation area and other parts of the plant.

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The addition of the secondary crusher would allow increased throughput at a cost of up to $40 million. The investment has a very fast payback of less than a year. If we do decide to proceed with the secondary crusher, it would be paid out of internal cash flow from the operation. CIM: Are there any circumstances in which poor economic conditions are actually to your advantage? O’Rourke: I’ve experienced that in the past, where even major companies are shedding producers that aren’t as profitable as others. They don’t see them adding a lot of value to their company, and as a consequence they may be willing to part with them at a reasonable price. In our case, we are currently a one-mine company with positive cash flow. We’re always looking at projects or at properties that would add value to our company. And from that point of view, there is an advantage for us in a market downturn. CIM: What do you consider your biggest success? O’Rourke: My biggest success would be pulling together strong teams of people that can work safely and in an atmosphere that they really enjoy. I look at a lot of people in our team as good friends. CIM: And your biggest challenge? O’Rourke: Probably the biggest challenge has been reliance on government decisions. They can make or break things, depending

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on what their philosophy is, as governments change from one to the other. A classic example would be Venezuela, where the government changed and they basically confiscated projects. I think you see that in a number of places. CIM: Do you think that same dynamic holds in British Columbia? O’Rourke: I’m not sure right now. It did in the 1970s. We had a change in government and they implemented a super-royalty for mineral projects, and it was very damaging. As a result, it took a decade for B.C. to regain its credibility as a miningfriendly jurisdiction. I know of one mine in particular, where the royalty was 130 per cent of the profit. So government has a tremendous influence on our business. CIM: How long do you plan to stay on at Copper Mountain? You could have retired by now. O’Rourke: I have no idea. I guess until somebody wants to kick me out! I did retire once. After I retired, I ran into people who I’d worked with, who were very competent, and I was willing to invest with them. I ended up more involved than planned originally, but if you enjoy it, then it’s much like a hobby. And I guess that’s the way I feel about mining. It’s a great industry, there are great people, and it’s very sociable and enjoyable. From my point of view, I have a lot of fun doing what I do every day. CIM

From left: Pierre Lassonde, Gerald Grandey, Chuck Fipke and Jim O’Rourke were inducted into the Hall of Fame this year.

Canadian Mining Hall of Famers 2013

By Peter Braul

Saint-Hyacinthe, Quebec, native Pierre Lassonde’s career has been one of the great mining successes in Canadian history. Educated in both engineering and business, he started FrancoNevada Corporation with Seymour Schulich in 1982, and brought the company to its $1.2-billion IPO in 2008 – at the time the largest the Toronto Stock Exchange had ever seen. Besides his business wisdom, Lassonde is equally worthy of praise for his philanthropic endeavours. He has injected tens of millions of dollars into mining-related university programs in Canada and the United States. He is the namesake of York University’s Lassonde School of Engineering, the University of Toronto’s Lassonde Institute of Mining and the University of Utah’s Pierre Lassonde Entrepreneur Centre, and he has been awarded the Order of Canada. Gerald Grandey, who retired from his job as CEO of Cameco in 2011, led the company from difficult times in the early 2000s to a market capitalization of $9.6 billion. A lawyer by training, he got his start opposing nuclear power plants in the Great Lakes region. Since then, he has been involved with some of the world’s most significant nuclear policy initiatives, including the Highly Enriched Uranium Agreement that was aimed at disarming Russian nuclear weapons and fuelling nuclear power plants in the West with the salvaged uranium. Under his leadership, Cameco became Canada’s top employer of Aboriginal Peoples, while also growing to five mining operations worldwide. Grandey currently serves on the boards of many organizations and is chairman emeritus of the World Nuclear Association. The father of diamond mining in Canada, Chuck Fipke’s tenacity led him to the discovery of the kimberlite cluster that became the Ekati mine. The Ekati discovery was the culmination of years of Fipke’s research – starting with his education in geology and evolving with his use of heavy mineral geochemistry as a tool for exploration. He opened CF Mineral Research in 1977, further advancing his expertise in the subject, and with Dia Met Minerals, brought it to bear in the Northwest Territories – where he made his famous find. And, in order to help others make use of the tools he developed, he published the world’s first guide to diamond exploration using indicator mineral geochemistry. He also founded the Charles Fipke Centre for Innovative Research at UBC Okanagan and is currently the chair of Metalex Ventures. CIM

64 | CIM Magazine | Vol. 8, No. 3

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Courtesy of Antofagasta Minerals

No illusions BY IAN EWING

For those planning capital projects, it is important to exercise fiscal restraint, yet be prepared to splurge on a chance to create value. To plot the best course, a company must have the vision to recognize its strengths and liabilities â&#x20AC;&#x201C; a task which history has proven difficult. Today, there are ways of evaluating exactly what can move a business forward and what threatens to break the bank â&#x20AC;&#x201C; but be ready to take a good hard look in the mirror.

Antofagasta Minerals has created a staged approach to developing its Centinela district, which contains three operating mines and four undeveloped deposits.

Courtesy of Rainy River Resources

ainy River Resources COO Mike Mutchler contends that the key to survival is managing capital costs and capital estimates, and that all starts with good scoping and project definition. “It’s making sure that we get the right fit for our application,” he says. In particular, Mutchler criticizes other projects that he feels have overbuilt. “We’re making a conscious effort not to build a Cadillac plant,” he points out. “We’re building a fit-for-purpose plant. We don’t want to invest more capital than we need in our plant; we want to invest the right amount of capital.” Kevin Bullock, president and CEO of Volta Resources, has a similar opinion. Volta currently has nine projects at varying stages of development in Burkina Faso and Ghana, and its flagship Kiaka project is moving towards the completion of a feasibility study. “You get to a point where people are saying, ‘How big could this be?’ and everybody’s excited,” Bullock says, “and then all of a sudden, when the market turns, it’s too big and costs too much to build.” Instead, he says, companies need to stay within themselves and not get caught up in their own hype. For Rainy River, currently in the late stages of feasibility, that meant actually decreasing the size of its gold plant in northern Ontario. Originally conceived as a 30,000-tonne-perday mill, the company scaled it back to around 20,000 tonnes per day, bringing the capital costs down to a level that was forecast to have a higher probability of success. Gerald Whittle, managing director of the mine optimization firm Whittle Consulting, agrees with their approach. “We like to give engineers credit for building the best plant,” he says, “but what’s the best plant? The one that maximizes recovery? That minimizes cost? That has the lowest capital? “I like the words, ‘fit-for-purpose,’ because that opens a discussion. What is it we really need here? It doesn’t have to be fancy or shiny or long-life or whatever. What’s the best outcome?”

The best defence is a strong offence Determining what is needed is never simple. Although aggressive cost-cutting is a surefire way into an investor’s heart, the consequences can be devastating and often do not address 68 | CIM Magazine | Vol. 8, No. 3

the real issue. “It makes me shudder,” says Whittle, “when I hear this mindless chatter about reducing costs. What people really want when they’re in trouble is to improve their cash flow. “You can reduce mining costs tomorrow,” he adds, “by parking half the trucks. But that would be an absolute disaster, because the revenue they would have produced would have more than offset their costs.” This approach also presents some serious questions about an operation, he explains. “If you can do the same work at a lower cost, why weren’t you doing that before?” Whittle’s firm instead advocates the importance of aligning business units towards a common purpose. In many companies, each organizational silo has its own objectives and its own key performance indicators. Geologists try to maximize reserves, mining engineers try to minimize costs or maximize plant utilization, plant managers try to maximize recovery or metal production, and marketing managers try to maximize the sale price of the commodity. “It’s chaos,” Whittle exclaims. The problem, he says, is not just that those objectives conflict; it is that not one of them is right for a well-structured mining company. “The ultimate objective of the company is to create economic value through better cash flows,” he says. That means maximizing net present value (NPV). Once the money is in the operator’s bank account, they can do whatever they want with it: invest in new projects or expansions, return cash to shareholders, or sit on it in case of downturns, as Volta tries to do. The best results of enterprise optimization attempts are obtained in new plants that can be optimized in every aspect to maximize NPV. Rainy River engaged Whittle to create a stockpiling plan that will allow the company to go after highergrade material more quickly, before going back to process the stockpiled material later in the life of the mine. Volta’s highly banded Kiaka gold deposit in Burkina Faso will also benefit from phasing and stockpiling, according to Bullock. Another option is staged development, which can involve building a small mill and running a high-grade policy for several years, then building a second mill once the head grade starts to fall off. “That second one can be self-financed,”

Courtesy of Volta Resources

Courtesy of Antofagasta Minerals

Above, left to right: Rainy River Resources worked with Whittle Consulting to create a stockpiling plan for their mine; Antofagasta’s Esperanza mine had problems that delayed its completion between 2007 and 2011, spurring the company to develop new procedures for quality control; Volta’s Kiaka gold deposit in Burkina Faso will benefit from the company’s use of phasing and stockpiling to maximize net present value.

Whittle says, “because you’ve made cash the first few years. And if the market goes bad, you don’t have to build it.” At the very least, he adds, you are deferring a big chunk of your capital expenditures. Antofagasta Minerals is using a staged approach to minimize upfront capital costs at its Centinela copper district in Chile. The area contains three operating mines – Esperanza, El Tesoro and Mirador – and another four deposits. The company is currently in the project definition stage for all of the Centinela district, considering geology, resources, engineering and environmental studies. “It is a very large project but it will be in three phases, one after the other,” explains project manager Francisco Walther. “We can check if we are moving in the right direction and control all aspects of the project.” Walther says the first phase will include optimization and life of mine extension of the El Tesoro and Esperanza operations, and is targeted for completion in 2016. Phase 2, in 2018, will see a new concentrator plant and, beyond 2020, the final phase will involve a second new concentrator. Antofagasta is also working to sequence mine planning within the district to maximize value and to minimize risk and capital exposure. These strategies can even help companies obtain financing, since investors look at cash flow profiles to see how quickly they will get returns. And though most effective when new deposits are about to come on stream, enterprise optimization can help many current operators too. “As long as you’ve got five or 10 years left on the life of the mine,” Whittle says, “then this analysis is still going to be valuable.” Variables such as phase design, mine schedule, cut-off grades, stockpiling, throughput, and product specifications can all be tinkered with to maximize NPV and front-load a mine’s returns – giving an operator more cash-in-hand almost immediately upon implementation. For a smaller company struggling to access capital in equity markets, it might be the difference between going broke or surviving until market conditions improve. “You can add, typically, a million dollars a week to your cash flows,” says Whittle.

Quality planning and strong teams required The most important aspect of cost management, however, remains vigorous early planning and detailed prefeasibility and feasibility studies. Independent Project Analysis, Inc. (IPA), leaders at researching and benchmarking capital projects, preach the importance of good project definition. Their research indicates that better early planning drives

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everything, from more competitive and predictable costs to better operability and fewer safety incidents. “The measurement of project definition is correlated with every outcome you could want,” says Phyllis Kulkarni, the plant-based systems manager at IPA. They have a database of nearly 15,000 projects worldwide, in every commodity, to back up their assertion. “The most powerful use of our approach is in defining the project and in doing an option analysis,” agrees Whittle. Without that, he says, “project managers will be meticulously executing the wrong strategy.” Unfortunately, in boom times of the last decade, there was a tendency to rush through prefeasibility and feasibility. “There was such great pressure to develop a new project very quickly, because the commodity prices were so high, that they started to take shortcuts,” says Claudio Martinez, managing director of Enthalpy Consulting. “And because of that poor definition, when they were in the middle of the project, they found they didn’t do all the proper engineering, follow the proper processes, and now they have to spend more money.” Antofagasta learned that lesson the hard way. After rushing through feasibility on several projects between 2007 and 2011, the company discovered during the execution of their Esperanza project that they had significant problems in the quality of their engineering, delaying completion of the final stages. “The ramping-up process has taken two years, instead of half a year,” reveals Walther. “It’s costing us time and money.” As a result, the company has spent the last two years developing a standardized internal procedure for quality control, based on Enthalpy’s process, called the Asset Delivery System. A key component is the Functional Quality Assurance Review, a senior team that formally reviews projects and ensures minimum standards are met. They have also made an effort to build stronger, dedicated project teams.

After a good team, Enthalpy’s Martinez notes, good checks and balances are the most important part of a strong planning process. “We strongly promote the stage-gate process,” he says, “where at the end of a stage, you have a gate you need to go through to make sure things were done properly.” However, now that money is tight, many companies are again skimping on – or skipping – their prefeasibility studies, according to IPA’s Kulkarni. “Doing a better job with feasibility ultimately lets you set a more competitive cost estimate, and deliver against that estimate,” she says. “If saving money is your goal, then it should be important.” Antofagasta will not know the final impact of its procedural changes for several years, but Walther is hopeful the work will pay off: “We recognized that we needed better quality. Our expectation for these instruments is to have better results.”

Companies see value of new tools Both Rainy River and Antofagasta, among others, have also embraced new techniques like stochastic mine planning methods (see “Endless possibilities” below), which integrate uncertainty to make mine planning forecasts, and report mine performance probabilistically. But broader uptake has been slow. In such a conservative industry, notes Whittle, you would expect to see a stronger focus on defining the uncertainty around estimates, but that has not happened. Although the techniques have been proven effective, McGill University professor Roussos Dimitrakopoulos, a leader in the field, is still fighting to get them adopted industry-wide. “The consulting world is quite good at the Monte Carlo simulations on the ore body side, which are used to quantify geologic uncertainty such as uncertainty in grades, metal content and material types,” explains Dimitrakopoulos, a Canada Research chair and director of McGill’s COSMO Stochastic Mine Planning Laboratory. “But up to now, consultants have been very limited in what they can do with stochastic opti-

Endless possibilities Stochastic mine planning deals with the inherent uncertainty (stochasticity) of mine planning, design, production forecasting and valuation of individual mining projects and operations. It can also be applied to mining complexes with multiple processing streams and products. The approach integrates two core technical elements: stochastic simulation and, in turn, stochastic optimization. These provide a new mathematical framework that supports the direct integration of uncertainty in the mathematical optimization processes of life-of-mine planning and, more recently, mine supply chains. Stochastic, or Monte Carlo, simulation methods for generating scenarios of forecasted commodity prices, market volatility and other variables are based on probabilistic concepts and provide any number of possible predictions over a specified time period. Different types of stochastic simulation methods also exist to evaluate mineral resources. Based on 70 | CIM Magazine | Vol. 8, No. 3

To maximize its probability of success, Rainy River Resources decreased the size of its planned gold processing plant in northern Ontario from 30,000 tonnes per day to 20,000 tonnes per day.

existing drilling data, these methods interpolate the grade, metal, material types and other properties of interest over the 3D space of an ore body. Like market uncertainty quantification, groups of simulated scenarios of an ore body describe

mization that utilizes simulated ore body (or supply) uncertainty in generating life-of-mine predictions and can also integrate market uncertainty in the same process.” Things are starting to change, however. Antofagasta uses Monte Carlo simulations for its economic and risk evaluations during feasibility, while Rainy River used them on its operating and capital cost models. “We wanted a very high probability of success, so we set an appropriate contingency to give us that,” says Rainy River’s Mutchler. “It gives you a good level of comfort with your costs and the ranging you’ve chosen for your costs.”

Stronger markets, weaker memories For now, companies will have to use every tool at their disposal to survive. But they may not have to scrimp and save for much longer. Ernst & Young’s global mining and metals leader, Mike Elliott, expects to see a gradual upturn by the second half of 2013. “We see some signs that suggest we may have already bottomed out,” Elliott says, “maybe in the fourth quarter of last year. In the second half of this year the availability of capital will free up a bit. It’s not going to bounce back up or anything, but we should see gradual improvement over the year.” Having survived tighter conditions, many companies with better corporate memories will be well-placed for a recovering market. The management team at Volta considers itself among that group. “I think we’re reminded of the lessons we’ve learned in the past, more than anything,” says Bullock. Others may face longer-term problems because of their cost-cutting measures. But the big question for the wider industry will be whether we have really learned the hard lessons about planning, project definition, and cost management from this downturn. “I would love to say yes,” sighs Enthalpy’s Martinez. “But I don’t think so.” CIM

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the spatial uncertainty of pertinent attributes like grade, rock hardness and others. These spatial simulations require vast computing power because ore bodies are described by hundreds of thousands to millions of 3D mining blocks. As a result, their industry application only became common in the last decade. The availability of stochastic modelling allows the development and implementation of stochastic optimization approaches. Stochastic optimization refers to various mathematical optimization approaches used to maximize net present value of life-of-mine planning. Unlike conventional approaches, stochastic optimizers simultaneously use groups of simulated scenarios of an ore body, costs and, more recently, simulated commodity prices as inputs, thus accounting for uncertainty when generating life-of-mine plans, designs and production schedules. This is shown to lead to substantially higher net present value, greater chances for meeting production forecasts, more metal production and larger pit limits.

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May 2013 | 71

Aucune illusion PAR IAN EWING

Ceux qui prévoient des projets d’investissement doivent bien gérer leur budget, mais ne pas hésiter à dépenser beaucoup lorsque se présente une occasion de créer de la valeur. Pour établir une stratégie optimale, une entreprise doit être en mesure de reconnaitre ses forces et ses faiblesses – ce qui n’est généralement pas facile. Il existe aujourd’hui des méthodes pour évaluer avec exactitude quelles dépenses favoriseront le développement d’une organisation, et lesquelles risquent de la ruiner – mais cela exige une solide autocritique.

ike Mutchler, chef de l’exploitation de Rainy River Resources, soutient que le secret de la survie est de gérer les coûts d’investissement et le financement estimé, en commençant par un cadrage et une définition de projet précis. « C’est s’assurer ainsi d’obtenir ce qui convient à ce que nous nous proposons de faire », dit-il. Monsieur Mutchler critique en particulier les projets qui, à son avis, construisent au-delà de leurs besoins. « Nous 72 | CIM Magazine | Vol. 8, No. 3

faisons un effort conscient pour ne pas construire la Cadillac des usines, affirme-t-il, et bâtir plutôt une usine adaptée à l’usage prévu. Nous ne voulons pas investir plus de capital que nécessaire dans cette usine, mais bien plutôt le capital qui convient. » Kevin Bullock, président-directeur général de Volta Resources, entretient une opinion similaire. Volta prépare actuellement neuf projets miniers au Burkina Faso et au

Courtoisie d'Antofagasta Minerals

Antofagasta Minerals a adopté une approche échelonnée pour le développement de son district Centinela, qui regroupe trois mines opérationnelles et quatre gisements inexploités.

Ghana, qui en sont à diverses étapes de leur développement, son projet Kiaka s’apprêtant à terminer une étude de faisabilité. « Vous en arrivez à un point où tout le monde se demande, emballé, jusqu’où on peut aller, explique Kevin Bullock. Puis le vent tourne soudainement et il en coûte trop cher de construire l’usine en raison de sa taille. » Il est d’avis que les compagnies minières devraient rester égales à elles-mêmes plutôt que de se laisser prendre au jeu. Pour Rainy River, qui en est à la dernière étape de son étude de faisabilité, cela signifiait une réduction de la taille de son usine de traitement de l’or située au nord de l’Ontario. Conçue à l’origine en vue d’une extraction quotidienne de 30 000 tonnes, l’usine a été réduite à une production de 20 000 tonnes par jour, ramenant les coûts d’investissement à un niveau qui, selon les prévisions, avait de plus grandes chances de succès. Gerald Whittle, directeur général de la firme d’optimisation des mines Whittle Consulting, se dit d’accord avec cette approche. « Nous aimons faire confiance aux ingénieurs lorsque vient le moment de construire l’usine idéale, dit-il, mais qu’est au juste l’usine idéale? Est-ce celle qui maximise les retours sur l’investissement? Celle qui réduit les coûts au maximum? Celle qui exige le capital le moins élevé? « J’aime bien l’idée d’une usine adaptée à l’usage prévu, car cela donne lieu à une discussion, poursuit-il. De quoi avonsnous réellement besoin? L’usine n’a pas nécessairement à être spéciale ou brillante, ou même avoir une longue durée de vie. Quel est le meilleur résultat que nous puissions viser? »

La meilleure forme de défense est l’attaque Il n’est jamais simple de déterminer ses besoins. Bien que la chasse aux coûts soit la meilleure façon d’atteindre le cœur d’un investisseur, ses conséquences peuvent être dévastatrices tout en ne répondant pas, bien souvent, aux véritables besoins. « J’ai des frissons chaque fois que j’entends tout ce papotage irréfléchi sur la réduction des coûts, affirme Gerald Whittle. Ce que veulent les gens lorsqu’ils sont en difficulté, c’est accroître leur flux de trésorerie. « Vous pouvez certes réduire les coûts de votre exploitation minière dès demain en immobilisant la moitié de vos camions, ajoute-t-il Mais cela serait parfaitement désastreux, car le revenu que ces camions auraient généré aurait plus que compenser ce qu’il en aurait coûté pour les garder en opération. » Pareille approche donne d’ailleurs lieu à de sérieuses questions quant à la méthode d’exploitation choisie, explique monsieur Whittle. « Si vous pouvez maintenant abattre la même quantité de travail à moindre coût, pourquoi ne le faisiez-vous pas auparavant? » La firme de Gerald Whittle insiste plutôt sur l’importance d’harmoniser les unités d’affaires avec un objectif commun. Dans bon nombre d’entreprises, chaque unité poursuit ses propres objectifs en fonction de critères de rendement qui lui sont propres. Les géologues cherchent à maximiser les réserves, les ingénieurs miniers à réduire les coûts ou à utiliser l’usine à sa pleine capacité, les directeurs d’usine à optimiser le retour sur l’investissement ou la production de métal, et les

directeurs de marketing cherchent quant à eux à maximiser le prix de vente du produit. « C’est le chaos! » s’exclame Gerald Whittle. Le problème, à son avis, n’est pas simplement que ces objectifs sont conflictuels, mais qu’aucun d’entre eux ne convient à une compagnie minière bien structurée. « Le but premier de la compagnie est de mettre en place une valeur économique grâce à de meilleurs flux de trésorerie », dit-il. Il s’agit donc ici de maximiser la valeur actualisée nette (VAN, voir l’encadré). Une fois l’argent déposé dans le compte en banque de l’exploitant, celui-ci peut en faire ce qu’il veut : l’investir dans de nouveaux projets ou prendre de l’expansion, verser de l’argent aux actionnaires ou le garder tout simplement en prévision d’un ralentissement économique, comme tente de le faire Volta. Les meilleurs résultats des efforts d’optimisation d’une entreprise se traduisent par de nouvelles usines, qui peuvent être optimisées à leur tour sous tous les angles en vue de maximiser la VAN. Rainy River a fait appel à la firme de Gerald Whittle en vue d’élaborer un plan de mise en stock qui lui permettra d’exploiter plus rapidement un matériel à plus haute teneur, puis de retourner au traitement du matériel emmagasiné plus tard au cours du cycle de vie de la mine. Le gisement d’or extrêmement rubané de Kiaka qu’exploite Volta au Burkina Faso bénéficiera également d’une mise en phase et d’une mise en stock, de l’avis de Kevin Bullock. Une autre approche encore est celle du développement échelonné, qui peut exiger la construction d’une petite usine pour le traitement sur plusieurs années d’un minerai à haute teneur, suivie de la construction d’une seconde usine lorsque la teneur de tête commence à diminuer. « Cette seconde usine peut s’autofinancer, dit Gerald Whittle, du fait de l’argent amassé au cours des premières années. Et vous n’avez pas à la construire si l’économie se met à ralentir. » Vous reportez ainsi, à tout le moins, une bonne part de vos dépenses en immobilisations, ajoute-t-il. Antofagasta Minerals se sert du développement échelonné dans l’exploitation de sa mine de cuivre du district de Centinela, au Chili, dans le but de réduire les coûts d’investissement dès le début des opérations. La région compte trois mines en opération, Esperanza, El Tesoro et Mirador, ainsi que quatre autres gisements. L’entreprise en est actuellement à l’étape de la définition de projet pour l’ensemble du district de Centinela, et effectue des études sur la géologie, les ressources, l’ingénierie et l’environnement. « C’est un projet de très grande envergure qui se s’effectuera toutefois en trois phases consécutives, explique le directeur de projet Francisco Walther. Nous pourrons ainsi vérifier que nous avançons dans la bonne direction et contrôler chacun des aspects du projet. » Francisco Walther indique que la première phase comprendra l’optimisation et l’agrandissement des mines El Tesoro et Esperanza, prévues pour 2016. La seconde phase, qui prendra fin en 2018, comprendra l’érection d’une nouvelle usine de concentration dans un premier effort d’expansion, suivie de la phase finale, au-delà de 2020, qui verra la mise en place d’un second concentrateur. Antofagasta travaille également à May 2013 | 73

Courtoisie de Rainy River Resources

ainsi ajouter un million de dollars en moyenne chaque semaine à votre flux de trésorerie », affirme Gerald Whittle.

Planification de qualité et équipes solides exigées

Pour optimiser ses chances de réussite, Rainy River Resources a réduit la taille prévue de son usine d’extraction d’or au nord de l’Ontario, de 30 000 à 20 000 tonnes par jour.

ordonner la planification au sein du district de façon à en maximiser la valeur tout en atténuant les risques. Ces décisions peuvent même avoir pour effet d’aider les compagnies à obtenir un financement, les investisseurs s’intéressant aux flux de trésorerie qui leur permettent de recouvrer rapidement leur investissement. Bien que ce soit les nouveaux gisements qui s’apprêtent à entamer leur production qui profitent le mieux de l’optimisation d’entreprise, celle-ci peut également aider les exploitants en cours d’opération. « À moins que la mine ne compte plus que cinq ou dix années de vie utile, déclare Gerald Whittle, ce type d’analyse lui sera d’une grande utilité. » Des variables telles que la conception des phases, le calendrier de production, les teneurs de coupure, la mise en stock, la capacité de production et les spécifications du produit peuvent toutes faire l’objet d’ajustements qui maximisent la VAN et un solide retour dans la phase initiale, donnant ainsi accès à l’exploitant à des liquidités presque dès les débuts de la mise en chantier. Pour ce qui est des petites entreprises qui luttent pour accéder au capital des marchés boursiers, cela peut faire la différence entre faire faillite et garder la tête hors de l’eau jusqu’à ce que la conjoncture économique s’améliore. « Vous pouvez 74 | CIM Magazine | Vol. 8, No. 3

L’aspect le plus important de la gestion des coûts demeure toutefois une planification précoce rigoureuse ainsi que des études détaillées de préfaisabilité et de faisabilité. La firme Independent Project Analysis, Inc. (IPA), chef de file en recherche et comparaison de projets d’immobilisations, insiste sur l’importance qu’il y a à définir clairement un projet. Ses recherches démontrent qu’une meilleure planification précoce est le fondement de tout ce qui suivra, depuis des coûts plus concurrentiels et prévisibles jusqu’à la réduction des accidents, en passant par une exploitabilité améliorée. « Cette évaluation de la définition d’un projet est corrélée par tous les résultats que vous pourriez souhaiter », dit Phyllis Kulkarni, directrice des systèmes d’usines chez IPA. La firme appuie son assertion sur sa base de données forte de plus de 15 000 projets répartis partout dans le monde et touchant tous les produits. « L’aspect le plus important de notre approche repose sur la définition du projet et l’analyse des options, précise Gerald Whittle, sans quoi, les directeurs de projet s’emploieront à mettre méticuleusement en application des stratégies erronées. » Malheureusement, durant la période de boom de la dernière décennie, la tendance était de précipiter les études de préfaisabilité et de faisabilité. « Tous ressentaient cette pression de développer un projet aussi rapidement que possible, tant les prix des produits étaient élevés, si bien qu’on en est venu à recourir à des expédients, raconte Claudio Martinez, directeur général d’Enthalpy Consulting. Et en raison même de cette piètre définition, les exploitants se rendaient compte au beau milieu d’un projet qu’ils n’avaient pas l’ingénierie voulue et n’utilisaient pas les bons procédés, et qu’il leur fallait maintenant dépenser encore plus d’argent. Antofagasta a dû payer un gros prix pour apprendre cette leçon. Après avoir précipité les études de faisabilité de plusieurs de ses projets entre 2007 et 2011, l’entreprise a découvert d’importants problèmes de qualité sur le plan de l’ingénierie au sein de son projet Esperanza, ce qui a en retardé l’exécution finale. « Il nous a fallu deux ans, au lieu de six mois, avant de pouvoir commencer l’exploitation, avoue Francisco Walther, ce qui nous coûte donc temps et argent. » La compagnie a donc passé les deux dernières années à mettre au point une procédure interne normalisée d’assurance de la qualité, en s’aidant du processus d’Enthalpy nommé système de livraison des actifs. L’un des principaux composants de ce système est la mise en place d’une équipe de hauts dirigeants qui examinent formellement les projets afin de s’assurer qu’ils sont conformes aux normes de qualité minimales. L’entreprise a également pris des mesures pour bâtir des équipes plus solidement engagées envers les projets. De l’avis de Claudio Martinez, d’Enthalpy, une bonne équipe doit s’aider d’un bon système de freins et de contrepoids.

May 2013 | 75

Courtoisie de Rainy River Resources

« Nous recommandons très fortement l’évaluation les jalons, dit-il, en fonction de laquelle vous devez vous assurer, à la fin de chaque étape, que tout a été fait correctement. » Mais maintenant que l’argent se fait plus rare, de dire Phyllis Kulkarni, d’IPA, de nombreuses entreprises se sont remises à lésiner sur les études de préfaisabilité, sinon à les ignorer complètement. « Une bonne étude de faisabilité vous permet de prévoir des coûts plus concurrentiels et de travailler en fonction de ces prévisions, dit-elle. Si vous souhaitez vraiment économiser de l’argent, vous devriez prêter attention à cette étude. » Antofagasta ne connaîtra pas les répercussions finales de son changement de procédure avant plusieurs années, mais Francisco Rainy River Resources a collaboré avec Whittle Consulting pour établir un plan de stockage pour sa mine. Walther a bon espoir que cela réussisse. « Nous avons dû reconnaître qu’il nous fallait une meilleure qualité, dit-il. Nous nous attendons à ce faisabilité, tandis que Rainy River s’en sert pour ses modèles que les instruments mis en place nous donnent de meilleurs d’exploitation et de coûts d’investissement. résultats. » « Nous visions une probabilité élevée de réussite et nous avons donc intégré l’impondérable voulu à nos calculs, déclare Les compagnies reconnaissent Mike Mutchler de Rainy River. Vous avez ainsi un bon niveau de confiance face à vos coûts et à la fourchette que vous leur la valeur de nouveaux outils Tant Rainy River qu’Antofagasta, entre autres compagnies réservez. » minières, ont adopté tout de go de nouvelles techniques, telles que la méthode de planification minière stochastique, qui intè- Marchés plus solides, mémoires plus courtes gre l’incertitude aux prévisions relatives à la mine afin de proPour l’heure, les compagnies minières devront se servir de duire un rapport de probabilités sur le rendement. Mais tous les outils à leur disposition pour survivre. Mais elles n’aul’industrie est plus lente à leur emboîter le pas. Dans une ront peut-être pas à économiser encore longtemps. Mike industrie aussi conservatrice, vous vous attendriez à ce que Elliott, chef des mines et métaux à l’échelle internationale chez l’on définisse l’incertitude en termes d’estimation, mais cela ne Ernst & Young, s’attend à une reprise graduelle d’ici la fin s’est pas encore produit, fait remarquer Gerald Whittle. Et bien de 2013. qu’on ait démontré l’efficacité de ces techniques, Roussos Dim« Des signes nous indiquent que nous avons peut-être passé itrakopoulos, professeur à l’Université McGill et chef de file le creux de la vague, dit-il, peut-être au cours du quatrième dans le domaine, continue de lutter pour que ces techniques de 2012. Au cours du second semestre de cette année, le capsoient adoptées à l’échelle de l’industrie minière. ital sera un peu plus disponible. Non pas qu’il amorcera une « Le monde des consultants est très habile, dans sa modéli- remontée ou autre chose du genre, mais nous devrions être sation des gisements de minerai selon la méthode Monte témoins d’une amélioration graduelle au cours de l’année. » Carlo, à quantifier les incertitudes géologiques telles que les Ayant survécu à ces années de vache maigre, de nomteneurs, le contenu métallique et les types de matériau, breuses entreprises qui en gardent souvenir seront très bien explique le professeur Dimitrakopoulos, directeur de chaire de placées pour profiter d’une économie qui reprend des forces. recherche du Canada et directeur du Laboratoire COSMO de Les dirigeants de Volta considèrent qu’ils font partie de ce planification stochastique des mines de l’Université McGill. groupe. « Plus que tout, nous nous rappelons les leçons Toutefois, jusqu’à maintenant, les consultants demeurent lim- apprises par le passé », dit Kevin Bullock. ités quant à ce qu’il leur est permis de faire au moyen de l’opD’autres seront peut-être aux prises avec des problèmes à timisation stochastique, qui se sert de la simulation de long terme pour avoir effectué des coupures de coûts. Il l’incertitude des gisements de minerai pour émettre des prévi- importe toutefois de se demander si la leçon sur la planificasions sur la durée de vie d’une mine, et qui peut également tion, la définition de projets et la gestion des coûts aura été intégrer l’incertitude au processus. apprise à l’échelle de l’industrie en raison de ce ralentissement Mais des changements commencent à se produire. Antofa- économique. gasta se sert de la méthode de simulation Monte Carlo pour « J’aimerais pouvoir dire que ce sera le cas, soupire Claudio évaluer l’économie et les risques au moment de son étude de Martinez d’Enthalpy, mais je ne le crois pas. » ICM Traduit par SDL

Northcliff’s operations manager Drew Takahashi leads visitors on a tour of the Sisson project.

Tungsten trailblazer With a positive feasibility study now complete, Northcliff Resources’ proposed tungstenmolybdenum project is slated to become Canada’s premier tungsten producer, and the first to generate ammonium paratungstate. BY GRAHAM CHANDLER

f all goes to plan, the Sisson project, a 100-kilometre drive northwest of Fredericton, New Brunswick, should be supplying world markets with refined tungsten in the form of ammonium paratungstate, or APT, by 2016. The feasibility study, prepared under the direction of Denver-based Samuel Engineering, details a 30,000-tonne-perday open-pit operation with a mine life of 27 years. Northcliff says the pre-tax net present value is $714 million at a discounted rate of eight per cent and an internal rate of

76 | CIM Magazine | Vol. 8, No. 3

return of 20.4 per cent – that means a payback of just over four years based on a project cost of $579 million. These values are calculated on long-term prices of US$350 per metric ton unit (MTU, or 10 kg) of APT and US$15 per pound of molybdenum. The decision to build an APT plant on site was a significant part of the mine’s anticipated profitability. “There is no getting around the fact that this is a lower-grade deposit and we needed to make sure that, from a metallurgical

Courtesy of Northcliff Resources

standpoint, we could get reasonable metal recoveries,” explains Chris Zahovskis, president, CEO and director of Northcliff. “Most tungsten mines will produce a concentrate and sell it to a refinery or an APT client. Our research shows the discount off the APT price – which is how tungsten is priced – ranges between 20 per cent and 40 per cent.” So, rather than lose the value to that discount over the mine’s life, Northcliff’s APT plant will capture it. Moreover, Zahovskis adds, the combination of where the mine is situated, its lowcost nature and the deposit’s long life further supports the APT plant decision. Zahovskis says there have been small tungsten operations in the region in the past, “but nothing appreciable.” The Sisson deposit was identified in the late 1970s, but “nothing much happened” because of low prices, he points out. Geodex Minerals acquired the rights to the property and began exploring further in 2004. “In late 2010, Northcliff became a joint venture partner with Geodex with a majority share, and in the spring of 2012 we acquired the remaining interest,” Zahovskis adds.

Attention to metallurgy Northcliff completed additional drilling in 2010 and 2011 to prepare for the feasibility study. The resource is a large, intrusion-related tungsten-molybdenum deposit. The company’s fact sheet describes it geologically as “hosted by deformed and metamorphosed Cambrian to Ordovician-aged volcanic and sedimentary rocks that are associated with Devonian-aged granodiorite, gabbro and granite intrusions. Tungsten and molybdenum mineralization occurs mainly as scheelite and molybdenite in steeply dipping quartz veins, on fractures, and as disseminations.” In light of the lower grade, extensive ore testing was done. “We spent a lot of time – in fact about 18 months – on a metallurgical test program,” says Zahovskis. “In 2011, we embarked on a very significant sampling program. We collected a 35-tonne sample from across the deposit and composited that material to represent different phases of the mining and differ-

SISSON

| project proﬁle

ent lithologic domains,” he adds. “Then we undertook metallurgical testing – a very extensive program in SGS Lakefield. We started off with batch tests, followed by locked cycle and even ran a pilot plant for a short period at Lakefield to inform the design of the concentrator for the Sisson operation.” The open pit will be mostly standard fare. “We’ll do clearing and grubbing initially to take the vegetation off. Drilling and blasting will follow that to get rid of some of the bedrock, and then we basically just work our way down,” says Zahovskis. Much the same as for a copper open pit mine, the pit design will be based on the ore geometry, grade and production rate. According to Zahovskis, “The design was put together with the thought of optimizing ore grades and operating costs as much as possible. The primary crusher will be located adjacent to the pit, resulting in short trips for the 136-tonne capacity haul trucks expected to deliver 10.5 Mt of ore each year. The concentrator plant is a kilometre away, and includes secondary cone crushing and tertiary high-pressure grinding rolls, followed by single-stage, two‐line ball mill grinding. “After grinding, it goes through flotation; the molybdenum is floated off first followed by tungsten flotation,” explains Zahovskis. Concentrates for molybdenum and tungsten will then be dewatered. The molybdenum concentrate will be sold to other parties for further processing, while the tungsten concentrate will be processed into APT on site. The tailings storage facility will store tailings from the processing plant and the APT plant, along with the mine waste. Zahovskis explains that overall, there is not much new being planned that is not currently being used in the industry, even the APT process. “We have done sufficient testing with our own material to give us confidence that we would get a very good recovery of tungsten trioxide from this plant,” he says.

Location is key The site is well situated to get people and supplies in and the product out. The main road runs 100 kilometres from Fredericton and a rail line is currently within 15 kilometres – and either option connects directly to the deep sea ports at Saint John to the south and Belledune to the northeast. There is a 345-kilovolt transmission line which crosses the Sisson property, and a separate 42-kilometre, 138-kilovolt transmission line will be built to service the project exclusively. Local labour at the ready will be a key aspect of the Sisson operation. “It’s not a fly-in/fly-out,” says Zahovskis. “It’s close enough to nearby communities and even Fredericton that people can come to work and go home at the end of their shift.” Fredericton, he says, is about an hour and 10 minutes away and there are small towns all along the way. “So we think there is ample opportunity for people not to have to endure long commutes.” Zahovskis says he knows of other mine workers enduring five-hour daily commutes in the area. And, he adds, “There’s a wealth of well-qualified mining people in the province.” Moreover, this year’s scheduled closing of Xstrata’s Brunswick mine in Bathurst, just to the north, may contribute to available supply of May 2013 | 77

project proﬁle | S I S S O N PROJECT SPECS AVERAGE

Tonnes Milled Tungsten (WO3) Production Mo Production Avg. WO3 Grade/ Recovery Avg. Mo Grade/ Recovery

ANNUAL

LIFE OF MINE

YEARS 1 TO 5

10.5 M/a 557,000 mtu/a

281 M 15.0 M mtu

10.2 M/a 689,000 mtu/a

4.1 M lbs/a 0.073%/77%

111.3 M lbs 0.073%/77%

4.4 M lbs/a 0.093%/81%*

COSTS: CAPITAL COST SUMMARY

Mine Concentrator & APT Plant Site Infrastructure & Ancillary Owner’s Costs & Indirects

220 ppm/82%

240 ppm/82%

34.1 247.9 55.4 168.4

Contingency (15%)

73.0

TOTAL

578.8

* after ramp-up of concentrator facility

couldn’t really talk too much about how everything was going to work out – quantities, cost and so on,” says Zahovskis. “Now that it’s complete, we are in a position to continue discussions with potential off-takers and others who have indicated a possible interest in participating in the project.” Clearly the biggest competitor is Chinese production of the mineral (see below). But Zahovskis is confident about the

The economics of tungsten What are the distinctive properties of tungsten? Tungsten, also known as Wolfram – hence its symbol “W” on the periodic table – is grey to white metallic in colour. Its melting point of 3,422 degrees C is the highest of all metals and its thermal expansion is the lowest. The element is extremely hard and wear-resistant: about 100 times that of steel. It is highly corrosion-resistant and does not break down or decompose. Because of these attributes, there is no real economic alternative in industrial applications.

So what are these applications? Due to its unbeatable hardness, tungsten is used in cemented carbide and high-speed steel The hardness and wear-resistance of tungsten make it a well suited tools, notably in manufacturing, construction, mining and oil and gas material for drill bit buttons. drilling. It is also used in flat-screen and lighting technology (LCD and LED), electronics, power engineering, coating and joining technology, the automotive and aerospace industries, the nuclear industry, medical technology, and the solar energy industry. Where is most of the world’s tungsten produced? China produces about 80 per cent of world supply (and consumes almost 60 per cent), followed by Russia, Bolivia and Austria. The largest individual producer outside China, the Cantung mine in the Northwest Territories, near the Yukon border, is Canada’s only major producer of tungsten. In its 2012 fiscal year, it produced 273,000 metric tonne units (MTUs) of concentrate. What are pricing trends? With world trade in concentrates diminished in recent years, the market is increasingly trending to APT (ammonium paratungstate – the main tungsten raw material traded in the market) quotations as a price guide. Industry prices are normally based on biweekly quotations published by the Metal Bulletin in London. APT pricing has been up-trending over the past two years: from US$200/MTU (or 10 kg) in January 2010 to US$450 in early 2012 on the European Free Market. “Tungsten consumption tends to follow industrial activity and general economic trends,” according to Kim Shedd, mineral commodity specialist for cobalt and tungsten at the National Minerals Information Center of the U.S. Geological Survey in Virginia, So tungsten hopefuls like Northcliff are particularly keen on a swift economic recovery. Sources: Mining Journal, International Tungsten Industry Association, North American Tungsten Corporation Ltd. website, U.S. Geological Survey, InfoMine

78 | CIM Magazine | Vol. 8, No. 3

Courtesy of Boart Longyear

tradespersons and operators. Zahovskis adds that many qualified people have left the province to work and would welcome the opportunity to return to a job closer to home. “In addition, we’ll be training our own employees as we bring them on.” There’s still a long way to go with a number of considerations – offtake agreements included – before the light turns green for the project. “Obviously without a feasibility study we

| project proﬁle

Courtesy of Northcliff Resources

SISSON

The resource is a large, intrusion-related tungsten-molybdenum deposit.

Canadian project. “We actually expect ourselves to be in line with Chinese production in terms of cost to APT because we have our own plant,” he says. “Most Chinese exports go to three main areas: Japan, North America and Europe – the big users of tungsten outside China.” Sisson is handily located for easy access to North America and Europe, he reckons, and “once the product is on an ocean-going vessel we can ship anywhere.” Off-take contracts are expected to be in place by year’s end. With the positive feasibility study in place, basic engineering will commence soon. And serious financing negotiations can now be approached. Stand-alone project financing for the $579-million undertaking might be challenging, so Zahovskis says he is looking at potential joint venture partners who would be interested in investing in the project. Those partners may or may not be offtakers as well. “And then obviously there will be a debt portion,” he explains. “Once we successfully secure the offtakes, then we can speak to the banks about the debt financing and that would determine what equity financing we need to do.” Mid-2014 is his target for finalization.

The final important piece, the environmental impact assessment report, will be submitted around the end of the second quarter of this year, says Zahovskis. “We expect approval sometime in the second half of 2014.” Meanwhile Northcliff will be preparing permits so upon EIA approval they will be ready to build. CIM

May 2013 | 79

projet en vedette | S I S S O N

Les pionniers du tungstène Forte d’une étude de faisabilité favorable, Northcliff Resources s’attend à devenir le principal producteur de tungstène du Canada ainsi que le premier producteur de tungstate(VI) d’ammonium, grâce à son projet d’exploitation de tungstène-molybdène. i tout se passe comme prévu, le projet Sisson, situé à 100 kilomètres au nordouest de la ville de Fredericton, au Nouveau-Brunswick, devrait pouvoir fournir aux marchés internationaux du tungstène raffiné sous forme de tungstate(VI) d’ammonium. Préparée sous la direction de la firme Samuel Engineering, de Denver, l’étude de faisabilité fait état d’une exploitation à ciel ouvert produisant 30 000 tonnes par jour et une durée de vie de 27 ans quant à la mine. Northcliff évalue la valeur nette avant taxe du projet à 714 millions de dollars avec un taux escompté de huit pour cent et un taux de rentabilité interne de 20,4 pour cent, ce qui signifie un délai de récupération d’à peine quatre ans selon un coût de projet de 579 millions de La découverte du gisement Sisson remonte aux années 1970, mais c’est l’apparition d’un marché du dollars. Ces valeurs sont calculées en fonction tungstène qui a rendu possible le développement du site. d’un prix à long terme de 350 $US la tonne métrique (10 kg) de tungstate(VI) d’ammonium et de 15 $US devenue coentrepreneur de Geodex à titre d’actionnaire majola livre de molybdène. ritaire, raconte M. Zahovskis, puis nous avons acquis les parts La décision d’ériger une usine de tungstate(VI) d’ammo- restantes au printemps 2012. » nium sur le site même a tenu un rôle d’importance dans le calcul de la rentabilité prévue de la mine. L’attention à la métallurgie « Comme il s’agit d’un gisement à faible teneur, nous devions Northcliff a procédé à des forages supplémentaires en 2010 nous assurer que nous pourrions en tirer des quantités raison- et 2011 en vue de l’étude de faisabilité. La ressource est un gisenables de métal sur le plan métallurgique, explique Chris ment d’un amas intrusif de tungstène-molybdène de grande Zahovskis, président-directeur général de Northcliff. La plupart taille. Le feuillet de documentation de l’entreprise décrit cet des mines de tungstène produisent un concentré qu’elles vendent amas comme étant « porté par des roches volcaniques et sédiensuite à une raffinerie ou à un acheteur de tungstate(VI) d’am- mentaires déformées et métamorphosées d’âge cambrien à monium. Nos recherches ont démontré que l’escompte accordé ordovicien, associées à des intrusions de granodiorite, de gabsur le prix du tungstate(VI) d’ammonium varie entre 20 et bro et de granite de l’âge dévonien. La minéralisation du tung40 pour cent, ce qui est la façon dont est établie la tarification du stène et du molybdène produit principalement de la scheelite et tungstène. » Ainsi, plutôt que de perdre la valeur de cet escompte de la molybdénite, que l’on retrouve dans des filons de quartz pendant la durée de vie de la mine, l’usine de tungstate(VI) d’am- fortement inclinés et le long des fractures, ainsi que sous forme monium de Northcliff en profitera pleinement. Chris Zahovskis de disséminations. » Étant donné la faible teneur du minerai, celui-ci a été l’objet précise que l’emplacement de la mine, son faible coût d’exploitation et la longue durée de vie du gisement ont également de nombreux tests. « Nous avons passé beaucoup de temps, près de 18 mois, à faire des essais métallurgiques, affirme Chris concouru à la décision de bâtir une usine. Il ajoute que de petits gisements de tungstène ont été exploi- Zahovskis. En 2011, nous avons lancé un important programme tés dans la région par le passé, mais qu’ils n’avaient rien d’ap- d’échantillonnage. Nous avons extrait 35 tonnes d’échantillons à préciable. Le gisement Sisson a été découvert à la fin des l’échelle du gisement et en avons fait un composite représentant années 1970, mais rien n’en est vraiment ressorti en raison des les diverses phases d’extraction ainsi que différents domaines prix peu élevés de l’époque. L’entreprise Geodex Minerals s’est lithologiques. Puis nous avons effectué les essais métallurgiques portée acquéreur de la propriété, qu’elle a commencé à exploi- dans le cadre d’un programme complet avec SGS Lakefield. ter plus à fond en 2004. « Vers la fin de 2010, Northcliff est Nous avons commencé par des essais par lots, suivis d’essais

80 | CIM Magazine | Vol. 8, No. 3

Courtoisie de Northcliff Resources

PAR GRAHAM CHANDLER

SISSON

cycliques, et nous avons même exploité une usine pilote à Lakefield pendant une brève période de temps afin de concevoir le concentrateur pour l’exploitation de Sisson. » Les travaux à la mine à ciel ouvert seront pour la plupart d’exécution standardisée. « Nous commencerons par les travaux de défrichement et d’essouchement en vue du retrait de la végétation, explique M. Zahovskis. Le forage et l’abattage à l’explosif viendront ensuite afin d’éliminer une partie du substrat rocheux, puis nous nous mettrons simplement à creuser. » À l’instar d’une mine de cuivre à ciel ouvert, la fosse sera fonction de la géométrie et de la teneur du minerai, de même que du taux de production. « Nous avons adopté cette conception particulière dans l’idée d’optimiser autant que possible tant la teneur des minerais que les coûts d’exploitation », précise M. Zahovskis. Le broyeur principal sera adjacent à la mine afin de minimiser les déplacements des camions à benne d’une capacité de 136 tonnes, qui seront appelés à livrer 10,5 tonnes métriques de minerai par année. L’usine de concentration sera située pour sa part à un kilomètre de la mine; elle abritera les cylindres secondaires de concasseur conique, les cylindres tertiaires haute pression et un broyeur à boulets mono-étagé à deux lignes. « Vient ensuite l’étape de la flottation, en commençant par le molybdène, suivi du tungstène », explique M. Zahovskis. Des concentrés de molybdène et de tungstène doivent alors être déshydratés. Le concentré de molybdène sera vendu à des tiers, qui en poursuivront le traitement. Quant au concentré de tungstène, il sera transformé en tungstate(VI) d’ammonium sur le site même. Un entrepôt servira au stockage des résidus provenant de l’usine de traitement et de l’usine de tungstate(VI) d’ammonium, de même que des déchets de la mine. M. Zahovskis indique qu’il n’y a rien de vraiment nouveau, dans l’ensemble, et que le processus correspond à ce qui se fait actuellement dans l’industrie, y compris le traitement du tungstate(VI) d’ammonium. « Nous avons effectué suffisamment d’essais à l’aide de notre propre matériel pour savoir que nous pourrions recouvrer de très bonnes quantités de trioxyde de tungstène de cette usine », dit-il.

L’emplacement est primordial L’emplacement du site facilite l’arrivée du personnel et des approvisionnements et l’expédition du produit. La route principale s’étend sur 100 kilomètres depuis Fredericton et une ligne ferroviaire se trouve à 15 kilomètres du site, toutes deux conduisant directement aux ports de haute mer de Saint-Jean au sud et de Belledune au nord-est. Une ligne de transport d’électricité de 345 kilovolts traverse la propriété de Sisson et une seconde ligne de 138 kilovolts, longue de 42 kilomètres, sera érigée expressément pour les besoins du projet. Une main-d’œuvre locale qualifiée constitue un aspect important du projet Sisson. « Nous n’utiliserons pas de navette aérienne, de dire Chris Zahovskis. Le site est suffisamment proche des localités environnantes, et même de Fredericton, pour que les gens puissent s’y rendre tout les jours et retourner chez eux après leur quart de travail. » Fredericton est à environ 80 minutes de route et celle-ci est parsemée de petites villes.

| projet en vedette

« Nous sommes donc d’avis que les gens n’aurons pas à se taper d’interminables heures de navette. » M. Zahovskis dit connaître des travailleurs qui doivent endurer des navettes de cinq heures chaque jour pour pouvoir travailler dans les mines de la région. « La province regorge de main-d’œuvre qualifiée », ajoute-t-il. Qui plus est, la fermeture de la mine Xstrata de Bathurst, au Nouveau-Brunswick, plus tard cette année, contribuera peutêtre à grossir les rangs des personnes de métier et des opérateurs. Zahovskis indique que de nombreuses personnes qualifiées ont quitté la province et qu’elles seraient heureuses d’accepter un poste qui les rapprocherait de chez elles. « Et puis, nous formerons nos employés au fur et à mesure que nous embaucherons. » Il reste encore beaucoup à faire, notamment la signature d’ententes d’écoulement, avant que le projet n’obtienne le feu vert. « Avant l’étude de faisabilité, il était évident que nous ne pouvions donner de détails sur les quantités, les coûts et ainsi de suite, dit M. Zahovskis. Mais maintenant que l’étude est achevée, nous pouvons poursuivre nos discussions avec des acheteurs potentiels et d’autres qui ont démontré un intérêt possible face au projet. » La concurrence la plus importante vient de toute évidence du marché chinois de la production de minerai, mais Zahovskis se dit confiant face au projet canadien. Nous nous attendons en fait à ce que nos coûts de production de tungstate(VI) d’ammonium reflètent ceux de la Chine, puisque nous aurons notre propre usine, dit-il. La plupart des exportations chinoises visent les trois grands marchés du Japon, de l’Amérique du Nord et de l’Europe, qui, avec la Chine, sont les principaux utilisateurs de tungstène. Sisson est idéalement situé par rapport aux marchés nord-américain et européen, de l’avis de M. Zahovskis, si bien que lorsque le produit se retrouvera sur un navire océanique, il pourra être expédié partout dans le monde. La signature des contrats d’écoulement est prévue pour la fin de cette année. Et maintenant qu’une étude de faisabilité est en place, les travaux d’ingénierie de base commenceront sous peu. Des négociations de financement sérieuses peuvent également être entreprises. Le financement autonome du projet de 579 millions de dollars peut s’avérer difficile et Zahovskis avoue qu’il cherche de possibles coentrepreneurs qui pourraient se montrer intéressés à investir dans le projet, ces associés pouvant ou non être liés à l’écoulement du produit. « Une part du financement viendra évidemment d’un prêt, dit-il. Lorsque nous aurons signé les contrats d’écoulement, nous pourrons discuter de financement par emprunt avec les banques, ce qui nous permettra ensuite de déterminer le financement par actions qu’il nous restera à établir. » M. Zahovskis prévoit finaliser cet aspect au milieu de 2014. Il compte également remettre le rapport sur les répercussions environnementales du projet vers la fin du second trimestre de cette année. « Nous devrions avoir le feu vert au cours du second semestre de 2014. » Northcliff entend d’ici là se procurer les permis qui lui permettront d’entreprendre la construction dès l’approbation de l’étude d’impact sur l’environnement. ICM Traduit par SDL May 2013 | 81

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Shafts & Hoists Lifeline of the mine TECHNOLOGY >>

By Eavan Moore

Courtesy of ABB

Underground mining has its ups and downs – and that is by design. Hoist systems shoulder the burden of transporting people, equipment and ore kilometres underground, while meeting heavy production demands.

A construction crew installs a drum hoist, a system well suited for today’s deep mines.

As miners dig deeper, their hoists must keep up with the change in scale. The modern standard of digital control gives systems built-in flexibility to cope with new conditions, but the greatest challenge, and the frontier in research and development, is the rope on which all else hangs. “It’s a bit cliché to say it, that hoist ropes are the lifeline of the mine,” says Allan Guse, principal engineer, hoisting group, Vale Canada Ltd. “But the fact is, the rope really is the key element of the whole system, around which much of the rest of the system is designed and configured.” Rope strength and longevity are the factors that limit the efficiency of a hoist system. Typical hoist rope designs surround a steel core or fibre with additional clusters of steel wires. With use, the metal corrodes. On a drum hoist, the coils rub against each other where they wrap around the drum, resulting in wear stresses. Deeper shafts – now extending beyond 3,000 metres – put even more strain on hoist ropes. It helps that staying on top of rope condition has gotten easier. Canadian R&D firm C-Core developed a camera network that saves the hour or so each day that a person would normally spend visually inspecting the rope on the shutdown hoist. The system, called RopeInspector, is marketed by Bestech. Electromagnetic inspection systems have also advanced. Both CANMET and South African firm Ansys have developed systems that provide ongoing monitoring during normal operation. Ansys’ Continuous Rope Monitoring System is installed at a number of mines, including AngloGold Ashanti’s Moab Khotsong, which boasts the world’s deepest continuous shaft at 3.5 kilometres. The system generates a constant magnetic field to expose broken wires, corrosion and other problems. It shows a basic status display on the operator’s screen, sends out an alert when it sees deviations from its designated safety parameters, and stores more detailed data for reference. “If you can [monitor] that continuously, then you can see May 2013 | 83

Courtesy of ABB

technology >> Shafts & Hoists Advances in rope inspection technology have made careful monitoring of wire rope condition more efficient.

little deteriorations starting to happen, and you can take maintenance action ahead of time,” says Guse, who thinks Vale will likely invest in at least one test system in the next couple of years.

Longer rope life Ideally, of course, the ropes would not break down. In contrast to the standard flattened-strand design, Guse says compacted-strand ropes, used in Xstrata’s Nickel Rim mine and Compass Minerals’ Goderich mine, offer better wear protection properties and, by the manufacturer’s estimate, last twice as long. The strands are drawn through a die tool to smooth the outer surface, reducing the indentation between strands. “The outer surface of the strands being compacted gives a very smooth surface to the strand of the rope, as opposed to conventional ropes, where each individual wire in the outer surface of the strand is exposed,” he explains. “With the smooth outer surface of the compacted strand, there are lower contact stresses.” But configuration changes cannot change the fact that steel ropes are heavy, which limits their load-bearing capacity. A stronger rope ends up bearing the burden of its own extra weight. It also tends to have a shorter lifespan, since stronger wires seem to invite wire fatigue and age hardening. In response, a design just reaching commercialization by CASAR Drahtseilwerk Saar GmbH uses a lightweight loadbearing core made from synthetic aramid or high-modulus polyethylene fibres. The core is wrapped in the conventional fashion, with steel strands. As a drop-in replacement for existing steel ropes, the hybrid model could carry more tonnes per skip with no change to its external wear properties. The downside is that electromagnetic testing would reveal nothing of the core. A fully synthetic rope, notes Guse, is further down the road. “Fifty years from now, we’ll probably be wondering how we ever hoisted with steel ropes before,” he says. The design and testing could take another decade – and it could be longer before operators pin their fortunes on plastic – but the all-synthetics would be lightweight and corrosion-free.

A better brake Paid out into the depths of a two- or three-kilometre shaft, rope engages in risky behaviour. That is when electrical 84 | CIM Magazine | Vol. 8, No. 3

engineers like Klaus Kacy, senior technical consultant at ABB Canada Inc., step in. A hoist system built after the end of the 20th century will have two key electrical components: a single alternating-current drive, and a programmable logic controller. While the mechanics of hoisting have not changed drastically since the 1930s, the controls are now software-based. Alongside the space and energy efficiency gains, this means manufacturers can easily program sophisticated cycle adjustments, allowances for rope stretching, and brake controls. Agnico-Eagle’s LaRonde mine, which includes the 2.2kilometre Penna shaft, was one operation that found itself in need of better braking. At great depth, Kacy explains, a steel rope behaves like a spring: when stopped suddenly, it bounces. For a cage hoist, this has serious implications if the people in the cage are exposed to abrupt deceleration after an emergency stop. After noticing signs that safety catches on its service hoist had been activated, LaRonde called in ABB to do an accelerometer test that gauged excessive deceleration of the cage. ABB developed and patented a control method that eases the conveyance oscillations. “Controlled rollback” activates when an emergency stop occurs with an upward-moving load. At first, little to no braking torque is delivered; gravity does the braking work. The drum is allowed to roll back, letting the cage fall downwards. At that time, the braking

torque gently increases. But the fact that the cage is now moving downwards instead of upwards means that oscillation energy dissipates first, and that the braking system can force a gentler deceleration.

Safety first Although controlled rollback can benefit friction hoists – a relatively cheap design option effective at depths below 1,600 metres – the technology was initially designed for drum hoists, which are better suited to deep shafts applications. The factor of safety for rope, calculated by dividing the breaking strength of the rope by the total suspended load, can determine not just the basic hoist design but the legality of new technologies. Ryan Gough, manager of project services at Cementation Canada, remarks that this actually poses a non-technical challenge to deep mining: sometimes industry innovates too fast for regulatory bodies to keep up. It took years for Agnico-Eagle to persuade Quebec regulators that switching from a rope safety factor of five to a factor of four would sacrifice no actual safety, so long as the stringent additional requirements already adopted by the South African Bureau of Standards had been met. The Blair multi-drum hoist provides another workaround for rope limitations. Designed for depth in the 1950s, the Blair hoist uses two smaller ropes per conveyance instead of one, dividing the weight. Xstrata used a Blair design for a service hoist at its Nickel Rim project in Sudbury and Cementation Canada is preparing to install one in Freeport McMoran’s Grasberg mine. “I think we will see more and more opportunities for the Blair hoist to be used than we have historically,” says Gough, noting that mobile equipment is getting bigger and is demanding more of service hoists.

Faster travel Ambitious underground mines have high capital costs, which puts pressure on the mine to keep its production running. If it can boost hoisting speed, so much the better. Gough thinks that the brake improvements of the last decade have helped, but he also sees interesting possibilities in the Levelok E-Brake system developed by Horne Group: a hydraulic mechanism that holds the cage steady at shaft stations and automatically brakes in a failed rope situation. “In jurisdictions where safety dogs are required on mantravel conveyances,” he explains, “we normally would operate on wood guides to allow the dogging mechanisms to operate properly, to give us acceptable deceleration rates.” The E-Brake meets Ontario’s deceleration standards for safety dogs on steel guides, potentially allowing cages to operate at higher speeds. Better brakes, stronger ropes, and continuous safety monitoring are not the flashiest innovations. But they smooth the way for everyday operations, cutting costs and helping define the new ordinary: deeper, faster and bigger. CIM

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May 2013 | 85

CIM community Branch Profile

It takes two in Toronto CIM branches thrive in Canada’s premier mining metropolis by Alexandra Lopez-Pacheco

Courtesy of CIM Toronto Branch

With many of Canada’s and the world’s major mining companies headquartered in Toronto, the city is a hub for people dedicated to the mining industry. Canada’s largest city also owns the distinction of being the only Canadian centre with two CIM branches. The CIM Toronto Branch has, for years, brought the city’s mining professionals together to network, share knowledge and create a sense of community and an environment of collaboration. However, to better serve members of the sprawling metropolis, some of its constituents recently spun off to form the Greater Toronto Area (GTA) West Branch.

Toronto branch The Toronto branch hosts numerous events throughout the year, including student networking sessions, mine tours and monthly luncheons that feature guest speakers. It also holds Networking by Design events in collaboration with CIM Mining Professionals – The Next Generation, Women in Mining, Hispanics in Mining (Hispanomine), Canadian Council for Aboriginal Business (CCAB) and, more recently, Women in Capital Markets. And, the branch’s 36-team Frank Grieco Golf Tournament, which will be held at the world-renowned Glen Abbey Golf Club on August 28, remains one of the biggest annual events in the industry. “One of the reasons we’ve been so successful in having a very active membership is that we’ve always attracted many senior executives who bring that calibre of experience and who also are able to recruit from their own ranks,” says Tom Rannelli, chair of the Toronto branch. “And we’re constantly asking all of our members for feedback.” By listening to and working with its members, the branch has leveraged its 86 | CIM Magazine | Vol. 8, No. 3

More than 200 students and industry professionals network over fine cuisine at the CIM Toronto Branch’s Annual Tastes of Toronto event held at the National Club on Thursday, October 18.

collective knowledge of best practices and used it to continuously improve its services. It has set out a strategic plan focused on how to best serve the branch’s membership and the mining industry as a whole. Currently, Rannelli explained, CIM Toronto is committed to increasing its active participants from 922 paid members today to all the 1,500 people on its mailing list by ensuring it is offering value to every single one of them. The Toronto branch is also looking at how to better accommodate the needs of its executive members, who are strong supporters but do not always have the time to attend every gettogether. Already, the revamped Taste of Toronto event, designed to give busy executives an opportunity to reconnect with each other while enjoying international cuisine, has been successful, but the branch plans to add other cultural and possibly sporting activities to its calendar to further address this need.

GTA West branch In 2009, the Toronto branch’s focus on serving its membership resulted in some members identifying a geographical dilemma. The Greater Toronto Area (GTA) has grown exponentially over the years, sprawling out particularly to the west of Toronto, where some 30-odd mining companies are headquartered. “A small group of us got together and said there was a good opportunity to bring CIM to the west end of GTA,” said Catharine Shaw, one of the founding members of the CIM GTA West Branch and its past chair. “Part of that was the success of the Toronto branch, which historically was the hub of membership for the GTA. However, in recent years, from a logistics standpoint, Toronto has been increasingly more difficult to reach for those living or working outside of the city, due to travel, cost and time. So a lot of potential members or people in the industry from the west end were not always able to attend events.”

CIM community

In 2010, the GTA West branch was born; it now has 70 paid members and a contact database of more than 400 people. “We wanted to address those needs and wanted to establish a branch for the GTA West. But we also wanted to work with the Toronto branch because they’ve had such great success and offer each other reciprocal membership campaigns to expand the CIM footprint,” Shaw said. The branch offers monthly luncheon meetings in Oakville, featuring expert speakers on topics that include supply chain best practices, commodity outlooks, innovations in mining, and aboriginal relations. This year, the GTA West branch is launching its own golf

event at the Millcroft Golf Club in Brampton on June 13. “Both branches share announcements, so all [of] our members have the opportunity to attend all the events,” said Shaw. “At GTA West, we try to fol2013 Toronto CIM Branch Events August 28 Frank Grieco Memorial Golf Tournament September 19 MES-CIM Toronto Joint Luncheon, National Club October 17 Taste of Toronto, networking event, National Club December 12 SNC-Lavalin Hamilton lectures series, National Club Luncheons, National Club: May 23, June 6, November 21

low Toronto’s lead because they’ve been at it a long time and are really good at it. We’re increasing CIM’s reach and providing a venue for the companies that participate to network and to promote the industry in a very positive way.” CIM

Greater Toronto Area West CIM Branch Events June 13 CIM GTA West Golf Tournament, Millcroft Golf Club, Brampton September 4 Canada-Southern Africa Chamber of Business/ CIM GTA West – Cheese and wine cocktail at Hatch, Oakville Luncheon Meetings, Otello’s Banquet & Conference Centre, Oakville: May 29, October 23, November 27

May 2013 | 87

CIM community Profile

Exploring a world of new opportunities Incoming president Robert Schafer brings his professional and volunteer know-how to CIM by Krystyna Lagowski

Robert Schafer is no stranger to long days and hard work. The incoming CIM president’s workday starts at 6 a.m. and does not end until 8 p.m., as he dutifully juggles his many professional and volunteer responsibilities. CIM, SME, PDAC, and the Canadian Mining Hall of Fame are just a few of the organizations to which Schafer devotes his energies. “I want to give back to the industry that’s given me a very exciting career,” he says. Currently the executive vice-president of business development at Hunter Dickinson Inc., Schafer is excited about his upcoming term as CIM president. His career began in exploration and has since brought him to nearly 80 countries, and he is hoping to leverage his vast connections in the global mining network to CIM’s benefit. “My involvement with many mining associations in many jurisdictions gives me broad perspectives on both governance and co-operative relationships among mining organizations,” he explains. Schafer is already engaged in updating CIM’s strategic plan, with the goal of further defining and developing action plans to advance the values that make CIM the community for leading industry expertise. Central to this, he says, is increased communication between CIM’s branches and societies. The strategic plan will be finessed over the next several months, with a final version scheduled to be ready for CIM Council endorsement later this year. He also has ambitious plans to advance the creation of a global mining alliance, which would include, as founding members, CIM, the U.S.-based Society for Mining, Metallurgy and Exploration (SME), the Australasian Institute of Mining and Metallurgy (AusIMM), and the Southern African Institute of Mining and Metallurgy (SAIMM). As well, Schafer is looking forward to the 23rd World Mining Congress in Montreal this summer. CIM will co-host the congress in conjunction with Canada’s top five mining universities. More than 1,500 mining professionals from around the world are expected to attend. Schafer’s own career in mining began more than 30 years ago, after he discovered his passion for geology while enrolled at Miami University (Ohio). “I’d always picked up rocks and enjoyed looking at mountain scenery, but I didn’t realize I was 88 | CIM Magazine | Vol. 8, No. 3

Explorer de nouvelles possibilités Robert Schafer mettra son savoir-faire professionnel au service de l’ICM par Krystyna Lagowski

Le nouveau président de l’ICM est un habitué des longues journées de dur labeur. Tout au long de sa journée de travail, qui débute dès 6 h et ne se termine pas avant 20 h, il assume consciencieusement ses nombreuses responsabilités à titre de professionnel et de bénévole. L’ICM, la SME, l’ACPE et le Temple de la renommée du secteur minier canadien font partie des organisations auxquelles il consacre ses énergies. « Je souhaite rendre service à cette industrie qui m’a offert une carrière si passionnante », explique-t-il. Occupant actuellement le poste de vice-président directeur du développement commercial chez Hunter Dickinson Inc., Robert Schafer a très hâte de commencer son prochain mandat à titre de président de l’ICM. Il a commencé sa carrière dans le secteur de l’exploration, ce qui l’a amené à voyager dans près de 80 pays, et il espère pouvoir faire profiter l’ICM de son vaste réseau de contacts dans le secteur minier à l’échelle mondiale. « Mon engagement auprès de nombreuses associations minières dans plusieurs juridictions m’a permis d’obtenir une perspective globale du domaine de la gouvernance et des relations coopératives entre les organisations minières », explique-t-il. Robert Schafer a déjà commencé la mise à jour du plan stratégique de l’ICM, avec pour objectif de définir et de développer davantage les plans d’action visant à promouvoir les valeurs qui font de l’ICM la principale source d’expertise de l’industrie. Ce plan repose, selon lui, sur une communication accrue entre les divisions et les sociétés de l’ICM. Le plan stratégique sera peaufiné au cours des prochains mois, et une version finale devrait être soumise à l’approbation du conseil d’administration de l’ICM plus tard cette année. Il a également des plans ambitieux visant à promouvoir la création d’une alliance minière mondiale, qui inclurait à titre de membres fondateurs l’ICM, la Society for Mining, Metallurgy and Exploration (SME) établie aux États-Unis, le Australasian Institute of Mining and Metallurgy (AusIMM) et le Southern African Institute of Mining and Metallurgy (SAIMM). Robert Schafer attend avec impatience le 23e Congrès minier mondial à Montréal, cet été. L’ICM accueillera le congrès avec les cinq principales universités spécialisées dans le secteur minier du Canada. Plus de 1 500 professionnels de l’industrie minière du monde entier doivent y participer. La carrière de Robert Schafer dans le secteur minier a débuté il y a plus de 30 ans, lorsqu’il s’est découvert une passion pour la géologie alors qu’il étudiait à l’Université Miami, en Ohio. « J’ai toujours aimé

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interested in geology,” he recalls. “Within one semester, I was hooked.” He went on to study at the University of Arizona, where he earned graduate degrees in geology and in mineral economics. Exploration work, Schafer explains, is like putting together a puzzle with 60 to 80 per cent of the pieces missing. “When you start with an exploration project, all you see is what’s exposed on the earth’s surface, with much of it camouflaged,” he says. “You’re putting together a puzzle one piece at a time and have to identify where those pieces are coming from – and not all of them fit together.” Schafer is quick to credit the people who have profoundly influenced his work. He points to Barry Watson at Rio Tinto, who gave him his first opportunity to plan, develop and carry out an exploration program – while still a graduate student. Schafer is also grateful to David Whitehead, whom he worked with at Billiton, for teaching him the economics of exploration and discovery, and to Hugo Dummett at BHP, for inspiring his drive and desire to succeed. “I’ve been fortunate to have a strong support system throughout my entire career,” he says. And, in turn, Schafer has proven his colleagues can rely on him for solid support. In 2000, while working for Kinross Gold as vice-president of exploration, Schafer was tasked with finding a deposit to feed the mill at the Kubaka mine. Schafer and his team discovered the million-ounce Birkachan gold deposit in Russia’s Far East, through 100 metres of glacial till. “By putting together the pieces of geology, geochemical and geophysical surveys, and focusing the exploration team to a specific area, we completed the project in 15 months,” he recalls. “It was a great example of Canadian-Russian cooperation and one of the first applications of GIS [geographic information systems] technology to make a virgin mineral discovery.” A busy life discovering mineral riches never diminished the value of family for Schafer. After recognizing how much time exploration careers can take professionals away from their families, he launched an annual Labour Day family picnic while he was president of the Geological Society of Nevada in the late 1980s. The tradition continues to this day. Schafer works in Vancouver but calls Salt Lake City, Utah, home, so he makes the trip between cities every week – flying to work on Sunday evenings and returning home Friday afternoons. He’s been making the two-hour commute for nine years. “I like being busy,” he says. “I like giving back, so I volunteer a lot. I consider myself a very fortunate person.” CIM

prendre en main des roches et contempler les paysages montagneux, mais je ne pensais pas avoir un intérêt pour la géologie, se rappelle-t-il. À la fin du semestre, j’étais devenu un passionné. » Il a ensuite étudié à l’Université de l’Arizona, où il a obtenu son diplôme en géologie et en économie des minéraux. Le travail d’exploration, explique-t-il, ressemble à l’assemblage d’un casse-tête où il manque de 60 à 80 pour cent des pièces. « Lorsque vous démarrez un projet d’exploration, vous ne pouvez voir que ce qu’il y a à la surface du sol, une bonne partie de ce qui vous intéresse demeure cachée, ajoute-t-il. Vous assemblez le casse-tête morceau par morceau et vous devez déterminer d’où proviennent ces morceaux; en outre, certains morceaux ne vont pas ensemble. » Robert Schafer est prompt à reconnaître les personnes qui ont profondément influencé son travail. Il mentionne notamment Barry Watson de Rio Tinto, qui lui a accordé sa première chance de planifier, développer et mettre en œuvre un programme d’exploration alors qu’il n’était encore qu’un étudiant diplômé. Il est également reconnaissant à David Whitehead, avec qui il a travaillé chez Billiton et qui lui a enseigné les aspects économiques de l’exploration et de la découverte, ainsi qu’à Hugo Dummett de BHP, pour l’avoir encouragé dans son désir de réussir. « J’ai été chanceux de pouvoir profiter d’un réseau de soutien solide tout au long de ma carrière », précise-t-il. En retour, Robert Schafer a démontré que ses collègues pouvaient se fier à lui pour obtenir une performance exceptionnelle. En 2000, alors qu’il occupait le poste de vice-président de l’exploration pour Kinross Gold, on lui a confié la tâche de trouver un gisement pour alimenter le broyeur de la mine Kubaka. Lui et son équipe ont découvert le gisement d’or d’un million d’onces de Birkachan, à l’extrémité est de la Russie, à travers 100 mètres de till. « En compilant les résultats des levés géologiques, géochimiques et géophysiques, et en concentrant les efforts de l’équipe d’exploration sur un site particulier, nous avons réussi à terminer le projet en 15 mois, se rappelle-t-il. Ce fut un bel exemple de coopération canado-russe et l’une des premières utilisations de la technologie des SIG (systèmes d’information géographique) menant à la découverte d’un nouveau gisement de minéraux. » Malgré sa vie trépidante consacrée aux richesses minérales, Robert Schafer n’a jamais négligé pour autant sa famille. Après avoir constaté à quel point une carrière en exploration peut prendre de votre temps et vous maintenir éloigné de votre famille, il crée un pique-nique familial annuel lors de la fête du Travail alors qu’il était président de la Geological Society of Nevada, à la fin des années 1980. Cette tradition continue jusqu’à présent. Robert Schafer travaille à Vancouver, mais sa ville adoptive est Salt Lake City, en Utah, et il voyage donc chaque semaine entre les deux villes; il prend l’avion le dimanche soir pour se rendre au travail et à nouveau le vendredi après-midi pour rentrer chez lui. Il fait la navette entre les deux villes depuis neuf ans. « J’aime être occupé, explique-t-il. J’aime aussi rendre service et c’est pourquoi je fais beaucoup de bénévolat. Je me considère comme une personne très choyée par la vie. » ICM Traduit par SDL May 2013 | 89

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Welcoming Francophone Africa Courtesy of Stephen Uhraney

Canada signs FIPA agreements with Cameroon and Zambia at CIM-hosted Franco-Mine 2013

Canada’s Minister of International Trade Ed Fast, left, and Zambia’s high commissioner to Canada Bobby Mbunji Samakai sign a foreign investment protection and promotion agreement at Franco-Mine 2013. / Le ministre du commerce international du Canada, Ed Fast, à gauche, et le haut commissaire de la Zambie au Canada, Bobby Mbunji Samakai, signent un accord sur la promotion et la protection de l’investissement étranger à Franco-Mine 2013.

Souhaitons la bienvenue à l’Afrique francophone Le Canada conclut des APIE avec le Cameroun et la Zambie à l’événement Franco-Mine 2013 organisé par l’ICM by/par Kelli Korducki

“Opportunity” was the mot du jour at Franco-Mine 2013, a daylong symposium held during the PDAC Convention in Toronto, which explored Canadian mining interests in Francophone West Africa and Quebec. More than 150 representatives from both jurisdictions, including federal ministers, along with financial and mining professionals, discussed growth potential and investment obstacles in each region’s mining sectors. Co-hosted by CIM and the Canadian and Quebec governments, the symposium was highlighted by the signing of a foreign investment protection and promotion agreement (FIPA) between Canada and Cameroon, and a second with Zambia. 90 | CIM Magazine | Vol. 8, No. 3

« Opportunité » était le mot du jour à l’événement FrancoMine 2013, un symposium d’une journée entière qui a eu lieu lors de la conférence de l’ACPE à Toronto et portait sur l’exploration des intérêts miniers canadiens en Afrique de l’Ouest francophone et au Québec. Plus de 150 représentants des deux gouvernements, y compris des ministres fédéraux et des professionnels des domaines financier et minier, ont parlé du potentiel de croissance et des obstacles à l’investissement dans le secteur minier de chaque région. Le symposium organisé conjointement par l’ICM et les gouvernements canadien et québécois a été couronné par la signature d’un accord sur la promotion et la protection de l’investissement étranger (APIE) entre le Canada et Cameroun, puis avec la Zambie.

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“Taken together, these two new bilateral investment agreements will help provide Canadian companies with the transparency and predictability they look for when considering expanding their business beyond our borders,” said Ed Fast, Canada’s minister of international trade. “Canada and Africa share a common goal,” said Fast. “We all want to increase and enhance the quality of life and standard of living for all of our citizens. We do that by allowing trade and investment, which I believe are the twin engines of economic growth, to generate long-term prosperity for Canadians and Africans alike.” Fast praised CIM for its longstanding commitment to responsible business practices, along with its facilitation of networking and professional development in the international mining sector. Pointing to the recently launched CIM branch in Dakar, Senegal, he highlighted two research projects the branch will oversee that aim to develop an analysis model for local and regional supply chain opportunities in West African gold mining. “I am confident that CIM’s new branch will make a positive contribution in the region,” Fast said. CIM executive director Jean Vavrek also expressed his excitement about the Dakar branch. “The launch of our first branch in West Africa, as part of the newly approved CIM African District, is the first step towards establishing a strong local leadership team and will serve as a great platform for activities that will encourage the expanding francophone mining community to come together,” he said. A recurring theme put forth by West African mining representatives was the degree to which Africa’s considerable mineral potential can be leveraged into increased economic independence within African mining nations, thus supporting sustained political stability. Canadian investments in African mining firms could facilitate side-by-side economic growth for both parties. “We really are a mining economy,” said Omar Hamidou Tchiana, minister of mining and industrial development of Niger. The mining industry generates 15 per cent of the nation’s revenue, he said, adding Niger boasts considerable mineral potential in uranium, phosphate, iron, platinum, silver, cobalt and manganese. Hamidou Tchiana added that Japanese, French, and Chinese investors have recently taken note of the country’s mining interests. Salif Lamoussa Kaboré, minister of mines and energy of Burkina Faso, boasted of his country’s 20-year political stability and significant deposits of gold and other minerals. He reported that private investments in the mining industry have grown steadily in the past decade, to the degree where gold has now surpassed traditional mainstay exports of cotton and cattle. Quebec presenters, like Natural Resources Minister Martine Ouellet, provided an overview of the state of mining in the province. Robert Giguère, general director of the ministry of natural resources, said a key platform for reaching out to young people and potential mining professionals will be next year’s Québec Mines International conference, which aims to

« Ensemble, ces deux accords d’investissement bilatéraux contribueront à accorder aux sociétés canadiennes la transparence et la stabilité qu’elles recherchent dans leurs projets d’expansion de leurs opérations au-delà de nos frontières », résume Ed Fast, ministre du commerce international du Canada. « Le Canada et l’Afrique ont un objectif commun, ajoute Fast. Nous désirons tous augmenter et améliorer la qualité et le niveau de vie de tous nos citoyens. Nous y arrivons en favorisant le commerce et les investissements, qui sont selon moi les deux moteurs de la croissance économique, pour mener les Canadiens et les Africains à la prospérité. » Fast a félicité l’ICM pour son engagement de longue date envers des pratiques d’affaires responsables et pour sa participation à la création de réseaux et au développement professionnel dans le secteur minier international. Faisant référence à la nouvelle succursale de l’ICM à Dakar au Sénégal, il a souligné deux projets d’études que celle-ci supervisera, qui visent à développer la chaîne d’approvisionnement des mines d’or d’Afrique de l’Ouest. « J’ai confiance que la nouvelle succursale de l’ICM participera au développement de la région », a souligné Fast. Le chef de la direction de l’ICM, Jean Vavrek, a aussi exprimé son enthousiasme quant à l’ouverture de la succursale de Dakar. « L’ouverture de notre première succursale en Afrique de l’Ouest, qui appartient au nouveau District africain approuvé de l’ICM, est la première étape vers le développement d’une équipe de direction solide au niveau local, et servira de plateforme parfaite pour des activités qui encourageront la communauté minière francophone grandissante à s’unir », a-t-il ajouté. Un thème récurrent chez les représentants de l’industrie minière ouest-africaine concerne le niveau auquel l’important potentiel minier de l’Afrique peut contribuer à augmenter l’indépendance économique des nations minières d’Afrique, ce qui contribuerait à rendre la stabilité politique plus durable. Les investissements canadiens dans les sociétés minières d’Afrique pourraient faciliter la croissance économique pour les deux partis. « Nous avons vraiment une économie basée sur l’extraction minière », indique Omar Hamidou Tchiana, ministre du développement minier et industriel du Niger. L’industrie minière génère 15 pour cent des revenus du pays, précise-t-il, ajoutant que le Niger affiche un potentiel minier considérable d’uranium, de phosphate, de fer, de platine, d’argent, de cobalt et de manganèse. Hamidou Tchiana ajoute que des investisseurs japonais, français et chinois ont récemment remarqué l’intérêt minier que représente le pays. Salif Lamoussa Kaboré, ministre des mines et de l’énergie du Burkina Faso, a vanté les 20 ans de stabilité politique de son pays et la richesse de ses dépôts d’or et de métaux précieux. Il signale que les investissements privés dans le secteur minier augmentent régulièrement depuis dix ans, au point où les exportations d’or surpassent maintenant celles des commodités traditionnelles que sont le coton et le bétail. Les présentateurs québécois, notamment Martine Ouellet, ministre des Ressources naturelles, ont donné un aperçu de l’état de l’industrie minière de la province. Robert Giguère, directeur général du ministère des Ressources naturelles, souligne que la conférence internationale sur les mines qui aura lieu l’an prochain au Québec sera une plateforme May 2013 | 91

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build networks and also publicize events with Francophone West Africa to provide collaborative opportunities for foreign governments. In a discussion of challenges and opportunities from an industry perspective, Mamoudou Diallo, general director of Semafo’s operations in Guinea, said training was a primary concern for his company. Oumar Toguyeni of Iamgold expressed the need to “develop local entrepreneurship to empower the population.” In order to embark on local mining operations in good faith, community engagement is essential, according to Toguyeni. Navin Dyal of Teranga Gold put the optics of these negotiations succinctly: with patience and by employing good practices, Canada is in a position to change the nature of African mining, with the net result being a higher standard of living for citizens of host countries wherein the industry and host governments work together. CIM

essentielle dans la sensibilisation des jeunes et de la relève des professionnels miniers. Cette conférence vise à bâtir des réseaux et présenter des événements avec l’Afrique de l’Ouest francophone afin de créer des occasions de collaboration pour les gouvernements étrangers. Dans une discussion portant sur les défis et les occasions qui s’ouvrent à l’industrie, Mamoudou Diallo, directeur général de l’exploitation de Semafo en Guinée, indique que la formation est une priorité pour son entreprise. Oumar Toguyeni d’Iamgold a exprimé le besoin « de développer l’entrepreneuriat à l’échelle locale afin d’ouvrir des portes pour la population. » Pour démarrer des exploitations minières avec confiance dans la région, l’engagement des collectivités est primordial, selon Toguyeni. Navin Dyal de Teranga Gold a résumé l’orientation de ces négociations : avec patience et en employant les bonnes pratiques, le Canada est bien placé pour changer la nature du marché minier en Afrique, avec pour résultat net de rehausser la qualité de vie des citoyens des pays hôtes, par la collaboration entre l’industrie et les gouvernements de ces pays. ICM Traduit par SDL

CALENDAR UPCOMING EVENTS ALTA 2013 Nickel-Cobalt-Copper, Uranium and Gold Conference May 25-June 1 | Perth, Western Australia www.altamet.com.au

CICEME-2013: 9th China International Coal Equipment & Mine Technical Equipment Exhibition June 28-30 | Beijing, China www.ciceme.com/en

Critical Minerals Conference 2013 June 4-5 | Perth, Western Australia www.criticalminerals2013.org

The Australian Mine Ventilation Conference July 1-3 | South Australia, Australia www.austminevent.com.au

The AusIMM International Uranium Conference 2013 June 11-12 | Darwin, Northern Territory, Australia www.ausimm.com.au/uranium2013

METPLANT 2013 July 15-17 | Perth Western Australia www.ausimm.com.au/metplant2013

PASTE 2013: 16th International Seminar on Paste and Thickened Tailings June 17-19 | Belo Horizonte, Brazil www.paste2013.com

World Mining Congress 2013 August 11-15 | Montreal, Quebec, Canada www.wmc-expo2013.org

EXPONOR 2013 June 17-21 | Antofagasta, Chile http://www.exponor.cl/ingles Computational Modelling ’13 June 18-19 | Cornwall, United Kingdom www.min-eng.com/modelling13 Physical Separation ’13 June 20-21 | Cornwall, United Kingdom www.min-eng.com/physicalseparation13

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ISARC2013: The 30th International Symposium on Automation and Robotics in Construction and Mining August 11-15 | Montreal, Quebec, Canada www.isarc2013.org ICANM 2013: International Conference on Advanced & Nano Materials August 12-14 | Quebec City, Quebec, Canada iaemm.com/ICANM2013

TECHNICAL ABSTRACTS

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journal

VOLUME 4, NUMBER 2

Modelling oil sand surface response below an in-pit plant in the Canadian oil sands T.G. Joseph, Alberta Equipment–Ground Interactions Syndicate (AEGIS), University of Alberta, Edmonton, Alberta, Canada; and N. Shi, JPi, Edmonton, Alberta, Canada

ABSTRACT Before any large plant is moved onto an oil sands-dominated surface, particularly those surfaces encountered in-pit, it is imperative that the ground be evaluated for bearing capacity. A 2,230-tonne mobile in-pit hopper/crusher facility designed for operation in the Canadian oil sands was modelled. This evaluation focused on track and outrigger pad versus ground interactions as the key performance indicators of appropriate ground performance below the unit in both operating and repositioning propel modes. A study of cyclic oil sand behaviour was also inferred from laboratory cyclic plate load data as an extension of the simulation model indications. RÉSUMÉ Avant de déplacer toute grande installation sur une surface dominée par des sables bitumineux, surtout celles rencontrées dans une fosse, il est nécessaire d’évaluer la capacité portante du sol. Une installation mobile trémie/concasseur de 2 230 tonnes, conçue pour les fosses des sables bitumineux canadiens, a été modélisée. L’évaluation ciblait les interactions entre les chenilles et les assiettes des stabilisateurs et le sol comme principaux indicateurs de comportement adéquat du sol sous l’unité pour les modes de déplacement en opération et en repositionnement. Une étude du comportement cyclique du sable bitumineux a aussi été inférée à partir des données de chargement cyclique sur plaques en laboratoire en tant qu’une extension des indications obtenues par le modèle de simulation.

Inflows in uranium mines of northern Saskatchewan: risks and mitigation R. Bashir, Golder Associates, Saskatoon, Saskatchewan, and Department of Civil & Geological Engineering, University of Saskatchewan, Saskatoon, Saskatchewan; and J.F. Hatley, Cameco Corporation, Saskatoon, Saskatchewan

ABSTRACT Northern Saskatchewan boasts some of the world’s largest known highgrade uranium deposits. The successful mining of these deposits, however, cannot be accomplished without overcoming technical challenges that include high grade of the uranium ore, specialized mining methods to deal with groundwater at high pressures, and poor ground conditions. This paper discusses the various mechanisms of inflows at three of Cameco Corporation’s sites in northern Saskatchewan. The risk of inflows is quantified in terms of unique challenges due to hydrogeological conditions, rock mass integrity, and uncertainty in geological conditions. Mitigation strategies in case of an inflow are also briefly described. RÉSUMÉ Le Nord de la Saskatchewan peut se vanter d’avoir les plus gros gisements d’uranium à haute teneur au monde. Toutefois, il n’est pas possible d’exploiter ces gisements de manière efficace sans surmonter des défis techniques, lesquels comprennent la haute teneur du minerai d’uranium, les méthodes spécialisées d’extraction qui tiennent compte de l’eau souterraine à pression élevée et les mauvaises conditions du sol. Le présent article discute les divers mécanismes de venue d’eau à trois sites de la Cameco Corporation situés dans le Nord de la Saskatchewan. Le risque des venues d’eau est quantifié en termes des défis uniques dus aux conditions hydrogéologiques, à l’intégrité de la masse rocheuse et à l’incertitude des conditions géologiques. Des stratégies d’atténuation en cas de venue d’eau sont aussi brièvement décrites.

Cyanide analysis for complex cyanide solutions W. van der Merwe, Measurement and Control Division, MINTEK Randburg, South Africa; and P. Breuer, Parker CRC for Integrated Hydrometallurgy Solutions, CSIRO Minerals Down Under National Research Flagship, CSIRO Process Science and Engineering, Australian Minerals Research Centre, Waterford, Western Australia

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ABSTRACT With the gold industry processing more complex ores, the online measurement and control of cyanide addition to the gold leaching circuit has become more critical. This paper compares the two commonly employed “free” cyanide online analysis methods (amperometric and potentiometric endpoint silver nitrate titration) with the rhodanine endpoint silver nitrate titration and ion selective electrode methods common at site laboratories. Measurement differences between these methods are presented and discussed for cyanide solutions containing copper and zinc with varying cyanide to metal ion ratios. The resulting cyanide available to leach gold is also compared using these measurement techniques.

RÉSUMÉ Alors que l’industrie de l’or traite des minerais de plus en plus complexes, la mesure en continu et le contrôle de l’ajout de cyanure au circuit de lixiviation de l’or devient plus critique. Le présent article compare les deux méthodes d’analyse en continu du cyanure « libre » couramment employées (titrage ampérométrique et potentiométrique du nitrate d’argent par détermination du point de virage); le titrage du nitrate d’argent par détermination du point de virage (rhodanine comme indicateur) et les méthodes de sélection des ions aux électrodes communes aux laboratoires des sites miniers. Les différences de mesures entre ces méthodes sont présentées et discutées pour des solutions de cyanure contenant du cuivre et du zinc avec des rapports cyanure à métal variables. Le cyanure résultant disponible pour lixivier l’or est aussi comparé au moyen de ces techniques de mesure.

Processing history at Vale Canada’s (Inco’s) iron ore recovery plant B.R. Conard, BRConard Consulting, Inc., Oakville, Ontario

ABSTRACT An iron ore recovery plant was operated by Inco from 1955 to 1980 near Sudbury, Ontario. As exposures to specific nickel substances have been associated with adverse respiratory endpoints, it is important to understand processes that give rise to such substances. This manuscript discusses the process and equipment, the propensity for aerosol formation, and the operational procedures used by Inco in roasting a pyrrhotite concentrate, reducing the nickel in the formed oxide, leaching the nickel in ammoniacal solution, purifying the resulting solution, making green or black NiO, and producing iron oxide pellets. Industrial hygiene measurements are also reported. RÉSUMÉ De 1955 à 1980, Inco a exploité une usine de récupération de minerai de fer près de Sudbury en Ontario. Puisque l’exposition à des substances nickélifères spécifiques a été associée à des effets respiratoires indésirables, il est important de comprendre les processus qui conduisent à produire de telles substances. Le présent article discute des processus et des équipements, de la propension à la formation d’aérosols et des procédures opérationnelles utilisées par Inco dans le grillage d’un concentré de pyrrhotite, la réduction du nickel dans l’oxyde formé, la lixiviation du nickel dans la solution ammoniacale, la purification de la solution résultante, la fabrication du NiO vert ou noir et la production de boulettes d’oxyde de fer. Des mesures d’hygiène industrielle sont aussi présentées.

Froth phase study of coal flotation in a hybrid mechanical flotation column H. Wang, M. Cao, Z. Xu, and Q. Liu, Department of Chemical & Materials Engineering, University of Alberta, Edmonton, Alberta; and J.C. Sztuke and A. Stradling, Applied Research & Technology, Teck Metals Limited, Trail, British Columbia

ABSTRACT The correlations between froth recovery of coal and air recovery were investigated using a hybrid mechanical flotation column. The particle slurry was fed onto the surface of air-water, two-phase froths to carry out the tests. Froth recovery was taken as the recovery of particles into the froth product, whereas air recovery was determined by the froth height method. The relationships between froth recovery and air recovery were nearly linear, with greater slopes for more hydrophobic particles. Inside the froth phase, the particles were stratified, with hydrophobic particles concentrated in the upper region and hydrophilic particles in the lower region. RÉSUMÉ Les corrélations entre la récupération de la mousse du charbon et la récupération de l’air ont été étudiées au moyen d’une colonne de flottation mécanique hybride. Afin d’effectuer les essais, la boue de particules a été alimentée à la surface de mousses air-eau à deux phases. La récupération de la mousse a été définie comme étant la récupération de particules dans la mousse alors que la récupération de l’air a été déterminée par la méthode de la hauteur de la mousse. Les relations entre la récupération de la mousse et la récupération de l’air étaient presque linéaires, avec de plus grandes pentes pour les particules plus hydrophobes. Dans la phase de la mousse, les particules étaient stratifiées; les particules hydrophobes étant concentrées dans la portion supérieure et les particules hydrophiles dans la partie inférieure.

May 2013 | 95

TECHNICAL ABSTRACTS

CIM

journal

VOLUME 4, NUMBER 2

Simulation analysis model and equipment selection in continuous surface mining systems S.P. Upadhyay, Z. Lin, S. Sundararajan, and J. Szymanski, University of Alberta, Markin/CNRL Natural Resources Engineering Facility, Edmonton, Alberta; and R.S. Suglo, University of Mines and Technology, Tarkwa, Ghana

ABSTRACT Fierce market competition and demand have made it imperative for mining companies to achieve higher productivity and operational efficiency. The selection of the best mining method and equipment combinations will enable companies to meet production and efficiency targets. Continuous mining is increasingly preferred by companies for its high efficiency and low unit costs. We developed simulation models for two continuous mining systems: the continuous surface miner (CSM) system and the at face slurrying (AFS) system. Considering two different case studies, the paper discusses application of developed models to determine the optimal number of trucks and equipment capacities for the two systems. RÉSUMÉ La compétition et la demande féroces des marchés font que les compagnies minières doivent accroître leur productivité et leur efficacité opérationnelle. Le choix de la meilleure méthode d’extraction et des meilleures combinaisons d’équipements permettra aux compagnies de rencontrer leurs cibles de production et d’efficacité. Les compagnies préfèrent de plus en plus l’exploitation minière en continu en raison de son rendement élevé et de ses faibles coûts unitaires. Nous avons développé des modèles de simulation pour deux systèmes d’exploitation en continue : les machines d’exploitation minière en continu et les systèmes de préparation des boues au front d’avancement. En analysant deux études de cas, l’article discute de la mise en application des modèles développés afin de déterminer le nombre optimal de camions et la capacité optimale des équipements pour les deux systèmes.

Time domain reflectometry measurements of oil sands tailings water content: a study of influencing parameters A.R. Sorta, D.C. Sego, and G.W. Wilson, University of Alberta, Department of Civil & Environmental Engineering, Markin/CNRL Natural Resources Engineering Facility, Edmonton, Alberta

ABSTRACT Temperature, solute, texture and thixotropic effects on time domain reflectometry (TDR) measurements of water content in oil sands tailings are investigated. Results indicate that TDR water content measurements are influenced by temperature, residual bitumen and percent clay in the tailings. Apparent dielectric constant (Ka) correction of 0.03-0.10/°C is required to account temperature effect. The Ka-volumetric water content relationships of slurry significantly differ from the commonly used Topp’s calibration equation. The age of the tailings and the addition of Phosphogypsum did not influence TDR water content measurements. RÉSUMÉ Le présent article traite des points suivants : la température, le soluté, la texture et les effets thixotropiques sur les mesures par réflectométrie temporelle (TDR) de la teneur en eau des résidus de sables bitumineux. Selon les résultats, les mesures de la teneur en eau par TDR sont influencées par la température, le bitume résiduel et le pourcentage d’argile dans les résidus. Une correction de la constante diélectrique apparente (Ka) de 0,03–0,10/°C est requise pour tenir compte de l’effet de la température. Les relations Ka-teneur en eau volumétrique de la boue diffèrent de manière significative de l’équation d’étalonnage de Topp, couramment utilisée. L’âge des résidus et l’ajout de phosphogypse n’ont pas eu d’effet sur les mesures de teneur en eau par TDR.

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96 | CIM Magazine | Vol. 8, No. 3

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May 2013 | 97

Project Azorian: covert Cold War Ops disguised as deep-sea mining by Correy Baldwin

t was April 1968, and something fishy was happening in the North Pacific Ocean. The U.S. navy had been monitoring a large deployment of Soviet ships that appeared to be conducting search operations over a known patrol route frequented by Soviet submarines. When the Soviet activity died down, the Americans sent out their own submarine from Pearl Harbor to look for wreckage. Zeroing in on readings of a possible explosion in the area earlier that March, the Americans eventually located the sunken Soviet submarine K-129 on the ocean floor, nearly 3,000 kilometres northwest of Hawaii. This was the middle of the Cold War, and a sunken Soviet submarine was a considerable asset to American intelligence – K-129 undoubtedly contained nuclear torpedoes, equipment and Soviet code books and coding machines. The problem was how to salvage the submarine without attracting the Red Bear’s attention. The solution came in the form of a commercial deep-sea mining operation, dubbed Project Azorian. The project began with the CIA approaching industrial magnate Howard Hughes, who agreed to provide his name as a cover for the operation. Hughes owned a deepwater offshore drilling company called Global Marine, which the CIA contracted to design, build and operate a high-tech recovery ship. From the outside, the ship would simply appear to be a deepwater mining vessel and would therefore not arouse Soviet suspicions. Defence contractor Lockheed was brought in to construct the necessary equipment. Work on the ship – the Hughes Glomar Explorer – began in late-1972. Hughes casually informed the media of his latest project: mining polymetallic nodules in the Pacific Ocean. The idea was genius. It was well-known that the Pacific seabed contained polymetallic nodules at the same depths (roughly 4,000 to 5,000 metres) at which the K-129 wreck lay. There was also growing interest in the small nuggets – which contain manganese, nickel, copper, cobalt and rare earth elements – although mining them had, to that point, appeared too great a challenge. Only an eccentric entrepreneur like Hughes would fund such an outlandish operation. Mining polymetallic nodules would technically involve lowering and raising a bucket using a string of steel pipes from

98 | CIM Magazine | Vol. 8, No. 3

a mining platform, and the Hughes Glomar Explorer would appear to be doing just that. Instead of a bucket, though, the recovery ship would be equipped with a large, heavy-lift grappling claw that could grab hold of the submarine and raise it directly into a massive compartment in the middle of the ship. At a cost of $200 million, the project was one of the most expensive intelligence operations of the Cold War. It was also, at 4,900 metres, quite possibly the deepest salvage operation ever attempted. The Hughes Glomar Explorer was completed in 1974 and it arrived at the recovery site that summer. When the claw was lowered, it latched on to a 138-metre section of the wreck that the CIA was especially interested in. Despite meticulous planning, the operation did not go smoothly. The mechanical claw malfunctioned during the lift, causing the submarine section to break apart and much of it to sink back to the ocean floor. Still, 38 metres of the submarine made it into the ship’s hold. What was actually recovered is not entirely known. The CIA has long acknowledged the covert operation but still refuses to comment on its success. It did recover the bodies of six Soviet crewmen, who were buried at sea in metal caskets due to radioactivity concerns. The Hughes Glomar Explorer fell into disuse for decades but has recently found new life as a deep-sea drilling vessel. In 1997, Global Marine Drilling leased it from the U.S. navy and modified it for its new, legitimately commercial life on the open ocean. Mining polymetallic nodules remained economically unfeasible until recently. Lockheed Martin is now using the data obtained during Project Azorian to begin deep-sea mining exploration, this time off Mexico’s Pacific Coast. That is, if we are to believe the official story. CIM

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