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September 2015

GOLD

MINERS DIGGING DEEPER INTO THE FUTURE

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CANADIAN Mining Journal

SEPTEMBER 2015 VOL. 136, NO. 7

www.canadianminingjournal.com

FEATURES

GOLD IN CANADA 12 YOUNG-DAVIDSON GOLD MINE A look at Alamos Gold’s Young-Davidson mine in Matachewan, Ontario, and how it’s grown in just over five years from an historic site into one of Canada’s larger underground gold mines.

18 AGNICO-EAGLE MINES Five Canadian mines help make Agnico-Eagle Mines one of the top gold producers in the country.

24 CLAUDE RESOURCES Company suspends production at northern Saskatchewan gold mines because of threat to workers from nearby forest fires.

26 PUMPS AND MINING Canadian Mining Journal takes a look at pumps used for safety and dewatering purposes in and around mine sites, plus a maintenance tip on how coatings can provide answers to fluid-handling problems.

DEPARTMENTS 5 EDITORIAL This month Editor Russell Noble talks about the upcoming federal election and how the colours (red, blue, orange and green) representing the four main parties combine to make the colour ‘brown,’ like mud… the stuff the government is stuck in when it comes to decisions involving the mining industry.

6 FIRST NATIONS Ontario Regional Chief Isadore Day, Wiindawtegowinini, talks about why the largest obstacle to the relationship between the mining community and First Nations has been bad politics.

8 LAW A column by Geoffrey Gilbert, a partner at Norton Rose Fulbright, Ottawa.

10 CSR & MINING A regular column by Michael Torrance, a lawyer in Norton Rose Fulbright’s Toronto office, on Corporate Social Responsibility.

36 COMMENT Sgt. Pat Poitevin, Senior Investigator, Outreach Coordinator, Sensitive and International Investigation Unit, RCMP, talks about stopping bribery and corruption.

38 UNEARTHING TRENDS

Image: Nancy Duquet-Harvey, Alamos Gold Inc.

This month’s column by Bruce Sprague, a partner and EY’s Canadian Mining and Metals Leader, tells readers to beware of the not-so-obvious risks in mining and metals.

ABOUT THE COVER This month’s cover shows the business end of a raise-bore drill at Alamos Gold’s Young-Davidson Mine.

Coming in October Canadian Mining Journal’s October issue will take a look at “Mining in Quebec.”

SEPTEMBER 2015

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For More Information Please visit www.canadianminingjournal.com for regular updates on what's happening with Canadian mining companies and their personnel both here and abroad. A digital version of the magazine is also available at www.digital.canadianminingjournal.com

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EDITORIAL

CANADIAN Mining Journal

Wallowing in the same old brown stuff

September 2015 Vol. 136 — No. 7 38 Lesmill Rd. Unit 2, Toronto, Ontario M3B 2T5 Tel. (416) 510-6789 Fax (416) 447-7658 www.canadianminingjournal.com

Editor Russell B. Noble 416-510-6742 rnoble@canadianminingjournal.com Field Editor Marilyn Scales 613-270-0213 mscales@canadianminingjournal.com Art Director Stephen Ferrie Production Manager Jessica Jubb Circulation Manager Cindi Holder 416-510-6789, ext. 43544 cholder@glacierbizinfo.com Publisher & Sales Robert Seagraves 416-510-6891 rseagraves@canadianminingjournal.com Sales Western Canada, Western U.S.A. and Quebec Joelle Glasroth 416-510-5104 jglasroth@canadianminingjournal.com Toll Free Canada & U.S.A.: 1-888-502-3456 ext 2 or 43734 Group Publisher Anthony Vaccaro Established 1882 Canadian Mining Journal provides articles and information of practical

use to those who work in the technical, administrative and supervisory aspects of exploration, mining and processing in the Canadian mineral exploration and mining industry. Canadian Mining Journal (ISSN 0008-4492) is published 10 times a year by BIG L.P. Mining. BIG is located at 38 Lesmill Rd., Unit 2. Toronto, ON, M3B 2T5. Phone (416) 510-6891. Legal deposit: National Library, Ottawa. Printed in Canada. All rights reserved. The contents of this magazine are protected by copyright and may be used only for your personal non-commercial purposes. All other rights are reserved and commercial use is prohibited. To make use of any of this material you must first obtain the permission of the owner of the copyright. For further information please contact Russell Noble at 416-510-6742. Subscriptions — Canada: $47.95 per year; $76.95 for two years. USA: US$60.95 per year. Foreign: US$72.95 per year. Single copies: Canada $10; USA and foreign: US$10. Canadian subscribers must add HST and Provincial tax where necessary. HST registration # 809744071RT001. From time to time we make our subscription list available to select companies and organizations whose product or service may interest you. If you do not wish your contact information to be made available, please contact us via one of the following methods: Phone: 1-888-502-3456 ext 2; Fax: 416-447-7658; E-mail: cholder@glacierbizinfo.com Mail to: Cindi Holder, BIG Mining LP, 38 Lesmill Rd, Unit 2, Toronto. ON, M3B 2T5. We acknowledge the financial support of the Government of Canada through the Canada Magazine Fund toward our editorial costs.

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By Russell Noble

rade schoolers learn very early in their education that when they mix paint colours, something magical appears right before their eyes. In fact, the transformation from one colour to another by blending two or more pigments is one of the first scientific experiments many of us experience. And, just as a reminder to many of you far removed from grade school, the basics are: blue (PC) and yellow make green (Green Party), red (Liberals) and yellow make orange (NDP), and all of them combined make brown. That’s right, but not by coincidence, the colours I’ve chosen for this exercise also represent the four main parties vying for the leadership of this country. And, taking this paint-blending charade one step further, look what happens when you mix red, blue, orange and green … you get ‘brown,’ like mud. And that’s what our federal Parliament turns into once all of the members are comfortably in their seats and wallow there for the next four years to bicker back and forth with prepared rhetoric to ensure that their names appear on the daily transcripts. I’m sure most of you have witnessed this, either in person or on television, and I hope you agree that it’s usually a sad and embarrassing exhibition of grandstanding to confirm their attendance. In any event, as we’ve all heard for the past few weeks, each and every candidate from the party leaders down, have made hugely expensive promises for things that rarely happen once they’re elected. In fact, I’m still amazed how politicians get away with even promising to commit hundreds of millions, even billions of ‘our’ dollars to certain causes when, last I heard, the country is nearly running on empty when it comes to money. And the mining industry knows this better than anyone. In recent weeks we’ve heard campaign promises to spend millions of dollars on First Nations programs, the infrastructure, daycare, power and pollution, and even incentives for tourism because Canada is a cheap place to visit now that our dollar hovers around the 75-cent (U.S.) mark, but unless I missed it somewhere, what about money to help miners and the other resources industries? Loggers and fishermen need support too, but for now I want to concentrate on mining and ask why it’s not on the agendas of those hoping to move to Ottawa? The last real money that I can recall being committed to mining for exploration and development was for Ontario’s ‘Ring of Fire,’ and we all know where that’s going at the moment. It’s almost as if the federal government has given up on the development of its resource industries, and because of that, many investors are following its lead by holding onto their money, or worse, putting it elsewhere. I know the government is supposed to lead by example, but I’m afraid that unless the candidates in this coming election step up and look beyond the obvious, and slippery issues involving the oil sands, and Mike Duffy, then I think Canada will just continue slugging its way through the same old muck created by new faces. CMJ CANADIAN MINING JOURNAL

2015-08-25 3:08 PM

FIRST NATIONS

What’s good for First Nations is good for business too By Ontario Regional Chief Isadore Day, Wiindawtegowinini

hat’s good for First Nations is good for business. It’s a basic fact that all members of the mining community should remember during the federal election.There’s an honest truth that gets lost in politics: First Nations are looking for opportunities and partners who respect our rights, lands and treaties. When I ran for election, I ran on a platform of Treaty implementation and opportunities for youth. The principle of sharing, which is the basis of our Treaty relationship, creates opportunities for youth. Sharing the wealth of Turtle Island includes the resources above, as well as below, and is premised on respect for the health of our lands. Put simply, if we follow the Treaties, both industry and First Nations share in economic gains today and for future generations in a way that maintains the health of our lands. The right partner understands that the economic fortunes of mines and First Nations are inter-

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twined. Development is not a zero-sum game. Either we both win, or no one wins. The largest obstacle to the relationship between the mining community and First Nations has been bad politics. As every mining company knows, accessing our lands can only be done within the context of Treaties. Every proponent knows it is the duty of the Crown to consult, and accommodate. First Nations will always assert their rights and title, and when the Crown looks the other way both proponents and First Nations enter a mutually harmful cycle of litigation. That means when politicians get it wrong, we all lose. This election should be an opportunity to figure out how we do better. Indian and Northern Affairs Canada is looking to create new consultation guidelines. Natural Resources Canada is tasked with implementing new transparency requirements on payments to First Nations by mining companies. The Mineral Exploration Tax Credit will be up for renewal again next year and some political pundits have said the 2015 credit reforms are against First Nations best interests. We need the right people in Ottawa to bring these pieces where we need them to be. For First Nations, economic development and respect for the environment must go hand in hand. Opportunities that respect the environment, create opportunities for our youth, honour our Treaties, and acknowledge the wisdom of our Elders will be embraced in most circumstances. It’s difficult to meet those criteria when government refuses to consult, punishes First Nations with punitive cut backs under the guise of transparency, or ignores environmental concerns. If we fail to get it right this election, we may lose our opportunity to move forward together and achieve mutual benefit.The stakes are high. The mineral sector may be in a slump, but the opportunities are endless. We know the right industry players can be good partners. More than 300 Impact Benefit Agreements have been signed between mining companies and First Nations since 1974. We must continue following best practices and throw out ideas that stand opposed to our Treaty relationships. The opportunities are rich. Let’s not allow bad policy and poor government practices to hold opportunities back. CMJ

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LAW

Diamonds, NWT, and how the Polar Bear got in there By Geoffrey Gilbert

he Gahcho Kué Project in the Northwest Territories is the world’s largest and richest new diamond mine. In joint venture with De Beers, Mountain Province Diamonds is developing the mine, which is progressing according to plan and budget and is on track for first production in H2 2016. It is expected to produce an average of 4.5 million carats a year over a 12 year mine life and has the potential to become one of Canada’s major high-grade and long-lived diamond mines. Financial close was reached on April 7, 2015 and was backed by a syndicate of Canadian and international lenders.

The Diamond Policy Framework Gahcho Kué is subject to the NWT government’s Diamond Policy Framework, which aims to develop and support the local secondary diamond industry. For example, the government of the NWT has committed to the certification of NWT diamonds as being mined, cut and polished in the NWT to verify the origin of the diamond (one of the popular tools used to signify the origin of the diamond as “conflict free” is to laser engrave the diamond with a microscopic-sized polar bear logo). The Framework was first adopted in 1999 and most recently updated in 2010.

ONE OF THE POPULAR TOOLS USED TO SIGNIFY THE ORIGIN OF THE DIAMOND AS “CONFLICT FREE” IS TO LASER ENGRAVE THE DIAMOND WITH A MICROSCOPIC-SIZED POLAR BEAR LOGO To the extent that one of the objectives of the Framework is to grow and diversify the NWT secondary diamond industry, the NWT government has taken steps to ensure that local manufacturers have a steady supply of incoming rough stones. Each developer of a project in the NWT must sign an agreement with the government of the NWT undertaking to sell a percentage of its rough stones to local manufacturers. After signing the agreement with the NWT, developers then negotiate a commercial agreement directly with the approved manufacturer of their choosing and that has been approved by the Minister of Industry, Tourism and Investment. The Minister may monitor, audit and

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inspect the manufacturer to ensure that the sorting and polishing is actually done within the territory, by companies that employ local residents. The premise seems simple enough; however, the issue is complicated by the fact that currently there is a very limited number of diamond polishers in the territory.

The Outcome In 2007, Mountain Province Diamonds Inc. signed such an agreement with the NWT government. Under the agreement, Mountain Province agreed to operate a sorting facility in the NWT and “establish a mechanism” for the sale of a percentage of its rough diamonds from Gahcho Kué to the local secondary industry. At the time the agreement was signed, the diamond manufacturing market in the NWT was burgeoning, marked by the opening of several new sorting and polishing facilities. However, by 2015, many of those facilities had closed as a result of deteriorating market conditions. Agreements under the Framework place developers in a challenging situation if the market changes drastically. Where there is only one provider, developers’ ability to negotiate the terms of the polishing agreement may be weakened due to the lack of market dynamics. Where there are no providers, developers risk breaching their agreement with the government altogether. At its inception, lenders and developers surely viewed the Diamond Policy Framework as a reasonable and desirable initiative. However, due to an unforeseen shift in the market and the commercial reality that such arrangements have to be bankable, the Framework has resulted in some additional considerations for both lenders and developers. Canadian mining companies need to be mindful of these limitations and hurdles when entering into these kind of agreements, think through all of the contingencies and prepare reasonable mitigation strategies while drafting the initial agreements, at all times understand and be mindful of the rigorous scrutiny lenders will bring to the project and make sure you have answers for all of the important commercial questions. All stakeholders need to work together throughout the financing to carefully consider the risk profile of these issues and properly allocate the risks to the party who is most capable of managing them in the long term. CMJ GEOFFREY GILBERT is a partner at Norton Rose Fulbright, Ottawa.

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CSR & MINING

International CSR standards and free, prior and informed consent By Michael Torrance

ree Prior and Informed Consent is a concept that is increasingly important in the context of consultation with Indigenous communities, and therefore for CSR management wherever mining operations affect Indigenous Peoples. In the CSR Strategy for the Extractive Sector (CSR Strategy) the Canadian Government endorsed the IFC Performance Standards on Environmental and Social Sustainability (IFC Performance Standards) as a key benchmark for performance by Canadian companies operating abroad. The original 2009 CSR Strategy specifically endorsed the 2006 IFC Performance Standards, which did not contain the concept of Free, Prior and Informed Consent (FPIC). The “enhanced” CSR Strategy announced in 2014 contemplated endorsement of the IFC Performance Standards version released in 2012, which includes the concept of FPIC in Performance Standard 7 (PS 7). As such, the parameters of FPIC in the context of PS 7 is a useful guide to the expectations surrounding FPIC for Canadian companies operating abroad. Generally, PS 7 addresses the potential for adverse social impacts that a private sector company may have on the Indigenous Peoples and populations residing on the lands that the company intends, or is, operating on or nearby. Indigenous Peoples are deemed to be ‘uniquely’ vulnerable to the extent they have been historically marginalized peoples who suffer from a lack of political representation and access from decision-making processes that have directly, or indirectly affected them. As a minority group, they are distinct “due to the linkage between their cultural identity and the lands on which they live and resources on which they depend”. The objectives of PS 7 are to: ensure the preservation of Indigenous culture and way of life; the avoidance of adverse impacts to Indigenous communities where possible; the compensation of Indigenous Peoples who have been adversely affected by the company’s project(s); and the promotion of sustainable relationships with the Indigenous Peoples that are directly or indirectly affected by the company’s project. PS 7 encompasses a wide range of Indigenous communities, given the complexity of defining Indigenous Peoples. PS 7 applies to Indigenous Peoples that are on their ancestral lands, as well as those who are not living on the land, but have maintained ties with it. In addition to those Indigenous Peoples who have been forcibly displaced from their ancestral lands. In order to determine if a group or community qualifies to be identified as an Indigenous People, the company can analyze applicable

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national law, engage in archivist and ethnographic research and obtain the assistance of the relevant Indigenous groups. In assessing which, if any, Indigenous communities are to be affected by a project, a company applying PS 7 must first determine if Indigenous communities exist in the project’s zone of influence. Like all of the IFC Performance Standards, PS 7 sets a performance baseline for CSR performance that may interrelate and overlap with domestic and international legal obligations, but which must be met especially where the rights of Indigenous Peoples are not safeguarded by States or legal systems. PS 7 itself draws from international legal instruments relating to the rights of Indigenous Peoples. In 1989, the International Labour Organization (ILO) promulgated the Indigenous and Tribal Peoples Convention (commonly known as ILO Convention No.169. The legal effects of ILO Convention 169 have been limited, as it is only legally binding on the States that have ratified it – to date, it has only been ratified by 22 countries The emphasis of the Convention is on recognizing Indigenous Peoples’ rights over their “own social, cultural and economic development.” These concepts have been adopted by the Inter-American Court of Human Rights in several decisions identifying consultation obligations on member States to consult with Indigenous communities affected by major development projects. While there is no universally accepted definition of FPIC, in the context of PS 7, it contemplates that consultation is conducted prior to the development activity, through good faith negotiations between the project proponent or State and the affected Indigenous communities, that will ideally lead to an agreement between the two sides. FPIC is widely understood as a process that permits communities of Indigenous Peoples to define a collective position in response to a project while recognizing the fact that different and diverging viewpoints may exist within those communities. This does not, in the context of PS 7, necessitate the unanimous support of the members of Indigenous communities and many would argue that it also does not provide a “veto” right over development. That being so, PS 7 does not provide a singular definition of FPIC and the concept is highly contentious. Despite the challenges in implementation, in light of the CSR Strategy and the pervasive role of the IFC Performance Standards, including in financing decision making, it will serve CSR and mining managers well to become familiar with the topic and how it could relate to their projects. CMJ MICHAEL TORRANCE is a lawyer in Northern Rose Fulbright’s Toronto office.

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GOLD in CANADA YOUNG-DAVIDSON MINE Early view of the barren mine site before structures started to change the landscape near Matachewan.

SO MANY

CHANGES FROM GROUND BREAKING TO A GIANT MINE IN JUST FIVE YEARS. Historic gold mine continues to grow. By Russell Noble

t’s hard to believe that it’s been more than five years since Michael Gravelle, Ontario’s Minister of Northern Development and Mines, broke ground at the YoungDavidson mine in Matachewan to mark the start of renewed construction on what today is one of the country’s larger underground gold mines. In fact, since that ceremonial shovel went into the ground on September 10, 2010, the site has been transformed from a local landmark containing a few remnants from of the original YoungDavidson/Matachewan Consolidated mine (mined from the mid 1930s to the mid 1950s) to now, where a small city of administrative buildings, head frame, mill, an open pit, tailings ponds, and a network of roadways criss-cross the 11,000-acre property. Located approximately 60km west of Kirkland Lake on Highway 66, the mine is centrally located between Timmins, Kirkland Lake, North Bay and Sudbury, and for the past five years, Alamos Gold Inc. has been building on, and extensively expanding the underground workings at the 85-year-old site. To say that Alamos has taken its work seriously is an understatement because as the mine’s General Manager Luc Guimond explains, “The Young-Davidson project was a challenge from the 12 |

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start because it involved the implementation of new technologies with original designs and underground workings and anytime you combine the two, the old with new, there’s always a chance the two don’t get along.” By that, Guimond explains, is that anytime you pick up where someone else left off, especially underground involving historic shafts and stopes, there’s always a question about stability and especially the safety for the miners entering the existing mine. In the case of the Young-Davidson Mine, however, Guimond said the teams of miners from his company, plus those from both of the main contractors, Dumas and Cementation, worked extremely carefully when expanding the mine and today, he proudly oversees the accident-free and productive mine. As mentioned earlier, one of the main contractors involved with the Young-Davidson mine is Dumas, a company that Guimond says was involved long before the official ‘go-ahead’ was given to put the mine back into operation. In fact, Dumas has been onsite continuously since 2006 when it was hired by Northgate Minerals (owners of the mine at the time), to dewater and rehabilitate the mine’s historic shaft, and replace the shaft bearings, as well as replace all timber sets with steel from surface to the 700-m level. WWW.CANADIANMININGJOURNAL.COM

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Photo: Emma Archer Photography 2013

Aerial view of the Young-Davidson gold mine shows the complexity of the project and detail (inset) of the various components. The open pit in the foreground was closed in June, 2014.

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GOLD in CANADA YOUNG-DAVIDSON MINE A stockpile of drill pipes ready for the raise-boring application.

Surface hoist of raise-boring installation.

A look at the cutting head used in the raise-boring of the shaft.

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Dumas was also responsible for completing the installation of services, the hoist installation, and rehabilitation of the existing head frame. During shaft rehabilitation, Dumas also undertook a concurrent lateral development program that included portal construction, ventilation raises, and associated mine construction. One of those construction phases involves an ore pass and ramp work that has involved more than 30,000m of ramp and lateral development to ore zones and ventilation drifts involving the excavation of approximately 7200m per year. Perhaps one of the more ambitious and innovative mining techniques used during the construction of the Young-Davidson mine was the raise-boring of a 5.5-m-diameter production shaft. Cementation, also a long-time contractor at Young-Davidson, having been on site since 2010, was responsible for the shaft’s engineering and design, plus underground development and construction. Dennis Martin, Raise Boring Manager, Cementation, explains in more detail by saying: “The technical challenge for raise boring Alamos’s Young-Davidson production hoisting shaft was drilling the pilot hole straight and reaming it out to 5.5m in diameter. “The vertical tolerance used for the engineering design was 300mm over the entire length of the shaft barrel, and completed at less than 100mm. The final shaft diameter of 5.5m was completed without an in-hole hardware failure, medical aid or lost time.” WWW.CANADIANMININGJOURNAL.COM

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He added; “This technical raise-boring challenge was accomplished due to three main elements and heavy capital investment by Cementation. 1. Tooling to drill vertical pilot holes with high accuracy; 2. Large diameter raise drills, rods, bottom hole assemblies, reamers; and 3. Very well-trained personnel.” Martin further explains that a detailed risk assessment was completed prior to starting work, and a methodology put in place for the main work activities. Here’s a look at the methodology used by the company. Pre-mobilization: Prior to the equipment arriving, Cementation had a representative on site from time to time to ensure the site preparations and requirements where on schedule. Site Preparation: The drilling site, raise drill foundation, underground reamer connecting site, and site services required for the raise boring operation of the project was completed by the Client as per Cementation drawings. Mobilization: First truck load arrived on site one day after the last of the client’s site specific workforce orientation requirements where completed. Off-loading the majority of the drilling equipment took place prior to the drill set up but continued during drill set up. It required a forklift capable of 5+ tonne and

Underground crews have been working steadily to expand the mine’s stopes and shafts for almost 10 years.

Innovative Design-Build Solutions

GOLD WINNER

Since 2010 Cementation has been part of the Young-Davidson mine development team carrying out shaft work, underground development, engineering and construction. This work has included the design and construction of the borehole hoisting facility, an innovative approach that helped bring underground production in on schedule and significantly reduced the capital of a traditional shaft hoisting system. Another innovative design-build project by Cementation.

www.cementation.com

SEPTEMBER 2015

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GOLD in CANADA YOUNG-DAVIDSON MINE

A picturesque view of the Yound-Davidson mine by Alamos Gold’s Nancy DuquetHarvey as it looks today.

First gold was poured in April, 2012.

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a 100+ tonne crane working on day shift only. Setting Up: Took approximately 10 days, was done on day shift only until the earliest opportunity 24/7 activity could take place. Drilling the Pilot Hole: This was a critical activity as mentioned above and strict operational procedures were in place. Time was not a factor, accuracy was and the results exceeded design tolerance by a wide margin. Breakthrough Area: The breakthrough area of the pilot hole is also the shaft bottom and this area was completed prior to completing the pilot hole. Shotcrete was applied to the back to keep the brow from peeling and provide a safe working area at the brow. Reamer Installation: The reamer assembly had six major components that took two days to assemble and attach to the drill string. Reaming the Raise: The reaming averaged 5.0 m/ day and mucking the cuttings was completed with a remote loader. Reamer Removal, Tear Down: It took 5 days to remove the raise drilling equipment from the top of the shaft and pull the reamer out the top with a crane. In addition to Cementation’s raise-bored shaft, the underground is also accessed via a second shaft and main ramp. The raise boring of the Northgate shaft was completed down to the mid-shaft loading pocket in 2013, which accesses the first eight years of mine production. Luc Guimond explains that work continues on developing vertical access in the underground mine below that of the mid-shaft loading pocket, to an eventual depth of 1500 metres. The existing shaft is expected to reach its ultimate depth this year to provide for the hoisting of personnel, materials, ore and waste. The mine operates scooptrams to load, haul and transfer stope production to the ore-pass system from where it is hoisted to the surface by 18-tonne skips. There’s also the ramp that is being extended to the bottom of the mine from the existing exploration camp, currently at the 900-m level. Once in the mill, both underground ore and stockpiled open-pit (closed in June, 2014) ore is processed through an 8,000 tpd single-stage semi-autogenous grinding circuit with a grinding circuit followed by flotation. Guimond explains that the flotation concentrate is further ground and leached in a conventional carbonin-leach system with flotation tailings also being leached in a carbon-in-leach circuit. The gold is recovered from the carbon followed by electro-winning and pouring dore bars. First gold was poured at the Young-Davidson Mine in April 2012. CMJ WWW.CANADIANMININGJOURNAL.COM

2015-08-25 3:20 PM

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2015-08-21 10:28 AM

Gold being poured at La Ronge, Agnico Eaglesâ&#x20AC;&#x2122; flagship mine in Quebec.

HOTTER

GAINS IN ASSETS Gold properties continue to pay higher dividends Staff Report

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2015-08-25 3:23 PM

GOLD in CANADA AGNICO-EAGLE MINES LTD.

any Canadian mining companies have earned national and international recognition for their knowledge and understanding of what it takes to be a successful and innovative miner, and AgnicoEagle Mines Limited of Toronto is certainly one of them. In fact, since 1957 when the company became known as “Agnico,” a name cleverly derived from the periodic table of elements using the symbols for silver (Ag), nickel (Ni), and cobalt (C0), the company’s early focus, until the later merger with Eagle Mines Ltd., a successful gold exploration company, the now-known Agnico-Eagle has become a leader in mineral exploration and development. With operations in Canada, Finland and Mexico, AgnicoEagle is a company with international credentials and it proudly ranks 13th in Canadian Mining Journal’s list of Canada’s Top 40, but perhaps most impressive is that it ranked first in Canada with an asset change of +331.1 % from 2013 to 2014. And here’s a look at five Canadian projects that have helped the company reach this envious position.

CANADIAN MALARTIC (50% ownership) The Canadian Malartic operation is one of the largest operating gold mines in Canada. The large open-pit mine and plant, located in the Abitibi region of northwestern Quebec, began commercial production in May 2011. The operation was built by Osisko Mining Corp., which was jointly acquired in June 2014 by Agnico Eagle Mines Limited (50%) and Yamana Gold Corporation (50%). The Canadian Malartic mine is located in the heart of the prolific Abitibi Gold Belt in Quebec, south of the town of Malartic, approximately 25 kilometres west of the City of Vald’Or. It only took six years from the initiation of exploration drilling in 2005 for the then-owner Osisko Mining Corporation (“Osisko”) to complete the mine development. In August 2009, Osisko received government approval to begin construction of the mine. The first gold pour was in April 2011, and the start of commercial production in May 2011. The total capital cost to that time was approximately C$1.1 billion. The mine poured its millionth ounce of gold in November 2013. The mine is currently Canada’s largest operating gold mine, and is developing into one of the world’s largest pure gold producers. The 55,000-tonnes/day open-pit mine and plant produced 535,470 ounces of gold as well as 533,315 ounces silver (on a 100% basis) in 2014. It is expected to produce approximately 280,000 ounces of gold in 2015, to Agnico Eagle’s account, with a mine life expected to last through 2028. The mine has 4.33 million ounces of gold in proven and probable reserves* (127 million tonnes grading 1.06 grams of gold per tonne) on a 50% basis. *Source: 50% basis, Canadian Malartic December 31, 2014 Reserves and Resources. SEPTEMBER 2015

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GOLD in CANADA AGNICO-EAGLE MINES LTD. Conveyway at Canadian Malartic.

Mining productivity improves, North Zone mining rate increases in Q2 2015 s Agnico Eagle’s 50% share of attributable production at the Canadian Malartic mine during the second quarter of 2015 totalled 68,441 ounces gold at a total cash cost per ounce of $609 on a by-product basis; production in this period included 69,000 ounces of silver. s During the quarter, on 100% basis, the mill processed 4,614,000 tonnes of ore (50,705 tonnes/day). Minesite costs per tonne were in line with guidance at approximately C$20 (C$23 including royalties). s The average stripping ratio in the second quarter was 2.64 to 1.0. s Agnico Eagle’s 50% share of attributable production at the Canadian Malartic mine during the first six months of 2015 totalled 136,334 ounces gold at a total cash cost per ounce of $621 on a by-product basis; production in this period included 141,000 ounces of silver. s During the six-month period, on 100% basis, the mill processed 9,294,000 tonnes of ore (51,343 tonnes/day). Minesite costs per tonne were approximately C$20 (C$23 including royalties). s Discussions took place in the second quarter with permitting authorities about improving the efficiency and environmental performance of the existing mobile crusher used for pre-crushing. An application for a Certificate of Authorization is being prepared for possible submission later this year.

Outlook Mill throughput levels at Canadian Malartic are forecast to be approximately 53,000 tonnes/day through 2016 (on a 100% basis). The Partnership continues to work on several mining and milling initiatives to optimize the operations. Permitting activities for the Barnat Extension and deviation of Highway 117 continue; the process remains on schedule for receipt of the necessary permits in November 2016. Drilling continues on the Odyssey North and Odyssey South zones, with data currently being compiled and interpreted. Odyssey North is in part hosted on the Malartic CHL property in which the Partnership increased its interest to 100% in March 2015.

GOLDEX The Goldex mine is part of the chain of operations and properties that Agnico Eagle owns in the Abitibi region of Quebec. 20 |

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Underground mining from the M and E satellite zones and processing in the mill started in September 2013. The Goldex operation achieved commercial production in October 2013. The Goldex underground mine and processing plant are located in the city of Val-d’Or, Quebec, some 60 kilometres east of the LaRonde mine. This proximity allows for operating synergies between the two sites. Commercial production from the M and E zones was achieved in October 2013. Goldex has proven and probable reserves of 0.3 million ounces of gold* (7.1 million tonnes grading 1.5 grams/tonne gold) as of December 31, 2014. The current reserves, which are in the M, Mx and E zones, are estimated to support an underground mine over a three-year life with average annual production of approximately 95,000 ounces gold, using long-hole stoping methods with paste backfill. Based on a positive internal technical study, in July 2015 the company approved the Goldex Deep 1 project, which is the development of the Dx and D zones between 850 and 1,200 metres depth, for production beginning in 2018 using the same mining methods.

Ore being stored under protective cover at Goldex.

Goldex is expected to produce 100,000 ounces of gold in 2015 and to average approximately 95,000 ounces of gold annually from 2016 through 2017 from the M and E zones. The mine is expected to average more than 100,000 ounces of gold production from 2018 through 2024 from the Dx and D zones. *Source: Goldex December 31, 2014 Reserves and Resources

Deep 1 project approved for mining; production expected to extend through 2024 s In the second quarter of 2015, payable gold production totalled 26,462 ounces at a total cash cost per ounce of $633 on a by-product basis. s During the quarter, the mill processed 604,000 tonnes of ore (6,640 tonnes/day) with mine-site costs at C$34 per tonne. s In the first six months of 2015, payable gold production totalled 55,712 ounces at a total cash cost per ounce of $585 on a by-product basis. s During the six-month period, the mill processed 1,171,000 tonnes of ore (6,468 tonnes/day) with mine-site costs at C$34 per tonne. s Agnico Eagle approved the Goldex Deep 1 project in July 2015 to develop the Dx and D zones for production. Deep 1 WWW.CANADIANMININGJOURNAL.COM

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underground development and resource conversion drilling will be accelerated in the second half of the year. s Mining operations at GEZ remain suspended.

Outlook The Deep 1 project was approved based on a positive internal technical study focused on mining the lower part of the Dx zone and the top of the D zone from a depth of 850 metres to 1,200 metres (Level 120), adding seven years to the mine life to 2024. The company plans to develop Deep 1 from the current Goldex infrastructure, with existing equipment and personnel. The mining rate for Deep 1 will be approximately 6,000 tonnes/day, producing an average of more than 100,000 ounces of gold per year. The plant would have additional capacity to process up to 2,000 tonnes/day from other sources such as the nearby Akasaba West project. No changes are anticipated in the processing plant; tailing deposition at the Manitou site is expected to continue. The Deep 1 project development capital is forecast at approximately $135 to $140 million including the cost of installing an automated conveyor system, and sustaining capital is estimated at $60 to $70 million. The advancement of the Deep 1 project unlocks significant upside potential for additional mineral resource conversion in Deep 1, potential for mining at Deep 2 (below Level 120), potential to develop the South Zone from the Deep 1 infrastructure, and the potential development of the Akasaba West deposit.

LAPA The Lapa underground mine is located near the LaRonde operation. It is Agnico Eagle’s highest grade mine, with gold grades more than twice as rich as the company’s average. The Lapa underground mine is located in the Abitibi region of northwest Quebec, just 11 kilometres east of Agnico Eagle’s LaRonde mine, and 49 kilometres west of the Goldex property. Lapa has proven and probable reserves containing approximately 0.2 million ounces of gold* (0.9 million tonnes grading 5.8 g/ tonne gold). Lapa is expected to pour 75,000 ounces of gold in 2015 and 50,000 ounces of gold in 2016, with a mine life ending in 2016. Additional near-term exploration results could extend the mine life. * Source: Lapa December 31, 2014 Reserves and Resources Aerial view of Lapa Mine operations.

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Zulapa Z7 zone continues to yield higher grades and recoveries s In the second quarter of 2015, payable gold production totalled 19,450 ounces at a total cash cost per ounce of $678 on a by-product basis. s During the quarter, the mill processed 126,000 tonnes of ore (1,387 tonnes/day) with mine-site costs at C$126 per tonne. s In the first six months of 2015, payable gold production totalled 45,370 ounces at a total cash cost per ounce of $615 on a by-product basis. s During the six-month period, the mill processed 278,000 tonnes of ore (1,538 tonnes/day) with mine-site costs at C$122 per tonne.

Outlook At Lapa, 2015 is the last full year of production based on the current life of mine plan. In 2016, production is expected to decline from the current level. Additional exploration drilling in the Zulapa Z7 zone at depth and on the adjoining Pandora property (50% Agnico Eagle) could potentially extend the mine life.

LARONDE LaRonde is Agnico Eagle’s flagship mine, and it is located in the Abitibi region of northwestern Quebec. LaRonde has produced 4.6 million ounces of gold since it opened in 1988 and currently has a mine life lasting through to 2024. The 7,200-tonne-perday mine and plant has produced 4.6 million ounces of gold as well as valuable by-products. The mine still has 3.4 million ounces of gold in proven and probable reserves* (21 million tonnes grading 5.2 grams of gold per tonne). The deep extension of the LaRonde mine achieved commercial production in November 2011 and is the focus of mining activities going forward. LaRonde is expected to increase gold production rates, anticipated to exceed 300,000 ounces per year by mid-2016 and continuing over the life of mine, reflecting the higher gold grades expected at depth. Ore is processed at the LaRonde mineral processing complex, which includes copper and zinc flotation as well as precious metals recovery and refining. The processing plant produces doré bars containing gold and silver, as well as zinc and copper concentrates that also carry valuable gold and silver credits. *Source: LaRonde December 31, 2014 Reserves and Resources

Gold production steadily increasing, commissioning of coarse ore conveyor on track for late Q3 2015 s In the second quarter of 2015, payable gold production totalled 64,007 ounces at a total cash cost per ounce of $613 on a by-product basis. s During the quarter, LaRonde also produced 201,000 ounces of silver, 827 tonnes of zinc and 1,133 tonnes of copper. s During the quarter, the mill processed 568,000 tonnes of ore (6,242 tonnes/day) with mine-site costs at C$99 per tonne. s In the first six months of 2015, payable gold production totalled 122,900 ounces at a total cash cost per ounce of $656 on a by-product basis. s During the six-month period, LaRonde also produced 398,000 ounces of silver, 1,763 tonnes of zinc and 2,300 tonnes of copper. CANADIAN MINING JOURNAL

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GOLD in CANADA AGNICO-EAGLE MINES LTD.

Outlook Studies continue to assess the potential to extend the reserve base and carry out mining activities below the present level (311 level, 3.1 kilometres depth) to the 371 level (a depth of 3.7 kilometres below surface). Drilling is ongoing to further expand the known mineral resource between the 311 and 341 levels. Additional holes are being drilled to evaluate the extent of the mineralization down to the 371 level.

MEADOWBANK Drilling for gold at the face at LaRonge.

s During the six-month period, the mill processed 1,126,000 tonnes of ore (6,223 tonnes/day) with mine-site costs at C$101 per tonne. s In the second quarter, work continued on the installation of the coarse ore conveyor system that will extend from the 293 level to the crusher on the 280 level. Installation of the new conveyor and the connection of an internal ramp at the 281 level are expected to be completed by the end of the third quarter of 2015. These two infrastructure components should help to improve mining flexibility and reduce congestion in the deeper portions of the mine.

The Meadowbank open-pit gold mine in the Nunavut Territory of Canada is Agnico Eagle’s first Low Arctic mine and largest gold producer. The Meadowbank mine is located in the Kivalliq region of Nunavut, about 2,600 kilometres northwest of Toronto. It is 300 kilometres west of Hudson Bay and 110 kilometres by road north of Baker Lake, the nearest community. Meadowbank was Agnico Eagle’s largest gold producer in 2014, and has 1.2 million ounces of gold in proven and probable reserves* (12 million tonnes at 3.08 g/t). The mine is located on a very large property that has exploration potential for gold. Meadowbank depends on the annual, warm-weather sealift by barge from Hudson Bay to Baker Lake for transportation of bulk supplies and heavy equipment. An all-weather road links Baker Lake to the site. An on-site airstrip is used for shipping food and goods and for transporting employees, who work on a fly-in, fly-out basis.

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• Ice Roads & Runways • Large Diameter Drilling • Mine Reclamation – Care & Maintenance • Remote Infrastructure Planning • Site Services & Crushing

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Mine commissioning and first gold production from the Portage open pit began in early 2010. The mine is expected to produce 400,000 ounces of gold in 2015. *Source: Meadowbank December 31, 2014 Reserves and Resources

Heavy machines work in tandem at Portage open pit.

tonnes of ore (11,199 tonnes/day), with mine-site costs at C$74 per tonne. s In the first six months of 2015, payable gold production totalled 179,799 ounces at a total cash cost per ounce of $672 on a by-product basis. The mine also produced 153,000 ounces of silver in the period. s During the six-month period the mill processed 2,010,000 tonnes of ore (11,103 tonnes/day), with mine-site costs at C$73 per tonne.

Outlook

Mine life extended as Vault pit extension approved s In the second quarter of 2015, payable gold production totalled 91,276 ounces at a total cash cost per ounce of $688 on a by-product basis. The mine also produced 57,000 ounces of silver in the quarter. s During the quarter the mill processed 1,019,000

In 2015, approximately 55% of the production is expected to occur in the second half of the year; the expected production increases would be due to higher grades being mined from the Portage E3 pit. The company announced in July 2015 that it would proceed with the expansion of the Vault pit. With the expansion, the Meadowbank mine is now expected to be in production until the third quarter of 2018 (approximately one year longer than originally forecast). In addition, a major drill program is planned at Amaruq in 2015 to expand the initial inferred resource base, with the goal of potentially developing the deposit as a satellite operation to Meadowbank. The extension of the Meadowbank mine life is expected to help bridge the production gap between the end of production at Meadowbank and the potential start of production at a satellite operation at Amaruq (not yet approved for construction). CMJ

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PEOPLE

BEFORE PROFITS Gold miner suspends operations to protect workers from fires By Russell Noble

here there’s smoke there’s fire is exactly what Claude Resources didn’t want to happen to its Seabee Gold Mine in northern Saskatchewan when smoke and heavy ash from nearby forest fires recently forced the company to suspend production for the safety of its workers. In fact, with less than 10km separating the mine from the leading edge of one of the 112 fires, (including 25 that were out of control) that devastated more than 600,000 hectares of vegetation in northern Saskatchewan, the company had no problem making the decision to evacuate and temporarily suspend underground mining at the mine site. As company President and CEO Brian Skanderbeg said, “Our number one priority is the safety and well being of our 24 |

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employees and as a precautionary measure during the recent fires, we moved all non-essential personnel from the site to help ensure that nobody was in danger.” Production at the mill, however, was not affected because the company had a stockpile of approximately 10,000 tonnes of ore available on surface, representing about 12 days worth of production. Now, with the fires out and everyone back at work, the mine is up and running again. To be more precise, the mine(s) are back in operation because the Seabee gold operation actually consists of two producing mines, the Seabee Gold Mine (since 1991), and the Santoy Gold Mine Complex (since January 2011). The Seabee Gold operation is located in the La Ronge Mining District at the north end of Laonil Lake approximately WWW.CANADIANMININGJOURNAL.COM

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GOLD in CANADA CLAUDE RESOURCES

Aerial view of the Seabee Mine shows the forests surrounding the mine.

Workers’ safety was top priority during the recent fires near Claude Resources’ Seabee Mine in Northern Saskatchewan. Because of the proximity of the fires to the mine, all underground operations were suspended.

125km northeast of the Town of La Ronge and about 150km northwest of Flin Flon, Manitoba. Access to the minesite is by fixed-wing aircraft from La Ronge or Flin Flon to an airstrip located on the property. Heavy equipment and other bulky mine supplies are trucked to the site on a 60-km winter road (typically used from January to March) from Brabant Lake on Highway 102. There are approximately 260 people working at the mine. The company’s Santoy Gold property, located about 14km east of the Seabee Mine, is a 4566-ha site that is connected by an all-weather road along with a power line to the main mine. It consists of two deposits, Santoy 8 and Santoy Gap. During the first quarter of 2011, the Santoy 8 deposit reached commerSEPTEMBER 2015

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cial production and production from the Santoy Gap began during the second quarter of 2014. Currently, Claude Resources is mining from the Stantoy Gap deposit, and the Seabee Gold Mine is expected to be the main contributor of total production at the Seabee Gold Operation for years to come. Brian Skanderbeg said the Stantoy Gap development was ahead of schedule with long-hole production by milling 279,597 tonnes of ore (from Seabee and Gap)in 2014 at a head grade of 7.32 g/t and a recovery 96.2 per cent. Since May, 2014, it has milled 124,188 tonnes at a head grade of 8.44 g/t. From this, Claude Resources produced 62,984 ounces of gold in 2014 and sold 62,772 ounces, an increase of 44 and 40 per cent respectively from the previous year. In keeping with these encouraging results, Skanderbeg adds that first half results in 2015 continued with 142,030 tonnes milled at a head grade of 9.49 g/t and a recovery of 96.2 per cent. Gold produced in the first half was 41,086 ounces, an increase of 39 per cent over the same period in 2014, and Claude Resources sold 37,860 ounces, an increase of 33 per cent more than in 2014. When asked what makes the Stantoy Gap so special, Skanderbeg says the system remains open at depth with 2,000 ounces per vertical metre (Seabee: 1,000 ounce/vertical metre) and a higher reserve grade with opportunity to increase, plus there’s a decreased production risk with the addition of multiple long-hole mining fronts. Also, he said there’s the opportunity to displace low-margin ounces with higher-margin ounces and optimize the mine plan for improved cash flow. To keep its prospects for future growth alive, Claude Resources continues with a significant underground drilling program of approximately 65,000 metres this year, and with resources of more than 1.27 million ounces of gold (NI 43-101), 1000 metres of shafts at Seabee, tailing facilities permitted for six years, and a mill capable of producing 900 tonnes per day, the company is well positioned to be one of Canada’s more noteworthy gold miners for years to come. CMJ CANADIAN MINING JOURNAL

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PUMPS

PUMPING AND DEWATERING By Russell Noble

A series of high-pressure pumps work side-by-side to provide water to remote sites.

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High-head dewatering pumps are vital to many mining operations.

G A

s every miner and mine owner knows, there are a multitude of dangers and other challenges associated with their work, especially for those working underground. Explosions, cave-ins, fires, and flooding are just a few of the potential dangers that can quickly turn a relatively safe working environment into a disaster, both in terms of human life and to Mother Nature herself. Thankfully, most of today’s mining operations are well equipped to handle the most severe of situations, and one company that stands out when it comes to the safe control of water is Atlas Dewatering Corporation. With almost 70 years in the pumping, dewatering, and environmental groundwater/surface water industry, the Concord (Toronto) based company specializes in full turn-key services to the mining industry, including pump rentals, sales, and service. Stephan Kokeza, Northern Territory Manager for Thunder Bay / Timmins says the company specializes in pumping and dewatering systems. With specific reference to mining, Kokeza says: “One of our goals is to assist in bringing environmental liabilities under control by offering local supply, and expertise, coupled with emergency response plans for things like spring run-off or tailings dam leaks. “The two-year-old Atlas Thunder Bay facility, with more than 60 pumps now in the rental fleet up to 18 inches, and miles of hose and pipe, have allowed us to respond to several mining emergencies this year with pumps and men on the ground the same day. And, with Godwin Pumps (Xylem) at our side, com-

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bined with our rental fleet, we are confident we can solve any challenge a mine may be facing. “In many cases, the reality is temporary and emergency pump systems do not get full benefit from all of a mines departments or review, and the supplier must ensure that the pump systems are safe. For example, such as ensuring the piping pressure limits of the HDPE line we may tie into are not exceeded, or the customer uses proper high-pressure hoses, connections, and with whip checks. It takes a big fire-fighter to hold a twoinch diameter fire hose with 60 psi, so imagine an eight-inch diameter hose on a pump with 250 psi.; people do not see this all the time, and we are continually educating our clients.” Kokeza adds: “Our experience in other industries with a Ministry of Environment Certified work force, working with fish-sensitive areas, permits to take water, and groundwater water treatment allow us to take a pro-active approach to prevent, detect, and avoid emergencies, and supply plans and pumping systems that will reduce liabilities.” Atlas also offers an extensive line of WellPoint, educator, deep-well, and pressure-relief systems to accommodate any dewatering need. “If the water table needs to be lowered, after 70 years, we are confident we have done it before,” says Kokeza. And finally, of particular interest to the mining community, the company’s pumping business offers pumps for open-pit dewatering, tailings and ponds water, and slurry management, emergency response, temporary fire pumps, temporary process pumps, and systems designed to deal with fish habitats and or treatment. CMJ CANADIAN MINING JOURNAL

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A look at various fluid-handling components coated to improve performance.

SMOOTH

& SLICK COATINGS PROVIDE ANSWERS TO FLUID-HANDLING PROBLEMS Special Report*

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PUMPS

Hydrophobic coatings In pumping equipment, it is possible to reduce power consumption and improve the hydraulic properties by changing the pump surface finish. In fact, the loss of efficiency is caused by frictional forces created between the fluid and the walls, the acceleration and the slowing down of the fluid, and the change in the fluid flow direction. The smoother the pump walls, the more fluid turbulence will be reduced, thus reducing the energy required for the pump to move the fluid through the hydraulic passage. In order to get the best performance possible, pump manufacturers seek to create the smoothest surface possible to reduce

the turbulence of the fluid. This can be obtained by the polishing of the selected metal, such as stainless steel; however, this method is extremely time consuming and expensive. A smooth surface finish can also be obtained by applying an erosion-corrosion resistant efficiency coating on the pump’s volute and impeller. These polymeric coatings are specifically designed to improve efficiency on fluid-handling systems and protect metals against the effects of erosion-corrosion. Their unique combination of properties such as self-leveling application, hydrophobicity and hydraulic smoothness makes these coatings ideal candidates for lining the hydraulic passages of pumps. These coatings possess a low electronic affinity towards water molecules and result in a smooth glossy finish once applied onto a metallic surface. This allows the water or other aqueous solutions to easily slide on the surface of the coating. The smoothness of these hydrophobic epoxy coatings is evident when the surface condition of high-performance coatings designed to improve efficiency of pumps, pipes, valves and other fluid -handling equipment, was measured as 15 times smoother than polished stainless steel. As a result of the smoother surface and reduction in flow resistance and friction, the hydraulic performance of the pump can be increased. The performance curves of a single-stage, end-suction centrifugal pump with a 250mm suction and discharge branches before and after being coated was performed by the British

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Minerals

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Copyright © 2015, Weir Minerals Netherlands b.v. All rights reserved. WEIR and WEIR (logo) are trademarks and/or registered trademarks of Weir Engineering Services Ltd. GEHO is a trademark and/or registered trademark of Weir Minerals Netherlands b.v.

umps and other fluid-handling equipment may suffer from multiple problems including physical and mechanical damage, as well as general or localized erosion and corrosion. These problems are linked to decreased efficiency and poor performance, leading to increasing operational costs, so therefore, minimizing performance deterioration is an important factor for pump manufacturers and end users. Indeed, hydraulic losses account for most of the efficiency decrease (9% for a mixed flow pump to 20% for radial flow). Coating technology can help in decreasing these losses, increasing the pump’s performance and reducing operational costs.

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National Engineering Laboratories (N.E.L.) and the pump, in uncoated condition and running at 1,300 rpm, was originally found to deliver 875 m3/h at 26.5m head and with overall peak efficiency of 83.5% (overall efficiency defined as the ratio of water power output to mechanical power input at the shaft). Testing of a coated pump gave a maximum of 6% increase in the peak efficiency and a reduction in power consumption of 5.1 kWh at duty point. Assuming

a 5,000 hours operating cycle/annum, the power savings over this period would amount to 25,500 kWh. Similarly, results have been measured by many pump manufacturers around the world, and feedback on industrial equipment protected with coatings show that it is possible to achieve a return in excess of new pump.

Pump efficiency In 2013, a water-elevation plant in Portugal

KSB Mining: Your partner for pumps, valves and service KSB is the single source for all your pumping needs. Our experts help ensure the best possible solution for every job, no matter if it’s selecting a new pump, stocking up on spare parts, or refurbishing existing equipment. KSB is well known for producing reliable and long lasting GIW ® Minerals slurry pumps. Together, our mining team strives to be an innovative partner that provides you with the longest wearing slurry & process solutions. We are your partner today and in the future. KSB Pumps Inc. · www.ksb.ca · info@ksbcanada.com GIW Industries, Inc. (A KSB Company) · www.giwindustries.com You can also visit us at: www.ksb.com/socialmedia

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was looking for a solution to improve its hydraulic efficiency. This plant was chosen because of its high energy consumption and costs, with an annual consumption of 1.7 GWh/year and a volume of water propelled of 1.2 Mm3/year recorded in 2012. The client was looking for a reliable and long-term solution to restore the damaged pump while reducing internal friction in the impeller and volute to enhance hydraulic efficiency. An internal pump coating was chosen to maximize water flow and reduce energy consumption while reducing internal wear and minimize future maintenance actions. The pump was disassembled and all internal surfaces were grit blasted to remove the previous coating. The surface was then cleaned and examined to ensure that it was free of dust and other particles. After grit blasting, the application areas were masked for the application of an epoxy paste grade composite for metal repair. Simply applied using an applicator provided with the product, this material was used to reconstruct the areas damaged by corrosion, rebuilding the original surface profile. The solvent-free composite provides excellent corrosion resistance and helped ensure the substrate is protected when it comes in contact with an abrasive material. Within the two-hour over-coating window, the first coat of the composite was applied by brush, followed by a second coat to obtain a total dry film thickness of 500μ. This coating was specified because it provides protection against erosion and long-term corrosion of equipment, whilst improving the efficiency of the pump. The main results after coating the pump and changes to the programming of the water elevation plan were: s Reduced energy consumption during non-peak hours 44.9% to 39.3% (-12.5%) s Reduced energy consumption by 14.9% (kW / m3), 147,247 KW/h recorded in eight months s 20.3% cost reduction s ROI: 4 months of operation CMJ *Information for this Special Report provided by Belzona Polymerics Limited, U.K. , a world leader in the design and manufacture of polymer repair composites and industrial protective coatings for the repair, protection and improvement of machinery, equipment, buildings and structures. WWW.CANADIANMININGJOURNAL.COM

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Deadline for revisions to appear in our November print edition is September 21, 2015.

FOR MORE INFORMATION PLEASE CONTACT: ROBERT SEAGRAVES • rseagraves@canadianminingjournal.com • 1-416-510-6891 JOELLE GLASROTH • jglasroth@canadianminingjournal.com • 1-416-510-5104 Toll Free Canada and USA: 1-888-502-3456 ext. 2 www.canadianminingjournal.com

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TECHNOLOGY

APPS

ARE NOW EVERYWHERE A LOOK AT HOW MOBILE APPS CAN IMPROVE MINE SAFETY By Michael Benedict

Hand-held devices make site-safety reporting quicker and more accurate thanks to mobile inspection apps that allow for multi-media, photos, etc. to report complicated issues and provide visual proof as needed.

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ine operators have become increasingly sophisticated in developing safety programs that protect workers and overall operations. That said, worker and site-safety reporting for compliance and regulatory requirements has historically been heavily reliant upon paper forms and manual processes – which can negatively impact reporting accuracy and timeliness, the costs associated with safety programs, and the productivity of workers responsible for these tasks. The need to evaluate mine safety programs is accelerated by requests for real-time documentation on worker/site safety and injuries, among other requirements. For mine operators seeking to enhance worker and site-safety reporting, and compliance, switching from paper forms and Excel spreadsheets to mobile apps offers several key benefits.

And then if there is a safety issue. It could take hours, or days, to get the information to the right person in order to deal with the issue. Mobile inspection apps allow your mining business to build in-time and date stamps, as well as GPS location, to help ensure inspections are being done correctly and in accordance with company and industry regulations. Mobile inspection apps also allow for multimedia (photos, etc.) to more easily report complicated issues and provide visual proof as needed. Finally, rather than collecting and filing multiple rounds of paper inspection form signatures, digital signatures can be collected directly on the smartphone or tablet device using just a finger or stylus. Mobile apps also create a standardized process for collecting important data.

Mobile apps for inspections improve quality control

Mobile apps address cost challenges of safety reporting

When it comes to conducting quality control, safety and compliance inspections at mine sites, paper forms introduce several vulnerabilities and inefficiencies. Workers could report inspecting a site they never visited, and workers must rewrite the same information over and over, use expensive carbon copies that are hard to read and easily lost, and are limited to text-only data.

Historically, all but the largest mine operators were priced out of custom building mobile business apps. Even if a mine operator could budget for one app – which may only work on some mobile platforms and devices – evolving business requirements would mean that the functional value of the app to employees and others might decrease over time. Then, the mine operator

Coal Rights For Sale Chugach Alaska Corporation (Chugach), an Alaska Native Corporation, is selling its coal rights in the Bering River Coal Field in southcentral Alaska. The coal is classified from bituminous to anthracitic, and is located on approximately 62,500 acres of full fee estate lands owned by Chugach. Proposals will be accepted through Monday, September 21, 2015. For more information and a sales prospectus, please contact:

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FROM EXPLORATION TO CLOSURE. JUST ASK GOLDER. Complex geology, remote sites and technical issues are some of the engineering challenges faced in mining projects. Add to that obtaining the required social, environmental and regulatory approvals, and your project can experience unexpected schedule and budget overruns. Integrating your engineering and environmental studies can result in a more robust design, streamlining the process and avoiding unnecessary delays and costly rework. Engineering Earth’s Development, Preserving Earth’s Integrity. Canada + 800 414-8314 miningsolutions@golder.com www.golder.com

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TECHNOLOGY In fact, Canvas’ recently released 2nd Annual Mobile Business App survey finds that 68 per cent of organizations were able to build a mobile business app in one day or less using cloud-based tools. In most cases, the apps were built by individuals who held little to no programming or IT expertise at all.

Mobile apps strengthen safety programs

A website that gives full details.

would be forced to spend more money customizing or changing the app over and over again. Not only are custom mobile app builds expensive, but they also tie up precious IT resources that can be better spent in other areas of the business. The good news for mine operators is that cloud-based app builder tools and even third-party business app stores are removing these traditional cost and resource barriers.

The accessibility of mobile apps can ensure that safety does not take a back seat to budget – especially during down economic cycles when mine operators must make hard choices and could be tempted to short shrift certain safety measures and even underreport injuries. According to the Office of the Inspector General’s 2014 audit of the United States Department of Labor’s Mine Safety and Health Administration (MSHA), more than 9,000 injuries went unreported from 2000 to 2012, resulting in more than $1 million in missed penalty fees. “Mine operators benefit from having low rates of reported injuries/illnesses,” the audit states. “High rates of injury or illness can increase workers’ compensation expenses and may single out mines for increased enforcement by MSHA.” Ultimately a safety program must not only protect workers but also maximize the time of employees and supervisors while keeping costs down. Mine operators are going to have to remain at the top of their game when it comes to safety —

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which means not overlooking MSHAâ&#x20AC;&#x2122;s requests for documents like employee medical and personnel records, or putting off paying delinquent fines.

Mobile apps strengthen self-audit programs Unlike large-scale mining operations, small to mid-sized mines typically lack the bandwidth for an internal team of safety specialists to manage training and ensure that regulations are met in a timely fashion. By leveraging DIY app builder tools and cloudbased mobile app solutions, operators are able to enhance safety operations without the need for staffing resources that are typically not available. Mine operators can in effect digitize manual processes and paper forms for self-audits through the use of cloud-based mobile apps. Essentially, a self-audit walks mine operators through the main areas MSHA inspectors will evaluate when they visit the mine, while prompting you to consider whether or not you meet compliance. Self audits can be enhanced through greater accuracy and efficiency by using mobile apps instead of paper forms, and while they typically donâ&#x20AC;&#x2122;t cover every single standard, they do touch on key parts of an inspection, including: Mandatory safety policies. Necessary safety policies range from the competent person you designate to handle emergencies to hazard communications and signage. Records and examinations. Required records span from accident, illness, and injury reports to proper documentation for all independent contractors, material safety data sheets (MSDSs), and records of routine inspections on machinery and equipment. Fire prevention. This includes proper on-site equipment for fighting all stages of a fire, records of routine inspections of fire extinguishers and hydrostatic testing, and appropriate storage of oxygen cylinders, explosives, and waste materials. Electrical. Assessments in this area involve the set up and maintenance of fuses and circuit breakers, guarding lights, grounding, insulation on wires and cables, lockout/tagout procedures, and transformation enclosures. Loading, Hauling, and Dumping. This covers everything from backup alarms, brakes, window construction, and seat belts on mobile equipment to berms at dumping locations, loose slopes, dust control, and road cleanup. Machinery and Equipment. Included here are conveyor warnings, guard construction, guarding against falling or flying materials or moving machine parts, and high pressure hose safety chains. Personal Protection Equipment (PPE) and Practices. PPE encompasses the use of glasses, hard hats, foot ware, noise, scaffolding, fall protection equipment, general housekeeping, passageways, dust overexposure, access to toilets, and more. For mine operators grappling with how to manage worker and site-safety compliance, and reporting cost-effectively and efficiently, mobile apps provide a compelling approach relative to paper forms and manual processes. CMJ

BUILT ON EXPERIENCE. FUELLED BY EXPERTISE. For more than 35 years, BBA has been helping industrial clients transform complex problems into practical, innovative and sustainable solutions. Recognized for its extensive field experience and cutting-edge expertise, BBA delivers a comprehensive range of consulting engineering services, from studies and asset integrity plans to commissioning and operational support. With offices from coast to coast, BBA is synonymous with proximity and agility.

Michael Benedict is Vice-president, application Store at Canvas, a leading provider of cloud-based software that enables businesses to replace paper forms and processes with customizable mobile apps for smartphones and tablets. SEPTEMBER 2015

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COMMENT

Stopping bribery and corruption By Sgt. Pat Poitevin

his past June, the establishment of the Extractive Sector Transparency Measures Act (ESTMA) brought into focus the efforts and commitment of the Canadian government, and governments around the world, in the fight against bribery and corruption. The ESTMA, along with the Extractive Industry Transparency Initiative (EITI), highlight the anti-corruption efforts made by the government of Canada as well as other authorities around the world who promote greater transparency and accountability in business transactions. Additionally, the increased enforcement action by the RCMP and their international law enforcement partners demonstrate their commitment to investigate and prosecute companies and individuals who partake in corrupt action. By the nature of its activities in high-risk countries, the extractive industry is particularly at risk of being entangled in bribery and corruption schemes. At every stage of the life cycle of an extractive project, contacts with foreign government officials are constant and numerous, exposing one to potential opportunities and pressure for corruption to occur. The impact to a company facing a conviction under the Corruption of Foreign Public Officials Act (CFPOA) goes beyond the criminal sanctions stemming from it which may include unlimited fines for the company and up to 14 years in jail along with fines for individuals. The following additional costs and consequences associated to a corruption investigation, prosecution and conviction should give pause to executives who may look at anti-corruption compliance as too costly and burdensome to implement; s Legal and auditing costs: Past corruption cases in Canada and elsewhere have shown that the legal and auditing costs resulting from internal investigations and the remediation process equals and often surpass the actual cost of the criminal fine. Court imposed probation conditions also add to these costs. s Impact on productivity: Company officials and other resources are diverted to dealing with the repercussions of corruption instead of concentrating on core business. Issues of employee morale, retention, hiring and other HR issues as a result of a corruption investigation can also negatively impact productivity. s Civil liability with shareholders: The increase in corruption related prosecutions of companies globally has been followed by an increase in class-action lawsuits against these companies and executives deemed responsible for the resulting decline in share value.

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s Successor liability: Where the goal of many junior mining and exploration companies is to secure a M&A deal, potential buyers or joint venture partners will walk away or demand deep discounts and waiver conditions rather than assuming the liability of a company facing criminal sanctions for bribery. s Impact on brand and potential business: A companyâ&#x20AC;&#x2122;s brand and reputation can be seriously impugned by a corruption investigation and conviction, which can impair its ability to obtain financing, secure business relationships and obtain contracts. International arbitration of disputes will not be available when a contract is secured through a bribe. s Higher costs to prove legitimacy and remediation: There will likely be higher costs resulting from the need to meet greater due diligence requirements to secure financing, insurance and other support from private and government agencies. s Proceeds of crime: Any profits stemming from contracts and agreements secured through a bribe could be considered proceeds of crime and thus possibly be forfeited. The costs and consequences of bribery and corruption cannot be ignored. The changing business landscape for the extractive industry requires companies to be pro-active in reducing their risk and exposure by implementing a robust anti-corruption compliance program. Leveraging available cost-effective tools, anti-corruption compliance should be viewed as an investment that increases a companyâ&#x20AC;&#x2122;s ability to manage risk, control costs and adopt an ethical governance model that will improve their ability to effectively prevent, detect and address bribery and corruption risk. Implementing a robust anti-corruption compliance program can reduce the risk of being subjected to a CFPOA (or foreign) prosecution and it is now being viewed as a competitive business advantage when dealing with potential M&A and joint venture partners. The RCMP is committed in its efforts to combat bribery and corruption. This commitment also involves working with and helping Canadian industry reduce their risk and exposure to bribery and corruption through outreach and prevention activities. For more information and links to material and anti-corruption compliance tools, visit www.rcmp-grc.gc.ca/ottawa/corruption/index-eng.htm CMJ SGT. PAT POITEVIN is Senior Investigator, Outreach Coordinator, Sensitive and International Investigation Unit, Royal Canadian Mounted Police.

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2015-08-25 3:29 PM

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ADVERTISERS INDEX

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UNEARTHING TRENDS

Beware; the not-so-obvious risks in mining and metals By Bruce Sprague

switch to growth mode, productivity improvement and access to capital are all critical risks for mining companies around the world. The three rank as the top business risks in EY’s Business Risks in Mining and Metals 2015-2016 Report. Most in the sector will understand why these particular risks top our list; but it’s the new and under-the-radar risks that have many going back to the drawing board, and asking critical questions about where to focus their efforts in the coming years. Cybersecurity appears on our top 10 risks list for the first time this year, as cyber-hacking in the sector has become more widespread and sophisticated. In fact, in our Global Information Security Survey 2014, 65% of mining and metals companies said that they had experienced an increase in cyber threats over the past 12 months – a number that is likely understated as many incidences go unreported. A big reason why cybersecurity is a growing risk is because of the increased connection between operational technology (OT) and information technology (IT) networks. In the past, IT security risk was not such a mainstream issue. However, many mining and metals companies have been investing heavily in new technology to manage and run their networks centrally, in a bid to improve production and operations, automate their supply chain, reduce costs, improve maintenance and streamline data flow. At the same time, mining and metals companies have historically underinvested in security, and security budgets are often static, despite increasing cyber threats. This means the likelihood of compromised cyber security is on the rise. That’s a problem, because a cyber-attack can cost a company millions of dollars in lost production, threaten worker safety and even cause massive reputational damage, if confidential or stakeholder sensitive information is leaked. Applying greater levels of security and control around IT to OT is critical in order to maintain cybersecurity in this integrated technology environment. Meanwhile, Canadian companies are facing some particular risks they can’t afford to let fly under their radar. Increased transparency requirements – such as the Extractive Sector Transparency Measures Act which came into effect on June 1 – and a looming skills shortage are issues that should be top-of-mind for companies in here. As I mentioned in a previous column in Canadian Mining Journal, as new transparency requirements become the norm in many countries, there’s a risk that publishing unexplained tax

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figures may result in misconceptions about a company’s tax profile – particularly around the reasons for low effective tax rates. For that reason, mining and metals companies ought to be proactive about implementing processes and strategies that will allow them to mitigate this risk. When it comes to labour in Canada, an estimated 40% of the workforce in resource extraction sector is at least 50 years old, and around 33% of those are expected to retire by 2022. These retirements will impact operational continuity and lead to a great loss of organizational know-how and operational experience for mining companies. It’s a big issue that compa-

WHEN IT COMES TO LABOUR IN CANADA, AN ESTIMATED 40% OF THE WORKFORCE IN RESOURCE EXTRACTION SECTOR IS AT LEAST 50 YEARS OLD, AND AROUND 33% OF THOSE ARE EXPECTED TO RETIRE BY 2022. nies must address. Strong talent management programs that focus on retaining the right people for today’s challenges will be as critical to the future success of mining companies as investment in exploration. The top 10 business risks for mining and metals companies today, compared to the top 10 in EY’s 2008 report at the peak of the super-cycle, provides a stark contrast to the issues faced now and then, and underlines the cyclical nature of the sector. Just three of the top 10 risks from 2008 rank in the top 10 this year. That’s a clear message that the nature of this business is fundamentally changing. What works today won’t be what will help companies thrive in the future. Companies must embed a culture of curiosity and innovation in everything they do – from IT to operations to human resources, and beyond. CMJ BRUCE SPRAGUE is a Partner and EY’s Canadian Mining & Metals Leader. He is based in Vancouver. For more information visit ey.com/ca/mining.

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SIMINE Gearless Mill Drives Take benefit from an expert partner for drive solutions â&#x20AC;&#x201C; backed by 500 operating years of experience

The Antapaccay copper mine in Peru mines and mills ore with the greatest possible efficiency â&#x20AC;&#x201C; thanks to a 40-foot SAG mill and two 26-foot ball mills. Because reliability and robustness are extremely important at an elevation of 4,200 meters above sea level, the mining company selected drive solutions from Siemens. One 24,000-kW gearless drive and two 16,400-kW models have been keeping the mills running steadily since 2012, even under the extreme conditions in the high mountains of South America. Siemens provided 50 operating SIMINE Gearless Mill Drives in the mining industry since 1980. In the 34 years since then, these drives have been in operation for a combined total of 500 years. Downtimes due to unscheduled maintenance work average less than twelve hours per year. With a gearless mill drive from Siemens you can be part of this unparalleled success story, and benefit from the extensive experience of an expert partner.

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