the
ECONOMIC
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CANADIAN EDITION
VOL. 1 • MAY 2015
Canada is a heavyweight inthe global mining sector
MAY 15 VOL 1 • ISSUE 1
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E DI TO R ’S NOTE
T
he Economic Review covers the ever “Evolving” trends of the mining industry within Canada. It features a range of aspects, from geologists, to prospector’s producers and equipment suppliers.
In this issue of The Economic Review “Once you’ve experienced four major collapses of the industry like we have, and bounced back each time, you realise the importance of preparing for a collapse, especially at the crest of a boom. Then, when the doldrums comes in, you are well-placed to build up, consolidate, and invest. This way you get ready to take advantage– the deeper the collapse, the bigger the boom and the rewards that come with it.” In the May edition of The Economic Review, we interviewed Réjean Girard of IOS Services Géoscientifiques and gained an insight into his perspective on the mining industry. With Canada reliant on 380,000 jobs within the mining sector, equating to one in every forty seven jobs, it is an industry that is hugely important to the Canadian economy. In addition, with 75% of all global mining companies head quartered in Canada, it is simply a beast that cannot be ignored.
the
ECONOMIC
review
CANADIAN EDITION
VOL. 0 • 2015
MINING FRESH IDEAS
Inspi re d by E conom ic Growth
Canada is a heavyweight in the global mining sector
EDITOR IN CHIEF-Djamil Benmehidi
MAY 15 VOL 1 • ISSUE 1
EVOLUTION
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TA B L E O F CO NTENTS
EVOLUTION
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GLOBAL ECONOMY
6
IOS
8
NWT & NUNAVUT CHAMBER OF MINES
16
DIAVIK
22
GARIBALDI
30
COPPER FOX METALS
36
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GLOBAL ECONO MY
ECONOMY
STATE OF GLOBAL AMONG THE CANADIAN MINING INDUSTRY’S ISSUES
TOP
New report details industry’s recent performance, challenges and opportunities
D
espite a positive long-term outlook for Canadian metals and minerals, the year ahead will be challenging for the Canadian mining industry based on findings from the Mining Association of Canada’s latest Facts & Figures 2014 report released today.
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“The cyclical nature of our industry means that mining companies are no strangers to ups and downs in the global market. In the current economic environment, the industry is focused on reducing costs, improving productivity and preparing for the next upswing,” said Pierre Gratton, MAC’s President and CEO. “We are confident
about the future demand for our products and the Canadian mining industry is focusing on getting in shape now to seize the growth opportunities ahead of it.” The report, which draws on the most recent data available from the federal government (mostly 2013), reveals the mining industry contributes greatly to the Canadian
G LO BA L E CONOM Y
economy in a number of important ways. Despite the volatility seen over the last couple of years, Canada’s mining sector contributed $54.0 billion to the national GDP in 2013 up from $52.6 billion in 2012. Mining industry exports accounted for 19.6% of the Canadian total in 2013, which is down slightly from the 20.4% seen the previous year. A bright spot remains the industry’s strong employment figures. According to Natural Resources Canada definitions and data from Statistics Canada, the mining industry employed more than 380,000 people in 2013, accounting for one in every 47 jobs in Canada. As well, more than 3,400 companies in Canada supply goods and services to the industry, which further extends the economic and employment reach of the Canadian mining industry. A recent study released by the Canadian Association of Mining Equipment and Services for Export found that in Ontario alone, the mining supplier industry represents 68,000 jobs across the province, and contributes 1% to Ontario’s GDP and $1.5 billion in government tax revenues. There were some indicators revealing that Canada’s mining industry may have lost ground recently. In 2013, exploration investment fell year-over-year by 41% to $2.3 billion. Spending intentions for 2014 anticipate investment levels to drop even further to $2.1 billion, approaching the low of $1.9 billion seen in 2009 during the global recession. Notably, in 2013, Canada slipped from being the world’s top destination for exploration spending—a position it held for the last decade—to the second spot behind Australia. Exploration spending is an
important measure of the financial health of the mineral exploration sector and also assists in predicting the future of Canada’s mineral production. Top three issues for the Canadian mining industry in 2015: 1. State of the global mining economy: Recent uncertainty over the short-term global economic outlook, particularly the softening of China’s growth, caused commodity prices to decline in 2014 and volatility is expected to persist in the year ahead. Despite challenges, the prevailing view is that the industry’s economic prospects over the long term remain strong, especially as the middle classes of China, India and other emerging nations continue to grow. “Opening the industry to new and growing markets for Canadian minerals and metals is crucial for the industry to thrive. The federal government should continue its robust trade agenda by establishing trade, investment and double taxation agreements, and by providing programmatic support to help companies compete,” said Gratton. 2. Lack of critical infrastructure: Mines require infrastructure like roads, ports, railways and power grids to operate, which are often not available in remote and northern regions of Canada. Immense opportunity for mining development lies in Canada’s northern regions, and would provide significant socioeconomic benefits to northern communities. “The government can advance this nation-building opportunity and meet its stated policy objectives for the North by creating the right fiscal framework to stimulate investment in critical infrastructure that mines and communities will both benefit from,” said Gratton.
3. Complex regulatory environment: Recent years have seen significant changes to the regulatory regime for mining in Canada. The Canadian Environmental Assessment Act, the Fisheries Act and the Navigation Protection Act were amended in 2012, and a review of the Metal Mining Effluent Regulations is still ongoing. As regulators transition to the new regulatory regime, it is crucial that mining projects are reviewed once, and that various federal requirements, along with Aboriginal and public considerations, are integrated into a unified, robust and timely process with meaningful consultation. This will ensure projects are reviewed effectively, yet efficiently to avoid costly and unnecessary delays due to overlap with other provincial reviews. “To adjust to lower prices for some commodities, and to cope with high operating costs and a still uncertain global economy, it is more critical than ever that government remain focused on expanding Canada’s trade network and enhancing Canada’s overall competitiveness as a destination for new mining development through strategic investments and effective policies,” said Gratton. About MAC The Mining Association of Canada is the national organization for the Canadian mining industry. Its members account for most of Canada’s production of base and precious metals, uranium, diamonds, metallurgical coal, mined oil sands and industrial minerals and are actively engaged in mineral exploration, mining, smelting, refining and semi-fabrication. Please visit www.mining.ca.
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“
“
POISED FOR THE NEXT BOOM!
IOS
IOS O
n the back of Canada’s substantial mining prowess, and the country’s wider role as a major commodities exporter, the rigorousness of the TSX saw the Canadian economy soar, and buck the negative trend during the global financial crisis as the economies of its G8 counterparts withered. Make no mistake about it – Canada is a heavyweight in the global mining sector, as demonstrated by the fact that it is home to 1,300 mining and exploration companies, which accounts for nearly 75% of all such companies globally. With this in mind, it goes without saying that the business of servicing the mineral exploration sector is competitive, and IOS Services Géoscientifiques works hard to live up to its mantra of ‘Integrity, Originality, Service’, in order to remain head and shoulders above the competition. “We are dedicated to mineral exploration - we have never deviated from this,” Rejean told us. “We are a thoroughly independent firm of geological consultants and mineral exploration contractors which provides a wide range of services to the industry, ranging from junior mining companies to major international companies.” “Our core business is mineral exploration on a contract basis. We provide a broad range of services, which are divided into 3 main branches: consulting, logistical support, and laboratory
By: Djamil Benmehidi - ER Magazine services. IOS Services specialises in remote projects with complex logistics and non-conventional commodities.” In an industry where competition is rife, it is essential that you fill niches which will continually attract new business - IOS has achieved this through being much more than your run-of-the-mill exploration consultancy and services provider. A key strength is that the company acts as the unique gateway into Quebec - a distinctive province with distinctive rules compared to the rest of the country, and thus, a tricky market to enter. “We worked on over 1,200 projects in Québec– we have achieved this through offering in-house, multi-skilled, turnkey services. Half of our work comes from international clients from all over the world, but who are working in Québec. Aside from language and regulation issues, operating a project in Québec requires logistical skills as well as a network. It’s something that our clients from other provinces, or further afield, appreciate to have somebody like us onside who can help them navigate.” “We act as a door in, if you will, and help companies coming into Quebec - by using us they don’t need to invest time and resources in building their own network and knowhow, saving precious resources for exploration strategies.” As anybody within the Canadian mining sector will confirm, this is
a ‘brutally’ cyclical industry. Since the founding of IOS 23 years ago by Rejean Girard and a team of his fellow post-graduates, the company has witnessed four major recessions first-hand. But unlike more conservative-minded rival companies, who have been unable to adapt to the rigours of an industry which is in a perennial state of flux, IOS has not merely survived the booms and busts but thrived. According to Rejean, the reason for this is simple – build up your resources and prepare for the coming financial storm during the good times, and then capitalise when the market is in the doldrums by expanding and investing in staff, equipment, and R&D. “Once you’ve experienced four major collapses of the industry like we have, and bounced back each time, you realise the importance of preparing for a collapse, especially at the crest of a boom. Then, when the doldrums comes in, you are well-placed to build up, consolidate, and invest. This way you get ready to take advantage– the deeper the collapse, the bigger the boom and the rewards that come with it.” And invest IOS Services must. Mineral exploration is not only a risky business but an expensive one – in light of this, it is easy for the conservative minded to focus more in the present, aka field operations, rather than invest in the new equipment and technologies which are the lifeblood for any company
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IOS
which aspires for longevity. But whereas the Canadian service sector is known for its safety-first, conservative outlook, Rejean and IOS are unusual, in that they are willing to take a calculated risk and take pro-active steps to invest in their future. On this, Rejean notes: “Our industry is currently facing the worst recession in 40 years. Access to capital from the stock market has dried up. Small companies are currently undercapitalised, while large one are socking away. Look at the performance of the Dow Jones – why investing in penny stocks while blue chips offer great returns on investment? So, no more risk capital! The current recession will go on for a minimum of 18 months but we are prepared.” He continued: “We are currently investing in mastering new technologies while we have the time for it. We’ve just bought an automated electron scanning microscope, so that we can
perform applied mineralogy. This is a million dollar machine, and during a boom period we would not have been able to learn how to put it at work. Having this technology will reposition many aspects of our business. By building up our toolbox in this way, we have given ourselves a boost which will help put us ahead of our competitors when the industry starts to boom again.” Following this acquisition, for example, IOS will be able to analyse soil samples for their metal content, in order to trace back the origins of these metals – this is an exercise which is an industry first. Such investment in equipment doesn’t stop here, however, as is illustrated by the fact that IOS has recently invested heavily in the development of a remarkable new all-terrain vehicle. The Kaskoo-X04 will make negotiating Canada’s vast and inhospitable tundra, swamps, and mountainous regions a great deal easier and
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cheaper. The Kaskoo-X04 project, completed in partnership with L’Équipe Fabconcept, will mean that, when engaged in certain remote projects, IOS can operate in the field without having to resort to the use of helicopters, which are staggering expensive to run – operation costs tumble as a result. In addition to this new tech, IOS Service has also recently achieved another new technological first: a geothermal temporary camp heating system - a new system which will enable IOS to heat field camps at 20% of the cost of regular fuel stove. Such innovation allows the company to consolidate their whole logistical offering and fine tune of operations through vastly improved efficiency, and show clearly why IOS leads the line. However, while such investment in equipment and technology is of critical importance, so too is having the right staff to man them. Even in the depths of
IOS
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IOS
this particularly harsh industry slowdown, IOS has 35 staff members on the books, although this number will typically rise by a 100 during more buoyant times. But whereas the mining sector is renowned for taking a somewhat cavalier ‘pick-up, put-down’ approach to staff retention and recruitment, Rejean believes strongly that, on the contrary, they are the key to the business’s success – this is reflected in IOS Services’ policy of scouting out the best young talent, nurturing this talent, and most important of all, holding onto it. “Staff is not just a commodity - to help them grow, you must plant them, water, and nurture them. Staff is very important - they are our most valuable asset.” As one might expect from a business operating in such a niche, skills specific sector, IOS Services relies on a small team of key professionals who are ‘the cream of the crop’, all of whom belong to professionals associations– it goes without saying that there is a strong focus on academic excellence, with all geologists, engineers, and chemists being highly qualified to B.Sc and Ph.D level, also. “We do a lot of work in partnership with the University of Québec, where we collaborate on short courses in Quality Controls and Geometallurgy, among others. Through doing this we are able to capture the best talent available by bringing them into IOS to do placements and help them gain practical experience.” This, as Rejean points out, cultivates a harmonious working environment which inspires great loyalty among staff. “Once they are with us here at IOS Services, they then get absorbed into the culture of the company and integrate – through this we build loyalty and an environment
where our staff stick with us, rather than jumping ship. It is no coincidence that while people stay in a role for 3 years before moving on in our industry, we retain our staff for an average of 12 years.” He continues: “Young talent stays with us because we also expose them to a variety of different tasks and experiences, as well as many clients who are leading industry players and the specialists who work for them. They learn a lot and appreciate getting this invaluable experience.” All in all, IOS Services Geoscientifiques is well-placed to continue biding its time and building its strength over the course of 2015, even though as Rejean anticipates: “things will remain difficult for the next 1224 months.” The coming year will be a year of consolidation, in anticipation of better times ahead. As Rejean puts it, IOS is continuing to put together a ‘dream-team’ – the current slump means that there are a number of highly reputed professionals currently available for work. Once IOS has cherrypicked the best and acquainted them, they will be ready to lead crews during the next boom. Additionally, further plans are afoot to improve the company’s laboratory offerings, and various new technologies are in the pipeline which will one day compliment the current crop of new technology which has recently been introduced to the IOS toolbox. Rejean mused: “we hope 2015 won’t be as bad as 2014,” – only time will tell if his hopes are realised. What is certain is that whether the coming year bodes well or ill, IOS Services Geoscientifique will continue to build on its 23 years of success with endeavour, and a not inconsiderable amount of ‘innovation, innovation, innovation.’
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NW T & NUNAV U T CH AMB E R O F M I N E S
NWT & NUNAVUT CHAMBER OF MINES By: Djamil Benmehidi - ER Magazine
C
anada has enjoyed a steady rise up the global GDP rankings in recent years, as its vibrant, diverse economy has continued to build in strength. However its continued future economic growth, which some economists suggest could even see Canada become a true global economic superpower in decades to come, will, arguably, rest on the shoulders of the country’s wild, untamed northern provinces. Canada’s vast, frozen North - a rugged, beautiful land which occupies an area nearly double
the size of Western Europe - is a place which could truly be described as one of the world’s final frontiers. It also happens to be a key economic driver for the country’s world-leading mining sector. As the voice of the Northern mining sector – which is already the region’s largest private sector contributor to the economies of the Northwest Territories and Nunavut, the NWT & Nunavut Chamber of Mines will be at the forefront of Northern Canada’s charge, as it seeks to build further upon and fulfil its considerable mining potential
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over the coming years. It is well-known that the Chamber of Mines is an industry association which is made up of over 300 companies and individuals, some of whom are elite players within the mining sector. It acts as a forum where its members, which includes mineral producers, exploration companies, equipment suppliers, and consultants, and even individual prospectors, can benefit from a golden network of high-power mining industry connections. In this fast-moving, unpredictable industry, such connections with mining’s big-hitters and access
N W T & N U N AV U T C H AM B E R O F M INES
Northern Canada, with its rugged beauty and outstanding mineral potential, is Canada’s mining frontier. (Courtesy Aurora Geosciences Ltd.)
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NW T & NUNAV U T CH AMB E R O F M I N E S
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N W T & N U N AV U T C H AM B E R O F M INES
The Mary River Iron Mine in the high Arctic is Nunavut’s second and newest mine and has begun mining the deposit in the large hill in the background (Approved - Courtesy Baffinland Iron Mines)
to the inside knowledge that potential partners may possess can be the difference between seizing an opportunity or missing it – aka success or failure. However as Executive Director of the NWT & Nunavut Chamber of Mines, Tom Hoefer, suggests, their remit goes further than this alone: “We are a non-profit society, created in 1967, that champions on behalf of the minerals industry in northern Canada (NU and NT).” “Our goals are to promote the industry and the North to Northerners, Canadians, and the world at large. We continue to speak out on industry opportunities, concerns and issues. We advise governments, investors, the media, educational institutions, and the public on industry positions and initiatives.” “The Chamber of Mines works in 5 strategic areas: we seek improvements in regulatory environment & access to land, improve aboriginal relations through active engagement, encourage infrastructure development, engage in active communications & public relations, and support membership & operations.” The role that NWT & Nunavut Chamber of Mines plays in ensuring that the region’s mining sector runs smoothly is important now more than ever, bearing in mind that there are a number of both threats and opportunities that lie before it. The slowdown in growth and tightening of belts among the BRICS nations, especially China, has seen investment in exploration and new mining projects effectively go into deep freeze in recent years. However the mining sector is notoriously cyclical, and while the recent sluggish economic performance of the BRICS countries has pushed the global mining sector into a major slump, it is widely accepted that demand for commodities in the long-run can only soar – Canada, and its mineral rich Northern territories are well poised to
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NW T & NUNAV U T CH AMB E R O F M I N E S
capitalise on such an opportunity. The Northwest Territories and Nunavut in particular are home to an abundance of riches, in terms of the minerals and metals which lie beneath the frozen ground. Over the coming 5 years a number of new projects are a work in progress, which could lead to projections for an enormous increase in mineral output in the north to be realised. Tom said: “We have tremendous mineral potential, and when you imagine we are 1/3 of Canada’s land mass, that is not surprising. As a result, we have one new mine in NU and 5 more in process behind it. We have one new mine under construction in the NWT, and 3 more behind it.” “But we need investment dollars now for infrastructure to put them all under construction. We also would like to see the markets change, and exploration investments strengthen. This is
a global situation, and we know the markets will eventually cycle back up, but we want to be ready for that moment.” For the Northern territories to achieve their target of an anticipated 91% increase in metal and non-metallic mineral output between 2011-2020 and reach its mining potential, the NWT & Nunavut Chamber of Mines, in its role as a champion for mining in the North, will be working actively to attract fresh investment to the area, and fortunately recent political developments mean that the mining sector will receive increased support from local government. “We work hard to promote the creation of an environment that is attractive for investors. Our success in getting governments and the public to support this is reflected directly in investment levels, unless of course, the global marketplace stymies us. Governments are making changes
Ekati diamond mine in the Northwest Territories is the largest diamond mine in Canada and has a plan to increase mine life by 10 years. (Approved - Courtesy Dominion Diamond Corporation)
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to make the North more attractive, and we will continue to work hard for continued improvements.” “Through devolution, the NWT Government is now the new “landlord” for non-renewable resources. This means that they are in the driver’s seat now, and as a local government that feels the consequences of their actions, are in a good place to make a real difference in supporting our industry and its growth. As a sign of change, they are advancing work under a new Mineral Development Strategy, partnered with our Chamber of Mines.” With devolution now under active discussion in Nunavut, one can expect an aggressive approach in that territory too build up its mining industry for the benefit of its residents and economy. The Chamber of Mines will continue to be an active participant in both territories as their economies evolve.
The Northwest Territories is the 3rd most valuable producer of rough diamonds globally. (Approved Courtesy Diavik Diamond Mines Inc.)
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DIAVIK DIAMOND MINEDEVELOPMENT OF THE A21 PIPE By: Djamil Benmehidi - ER Magazine
O
nce upon a time the notion of discovering diamonds in Canada’s frozen wilderness was the stuff of dreams for explorers, who doggedly spent decades searching the length and breadth of the sub-arctic tundra and ice-fields of the Northwest Territories for the precious but elusive gemstone. But this all changed in an almost fairy tale fashion when in 1991 a persistent geologist, by the name of Charles Fipke, succeeded in finding a diamond deposit with the last dollars in his pocket. Subsequently this lit the fuse for one of the biggest rushes ever recorded in North America – the rest, as they say, is history.
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DIAV IK
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D IAVIK
Taking into account that it is a relative newcomer to the party, Canada’s recent emergence as a top-three global diamond producer has been pretty remarkable, bearing in mind that it was only seven years after Charles Fipke’s discovery that the country’s first diamond mine entered production in 1998. In terms of output, Canada’s prolific diamond mining sector currently produces over US$1.2billion worth of diamonds annually,
as sought after for quality as they are for their ethical guarantees – Canadian diamonds are much sought after by more discerning buyers, safe in the knowledge that stones do not come from conflict zones and are mined in environmentally sound manner which benefits local communities. It is no wonder that Diavik gemstones typically end up with some of the most exclusive jewellers and reach consumer markets across the world. To describe the Diavik project
deep into the bed of Luc De Gras, and are safely enclosed within uniquely created rockfill dike dams, which encircle the pits and the ore bodies within and keep the waters of the Luc de Gras at bay. The 3.9km & 1.3km long dikes are astonishing feats of engineering, bearing in mind the near unassailable conditions in which they were constructed. To the naked eye, it is difficult to comprehend that they were, in fact, built with human hands. Following a rigorous process
which accounts for nearly 15% of the world’s total rough diamond production on the basis of value – only Russia and Botswana rank ahead. Nearly 20 years on, there are now three world-class diamond projects in operation at the Lac de Gras kimberlite field alone – a region of outstanding natural beauty, around 300km north-east of the NWT capital, Yellowstone. And of these three mines, which sit atop difficult to reach diamondbearing kimberlite pipes on the bed of the stunning Luc de Gras, the Diavik Diamond Mine is the largest and greatest. Owned by the global mining giant, Rio Tinto, and the Dominion Diamond Corporation, the Diavik Diamond Mine produces a staggering 6-7 million carats annually, a sizable proportion of which are large, white-quality stones. Understandably, this means that Diavik’s diamonds are
as truly epic in scale would be an understatement – quite simply, it is one of the world’s largest and richest diamond mines, in terms of rock value. Both an industrial complex and, due to its remote location, self-contained town for the 1000 or so, largely local staff who are employed there, Diavik is home to processing and recovery plants, administrative buildings, independent power generation, water supply, boiler, and waste treatment plants, huge fuel storage tanks, and an airstrip which is large enough to accommodate Boeing 737’s and even Hercules C-130 transport aircraft. As one might imagine, Diavik is a spectacular sight to behold when viewed from an aerial vantage. Unsurprisingly, its most striking features, however, are the vast conacle-shaped open pits – the A154 North/South and A418 pipes - which delve up to 35m
of environmental and feasibility studies over a four year period, all of which was overseen by a round table of representative organisations and local government, the Diavik operators went above and beyond in ensuring that not only would the Luc de Gras be protected, but also that local populations would benefit directly and fully from the mine’s presence. In line with this, the rockfill dikes surrounding the site were designed to protect the pristine and ecologically diverse waters of the Luc de Gras from Diavik’s mining operations. However the effort that was expended to build the dikes was great indeed, and from the start the build was hampered by extremely tough operating conditions. The bitter cold of the north, where temperatures as low as -40⁰c are far from uncommon, along with the mind-boggling technical challenges posed by
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io Tinto owns a 60% interest in, and operates the Diavik Diamond Mine in Canada’s remote Northwest Territories. Discovered in 1994, Diavik commenced production in 2003, has an annual production of some 6 to 7 million carats of predominantly large, gem quality diamonds. It currently employs around 1000 permanent employees and contractors, and almost half are local. Total spending since 2000 is $6.2 billion, of which $4.5 billion (72 per cent) is Northern.
The Diavik ore bodies comprise four kimberlite pipes ( A154South, A154North, A418 and A21) located in shallow waters adjacent to East Island, Lac de Gras. Mining could only proceed safely at Diavik if the waters of Lac de Gras could be held at bay with certainty, so unique rockfill dike structures have been built into the lake. Diavik’s project approval was received in 1999 and A154 dike construction began in 2001 with commercial diamond production commencing in 2003 for the A154 pipes. Construction of a second smaller dike, the A418 dike encircling the A418 pipe, was approved in 2004 and completed in 2006 with ore production beginning in 2008. Simultaneously, work began on the underground mine feasibility study with study approval in November 2007. Underground production commenced in March 2010 and Diavik became an all underground mine in September 2012 when open pit mining of its three kimberlite pipes ceased. The A154 dike, Diavik’s first, was awarded Canada’s most prestigious engineering award. The A418 dike was built with the same awardwinning technologies. Diavik has a proven safe and successful record of dike construction and mine operations. The two current dikes have safely held back the waters of Lac de Gras allowing a decade of safe open-pit mining of three kimberlites. The dikes include hundreds of sensors measuring temperature, pressure, and movement. Both A154 and A418 dikes continue to perform as expected. The A21 pipe With its proven track record of dike construction and open-pit mining, Diavik will in 2015 begin construction of the dike to access the A21 kimberlite pipe. Total capital cost is estimated at US$350 million over four years. The A21 dike will be 2.2 kilometres in length and constructed in water up to 20 metres deep. This compares to Diavik’s A154 and A418 dikes which are 3.9 km and 1.3 km long and built in 25 metres and 35 metres of water respectively. Currently, the A21 mine plan is open-pit only.
constructing a mine which is surrounded by vast body of water and ice, meant that a genuinely new and innovative approach to engineering and construction was required. But trying as the task might have been, the saga of Diavik’s construction was a successful one, which was afterwards rewarded with Canada’s most prestigious engineering award. The two current dikes have now safely held back the waters of Lac de Gras for over a decade, which allowed for the safe open-pit mining of the three kimberlites until diamond mining became a purely underground operation in 2012. The dikes include hundreds of sensors measuring temperature, pressure, and movement. Even now, both A154 and A418 dikes continue to perform as expected. With all this in mind, it is easy
to imagine how total spending at the site since development began in 2000 has reached US$6.2 billion, and how the site generates an income of hundreds of millions of dollars each year. However following the exciting announcement by Diavik owners, Rio Tinto and Dominion Diamond Corporation, that formal approval has been granted for the development of a fourth kimberlite pipe, known as A21, the already world-class mine is set to be taken to the next level. The A21 pipe development was part of the original mine plan and it is estimated that the cost of the project will be in the region of US$350 million, over the coming four years. A 2015 programme of works is due to begin and it is anticipated that the A21 pipe will enter diamond production during the latter
part of 2018, and provide an important source of further incremental supply for Diavik – this is expected to ensure the continuation of existing diamond production levels as the A154 and A418 pipes begin to decline. The A21 dike will be 2.2 kilometres in length and constructed in water up to 20 metres deep. This compares to Diavik’s A154 and A418 dikes which are 3.9 km and 1.3 km long and built in 25 metres and 35 metres of water respectively. Currently, the A21 mine plan is open-pit only. The Rio Tinto Diamonds & Minerals CEO, Alan Davies, said: “Our decision to invest in the Diavik A21 project reflects our strong confidence in the diamond sector and in our ability to compete effectively in the industry.” The A21 kimberlite pipe is
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located just south of Diavik’s existing mining operations and, just like the existing three pipes, require a rockfill dike construction to encircle the ore body located just offshore of existing mining operations at Lac de Gras. As is to be expected, Diavik will utilise the same innovative design and engineering technologies used to construct the Diavik mine’s two other dikes, which enabled the successful mining operations of the existing pipes. Once completed, the A21 dike will be 2.2 kilometres in length and constructed in water up to 20 metres deep, and the pipe itself will operate as an open-pit mine, rather than an underground one like its peers It goes without saying that the
same safety first approach to the build will also be utilised, along with an ongoing commitment to Diavik’s community partnerships, which generate employment in the area, and providing significant business benefits to local communities, many of which are Aboriginal. The President of Diavik Diamond Mines, Marc Cameron, said: “This is great news for Diavik, but also for the local communities in which we operate where we are committed to delivering economic and social benefits that will endure beyond the life of the Diavik mine.” The coming years will be an exciting time as the new A21 pipe development project progresses with earnest, and also a most challenging period too if the
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challenges posed by the previous dike builds are anything to go by. However this extension of Diavik Diamond Mine’s lifeline, and the continued investment and benefits that will reach local communities and the local economy as a result, will ensure that Diavik continues to produce high quality gems up until 2023, and potentially beyond. Diavik has a bright future ahead which will see the project continue to hold its lofty status as an industry leading world-class diamond producing site for some time, and continue to deliver on its social, environmental, and economic commitments to the many who benefit from its continued success and enormous capacity for wealth generation.
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GAR I BALDI
GARIBALDI RESOURCES
By: Djamil Benmehidi - ER Magazine
I
t would be something of an understatement to say that the market for commodities has seen better days - the current harsh climate in which mining companies operate is, in the view of many in the know, the toughest in generations. Predictably such hostile conditions have made life especially tough for mining juniors, but whilst Garibaldi Resources has had a tough time of it, just like its peers, the dynamic Vancouverbased outfit has, in the words of its determined CEO, Steve Regoci, “focused on moving its feet forwards,” rather than succumb to the challenges posed by the commodities downturn. Garibaldi Resources Corp. is a Canadian junior mining company which is in the business of acquiring, exploring, evaluating, and developing gold, silver, and base metal deposits. In spite of low commodities prices and a stagnant marketplace, Garibaldi has built up an impressive portfolio of projects across the mineral-rich Sierra Madre region in Mexico and across swathes of North-Western British Columbia. Today, the company’s portfolio includes the highly mineralised La Patilla project in Sinaloa State and the Rodadero, Tonichi, and Iris projects in Sinora and Chihuahua States in Mexico, whilst in Canada, Garibaldi also owns the MSM, Red Lion, King, Tora
Tora, and Black Gold sites, as well as its world-class flagship asset, the Grizzly project in North-Western British Columbia. When asked the reasons for why Garibaldi’s fortunes had soared, Regoci suggested that it was simply down to the business getting the basics right. In particular, a combination of solid management, a willingness to embrace new ways of doing things, and a little good fortune has seen Garibaldi Resources not merely get by in difficult operating conditions but thrive. “We’ve put together a very solid management team to look after our projects down in Mexico as well as our projects up in British Columbia. I took over in 2004 after spending over two decades in the investment community where I worked as an investment adviser, financing juniors exploring for gold and silver. In 2004 we made that move (from base metals) at Garibaldi – it was a prescient move. We got involved when gold was US$400 and now its US$1,200 (per oz). As a management team, our focus is always on ways to leverage our assets, operate smartly in a responsible way regardless of the prevailing conditions. Certainly we’re now entering the most productive stage of our company’s history.” In terms of embracing new ways of doing things,
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G A RIBALDI Garibaldi has focused on using the latest technology to stay one step ahead of the pack, as is demonstrated by the company’s utilisation of a NASA developed, highly sophisticated remote sensing technology, otherwise known as Hyperspectral Imaging – it should be mentioned that this was an industry first for a junior explorer, on Garibaldi’s part. This technology, which was originally developed so that the International Space Station could map terrestrial and marine environments whilst in orbit, has revolutionised the way in which mining companies go about exploration. Indeed, Hyperspectral Imaging proved to be invaluable for Garibaldi Resources when the company entered Mexico in 2004, after having secured a number of district scale projects across the prolific Sierra Madre. It was wellknown that the area possessed extensive belts of epithermal type gold-silver occurrences and that the acquired projects, which included the Rodadero, Tonichi-Onavas, and Iris projects in Sonora and Chihuahua States, while unexplored, were heavily mineralised with high-grade gold and silver. Regoci said: “We had over 3,500 sq. kilometres of land to cover and we flew a Hyperspectral Survey over all of it – these surveys were how we were able to prospect Mexico. The spectrometer works by collecting sunlight reflected from the ground being surveyed, measuring the spectral bandwidths indicates the mineral profile present at surface– each mineral has its own unique spectral signature. We basically selected areas where we knew there were mineral ore bodies, captured their Hyperspectral signatures, and then compared our findings to the signatures measured on our concessions. These surveys allowed us to cut the search area down from 3,500 sq. kilometres to 350 sq. kilometres.
Through a selective protocol we were able to reduce our vast concession areas down to drill targets which made exploration more cost-effective and nonintrusive. We will be employing these techniques to some of the huge land-packages that we are working on in British Columbia. Back then this technology was a novel and nobody used it – it was quite something. Now it’s almost a part of the curriculum for most of the major mining corporations” The lessons learned and techniques perfected during Garibaldi’s cost-effective exploration of its Mexico-based properties are set to be employed when the company sets out to develop its Canada-based projects in the near future, which are at an earlier stage of development. At present, Garibaldi’s strategy is aimed at sustaining year round exploration activity on two broad fronts in Mexico and in British Columbia with the obvious advantage that during the hottest months in Mexico the company can explore in B.C. and when it freezes over, it becomes more cost effective to expand exploration to the more temperate climate in Mexico. Garibaldi management believes this is a very successful way to manage exploration dollars efficiently to take advantage of climate. Regoci said: “We’ve got 5 properties, which are long-run projects, in Canada – most of these were acquired as inventory projects/ long-term projects, but we’re now preparing to utilize what we’ve learned in exploring large land packages in Mexico, and applying that experience to our projects up in British Columbia.” “We have our flagship coppergold project in the Sheslay Valley, the Grizzly project, in the NW of British Columbia. There have been some very significant discovery holes on our northern border by 2 companies – Prosper Gold and Double View – and some very exciting results. We have the largest land package
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GAR I BALDI
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G A RIBALDI in the Sheslay Valley located in the Stikine Terrane which hosts world Class copper-gold deposits like Red Chris and Galore creek, there’s great anticipation as we advance to drilling stage.” We’re very, very opportunistic. We’ve recently raised a few dollars on the flow-through side for this, which is our first financing since 2009, we’re going to take these projects to the next level and I’m sure that we’ll do a combination of things, including farming some of these projects out to larger companies.” This desire on Garibaldi’s part to leverage its projects by finding, developing, and then selling them on to the industry big hitters will continue to be the company’s aim for the foreseeable future, although as Regoci admits, you can never say never. “We’re explorers, we’re not production people. Could we evolve into that? Possibly, but that’s not our initial goal - we’re in discovery mode. The climate is challenging and times are still tough but we’ll keep doing what we do and moving both feet forward towards discovery and adding value for our shareholders. We expect the bottom is near and we’ll be well positioned as the next boom emerges. There are 7.3 billion people in the world – a world which is still growing and rapidly industrialising. Obviously the renewables sector is picking-up but there will continue to be demand for commodities for a long time yet.”
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COPP E R FOX M E TA L S I NC
COPPER FOX METALS INC. By: Djamil Benmehidi - ER Magazine
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y its nature, Canada’s world-leading mining sector is conservative in the way that it goes about its business - in this respect, Copper Fox Metals Inc. is much like its peers. But as any business leader knows all too well, success or failure hinges on sound judgement – on knowing
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CO P P E R FOX M E TA LS INC.
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when to balance the need for conservatism and risk mitigation with a willingness to take a bold leap when the need arises. It is in this regard that Copper Fox differs from others in the sector, because as its acquisition of the Schaft Creek project in 2002 demonstrated, the business has shown that it isn’t afraid to take a gamble, albeit a calculated one, and tread where others won’t in pursuit of success. Since becoming President of Copper Fox in 2009, Elmer B. Stewart has overseen a period of great change, as the company made its transition from being a fledgling company with potential to the Tier 1, TSX Venture 30 Index listed exploration and development junior that it is today.
When asked about his business, Elmer said: “We specialise in the exploration and discovery of copper deposits. Our strategy is simple – we operate only out of North America, where there is little to no geopolitical risk, a number of large undeveloped deposits and the potential to discover large copper deposits.” He continued, “Copper Fox’s strategy is to acquire properties, explore and develop them, and then sell them on to the large producers - this is the niche where we fit best. Of course we are careful to limit risk and financial exposure, which is why our feasibility studies are rigorous. Acquisition of a project has to make sense.” In spite of how tough it can be to find suitable sites, the last few
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years have been a busy period for the company, which has been actively snapping up a number of promising properties to add to its expanding portfolio. Presently, the company owns the Van Dyke and Sombrero Butte projects in Arizona, a 42% interest in the Eaglehead project in British Columbia, and most notably of all, the resource-rich Schaft Creek site, also in British Columbia. Elmer believes that the highly-promising Van Dyke and Eaglehead projects represent the future for Copper Fox, and that further exploration and drilling of the sites will vindicate his view that both have the potential “to be the next Schaft Creek”. Indeed if any of these future projects do prove to be as lucrative as Schaft Creek, Copper
CO P P E R FOX M E TA LS INC.
“WE SPECIALISE IN THE EXPLORATION AND DISCOVERY OF COPPER DEPOSITS”
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Fox’s first-time, flagship project, then it is rest assured that the C$20 million that the company has so far received from Schaft Creek is only the beginning. It would be no exaggeration to say that Schaft Creek, with its vast deposits of copper-molybdenumgold-silver porphyry, makes it one of the largest undeveloped deposits in North America. Indeed, the property’s original owner and Copper Fox’s current joint partner, Teck Resources Limited, knew this all too well. However the economics surrounding Schaft Creek, which were based on feasibility studies completed in the 1980’s, made the prospect of developing the project a risk that they were unwilling to take. Earlier surveys of Schaft Creek, which have been conducted on a number of occasions since the site’s discovery in the 50s, suggested that while the project’s copper reserves were unquestionably large, the copper itself was lowgrade, the by-product credits were not taken into account and that a lack of electricity to the region made mining operations economically unviable. But while Teck was happy to option the property they retained a back-in right, Copper Fox had other ideas, and invested a lot of faith and huge sums of money in the belief that the Schaft Creek project could be made into a mine. A reassessment of the property
was conducted via an up-to-date pre-feasibility survey - using an updated geological model, resource estimates, and revised estimates of capital and operating costs - which revealed that while the average copper grade of the site was low, at 0.27, specific zones were found where far highergrade copper mineralization were found, typically between the 0.40.5 mark. Over a shortened 21 year lifeline, Schaft Creek displayed the technical and economic aspects of a potential mine in the making. It is no surprise that upon the emergence of the news that Schaft Creek was a resource rich, bankable asset, Teck quickly activated their back-in right clause which was inserted into the deal when Copper Fox originally took the project off their hands. Bearing in mind that the anticipated cost of building a 130,000 tonne per day mine is around C$3.2 billion, shared ownership with a mining heavyweight of Teck’s calibre is a blessing – especially so when the strong working relationship between the two companies is taken into account. Teck was the ideal partner for Copper Fox, according to Elmer, who is delighted to be working with them on the current and future development of the project. When asked what 2015 and the years following hold for Copper Fox, Elmer’s goals are clear: finish optimisation work at Schaft
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Creek alongside Teck, in order to prepare the property for a future sale, continue the preliminary assessment of the Van Dyke and exploration of the Eaglehead and Sombrero Butte projects. “Schaft Creek will go up for sale at some stage, and it is part of our business strategy that we want to keep three projects on the go at all times. There will be a lot of engineering work as we seek to de-risk and look for any fatal flaws. We are conservative in the way that we do business and we don’t take on problems – we walk away.” This is important when you operate in an industry in which buyers are highly risk-averse, and particularly in the current state of the mining sector. It goes without saying that in terms of longterm fundamentals, an upturn in copper prices, and subsequently, demand, is inevitable. However there is no denying social and geopolitical issues, coupled with rising capital costs, have created a tough global environment in which to operate. But Copper Fox has considerable experience in what they do, and will continue to deliver to producers what they want: a low-risk asset, requiring low capital intensity, which has been properly de-risked. The proof was in the pudding with regards to Schaft Creek – time will tell if the other more recent additions to Copper Fox’s portfolio repeat this success.
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