Mining Global June 2014

in this issue

edit o r ’ s c o mment

“Any sufficiently advanced technology is indistinguishable from magic” – Arthur C. Clarke I n t h i s i s s u e o f Mining Global, we ring in the new age of mining

with automation. With the recent success of unmanned vehicles, we spoke with BHP Billiton’s president of coal on how the innovative technology is increasing productivity and in doing so, changing the face of the industry. We also divulge into the collapse of the Newmont/ Barrick merger as well as the structural decline of Australia’s coal sector.

Rounding out the issue, we highlight the top driverless trucks in the industry as well as break down the top 10 coal mines the world.

First up is the driving force behind BHP’s push towards automation.

We had the pleasure of sitting down with president of coal, Dean Dalla Valle to discuss how the mining giant is employing new tech to increase mining productivity while simultaneously reducing costs. You won’t want to miss what the company has planned for the future.

The merger was expected to be the biggest deal in history of the mining industry. In the blink of an eye, however, it was all over. We expose why the deal between Barrick Gold and Newmont Mining ended and what pitfalls companies can avoid to ensure it never happens to them.

In our mining site section, we spotlight the impact renewable energy is having on Australia’s coal industry and what companies can do to combat these growing changes. It won’t be easy but Australia is proactively working to ensure coal remains a staple in its economy.

Finally, we highlight the top 10 coal mines around the world as well as the top driverless trucks influencing the mining industry. Find out which mines produce the most coal and how unmanned vehicles are setting the stage for the future of mining.

Enjoy the issue!

Robert Spence Editor robert.spence@wdmgroup.com 3

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C o n te n ts

FEATURES

This month focus: the collapse of Barrick/Newmont Deal and the rise of remote tech in mining operations & trucks

8

Operations Inside Look to Why the Barrick/Newmont Deal Collapse

Top Driverless trucks

The worlds most productive Coal Mines

32

Mining Sites Interview with BHP Billiton

Machinery

Top 10

24 Technology

16

Australian Coal Industry Enters Structural Decline

38 5

Mining Penmont

Contents

120

Kirkland Lake

48

104 Perseus Mining 72

North American Construction Group The Anitua Group

88

58 Northern Cross

134 Discovery Metals

(Yokon) Limited

company profiles We take a look at some great companies that operate in the mining sector, turn to page 114 for our feature on Perseus Mining.

Canada

Australia

48 Kirkland Lake

88 The Anitua Group

58 Northern Cross (Yukon) Limited

104 Perseus

USA 72 North American Construction Group

America Latina 120 Mining Penmont

146 Venetia Mine Africa 134 Discovery Metals 146 Venetia Mine

7

O p e r at i o n s

Inside look Newmo and how it

Why the bigge future comp

k to Why the Barrickont Deal Collapsed it could of been avoided

est merger of all-time fell apart and how can panies can avoid it from happening to them

W r i t t e n b y: R o b e r t S p e n c e

9

O p e r at i o n s The merger between Newmont/Barrick was said to be all but done. Both companies had agreed upon terms and were reportedly in the final stages of agreements. Then in the blink of an eye it all ended. Days later war of words broke out with finger pointing occurring on both sides to why the deal wasn’t going to happen.

It was going to be the biggest deal in history for the mining industry; combining two of the world’s largest gold mining companies into one powerhouse. The possibilities were endless for the companies, including a potential $1 billion in cost savings. So why did the merger discussions fail?

Clash of personalities The two firms have tried numerous times over the years to merge, going back at least as far as 1991. Under the now-abandoned proposed terms, the merged companies were set to spin off their assets in Australia and New Zealand. That move would have allowed the companies to focus on their most productive assets in Nevada as well as squeeze the most synergies, while offering investors the choice to participate in a separate company.

For a marriage to be successful, 10

June 2014

Barrick’s outgoing Chairman Peter Munk both parties have to consent. In the proposed marriage between Barrick Gold and Newmont Mining, the two parties could not find common ground.

The merger talks didn’t work out because two companies could not agree on how the combined business would run. According to Barrick Gold, Newmont had reneged on three key elements to the proposed deal: a Toronto headquartered company, the composition of the

B a r r i c k - N e w m o nt D e a l

Newmont Chairman, Vincent Calarco combined company and the roles of the chairman, chief executive officer and lead director.

On April 28, Barrick Gold released a press release stating that merger talks between the two gold giants were over.

Barrick’s outgoing Chairman Peter Munk openly criticized Newmont, claiming that the company is “not shareholder friendly.” The actions

by Munk were very antagonizing towards Newmont’s board,

especially when the two companies are negotiating a partnership.

Newmont then released a letter it sent to Barrick co-chairman John Thornton and the company’s board of directors.

“While our team has found your management team’s engagement to be constructive and professional, the same constructive nature cannot be said of our discussions with your co-chairman on certain fundamental 11

O p e r at i o n s

Barrick Gold is well-known for being a very aggressive company by nature

“You have to do the same amount of research in an acquisition as you would trying to grow it organically” - Fentress Seagroves, a principal with PricewaterhouseCoopers 12

June 2014

strategic and structural issues over the past two weeks,” Newmont chairman Vincent Calarco wrote.

“Our efforts to find consensus have been rejected out of hand repeatedly. And, as we contemplated further dialogue, we read in the continuing reporting of the transaction in the financial press a pointed characterization of our company as ‘extremely bureaucratic and

B a r r i c k - N e w m o nt D e a l

not shareholder friendly.’ Nothing could be further from the truth.”

A difference in culture also played a role in the collapse. Barrick Gold is well-known for being a very aggressive company by nature. Throughout its history, it has not shied away from big acquisitions in its effort to grow. On the other hand, Newmont is very much more conservative.

The company does not engage in the same level of empire building.

The failure of the Barrick/Newmont deal demonstrates that clashing personalities and a difference in company culture can destroy a transaction that seemingly makes sense in every other way.

How to avoid failure Successfully implementing a merger is not easy. Roughly two in three mergers and acquisitions don’t succeed.

“I like to tell my clients that you can learn lessons from successful transactions, from failed transactions, from any transaction,” says Fentress Seagroves, a principal with PricewaterhouseCoopers’ transaction services group, which advises on merger and acquisition strategy.

“All will raise different challenges.”

To maintain and complete a successful merger, companies must have three common traits: a disciplined corporate strategy, a thorough due-diligence process and attention to transitional risk.

“Failure in a transaction is often created by the lack of a disciplined approach,” Seagroves says. “You have to do the same amount of research in an acquisition as you would trying to grow it organically.”

“Spend a lot of time on how the contract can create protections for you,” Seagroves says. “You have to be sure all those things you planned in the Barrick Gold Corp.

Chairman, John Thornton

13

O p e r at i o n s beginning--why this is a strategic fit-actually happen. These aren’t things you start thinking about at close.”

Once you’ve negotiated a deal and signed the papers, the work isn’t done.

“In a lot of ways, that’s just the beginning,” Seagroves says, noting that a successful transaction requires planning, even for the unexpected, like losing key employees or customers. “It’s very hard to change a business effectively if you don’t know what you’re going to be up against, post-close.”

No matter what, one fact will always remain true about mergers: they are very difficult to implement.

What’s next?

Although the merger between Newmont and Barrick didn’t pan out, some analysts remain optimistic the two sides will eventually reach one.

Both companies are in dire need of bringing down their all-in sustaining costs and the deal would greatly benefit investors of both companies.

However, mergers often have more to do with glory-seeking than business strategy. One of the major driving forces behind mergers and acquisitions is ego, which are 14

June 2014

B a r r i c k - N e w m o nt D e a l

‘For a successful merger to happen, both companies should 100 percent agree on: financial compatibility, cultural compatibility, equal market opportunities, and systems and infrastructure’ typically bolstered after buying the competition. Another driving force behind failed mergers can be fear.

Uncertain outlook and factors all play a role in the diminishing of a potential For a successful merger to happen, both companies should 100 percent agree on: financial compatibility, cultural compatibility, equal market opportunities, and systems and infrastructure. Focusing on these four main areas should enable companies to conduct their due-diligence and successfully complete their deals.

And while it’s a mistake to assume that personnel issues are easily overcome, it’s a necessity for any business to grow.

15

M ac h i n e r y

16

June 2014

Top Driverless Trucks in the Mining Industry Today As Rio Tinto and BHP move forward with automated machinery, we examine the top driverless trucks and which future ideas could potentially bolster the industry W r i t t e n b y: R o b e r t S p e n c e 17

M ac h i n e r y The mining industry has grown quite a bit in the last few years. The increasingly unstable markets have caused companies to start thinking outside the box for new ways of increasing productivity while also decreasing costs.

One of the latest advances has been the launch of driverless trucks. The ingenious idea, which almost seems straight out of a George Luca film, has been largely put into action by mega mining companies Rio Tinto and BHP Billiton. The move has the potential to cut operational costs tremendously while simultaneously increasing productivity and mine-site safety.

The technology The real story behind driverless vehicles is the technology. It utilizes a combination of sensors such as radar and GPS to navigate the vehicle around a pre-defined course from loading units to dump locations, including waste dumps, stockpiles and crushers.

Rio Tinto is currently leading the pack in driverless technology. The company has been working with Japan mining equipment manufacturer Komatsu Limited., already operating 18

June 2014

Komatsu dump truck working at the 53 driverless vehicles at various locations across Australia.

The technology for Rio’s driverless trucks is called Autonomous Haulage System (AHS), a comprehensive fleet management system. The trucks are operated and controlled via supervisory computer that collects and directs information on target course. The speed of the trucks is sent wirelessly from the supervisory computer to the trucks, while the

Rio Tinto’s Paraburdoo site GPS provides their position.

BHP Billiton is also involved in the race for automation. The company has been working with Caterpillar since 2007 to produce its own autonomous driver technology and has recently been testing Caterpillar’s 240-ton vehicle, marketed under the Cat MineStar trademark, at its Jimblebar iron ore mine in Western Australia.

“It has a GPS and a number of scanners on the front of the

machine, and a number of sensors on the machine itself,” said Tim Day, general manager of BHP’s Jimblebar mine.”In between all of those, it can sense where it’s going around site. To tell it where to go, we have a map of the mine site, which in effect can tell the machine which lanes it can physically go on-site.”

The benefits So far, the benefits of driverless 19

M ac h i n e r y

BHP Billiton has partnered with Caterpillar to test CAT’s fleet of 240ton vehicles at its Jimblebar iron ore mine in Western Australia

technology are remarkable. The unmanned trucks can streamline the rigorous procedures mining can take, running 24 hours a day, seven days a week with no breaks or shift changes.

According to a professor from the University of British Columbia, the benefits of driverless technology include 15-20 percent increase in output, 10-15 percent decrease 20

June 2014

in fuel consumption, and an eight percent lowering in maintenance.

The driverless robotic trucks have been met with huge success, now spanning across three different mines.

In April, Rio Tinto CEO Sam Walsh said its fleet had “moved more than 150 million tons of material.” -- up from 100 million tons a year ago.

“To put this in perspective, this would

D river l e s s T ru c k s in the M ining I ndu s try

amount to filling Wembley Stadium approximately 80 times,” Walsh said.

Rio plans to add an additional 150 units of the 930E FrontRunner, each capable of carrying more than 300 tones, over the next four years. Komatsu is working with General Electric to produce the engine and other nextgeneration mining equipment.

In addition to productivity, unmanned vehicles provide a wealth of safety additions.

BHP Announced earlier this year it would be expanding a second circuit at the Jimblebar mine, increasing the fleet to six trucks. In the announcement, BHP cited safety as one of the biggest drivers behind the trial’s expansion.

“The use of autonomous haul trucks

‘The use of autonomous haul trucks has the potential to introduce safety benefits by removing people from potentially hazardous environments’

has the potential to introduce safety benefits by removing people from potentially hazardous environments; increasing the predictability and productivity of haulage operations, providing new employment and training opportunities for our people and reducing the labour intensity of future mining operations,” the announcement said.

With the use of driverless trucks, operations become more predictable for mining companies, helping to remove the human error and fatigue possibility. Fewer mistakes mean greater reduction in employee risk.

According to Tim Day of BHP Billiton, the motive for driverless trucks is straightforward. “The single biggest reason is safety.”

The main motice for driverless rucks is safety

21

M ac h i n e r y

Picket line at the mine “On a mine site, one of the issues we have is that we expose operators to machinery for long periods of time.

We have fatigue issues, so it takes our people away from the front line.”

“It should also actually introduce a lot more hours onto the machines, so you can actually use the machinery more because you don’t need lunch breaks, you don’t need crib times or shift changes,” Day said.

22

June 2014

The next chapter The implementation of newer technology won’t stop with driverless trucks. Mining companies have already been linked with other technological advances.

According to the Civil Aviation Safety Authority, Leighton Holdings Ltd’s mining units, which works with mining giant Glencore, already holds a license to operate unmanned aerial vehicles,

D river l e s s T ru c k s in the M ining I ndu s try

‘This trend towards technology could very well be the starting point to a revitalized mining industry actually using inventions for production’

otherwise known as drones in Australia.

The innovation isn’t stopping there.

In 2008, Rio Tinto also launched its Autonomous drill systems at its West Angelas mine. The drills have rock-recognition capabilities and will be rolled out into operations in the next few years. The idea of automation isn’t a new one but companies are beginning to jump on the trend and make the investment.

According to the country’s Bureau of Statistics, Australia spends about $3.7 billion a year on research and development. Rio Tinto alone spent $370 million on its technology and innovation unit in 2013.

“These types of incremental improvements have a direct impact on the bottom line, and help us power our operational performance,” Walsh said. “While … initiatives may not sound considerable in isolation, together they all make a substantial difference.”

This trend towards technology could very well be the starting point to a revitalized mining industry actually using inventions for production.

The wave of integration could lead companies into the next chapter of mining with fully-automated mines.

23

TE C HNOLO G Y

Interview with BHP Billiton: How the Mining Giant is Employing Tech Innovations President of BHP’s coal sector, Dean Dalla Valle explains how the company is boosting productivity by implementing new technology into their mining machinery W r i t t e n b y: R o b e r t S p e n c e

24

June 2014

25

TE C HNOLO G Y The age of technology has finally arrived in the mining sector.

Companies are beginning to embrace new technological advancements, implementing a wide range of initiatives into their operations to increase productivity, reduce costs, and enhance overall safety performance. One of the major driving forces in boosting productivity has become automation.

In 2013, BHP Billiton’s coal business

produced 154-million tons of coal, including both metallurgical coal and energy coal. The company has been off to a great start in 2014, reporting record outputs for coal and achieving a production increase of 10 percent business-wide in the last quarter.

And while the depressed thermal and coking coal prices have significantly reduce the profitability of BHP’s coal mines, the move towards automation is a game-changer for BHP. The

Main image: BHP’s Perth remote operations centre, insert right: BHP’s president of coal, Dean Dalla Valle

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June 2014

feature arti c l e s h o rtened head l ine

recent deployment of driverless trucks has allowed the company to increase mining productivity while simultaneously reducing costs. We sat down with BHP’s president of coal, Dean Dalla Valle to discuss the company’s recent success and how the introduction of technology is improving it operations.

‘In 2013, BHP Billiton’s coal business produced 154-million tons of coal, including both metallurgical coal and energy coal’

Implementing innovation The concept of driverless technology

27

TE C HNOLO G Y

BHP has been working with heavy machinery expert Caterpillar to produce driverless mining trucks

BHP operates automated drilling processes within its Western Australia operations

28

June 2014

isn’t a new one for BHP. Since 2007, BHP has been working with heavy machinery expert Caterpillar to innovative driverless vehicles, applying the game-changing systems into its iron operations in the Pilbara region of Australia. Since 2011, the company has been testing the high-tech systems for its coal business with trials in New Mexico.

The trials are aimed at testing the process and technology required to safely and efficiently operate these unmanned vehicles in a production environment as well as understand the production benefits and safety implications of using them.

Recently the company announced its looking to expand its driverless truck technology to coal mines in eastern Australia with a rollout planned later this year.

“There’s no doubt it will happen, and I’d like to think that within 12 months we will be running trials,” said Valle.

One of the biggest benefits of robotic trucks is the ability to cut costs. With the use of unmanned vehicles, the company can reduce overhead, including the need to house, feed and employ four drivers.

It can also improve efficiency and

I nterview with B H P B i l l it o n

‘The use of automation allows the dangerous work of mining to be executed with significantly less human labor and error’ overall safety performance.

The use of automation allows the dangerous work of mining to be executed with significantly less human labor and error. The new technology has seven in-built safety features which prevent the trucks from colliding with one another as well as operating alongside manned vehicles.

BHP cites safety as one of the main reasons for utilizing the technology.

“It’s part of our long term strategy to investigate mining technology options to drive safety, productivity and efficiency,” says Valle. “I believe there is a real opportunity for Australia to be harnessed, particularly if you bring

together the tech-savvy workforce and our world class miners.”

The use of automated drilling has also become a possibility. BHP has been applying its automated drill rigs, which are operated within BHP Billiton Mitsubishi Alliance in Western Australia. The use of automated drilling is safer and more cost efficient. The company plans to expand this scope of operation to all of its coal mines around the world.

“We continue to assess autonomous haulage for our coal operations, along with autonomous drilling,” says Valle. “At this stage no decision on the detail has been taken.”

29

TE C HNOLO G Y Game changer The rise of automation is leading to great things for the slumping coal industry. According to Valle, modernizing coal mining in an era of productivity gains requires the company to work smarter. “To do this, we need high performing teams and we must ensure our people have the opportunities to develop their careers through mobility in the industry. There are also opportunities to improve productivity across the coal supply chain, including the costs of railing, trucking and shipping our coal to market, particularly Australia.”

Lower than expected coal prices have caused many companies to shut down mines and lay off workers. With the introduction of driverless trucks, BHP is converting the stale industry into the next generation of mining.

“We are making some hard decisions and working to transform the culture of our industry and our business to ensure it is successful,” says Valle. “We have invested in systems to standardize many aspects of the way we manage our business all over the world.”

The future The use of autonomous trucks is 30

June 2014

“It’s part of our long term strategy to investigate mining technology options to drive safety, productivity and efficiency” - BHP’s president of coal, Dean Dalla Valle

still in its infancy for BHP. Other companies like Rio Tinto have made waves in the industry, taking the technology and spreading it like wildfire across operations. BHP, however, is taking its time to ensure the technology is perfected.

“While the business is currently only in the early days of investigating autonomy, it is part of our long term strategy to investigate mining technology options to drive safety, productivity and efficiency,” says Valle.

Beyond the driverless trucks at its coal mines, BHP is looking at other technologies to remove trucks from mines by using in-pit conveyers, crushers and other technology.

“Technology companies, small and large, need to look at how we can marry these skills together,” says Valle.

“There is a need there and I believe the smarts to do it are available.”

The introduction of autonomous trucks has the potential to revolutionize the mining industry and BHP is on the forefront of doing so.

The company knows machinery has the potential to play a vital role in minimizing downtime and boosting productivity, saving BHP valuable time and money.

31

M i n i n g Si t e s

Australian Coal Indus Decline’ How to Combat

As the popularity of renewable en exporters are looking to India as W r i t t e n b y: R 32

June 2014

stry Enters ‘Structural these Growing Challenges

nergy continues to rise, Australian s the next big coal import market obe rt Spe n c e 33

Mining Sites China’s demand for coal is beginning to dwindle. India is facing power generation issues and the two factors combined are causing Australia’s coal industry to quickly enter a structural decline.

According to a recent report by the Institute for Energy, Economics and Financial Analysis predicts countries like China won’t be able to afford imported coal and will resort to either its own reserves or renewable energy such as solar and wind.

“Renewables are a lower cost, cleaner solution, particularly when the deflationary impact of wind and solar is incorporated,” the study states.

In the last three years alone the Tim Buckley, IEEFA Director

34

June 2014

The future of Australia’s coal exports price of coal has dropped significantly.

The mining sector claims this is part of a cyclical reverse in fortunes as the resources boom begins to cool.

But with several high-profile projects being cancelled in recent years, the outlook isn’t looking good.

“Evidence is mounting that coal mining in Australia is entering structural not cyclical decline,” Tim Buckley, IEEFA director of energy finance studies Australasia said. “This report is a wake up call to investors and industry,

“This report is a wake up call to investors and industry, questioning the economic basis for an increasing number of proposed coal projects in Australia” – Tim Buckley, IEEFA Director of Energy Finance studies Australasia

s face a period of uncertainty questioning the economic basis for an increasing number of proposed coal projects in Australia.”

The report says that as Chinese coal demand idles, eyes have turned to the Indian market to boost the industry. However, the Indian coalfired power generation industry faces fundamental financing problems.

“India’s perilous economic and financial situation create further uncertainty for companies relying on its ability and willingness to import coal, with its associated

implications for inflation, current account deficits, economic instability and energy security,” Buckley said.

The report by the Institute for Energy shows that imported coal would need to be priced at double the wholesale price of India’s electricity and would not alleviate India’s energy poverty.

“People think India will just follow the same growth of China, but India’s economy has choked on coal energy and it doesn’t need more expensive coal imports,” he said.

In May of this year, HSBC and 35

M i n i n g Si t e s Deutsche Bank both confirmed they will not be funding the Great Barrier Reef project, located north of the Galilee Basin in the western Queensland region of Australia.

Investors have sternly limited their exposure to coal investments as the social, environmental, climatic, and economic risks become increasingly clear.

How to Combat these Growing Challenges The problem for Australia isn’t lack of coal resources; it’s the reality that new projects now require billions in longterm infrastructure commitments.

This cost along with plummeting global prices for coal is creating a higher return hurdle for investors.

A recent series of reports from global investment bank Citigroup has highlighted the drastic changes of the coal market along with the enormous impact it will have on the future of the industry.

“Investors are increasingly considering whether some fossilfuel related assets might become “stranded”, with significant loss of value, if stronger carbon constraints are imposed to mitigate the risk of dangerous climate change, or if alternative energy solutions become

Investors have sternly limited their exposure to coal investments as the social, environmental, climatic, and economic risks become increasingly clear

36

June 2014

xxx

“The coal industry needs to solve some issues itself, and some issues we need to work on with government” – Peter Freyberg head of coal assets at Glencore technically and economically more attractive,” Citi notes.

Coal isn’t going away just yet.

Major coal miners in Australia have become vocal about their plight in the coal sector, warning further obstacles lie ahead in Australia if governments, both state and federal, don’t get the regulatory settings right.

According to BHP Billiton’s president of coal, Dean Dalla Valle, Australia’s cost environment is making the local sector globally uncompetitive, and risks losing to rivals unless the settings are corrected.

“Australia needs to ask itself where future coal supply will come from — coal is abundant globally; we aren’t the only coalminers in the world,” he said.

According to Peter Freyberg, head of Glencore’s global coal

Australia has to adopt a disciplined approach to coal investment assets, the Australian coal industry is under extreme pressure despite ongoing growth in global demand.

“The Australian coal industry isn’t as competitive as it should be.”

Freyberg believes productivity, industrial relations and regulatory setters were factors impacting the country’s competiveness. He believes Australia needs to adopt a disciplined approach to investment.

“The coal industry needs to solve some issues itself, and some issues we need to work on with government.”

If the coal industry is to survive in Australia, the government has to actively support mining developments and help grow the industry into the future.

37

TOP 10

Top10

Coal

We break down the bi world in terms of reve Written by: Robert Spence

Mines

iggest coal mines in the enue and production

39

top 1 0

10

Cerrejon Colombia

The Cerrejon open-pit coal mine is located in South America in Colombia. Situated near the basin of the Rancheria River, the Cerrejon mine is divided into three main areas – Cerrejon North Zone, Cerrejon Central Zone and Cerrejon South Zone – and stretches over 170,000 acres.The mine has been in production since 1985, producing 32Mt of thermal coal per year. The Cerrejon mine, which is independently operated, is owned by a joint venture partnership between Anglo American (33.3 percent), BHP Billiton (33.3 percent) and Glencore Xstrata (33.3 percent).

In 2011, an expansion project named P40 commenced to increase the mine’s annual production to 40Mt by 2014. www.cerrejon.com

09

Raspadskaya Russia

Opened in 1973, the Raspadskaya mine is the largest coal mine in Russia and the ninth largest in the world. Located in the Kemerovo region of Russia, the Raspadskaya is an underground coal mine complex comprised of two underground mines --MUK96 and Raspadskaya Koksovaya; and one open-pit mine called Razrez Raspadsky. Owned and operated by the Coal Company Raspadskaya, the mine produces 100 percent coking coal. In 2008, the Raspadskaya mine produced 22 million tons of coking coal and has a total coal reserves estimated at 782 million tons. www.raspadskaya.com

40

June 2014

COAL MINES

08

Caballo USA

Reaching number eight on our list is the Caballo coal mine. Owned and operated by Peabody Energy, the surface mine is located 20 miles southeast of Gillette in Wyoming and first opened production in 1978.

Operating seven days per week with two 12-hour shifts daily, the Caballo mines extracts coal from two seams (Smith and WyodakAnderson). Coal production is transported by BNSF Railway and Union Pacific Railroad to customers throughout North America. During 2007, production for the site amounted to 31,172,396 tons, the sixth highest among coal mines in the United States. www.peabodyenergy.com

07

Mt. Arthur Australia

The Mt. Arthur mine is an open-cut coal mine located in the Hunter Valley region of New South Wales, Australia. Located near the town of Muswellbrook, the Mt. Arthur mine produces thermal coal for power generation. As of June 2013, the mine had 1,049 million tons of coal (585 million tons proven and 464 million tons probable). Owned and operated

by BHP Billiton, the mine consists of mainly two open cut mining areas – the Northern Open Cut and the Southern Open Cut. There are more than 20 coal seams mined at the site. The estimated reserve life of the mine is 40 years. www.bhpbilliton.com 41

top 1 0

06

Peak Downs Australia

As number six on our list, The Peak Downs mine is the largest coal mine in Australia.

The open-cut coking coal mine in Queensland is one of seven mines in the Bowen Basin. The mine, which began production in 1972, is estimated to hold 1,063 million tons of recoverable coal reserves as of June 2013. The mine is owned and operated by BHP Billiton’s Mitsubishi Alliance (BMA). The Peak Downs mine is operated utilizing dragline and truck/shovel fleets and transported via railroad to the Hay Point Coal Terminal near Mackay for shipping. www.bhpbilliton.com

05

Black Thunder USA

Located in the U.S. state of Wyoming, the Black Thunder mine is the second largest coal mine in the United States. The mine was originally opened in 1977 by ARCO Coal until was acquired in 1998 by Arch Coal. The surface mine is estimated to contain 1,466 million tons of recoverable coal reserves as of December 2012. Black Thunder consists of seven active pit areas and three loadout facilities. Production of raw coal is directly shipped through the Burlington NorthernSanta Fe and Union Pacific railroads. The mine produced 92.9 million tons of coal in 2012. www.archcoal.com

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June 2014

COAL MINES

04

Moatize Mozambique

With some of the world’s richest coal deposits, the Moatize coal mine is number four on our list.

Located at Moatize in the Tete Province of Mozambique, the coal mine currently holds an estimated recoverable coal reserve of 1,498.8 million tons as of December 2012.

Officially inaugurated in May 2011, the Moatize mine is operated by mining giant Vale, who holds a 95 percent interest in the mine site.

Vale plans to spend $6 billion to expand the site in the second half of 2014, increasing production from 11 million tons to 22 million tons per year. Vale has also invested in two African railroads that connect to ports – Sena and Nacala Corridor – in order to transport the mine’s output. www.vale.com

03

Hei Dai Gou China

Belonging to Shenhua Zhungeer Energy Co. Ltd, the Hei Dai Gou mine is one of China’s largest open-pit coal mines. Since 1999, the mine has been producing low sulphur and low phosphorus coal with an annual output of 31 million tons. Located in the central Zhungeer Coalfield in Inner Mongolia, the mine is situated closely to highways as well as the Dazhun electrified railway. The Hei Dai Gou mine is China’s first coal mine to use AC Powered Walking Dragline. The mine is estimated to contain 1.5 billion tons of recoverable coal reserves. www.csec.com 43

COAL MINES

02

Haerwusu China

China’s largest open-pit coal mine belongs to Haerwusu.

Located in the Inner Mongolia Autonomous Region of China, the mine is spread across the middle of the Zhungeer Coalfield and is estimated to contain 1.7 billion

tons of coal reserves. Owned and operated by Shenhua Group, the Haerwusu mine began production in October 2008, with development costs at approximately $1.1 billion. The giant open-pit mine is estimated to have a reserve life of more than 75 years, making it the number one coal mine in China. www.shenhuagroup.com.cn 45

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01

North Antelope Rochelle USA

Holding the number one spot on our list of the top coal mines in the world is the North Antelope Rochelle mine in Wyoming, U.S. The mine produced 107.7 million tons of thermal coal in 2012 and is believed to produce the cleanest coal in the world. Owned and operated by Peabody Energy, the surface mining operation began producing coal in 1983. The coal is mined from three pits and is hauled by truck to one of four hoppers at the mining complex, where coal is crushed, conveyed to silos, and then to the loadouts.

The mine shipped 110.9 million tons of compliance coal during 2013, and more than 1.8 billion tons since the mine began. The North Antelope Rochelle mine is estimated to contain more than 2.3 billion tons of recoverable coal. www.peabodyenergy.com

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June 2014

COAL MINES

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Kirkland Lake Gold Kirkland Lake Gold Maintains Standards

Kirkland Lake’s mission statement is to produce gold in a s sustainable and profitable manner Written by: Andrew Rossillo

Produced by: Bobby Meehan

ns High Grade

safe,

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c o m pa n y n a m e

K

irkland Lake Gold operates in Northern Ontario, Canada, one of the safest mining jurisdictions in the world. The Company mines one of the highest-grade ore bodies in the world at 0.44 opt (14 g/t) with massive exploration and growth potential in the immediate area.

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June 2014

Kirkland Lake’s mission statement is to produce gold in a safe, sustainable and profitable manner such that the Company generates a return on investment for its shareholders while providing benefits to all stakeholders with the goal of improving the lives of their employees and the residents within the communities that they

sector

operate. The Company remains true to this mission statement by considering safety, sustainability and profitability in every decision they make within the business each and every day.

Kirkland Lake operates with the core values of safety, trust, respect, equity, environmental, teamwork and social responsibility. “We want

our employees to go home in the same condition as they came to work. Subsequently, safety is at the forefront of every decision we make while all meetings start with a safety talk. In the workplace we believe in trust through honesty, commitment and open dialogue and communication,” says Kirkland Lake’s CEO George Ogilvie. w w w. k l g o l d . c o m

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Kanuck Rock Drill Services Manufactures and repairs mining products which include rock drills, component rebuilding, custom machining, mechanical drawings, manufacturing drill parts, air motors, jackleg and stoper airlegs. Owned and operated by Lawrence Beaucage. Mr. Beaucage has been employed in this industry for over 35 years. Kanuck Rock Drill Services serves the Sudbury Region, and Northern Ontario Areas.

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For more information please visit our website at www.kanuckrockdrillservice.ca

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WE SERVICE NORTHERN AREA OF ONTARIO, CANADA

Your Northern Ontario Provider.

North Star Linen can supply your operations with a wide range of coveralls and uniforms to suit your work environment. From high visibility coveralls, Arc Flash coveralls, to regular coveralls and uniforms, we have a great selection available for you.

North Star Linen offers the Locker System to facilitate the distribution, control inventory and losses. Our weekly program also includes bins or carts to manage the soiled inventory.

Phone: 705.335.2208 I Toll Free: 1.800.461.5756 I Fax: 705.335.6875 E-mail: uniforms@northstarlinen.com I www.northstarlinen.com

K i r kl a n d L a k e G o l d “We respect everyone’s contribution no matter how small and regularly reward and acknowledge our employees when we see good results and the right behavior. More often than not it requires a team effort to get the best results. We also treat our people with dignity. All of these values are part of how I conduct myself as the CEO so that they can cascade down into the business. Environmental stewardship and sustainability is also a very important core value for us; which is highlighted in our main energy conservation program. We take our social responsibility very seriously and subsequently invest in the community and groups when the right opportunities present themselves.”

A concrete example of how these values are applied to their employees includes the Company’s improved management: “I think the management here is enjoying the new management style. I encourage collaboration amongst managers and staff, support and consider new ideas or suggestions on how we can improve. Now it’s much more of a partnership and collaborative

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process where we determine the targets and hold ourselves accountable and responsible for our results towards our targets. And we’re constantly monitoring, giving positive recognition and feedback when we’re doing well, as well as addressing weaknesses through discussion and action planning.”

Continuous Improvement Among the many factors that help keep Kirkland Lake among the leaders in the mining industry is their dedication to continuous improvement. This includes raising cut-off grades and stopping the practice of mining incremental tonnage, which is mineralization not in any reserve and resource category, but previously was mined when encountered.

Something that is unique to the Kirkland Lake Gold Camp is their high reserve grade of 0.44 ounces per ton. “Prior to my appointment, mined grades were significantly below reserve grades. This was creating an adverse effect on costs and margin. Stopping this practice has increased our calendar year grade to 0.39 ounces per ton, a w w w. k l g o l d . c o m

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K i r kl a n d L a k e G o l d significant improvement over the 0.30 ounces per ton the Company was averaging prior to January 2014,” says Ogilvie.

The primary methods of achieving these particular results through continuous improvement include tighter dilution control, tighter scrutiny with onsite requests for capital (managers required to show IRR, payback and NPV’s and other justifications on capital requests), and aggressively looking at new ore sources on our existing land package to feed the mill and lower costs.

In addition, Ogilvie shared a

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particularly promising element regarding improved productivity through new equipment: “We’re looking at productivity gains in the mine department. In some areas where we should be more productive, we ordered new electricity powered equipment from Atlas Copco. Typically, all the drilling is done with handheld drills, which operate through compressed air, which is very inefficient and not particularly effective...so once our new electric drills arrive we think in the second half of the calendar year we should see better productivity.”

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K i r kl a n d L a k e G o l d

Operations Kirkland Lake Gold Camp has been producing for a very impressive 100 years. One of the most recent releases from the company provided details regarding why we might be able to expect 100 more. According to the report, it included near-surface mineralization within 1,000 feet of surface of 152,000 oz. gold (104,000 oz. indicated and 48,000 oz. inferred category) at 0.35 opt grade. “We believe this represents an expansion opportunity in the future; which could be mined cost effectively while the mill has excess capacity. Subsequently, 56

June 2014

one exploration drill is currently expanding the resource with a second doing in-fill drilling with the hope of having a mineable reserve in 12 months with plans to mine the orebody at that time. All of this could be completed with minimal capex and could be undertaken quickly once given the green light due to the near surface proximity.�

Next Phase of Development The strategy for Kirkland is to return the mine to producing at its historical grade averages of 0.4 – 0.44 ounces per ton. The Company also plans to lower unit costs through scale and efficiencies and return to generating free cash

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Company Information Industry

Mining founded

2001 employees

250-499

flow. Once this is achieved the company will look to further increases output through self-funded exploration and development of other sources of ore from their current property position.

“The Company’s share count of 70 million shares in issue, 83 million fully diluted permits that once the company’s production is steady state and generating significant free cash flow significant return on investment would be seen by shareholders,” says Ogilvie.

With its new business plan in place, the Company has a strong focus on higher grade.

The Company expects to return to breakeven and profitability in the next several quarters. Once profitability has been returned any future uplift in the gold price will result in a corresponding uplift in free cash flow, meaning greater return on investment for shareholders. All signs point to Kirkland Lake being a solid investment.

revenue

$100M - $250M

w w w. k l g o l d . c o m

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Northern Cross (Yukon Northern Cross (Yukon) Limit of natural resource discoverie

Richard Wyman discusses the recent company activities a exploration and development in the Yukon now that the com Seismic Program in the region Written by: Lindsey Ryan

Produced by: Aaron Wells

n) Limited ited is on the verge es in the Yukon

and anticipated future natural resource mpany has completed the first ever 3-D

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Northern Cross (Yukon) Limited

F

ounded in 1994 by Richard Wyman and David Thompson, Northern Cross (Yukon) Limited (NCY) set out to explore for and potentially develop oil and natural gas in the Yukon. Operating as the only company of its kind in the Northern Yukon territory, the company commenced almost three years ago the most ambitious exploration program in fifty years in northern Yukon. This past winter, for the first time ever in the Yukon, a 3-D

seismic program was conducted to further advance the geological understanding of the region.

Richard Wyman graduated from Queens University in Ontario with a degree in chemical engineering and has focused his degree in the oil and gas industry. He has had the opportunity to gain knowledge in exploration, evaluation, reservoir management of producing properties, development planning of Northern resources and even

“Safety is a paramount concern for us and there are a lot of reasons for it but remoteness is one of them� – Richard Wyman, President

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June 2014

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analyzed equities for Canadian junior and senior oil and gas companies. With his degree and multitude of experiences in this field, it is no surprise that he expanded his interest and co-founded NCY with David Thompson, a classmate at Queens, who has a similar background and interest.

The company is the owner and operator of three Significant Discovery Licenses, representing the only discovered petroleum and natural gas resources in northern Yukon. NCY also holds an additional 1.3 million acres of exploration land, located in Northern Yukon on the Arctic circle, called the Eagle Plain. Wyman explains that “in the last 20 years, since NCY was incorporated, the company has been undertaking a variety of exploration activities to establish a resource base that will hopefully someday result in commercial

“The emphasis is going to be aimed at conventional resources, hopefully oil, and build from that to expand as land is retained or added and ideas are matured” – Richard Wyman, President

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Northern Cross (Yukon) Limited developments.” According to Wyman, they “haven’t quite got the resource mass yet to move toward a development but they’re getting there.”

Forging strong partnerships So what actions are being taken to achieve these development goals? Assisting in the long term vision of resource development is the Chinese National Offshore Oil Company (CNOOC). Three years ago, the CNOOC became a major shareholder with Northern Cross Yukon, thus allowing them to obtain the capital to move forward with the programs that can help the company

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identify new resources and increase the resource base.

Wyman explains that since CNOOC has become involved, “a preliminary phase of exploration drilling has been conducted, including four new wells, some reaching almost 3,400 meters measured depth”. In addition to the new wells which provide modern data about the geology and the hydrocarbon system, Northern Cross Yukon has just conducted the first ever 3-D seismic program in the Eagle Plain to identify potential new resource areas for exploration and development. This project is

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Northern Cross (Yukon) Limited

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believed to be one of the largest 3-D programs in Canada this year and is covering an area of about 350 sq. kilometers. It is certainly the largest 3D seismic survey in northern Canada this year.

Depending on what the seismic data reveals about the resource opportunities at Eagle Plain , Northern Cross Yukon might establish sufficient resource mass during the next round of drilling to proceed to a phased development Because the Eagle Plain has a confirmed hydrocarbon system, there is a reasonable possibility of making one or more commercial discovery(ies) in Eagle Plain.

Also, NCY has a strong strategic position at Eagle Plain that suggests significant running room to repeat on any drilling success.

Modern technology plays a critical role

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Northern Cross (Yukon) Limited While having the financial capacity to undertake and a large exploration project in a remote, frontier setting is essential, it is equally helpful to be able to take advantage of modern technologies that were not available to the original explorers at Eagle Plain in the 1960’s. The ability to drill directional and horizontal wells and undertake a 3D seismic

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program are expected to improve drilling outcomes and production performance. Other techniques that have become mainstream practices elsewhere in North America, such as hydraulic fracture stimulation, may eventually have application in Eagle Plain though it is still early days to confirm this. NCY is able to evaluate a broader range of

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P.O. Box 151 Fort McPherson, NT X0E 0J0

867-952-2901

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SEPTIC SERVICES

GeoTir is a full service seismic project management company dedicated to exceptional service and end results.

Mike Little, President mike@geotir.com Daryl Robbins, VP, Operations daryl@geotir.com Lisa Eastman, VP, Marketing lisa@geotir.com

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Congratulations to Northern Cross Yukon on their successful seismic and drilling operations this year

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geological settings using modern diagnostic tools that enhance the resource potential of the region. The exploration program is investigating a variety of structural and stratigraphic play concepts that have shown merit in other sedimentary basins around the world. The combination of all these factors gives NCY the encouragement to continue its ambitious program and hopefully satisfy the primary objective of establishing commercial production in the Eagle Plain area.

One of the challenges Northern

Northern Cross (Yukon) Limited

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Cross Yukon has faced is trying to maximize the value of old data from seismic and drilling activities conducted during the first major wave of exploration work at Eagle Plain between 1959 and 1972. The other major challenge is working with a dataset that is at best pretty coarse. Old 2D seismic lines are often 10 or more kilometres apart so there are large data holes in the basin.

Similarly, the legacy drilling totaled about 34 wells and most of them are between 10 and 50 kilometres apart so modeling the geology of the basin has had its challenges. With new data from recently drilled wells and the 3D seismic survey, we are progressively reducing the uncertainty of exploration and hopefully improving our chances of success. Wyman’s anticipates that over the next three to five years, “the emphasis is going to be aimed at conventional resources, hopefully oil. With the large land position, there is running room to build on any initial success. Though the anticipation and excitement of receiving and interpreting the seismic data is high, safety is still a crucial factor to Northern Cross Yukon for its employees. “Safety is a paramount concern for us and there are a lot of reasons for it but remoteness is probably the most important influence”. The Eagle Plain is located in a remote territory of the Yukon, making it a long drive to the nearest hospital. Only employees and contractors who demonstrate the upmost professionalism and safety record are considered for the job.

In the search for new employees, Northern w w w. n o r t h e r n c r o s s y u k o n . c a

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Northern Cross (Yukon) Limited

Cross Yukon has not lost awareness of the surrounding territory and the local aboriginal communities and residences in the territories.

The company prides itself on

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maintaining positive relationships with the local First Nations and makes an effort to include them in the operations. The relationships with local First Nations have been

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Company Information Industry

Mining headquarters

Calgary, Canada employees

15, 12 in Calgary and 3 in Whitehorse

building for many years and Northern Cross Yukon is happy to help provide both business and employment opportunities to help meet economic development objectives of the region.

w w w. n o r t h e r n c r o s s y u k o n . c a

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North American Construction Group: Quality construction and min services

North American Construction Group: a premier provider of construction and mining services Written by: Thomas Melville Produced by: Brad Levin

ning

f heavy

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North American Construction Group

N David Blackley

Joe Lambert

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June 2014

orth American Construction Group, based in Edmonton, Alberta, has been a leading provider of heavy construction and mining services throughout Canada for more than 60 years. NACG offers an experienced, comprehensive, and integrated approach that fits their customer’s requirements from consultation to completion.

NACG is primarily a heavy civil mining and construction company working predominately in oil sands, but also in the resource industry – coal, gold, diamond mines – as well as highway work, underground utilities, and piping. In addition, the Company does earthwork for hydro dam projects, front end construction activity, and civil and underground work around refineries in Edmonton and throughout Alberta. It also has one of the largest independently owned fleets of

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equipment in Canada.

The Company, founded in 1953 as a highway construction business, was purchased by a private equity firm and listed publicly in 2006. In the past two years NACG sold off its pipeline and piling divisions for improved financial stability and to reduce debt. Now their core focus is on being a heavy construction and mining company.

“The changes we made over the past year have really shown us how we can improve our costs and our performance and still maintain a strong safety and client service focus,” says Joe Lambert, COO of North American Construction

Group. “We sold some assets because the marketplace was oversaturated and felt our timing was ahead of the curve on that. We made those decisions and got to a better place faster than a lot of our competitors and we think that puts us in a good position moving forward.”

Health and safety NACG’s ultimate goal is to reduce or eliminate workplace injuries and incidents by using every means possible and through the aggressive promotion of healthy and safe work practices in the work environment.

The Company strives to ensure

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North American Construction Group

Work doesn’t rest in the oil sands, even when the sun goes down

Martin Ferron

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June 2014

the optimum success of this policy through compulsory participation by all employees, management, and subcontractors.

“In today’s industry, health and safety is the price of admission,” Lambert says. “We’re focused on safety as a company value because it’s not only a moral obligation, it’s good business.

We are proud of our safety record and have had significant improvements for six consecutive years.”

Safety starts with leadership and the NACG’s

C o n s tru c ti o n

managers create and promote a safe workplace through active and visible direction in the field, by leading by example, and by promoting the Company’s core values. Management is also constantly communicating the importance of health and safety programs throughout the organization.

To help achieve the goal of minimizing incidents and creating a safe work environment, the Company’s employees also have a personal responsibility to work safely at all times and a

“When it comes to construction and mining, if you take care of your people and you take care of your equipment then you’re well on your way to success”– Lambert says w w w. n a c g . c a

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Your one stop to rent, buy, lease your mining, pipeline

and construction equipment. Our fleet includes dozers,

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We also have a mobile fleet of service trucks.

74 Liberty Road Sherwood Park, AB T8H 2J6 Fort McMurray Sherwood Park

Camrose

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commitment to adhere to NACG’s standards of practice for health, safety, and environment as a condition of employment.

The Company adheres to programs and training in risk management, disability management, risk tolerance, risk assessment, as well as field level work-safe operating procedures.

They complete fitness-for-work screening, which includes drug and alcohol testing programs, vision testing, hearing testing, cardio vascular testing, and functional capacity testing to make sure that the people being hired can meet the

physical demands of the job.

“In our business one of our key philosophies is prior to hiring individuals, let’s make sure we know as much about them and their fitness for the particular work that we’re doing,” Lambert says.

People management In 2013 NACG was recognized as one of “Alberta’s Top 60 Employers,” which was the third consecutive year they were named on the list.

“That shows that we are doing the right things that are important to employees,” Lambert says.

“When it comes to construction

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t n e m p i u q e y v ” a s t e “h ecialis sp

• Mobile Welding & Fabrication • Mechanical Repairs In Field & Shop • Mobile Lineboring • Industrial Electrical Installations • Oilsands Bucket Rebuilds • Lubrication Modules Gladiator Equipment Inc.

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and mining, if you take care of your people and you take care of your equipment then you’re well on your way to success.”

The Company has 1,600 experienced employees who are used to working in the extreme northern climate and conditions in the oil sands area in Canada. NACG offers a competitive wage to go with this challenging work and also puts a lot of time and energy into employee training programs.

In addition, the Company has extensive training programs for supervisors and managers – to ensure that they have good people

to manage people well. They also offer equipment operating training, maintenance training, and even mentoring programs.

On the safety side, they have a “green hand” program for new employees. “We also use it to learn information from those new employees who have good ideas from past places they worked,” Lambert says. “New hires require training and coaching commitment, but they also bring different experiences and ideas and we have no issue stealing good ideas when we hear them.”

NACG’s Immersive Simulator trains workers to operate some of the largest machinery in the Mining industry w w w. n a c g . c a

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Mountainside Heavy Rents, a division of Mountainside Sales and Rentals is a privately owned business serving Central and Northern Alberta.

With over 12 years experience in locating and supplying equipment to our customers in Oilfield, Mining, Logging and Construction Industries we are known to Deliver!

Our extensive line of equipment includes everything from light towers, flameless heaters, excavators to rock trucks, loaders and everything in between.

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Technology NACG uses state-of-the-art equipment provided from primary equipment vendors. The Company’s philosophy is all about having quality equipment and maintenance programs. As an equipment operator that’s your office, that’s your workplace, when there is quality equipment that’s safe and running effectively then that creates a good office environment for the operators.

One of the major technological advantages NACG has is its immersive simulator, which creates an actual environment, much like a NASA simulator. The immersive

simulator tracks the operator’s head movements and allows the Company to train operators not only on safety but on production. It can simulate emergency situations, like fires, and make sure people know how to respond. Workers may go throughout their career without having an emergency and this technology is able to train people so they know what to do when those situations occur.

There is also a lot of technology in the equipment with GPS and the real time reporting of machine health, where it can monitor equipment for faults on the equipment, which gets

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supplier profile

supplier profil e

WE KEEP YOU ROLLING Kal Tire Mining delivers innovative solutions to maximize tire life and increase mining productivity.

With over 40 years of experience and global operations on five continents, Kal Tire Mining is the only tire service provider capable of handling all of your tire requirements on a daily basis.

Proud to support NACG across Canada. info@kaltire.com www.kaltiremining.com

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reported immediately.

“On the equipment side it’s about identifying maintenance issues before there are failures,” Lambert says. “That’s where you save your money and create the safety and efficiency in those systems. GPS on equipment makes you more effective.”

Scope of operations NACG operates on almost every mine site in the oil sands and has also worked in British Columbia, Ontario, Saskatchewan, and Yukon for all the resource industries – gold, diamonds,

copper, coal – as well as heavy civil and construction work. The bulk of their revenue comes out of working the oil sands, which is a huge marketplace.

The Company got started in the oil sands in the ‘70s and has been there ever since. “At most of the oil sands mine sites - we have been there since they opened,” Lambert says.

NACG has a central office based in Edmonton with good communication and project management training for employees on work sites. They pride themselves on going into the field knowing what the plan is and how

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North American Construction Group

An NACG worker fills out a Standard Operating Procedure (SOP) form

to execute it safely and efficiently.

The management team has a depth of experience in the execution of project. It’s not unusual to find guys with 20-30 years of experience running NACG jobs.

“When they have been around with us that long then we know their skill sets well and can place 86

June 2014

them on the projects where their ex tensive skills and experience benefit us the most,” L amber t says.

Major projects The Company recently announced that it had secured a new five-year master services contract for the

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provision of civil mine support services in the oil sands. The scope of the new contract covers overburden removal, reclamation, mine services and civil support and maintenance. Activity levels at the site ramped up at the beginning of this year.

NACG is also involved in an Alberta highway construction job that started in February.

Trends and challenges Over the last few years there has been a heightened competition in the market, even internally from NACG’s clients that have their own equipment and will in-source work, and that can affect the marketplace.

“We need to make sure we keep our focus on safety and we need to be able to run tight on our costs,” Lambert says. “If you have competitive pricing and strong safety performance you have a good chance of getting the work.”

Also important is NACG’s sturdy long term relationships with clients – many since the inception of their operations. Another way the Company is competitive is its diversification with roadwork, light industrial, piping, under-ground utilities, dam construction, and work in other resource areas.

“All industry areas have a cyclical nature and diversification helps normalize that cyclical impact,” Lambert says. “But the oil sands is a consistently strong market area and a place we expect to have a majority of our business for a long time.”

Company Information Industry

Heavy Construction & Mining headquarters

Edmonton, Alberta, Canada employees

1300

products/ services

Heavy Construction & Mining

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as

The Anit land

The Anitua Group:

solutions for all spects of mining

tua Group, one of Papua New Guinea’s most successful downer companies, has paved a new road for itself after transforming its safety and management programs Written by: Laura Close Produced by: Glen White

89

The Anitua Group

T Horizontal Drill Rig

Post courier

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June 2014

he Anitua Group was founded in 1989 by a group of Lihirian landowners.

The people of the Lihir Island chain own the company – six clan groups, the locallevel government and 2,500 individuals are shareholders.

The original purpose of the company was to provide the landowners with the opportunity to participate in the Lihir Gold project at one of the world’s largest gold mines. Now, The Anitua Group is the largest single supplier of goods and services to Lihir Gold Limited and has successfully expanded throughout PNG and even has two Australian-based businesses.

The Anitua Group comprises several different businesses, including Anitua Corporate Services,

s o l uti o n s f o r a l l a s pe c t s o f mining

New TAG Structure

Anitua Mining Services, Anitua Hardware, Anitua Supermarket, Anitua Protective Services, Anitua Investments, Anitua Properties, Anitua Transport Services, Anitua Radial Drilling Services, Lihir Business Services, Lihir Auto Services, Lihir Investments (Australia), Anitua Logistics (Australia), Anitua Motors, Anitua Constructions, Anitua Farms and the mega camp management and catering groups, NCS Holdings and The Alliance Group (TAG). The Anitua Group’s services include contract mining, construction, security, roadwork and civil construction, quarrying, warehousing and logistics, retail, farming, hospitality, IT services, mine site support and earth moving, training, drilling, property investment and management, transport and shipping, small business services, catering, fresh produce, automotive sales and repairs, catering and camp management – the diversity of these services being clearly indicative of the Group’s capacity to provide solutions for all aspects of mining and resource projects not to mention those in other industries as well. w w w. a n i t u a . c o m . p g

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The Anitua Group Safety standards

Difficult Terrain X smoke crop

“Anitua recognised early that workplace safety had to be fully integrated into all aspects of the business to be sustainable” – Colin Vale, Executive Director

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June 2014

Safety is paramount to The Anitua Group, and over the past several years has been the main focus of Executive Director, Colin Vale.

“Anitua recognised early that workplace safety had to be fully integrated into all aspects of our businesses to be sustainable,” said Vale.

Since sustainability is currently a main goal for the company, a Safety, Health, Environment & Community (SHEC) management system has been adopted; this approach aligns with ISO 18001 (Occupational Health and Safety), ISO 9001 (Quality Management System) and ISO 14001 (Environmental Management System). The SHEC system has several benefits including laying the foundations for a thriving safety culture throughout the Group. The ability to meet stringent safety targets is critical to Anitua Mining Service’s contract with Lihir Gold Ltd. The Alliance Group’s (TAG’s) success in winning catering and camp management contracts on PNG’s mega LNG project is partly due to their exemplary safety record. The oil and gas industry has even more stringent requirements than the mining industry, something that both NCS and TAG have consistently demonstrated they can deliver on.

Vale also touted the company’s two pronged approach to safety. The senior management and supervisors exemplify good safety practices, while lower-level employees participate in safety committees and the development of safe

s o l uti o n s f o r a l l a s pe c t s o f mining

work procedures. This way, all employees feel empowered to work safely, and do not hesitate to raise concerns when they are noticed.

To further prove to employees that safety is a priority, Anitua has set up a safety awards program. “Anitua felt it was important to recognise those individuals that really exemplified great personal safety behaviours in the workplace and used these behaviours to influence the culture for the better,� Vale commented.

Employees are recommended by their peers and supervisors. The SHEC management committee meets and evaluates each of the nominees, and makes their decisions based off

Key Personnel

Colin Vale Executive Director

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s o l uti o n s f o r a l l a s pe c t s o f mining

of this meeting. The Safety Through Innovation Award is a significant award coveted by each of the Group’s businesses and encourages a proactive and creative approach to solving safety issues within the workplace. The Group has introduced a new award for 2014 to recognise staff who are addressing the issue of violence against women – a considerable community and workplace safety issue in PNG. This is the first workplace safety award of its kind to be offered in PNG, and perhaps the world. Awards are a combination of prize and public recognition and the annual award ceremonies are greatly anticipated.

Anthony and Constructions

Approach to management Just like with their approach to safety, management across all Anitua businesses has been streamlined, and a strong core corporate team (including finance, quality, HR, safety, business development and marketing) has been put in place. This structure provides support services to each of the many businesses within the Group, allowing them to focus on operations and growth. With over 3,400 employees, practices like team building and training, regular management meetings and a strong understanding of the company structure are important to keeping the company moving forward. “Anitua Corporate must deliver management,

Winifred Amy Vagi

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Port Moresby Office: Six(6) Mile Telephone: 675 323 9991 Fax : 675 323 9974

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Anthony and Liz

processes and services that create more value for the individual business units and the group as a whole than the individual business units can do on their own,” Vale commented.

Anitua works from a flat and lean management structure, which has helped the company become one of the most successful in Papua New Guinea. The Group has been commended by World Bank PNG Country Manager, Laura Baily, as a stand out example of a successful, special and unique landowner company, and one of the best in PNG. Surveys carried out by the World Bank highlighted that The Anitua Group has the right commercial model, which is deemed critical to ongoing sustainability and success. Laura went on to explain that for landowner companies to be successful, they cannot behave as a social entity – but must have a clear and focused commercial model.

The Group’s clear and explicit understanding of its business goals (operating alongside its clear social goals) and its ability to attract senior talent who have a genuine commitment to development and a focus on w w w. a n i t u a . c o m . p g

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BNG Trading Co Ltd has been operating continuously in Papua New Guinea since 1924 and has established itself as one of the leading suppliers to both the Bakery and Food Service channels in PNG, through the distributorships of Sinmag equipment, Bakels ingredients, Peerless shortenings, Riviana, McCains, Steric and its own brands of catering packs such as Ba Barons and Bakery Delights.

The company has offices in Port Moresby, Lae and Kokopo supplying over 600 customers including groceries, wholesalers, foodservice, bakeries and mining camps.

CONTACT: info@bngtrading.com.pg www.bngtrading.com.pg

Port Moresby: (675) 323 3366 Lae: (675) 472 2266 Kokopo: (675) 982 8561

Tyres To Suit All Applications Bridgestone Tyres (PNG) Ltd Head Office: Milfordhaven Road P.O. Box 459 Lae MP Papua New Guinea Phone: Fax: Email:

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Expac (Qld) Pty Ltd. All Parts & Industrial Needs Supplied to All Industries

44 Achievement Crescent, Acacia Ridge, Qld 4110 Tel: (617) 3274 3500 | Fax: (617) 3274 3997 Email: sales@expac.com.au

• General machinery parts suppliers and all industrial products • Available facility to consolidate orders and arrange the logistics

Proud to be a supplier to The Anitua Group www.expac.com.au

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building the skills of PNG workers have been key factors in the Group’s success. The Group was recognised for being able to grow and expand beyond the initial resource project that enabled it to exist – to expand and diversify the businesses within the Group and to expand geographically throughout PNG. This successful expansion and diversity of the Group’s portfolio of businesses has contributed to providing sustainable jobs, training a large number of people and helped improve the quality of life of those in the communities in which they operate.

Unlike many landowner companies in PNG, the Group is a commercial success, providing long term benefits back to the community and its Lihirian shareholders. A board consisting of representatives of each of the six major clans ensures that the interests of the local community are well represented when deciding upon the strategic direction of the Group.

Anitua has a number of training programs in place, ensuring staff at all levels have the opportunity to receive training and career progression. Annual employee feedback surveys are conducted and the results acted upon to

Food prep smiling

NCS Remote Camp Kitchen

“Anitua felt it was important to recognise those individuals that really exemplified great personal safety behaviours in the workplace and used these behaviours to influence the culture for the better” – Colin Vale, Executive Director w w w. a n i t u a . c o m . p g

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The Anitua Group

Anthony March 1

“Interestingly every business plan I’ve ever undertaken has had stretch targets that we smashed!

This always surprised me” – Colin Vale, Executive Director 100

June 2014

ensure continual improvement and that the Group remains an employer of choice within PNG. An enormous effort is made to treat all employees with respect and to actively encourage women to participate in the workforce. A person is not terminated without following due process, and senior employees are not terminated without the ED reviewing the employee and case.

The management team makes an effort to “uphold and enforce values, take a stance on

bullying and violence in the work place, do what we say we will and communicate regularly with employees,” Vale said. “Create a culture of family and you will attract and retain employees. We have policies and procedures and a code of conduct that we live by.”

Indicative of the culture, values and code of conduct, is the Group’s Corporate Social Responsibility Program, launched on White Ribbon Day in 2013. The main focus is on

Traditionally decorated Admin staff

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The Anitua Group

JGJ Liz Peter Oneill

“Anitua is very proud to be the first and only PNG business to adopt the program, the purpose of which is to make our workplaces safer for women and more supportive of those of our staff who are victims of violence” – Dr. Linda Van Leeuwin, EVAW Program Manager

NCS Chef with 2 plates-meals

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eliminating violence against women (EVAW).

A key component of the program is the implementation of Australia’s White Ribbon Workplace Program. EVAW Program Manager, Dr Linda Van Leeuwin reports, “Anitua is very proud to be the first and only PNG business to

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adopt the program, the purpose of which is to make our workplaces safer for women and more supportive of those of our staff who are victims of violence.”

Company Information Industry

An eye towards the future

Mining

As The Anitua Group continues to improve its already strong safety program, and continues to strengthen the foundation for their impressive management system, Vale and the company are looking towards other opportunities outside of the gold mine on Lihir. A number of the Group’s businesses are looking to replicate the success of catering and camp management giant, NCS, which has successfully expanded off the island and now operates in 27 different sites throughout PNG. The Group’s Mining Services business is poised for strong growth, with the country enjoying a buoyant resources industry.

There are currently strategies in place for growth, with a number of opportunities close to fruition that could be potential game changers for the company.

“Interestingly every business plan I’ve ever undertaken has had stretch targets that we smashed! This always surprised me,” said Vale.

The company’s continuing success, however, should be a surprise to no one.

headquarters

Lihir Island, New Ireland Province, Papua New Guinea founded

1989 employees

3,400 products/ services

Mining, Drilling, Roadwork & Civil, Construction, Retail, Auto, Logistics, Security, Small business, Farms, Camp Management & Catering, Logistics, Property Investment & Management, Quarrying, Training, IT services and fresh produce

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Perseus Mining: The Gold Standard in West A

As one of West Africa’s emerging gold producers, Perseus shareholders and the surrounding community Written by: Laura Close Produced by: James Hayes

Africa

s has committed excellence to its

1 10 5

Perseus Mining

Perseus Mining corporate video

P

erseus Mining is a young and financially successful gold producer operating in Ghana and Côte d’Ivoire in Africa.

Headquartered in Perth, Australia, the company is listed on both the Australian and Toronto stock exchanges. As the stabilising initiatives of the 2014 fiscal year come to an end, Perseus is looking towards a bright future of growth and potential expansion.

Operations at the Côte d’Ivoire mine

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Production at Edikan Perseus first produced gold at Ghana’s Edikan Gold Mine (EGM) in August 2011, and the site achieved commercial production in January 2012. Edikan has 5.7 million ounces in measured and indicated gold resources, including 2.9 million ounces in reserve, and 2.4 million ounces

MINING

Edikan Mine

Gold production

in inferred resources. For Fiscal 2014 (FY2014) Edikan will produce gold in the range of 130,000 to 193,000 ounces of gold.

EGM’s large reserve guarantees that mining and processing will last for at least a dozen years.

Perseus has maintained production levels while the gold price is in a downward trend, and will look to increase production if the price improves, building on its already-strong revenue stream.

‘Gold from Perseus’ Sissingué project in Côte d’Ivoire is a higher grade, but comes from a much smaller deposit than Edikan’

Sissingué Project development Gold from Perseus’ Sissingué project in Côte d’Ivoire is a higher grade, but comes from a much smaller deposit than Edikan. Perseus is currently researching a less capital-intensive way to operate the Sissingué project; part of this plan includes looking into the metallurgy at the site w w w. p e r s e u s m i n i n g . c o m

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BRINGING MORE TO MINING

Perseus Mining

AMS - African Mining Services Established in 1996, African Mining Services (AMS) is one of the largest contract mining companies in Africa.

The company provides a complete range of surface contract mining services to resource companies across the region. Its roster includes full drilling and exploration, load and haul, drill and blast, and grade control.

In 2010 AMS secured a mining contract from Perseus Mining for work on the Central Ashanti gold project in Ghana. The contract, which is projected to generate $300 million in revenue over five years, is for complete service including grade control, drilling and blasting, loading and hauling ore and waste and crusher feed. The project commenced in October of 2010 and is expected to be completed by September 2015.

As parent company to AMS, Ausdrill Limited is an integrated mining and energy services group. The company provides an extensive array of global services including exploration, mine development, surfacing and underground mining, manufacturing, energy, and infrastructure services.

Ausdrill is an ASX 200 company employing over 4,500 people in 19 specialist mining and energy businesses across nine countries.

Servicing key African countries – Ghana, Mali, Burkina Faso, Cote D’Ivoire, Tanzania and Zambia. AMS is a wholly owned subsidiary of Ausdrill Limited.

MINING

and materials in the area. The company is close to identifying a route that will deliver a far better outcome than originally envisaged, and a plan to move forward with this route will be applied near the end of this year.

Growth Continuous improvement strategies at Perseus have two broad forms: formal and informal business improvement programs. The formal programs are for identifying the larger, more discernible concerns or ideas that would affect large parts of the business or the company as a whole. Employees from the ground up are encouraged to recommend any ideas for the informal business improvement programs; these are small-scale improvements that can be made to day-today work.

In Ghana, employees from all levels of the organisation have made many of the productive informal suggestions. If these informal programs require research or investigation, they are upgraded to formal programs.

Currently, Perseus is looking to make improvements to the processing side of the business, including mechanical changes to how it processes ore. These changes will be responsible for significant w w w. p e r s e u s m i n i n g . c o m

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Exploratory drilling core sample

Perseus Mining

MINING

benefits in the form of increased throughput rates and improved recoveries. On the mining side, Perseus is looking into how it blast ore. The goal with this research is to improve how the ore breaks by a change in drill patterns, leading to a potentially easier mining process and better working conditions.

With the gold price cycle down, F2014 has been a stabilising year for Perseus. The company has reduced costs by introducing cost-effective alternatives and improving efficiency. Plans for F2015 (which starts in July) include expanding the Sissingue project and increasing production levels at Edikan.

Performance improvement plan 1. Optimise Edikan Life of Mine Plan focussing on maximising cash margins and increasing NPV 2. Focus on process improvements at Edikan 3. Focus on reduction of costs across the company 4. Focus on efficiency of capital deployment

Analysts’ outlooks Evans and Partners latest research report on Perseus shifted its rating from Neutral to Positive, as early production statistics for the March 2014 quarter showed promised and followed on from a strengthened performance in the December

Employee training

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Perseus Mining

MINING

Employee training and incentives Intensive on-the-job training was an absolute necessity for Perseus coming into Africa. Fifty percent of the workforce is made up of locals from five different villages that surround the Edikan mine, and most had had no industry experience.

Because of this, up to eight employees are solely involved in training the workforce.

Although building and training a workforce from scratch takes a lot of investment and time, it was worth it. Perseus has had the opportunity not only to build a close relationship with the community, but also has been able to train its workers from the beginning.

Perseus offers both short- and long-term incentive programs for its employees. The short-term programs are KPI (key performance indicator) based, and include extra funds for achieving or exceeding certain outcomes. A small

‘In its latest Gold Sector Review, Credit Suisse increased its target price for Perseus to $0.65/share (from $0.64/sh) with an Outperform rating’

100 95

Gold Recovery % Actual

Budget

90 85 80 75 70 65

FY-12-Q1 FY-12-Q2 FY-12-Q3 FY-12-Q4 FY-13-Q1 FY-13-Q2 FY-13-Q3 FY-13-Q4 FY-14-Q1 FY-14-Q2

2013 quarter. Analyst Cathy Moises put a target price of $1.13/share on Perseus, saying, “We see [Perseus] as a key recovery play in CY14 as plant problems appear largely resolved and the realisation of the revised mine plan at Edikan.

Perseus is trading at less than half our current valuation; with a strong balance sheet and an eminently achievable business plan.”

In its latest Gold Sector Review, Credit Suisse increased its target price for Perseus to $0.65/ share (from $0.64/sh) with an Outperform rating (previously Underperform).

The company’s gold recovery production performance began to stabilise and improve through 2012

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Perseus Mining

MINING

portion is allocated towards the full company, another percentage is allocated to the Ghanaian business, yet another to individual departments, and another to individual performance.

The long-term incentive program corresponds to company performance among a selection of its peers. If the total shareholders’ returns generated by the company are in the top 25 percent of a selected peer group of companies, then the rights to acquire shares at no cost are vested with that individual. This aligns with shareholders’ interests, so if Perseus is generating significantly better returns for its shareholders than other companies, the share prices are going to go up, and these rights will become more valuable.

Edikan Total Rehabilitated to Natural (76.85 Ha or 10.47% of the Total Land Disturbed) Edikan Total Land Disturbed (733.77 Ha) Edikan Total

Contributions to the surrounding community People may think that the environmental standards in a developing country would not be as high as the rest of the world, but Perseus

Rehabilitated for Erosion Control (32.95 Ha or 4.49% of the Total Land Disturbed)

Perseus continually reclaims and re-vegetates the land

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Perseus Mining

‘It is one of Perseus’s biggest priorities to maintain good relationships with their community’

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In the Edikan

has found the opposite to be true. The high environmental standards, although expensive and intensive to meet, are motivation for the company to better its social licence.

To make sure it leaves the site better than Perseus found it, the company continually reclaims and re-vegetates the land where it can.

It supports a large nursery which grows trees and grasses from seedlings to maturity. Another important environmental initiative includes monitoring ground water.

As stated earlier, five surrounding villages supply around 50 percent of Perseus’s workforce.

Some communities were relocated ahead of operations commencing at Edikan, with Perseus compensating those affected. Currently the company is building a subdivision that will include

community Perseus runs several health and education programs

‘CEO and Managing Director Jeff Quartermaine realises the community, mine and company are inextricably linked’

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Perseus Mining

Edikan Mine

‘In the future, the company aims to become a multimine operator to provide multiple income streams and increase its stability in the region’

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400 dwellings when completed.

CEO and Managing Director Jeff Quartermaine realises the community, mine and company are inextricably linked, and that Perseus’s presence and ability to operate in the area is only as good as the company’s social licence. Because of this, it is one of Perseus’s biggest priorities to maintain good relationships with its host community.

Perseus has been responsible for several health and education programs in the community.

The company has donated material supplies to primary schools, and has financed close to 100 scholarships to technical college students in the nearby city of Kumasi. Perseus is also considering extending its programme of educational support

MINING

Company Information Industry

Mining Central Ashanti Gold Project (CAGP) headquarters

Perth, Australia founded

2011 employees

750 (1,000 contractors) Edikan Mine revenue

to members of its host community by offering scholarships for university-level education.

Even though Perseus is a relatively young company, it is financially strong; the company has cash on board, no debt and a modest amount of hedging as a buffer against collapse in the price of gold. And while F2014 was about stabilising, F2015 will be about moving forward.

In the future, the company aims to become a multi-mine operator to provide multiple income streams and increase its stability in the region.

Perseus has a successful group doing grass roots exploration, so the path for growth will most likely lead towards an organic option, rather than an acquisition.

$293m products/ services

Gold

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Minera Penmont (Fresn A bright future in the product Carrying a mining legacy for Mexico Written by: Rebecca Castrejon Produced by: Taybele Piven Interviewee: Jose Arturo Arredondo Morales, general manager

nillo PLC): tion of gold

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M i n e r a P e n m o n t ( F r e s n i ll o P L C )

F Dore gold and silver bars

Mine La Herradura

122

June 2014

or the past five years, the mining company, Minera Penmont, has strengthened operations and doubled in production, reaching revenues of more than $700 million annually.

In addition of being the main gold producer for Fresnillo PLC, Minera Penmont has quality certified operations that earned them national recognition, such as Six Sigma, philanthropy and social responsibility awards, as well as their prestigious leadership position in the mining sector.

As part of Fresnillo PLC Group, they ranked among the leading mines in the domestic market, with an estimated production of 480 thousand ounces this 2014. “As a company we are among the top three producers in Mexico, but as a mining unit we are number one nationwide,� says Arredondo.

Strategic Administration It was 13 years ago when Jose Arturo Arredondo, engineer and current CEO of Minera Penmont, began working in the unit after graduating from Mining Engineering and Plants Benefit from the University of Guanajuato in 1975. Since then, Arredondo has held various positions in the mining industry.

Such experience gave him operational knowledge of the business and the confidence to achieve greater and better results in open pits by optimizing the unit.

In December of 1987, Arredondo joined the

M ining

PeĂąoles Group (now Fresnillo PLC) to operate his first job within the mining unit as superintendent of planning and engineering.

Years later, he took the position of mine superintendent and in 2008 he achieved the general manager post in Mine La Herradura.

The Mining Market in Mexico The mining industry received an economic impact in 2008, after the decline in metal prices. This drastic change strengthened gold producers by raising the market price from $870 per ounce, up to $1,800 during 2012. “This gave us room to invest in exploration, and to prepare and open two additional pits,� recalls Arredondo. The company took advantage of the commercial rates by starting constructions in: Mine Soledad & Dipolos (between 2008 and 2009)

Who We Are We are a group of leading Mexico-based precious metals. Our flagship mine has been in operation for almost 500 years. Our people, experience and strategy for growth will help them succeed in the coming years

Laboratory Robotics

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Arturo Arredondo, CEO of Minera Penmont

M i n e r a P e n m o n t ( F r e s n i ll o P L C ) and Mine Noche Buena (between 2010 and 2011), to address operations between 2010-2012.

These openings increased production exponentially, almost doubling their output from 260 thousand ounces in 2009 to 490 in 2012.

After the Tax Reform came into effect in early 2014, various industrial sectors experienced a production drop in operations due to increased fees on mining concessions, the rise of taxes for investment in mining mandatory funds (outside of unifications) and for royalty investments by the company. In addition, they suffered an accentuation of 7.5 percent of production tax, with an added 0.5 percent for gold and silver producers, among others.

“This will affect several mining units due to a decrease in profit margin, it may even close some projects,” says Arredondo.

mining

Investing through the metal price cycles, delivering growth through development projects and maximizing the potential of existing operations, will continue to be a hallmark of our

Progressive Projects Through a system of continuous improvement in Minera Penmont, they have upgraded the duration of processes, among which are: 1. The opening of the Dynamic Leaching plant.

strategy.

“As a company we are among the top three producers in Mexico, but as a mining unit we are number one nationwide” – Jose Arturo Arredondo, CEO of Minera Penmont w w w. f r e s n i l l o p l c . c o m

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www.hanka.com.mx

M i n e r a P e n m o n t ( F r e s n i ll o P L C ) With an investment of $120 million, the plant opened in March 2014, with a capacity of 8,000 metric tons per day (MTPD). The site will improve the metallurgical recovery up to 93 percent, which translates in an additional 20 percent in terms of economic value.

2. Exploration in Pite Centauro. This site currently processes mineral with laws greater than 1.8 GR/AU per tonne. In less than five years they expect to generate high-grade resources, for their process in Dynamic Leaching Plant, through direct labor and diamond drilling in mineralized depth structures at Mine La Herradura.

3. Optimize productivity at Merrill Crowe and Noche Buena Plant. They are increasing the treatment capacity to withstand the fall of ore treated. At Merrill Crowe they will expand production from 1,800 to 2,500 cubic meters per hour, and at Noche Buena from 900 to 1,600 cubic meters per hour.

mining

Our longevity in the industry and the performance of financial markets is based on many competitive differentiators

Forefront Operations With operational leadership in mind, Minera Penmont invested more than $90 million in equipment, such as shovels 60/60 Caterpillar and a fleet of 793-Caterpillar trucks with a loading capacity of 240 tons. The above acquisitions were made in order to sustain the pace of operations, recover some production deficit for the closure of Soledad & Dipolos and to increase production in the main pit (Pit Centauro).

Their investment in exploration, acquisition w w w. f r e s n i l l o p l c . c o m

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www.gs-mx.com

ventas@gs-mx.com

M i n e r a P e n m o n t ( F r e s n i ll o P L C )

mining

of the latest technology in several areas of the operation and their strategic production of mineral resources, promoted the growth in operating pits and a continue search for new deposits.

“Our greatest strength is the mineral resources that are available to us, having invested in exploration and verifying that the deposit is of economic interest, these have allowed us to have greater permanence in the mining sector,” says Arredondo.

Developing Skills Minera Penmont provides training with modern equipment, the personnel has drilling exercises through a machinery simulator of high-capacity trucks, wheel loaders, shovels, tractors, etc. This mechanism accelerates the learning process, raises technical skills and reinforces the employee knowledge.

“We give the opportunity to train in a secure environment for both the staff and the equipment,” says Arredondo.

Dynamic Leaching Plant

Advanced Automation The vast production in Minera Penmont requires modern equipment and advanced technology

“Our greatest strength are our mineral resources” – Arturo Arredondo, CEO of Minera Penmont

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www.grupo-vysisa.mx reprosi@prodigy.net.mx

M i n e r a P e n m o n t ( F r e s n i ll o P L C ) to keep them in the industry’s competitive edge.

An example is the use of Mine Star system to populate the fleet and mining equipment to carry, reduce downtime and increase productivity.

The effectiveness of the Mine Star program has resulted in preventive maintenance in their operations by identifying materials and travel destinations. It also interfaces with other systems, which facilitate data collection.

Robotics is also present in the lab area of Minera Penmont, where robots prepare samples, thus increasing output in La Herradura mining unit. This technology is in the process of being installed in Mine Noche Buena.

Green and Responsible The sustainable development policy in Minera Penmont is implemented through the Health, Safety, Environment and Community Relations System (SSMARC), which examines the adequate form of exploration, exploitation and processing of minerals.

Within their responsible range, the company collaborates with the following: • Ecological: Respecting environmental policies inside and outside the mine.

• Social: Working in harmony with customers, suppliers, staff and the general public.

• Economic: Maintaining profitability and ensuring a secure source of income for all jobs.

(SSMARC) is associated with the regulations ISO 14001:2004 and OHSAS 18001:2007, which mentions the environmental hazards to workers,

mining

“Our greatest strength mineral resources are available to us, having invested in exploration and verifying that the deposit is really a big economic interest allows us to have greater permanence in the mining sector” – Arturo Arredondo, CEO of Minera Penmont

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M i n e r a P e n m o n t ( F r e s n i ll o P L C )

“As a company we are among the top three producers in Mexico, but as a mining unit we are number one nationwide” – Arturo Arredondo, CEO of Minera Penmont

Mine Noche Buena Pit Noche Buena

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June 2014

mining

equipment and facilities of the mining unit.

“We met the three main aspects of sustainable development, ecological, social and economic.

We respect and comply with all environmental regulations that apply to us,” says Arredondo.

Growth Plans To sustain their leadership they seek to produce 62 million ounces of silver and 500 thousand ounces of gold in the various units of Fresnillo PLC by 2018. Therefore, they started to increase the movement of material in Mine La Herradura and Noche Buena.

With Peñoles Group they delivered their entire metallurgical production to Met-Mex Peñoles, who then refines and markets substances in Mexico and abroad. Additionally they attributed 56 percent of their gold production to Fresnillo PLC and 44 percent to their partner Newmont.

Company Information Industry

Mining Headquarters

Sonora, Mexico Founded

1972 employees

1,350 key people

Jose Arturo Arredondo Morales (general manager) Services

Projections With the upcoming opening of an underground mine in Tajo Centauro and the increased exploration and preparation of pits, Minera Penmont objectives are more than feasible to sustain a production of 600 thousand ounces of gold per year.

“While we depend on metal prices to visualize the future, we have strategic plans which determine our way forward in the long term,” says Arredondo.

Producers of gold, silver and minerals. Petroleum exploration revenue

USD $720 millions website

www.fresnilloplc.com

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Discovery Metals goes underground for copp

The Botswanan exploration and production expert is build the Zeta project, one of three proposed underground mine Written by: Tom Wadlow Produced by: Anthony Munatswa

per in Boseto heartland

ding on impressive copper and silver outputs with es planned to boost lifespan and capacity

135

D i s c o v e r y M e ta l s

D Mine workers

Primary Crusher reinforcing bar

iscovery Metals is set to open up new opportunities underground at its flagship Boseto asset as it looks to maximise exploration possibilities in the north-western region of Botswana.

Having commenced production of copper and silver at its heartland in 2012, the company has been given the first green light by the government to increase production capabilities to around 50,000 tonnes of copper per annum, extending the site’s lifespan from 15 to 25 years if all three expansions go ahead.

The Australian-founded group, renamed Discovery Metals from Discovery Nickel Limited in 2006, also has important operations outside of Boseto in copper, manganese, gold and nickel.

A key ethos behind its continuing exploratory work is sustainability both in its treatment of people (employees and locals) and the environment, ensuring that existing and new developments deliver optimum national benefit while avoiding undue natural harm.

‘These are exciting times for Discovery Metals which will allow the development of our underground mining programme to progress’ – CEO, Bob Fulker 136

June 2014

M ining

Key Personnel

Jeremy Read Chairperson

Boseto Copper Project

Going underground The Botswanan government granted approval for the first of three expansion projects at Boseto in April, giving the go ahead for the proposed commencement of the Zeta underground mine, which will produce around 1.5 million tonnes at 1.3 percent copper per annum.

The mine has ore reserves of roughly 7.3 million tonnes, also including significant reserves of silver.

In a company press release, CEO Bob Fulker said: “These are exciting times for Discovery Metals which will allow the development of our underground mining programme to progress and is consistent with the new overall strategic direction of the company to develop

Ribson Gabonowe Non-Executive Dir.

Russell Luxford Non-Executive Dir.

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supplier p r ofi l e

DR

D com Sub Sa DTH a

W

Head Office: T: +27 14 573 3444 • F: +27 14 573 3555 • E: info@discoverydrilling.co.za Botswana: T: +26 7 261 5870 • F: +26 7 261 5775 • E: louw@discoverydrilling.co.bw

RILLING DYNAMICS DONE DEEPER

Discovery drilling is one of the leading diamond drilling mpanies in South Africa, drilling any where south of the ahara. Drilling from BQ to T6-146 size core. We also do and RC drilling and we manufacture our own drill rigs.

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www.discoverydrilling.co.za

D i s c o v e r y M e ta l s

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Primary crusher with lights on 140

June 2014

our underground mineral resources.�

There is also potential for two more underground mines (North-East Mango 2 and Zeta North-East) which will further bolster production, increase employment and bring greater benefits to local businesses and communities.

The ultimate aim is for the three underground sites to keep the 3.2 million tonnes per annum Boseto mineral concentrator running at maximum throughput and capacity.

minig g l o ba l

Copper heartland In September 2012, the 100 percent-owned Boseto Copper Project was officially opened by the President of the Republic of Botswana, His Excellency Seretse Khama Ian Khama, accompanied by Vice President and Minister for Mines, Energy and Water Resources, Dr Ponatshego Kidikilwe.

It is one of the country’s biggest producing sites, with 18 million tonnes of material mined in the six months to December 2013. In this

‘Boseto... is one of the country’s biggest producing sites, with 18 million tonnes of material mined in the six months to December 2013’

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D i s c o v e r y M e ta l s

Concentrate bags ready for shipment

period some 24,495 tonnes of concentrate was produced, containing 9,057 tonnes of copper and 327,062 ounces of silver.

April 2014 was a record-breaking month for copper production at Boseto, with the 2,011 tonnes produced its highest ever, beating the previous high marker of 1,915 seen in July 2013.

The base is situated on the everproductive Kalahari copper belt, an area which the company has targeted for further exploration in the coming years.

At present Discovery Metals holds 18 prospecting licences covering 10,513 square kilometres in the Kalahari Copperbelt of north-

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M ining

west Botswana. The prospecting licences extend from 60 kilometres south-west of Maun through to the Namibian border, a distance of more than 280 kilometres.

Discoveries beyond copper Though the main focus of Discovery Metals is on Boseto, it also operates in metals beyond copper and silver.

Staying in the Kalahari region, the company holds 17 prospecting licenses (15,000 sq km) as part of its manganese exploration work.

It has also carried out important preliminary exploration of Kraaipan gold in southern Bostwana, directly along strike from significant gold deposits in South Africa, including the well-known Kalgold deposit, which has over four million ounces of gold up to 150 metres underground.

Nickel is another area of interest for Discovery Metals, demonstrated by the Dikoloti Project, a joint venture with The Japan Oil, Gas and Metals National Corporation (JOGMEC) in the north east of Botswana.

The area in question covers 283 sq km and has four nickel-copper deposits with a combined historic resource of 182 million tonnes.

Sustainable ethos What will enable Discovery Metals to make the most of its ongoing and planned exploration and production work in Botswana and beyond

Moving through the crushing circuit

‘Staying in the Kalahari region, the company holds 17 prospecting licenses (15,000 sq km) as part of its manganese exploration work’

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D i s c o v e r y M e ta l s

Boseto Copper Project

Boseto crushing circuit

144

June 2014

is its sustainable mantra, incorporating both the environment and local people.

In 2012, the company published its first sustainability report, a detailed 11-page document outlining its efforts to create a sustainable and ethical operation.

On the environmental side it is committed to minimising harmful impacts in the short term by deploying rigorous dust extraction methods, and in the long term by using diesel to power vehicles and generate electricity. Other areas such as local biodiversity and water use are monitored closely and involve consultation with stakeholders.

From a human perspective, the Boseto Project was set up without the displacement of any citizens as the site is 20 kilometres from the nearest settlement. Despite this, it has still offered

M ining

Company Information Industry

Mining headquarters

Gaborone founded

2003 (Discovery Metals named in 2006) Key People/

communities blighted by high unemployment the opportunity to gain apprenticeships and work.

Within the company, staff are put through an intensive training programme which includes induction in computer skills, administrative processes, safety, risk management, archaeological finds, environment, equipment operation, process operational procedures, driving, technical aspects, and on the job training.

The company employs three expatriate and several local trainers and supports the programme by the use of consultants.

As more exploration and production opportunities spring up at Boseto and in other parts of Botswana, Discovery Metals looks well-placed to play a vital part in the country, maximising its undoubted minerals potential.

Titles:

CEO, Bob Fulker employees

500 revenue

R500 million products/ services

Copper, silver, nickel, gold, manganese

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Venetia Mine prolongs life into the 2040s with a R20 billion developme

South Africa’s largest diamond mine is transforming its ope from open pit to underground, thereby sealing both its futu of the community it operates in Written by: Sheree Hanna Produced by: John Holliman

ent

erations ure and that

1 14 7

V e n e t i a M i n e (De Beers Consolidated Mines Pty Ltd)

“I believe we have managed to steer through most of the turmoil mines have seen of late through the social space and community involvement, by trying to understand the real needs of the community and by making a contribution� – Ludwig von Maltitz, GM

D

iamonds are forever, and while the life of the Venetia Mine will eventually come to an end at some point in the future, that future is safeguarded thanks to a R20 billion ($2bn) investment which will extend the life of the mine into the 2040s.

The diamond mine, which is located in the north of South Africa close to the Zimbabwe border some 80 kilometres west of Musina, has launched the construction phase of the Venetia Underground Project which will transform the open pit operation to an underground mine.

The project was launched in October 2013 and is a major boost for sustainable employment at the mine and amongst suppliers and the local communities. Additional jobs will peak at just over 1,100 in 2016 to 2019 during the lateral development and infrastructure phase of the underground project.

The mine was officially opened in August 1992 and is owned by De Beers Consolidated Mines (DBCM) which, since the Oppenheimer family sold off their 40 percent stake in the De Beers Group, is now a part of, and 85 percent owned by the global mining group Anglo American Plc. Within the mining community, Venetia has built a solid reputation for its health and safety, environmental, corporate social responsibility and community-driven ethos which has seen it develop healthy relationships with external stakeholders.

c o n s tru c ti o n

Infrastructure phase of the underground project

While the platinum sector and other parts of South Africa’s mining industry have been tainted in recent months and years by industrial disputes such as the tragic events of the Marikana Massacre in August 2012, the diamond sector and Venetia Mine have not been adversely affected.

Making a contribution General Manager Ludwig von Maltitz said: “We have built up good relationships with the National Union of Mineworkers respecting the impact and role that they play within the business.

I believe we have managed to steer through most of the turmoil that mines have seen of late, focusing as we do on the social space and on community involvement by trying to appreciate

Exploration workers

“We have built up good relationships with the National Union of Mineworkers” – Ludwig von Maltitz

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Venetia Mine

MINING

President Jacob Zuma

and understand the real needs of the community and by making a tangible contribution to alleviate some of their challenges.”

The development of the underground mine, which is set to begin producing diamonds in 2021 dovetailing with the winding down of the open pit operation, will in itself create new opportunities for the local communities.

“Underground mining offers a new platform for skills development,” explained von Maltitz.

“People have the opportunity to transition from open pit to underground and this will provide long term employment, adding another 20 years to the life of the mine and to associated businesses.”

Job numbers will rise during the construction phase and in 2021 when the underground operation begins Venetia mine will support 6,625 jobs of which 1,482 will be at Venetia and 5,143 elsewhere supporting the mine’s activity. About

launches construction phase of De Beers Venetia Underground Diamond Mine

6,625 Number of jobs to be supported

by Venetia Mine in 2021

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supplier profil e

Inspection & Quality Services (Pty) Ltd

Services provided by IQS:

Appointed Project Quality Management Service Provider for Venetia Underground Project

• Project Management & Consulting • Quality Assurance & Quality Control • Welding Consultation & Services • Non Destructive Testing (UT,MT,PT,RT) • Accredited Hull Gauging Services • Rope Access Inspection • Wire Rope Inspection & Condition Monitoring • Heat Treatment Services • SHEQ Development & Auditing • Boiler, Heat Exchanger Tube Inspection

Celebrating 25 years of Inspection and Quality Services

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Venetia Mine

MINING

Sorting diamonds

3,000 employees and contracting partners currently work at the open pit mine.

“The Venetia Underground Project team have constructed a terrace, and developed a portal with related infrastructure. This includes beginning to sink two shafts which will have associated headgear and tunnels to give access to the Kimberlite ore,” von Maltitz said.

Since the commissioning some 23 years ago, about 100 million carats have been mined and currently production averages three to four million carats a year.

“..about 100 million carats have been mined and currently production averages three to four million carats a year”

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supplier pr o f il e

Mine Training And Development

Prisma Training Solutions is a MQA Accredited Company and ISO 9001 Certificated. Prisma Training Solutions has been a premier training provider in the mining industry since (2007).

Prisma Training Solutions is a MQA Accredited Company and Being MQA accredited clients are guaranteed to receive ISO 9001 Certificated. Prisma Training Solutions has been a industry-qualified expertise andmining service.

An added premier training provider in the industry sinceincentive (2007). for clients need of up-skilling current staff, is Prisma’s Being MQAinaccredited clients are for guaranteed to receive various solutions uniquely for any industry-qualified expertise suited and service.

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Training provider for Mining Operations and Safety Training at: Training provider for Mining Operations and Safety Training ••BHP Billiton • Anglo Platimum De Beers - Openat: Pit Mines • FQML (Zambia) *•BHP Billiton *•Anglo Platimum Coal De• Beers –Platimum Open Pit Mines •Anglo BHP Billiton Anglo * Anglo CoalCoal * De • Beers – Open Colliery Pit Mines Anglo Optimum ••Anglo Kumba IRON ORE • Optimum Colliery * Sichen * Optimum Colliery •Assmang Anglo Kumba IRON ORE • UMK UMK *•Assmang *•UMK • Assmang • Moolmans (Aveng) PMC Moolmans (Aveng) *•PMC *•Moolmans (Aveng) • Swakop Uranium Husab (Nambia) • MCC Koidu Holdings (Sierra MCC *•Koidu Holdings (Sierra Leone)Leone) *•MCC •FQML Koidu Holdings (Sierra Leone) • Goldfields (Ghana) *•FQML (Zambia) *•Goldfields (Ghana) (Zambia) Goldfields (Ghana)

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Venetia Mine

MINING

The company cares about the community

Community support The majority of the permanent workforce is located in Musina and Blouberg and the company provides buses to transport them safely to the site.

The focus on community is planned in Venetia’s Social Labour Plan in which 56 million rand has been set aside over the next five years to finance various impactful projects.

The company is a keen supporter of education, skills development and training, infrastructure development, the environment and enterprise development. The De Beers Venetia Zimele Business Hub supported and run near the mine drives development and mentors entrepreneurs.

56m Rand The sum set aside for Venetia’s Social Labour Plan

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Venetia Mine

11

Number of new schools the company has assisted in building in the last 10 years

In partnership with the Department of Education and Limpopo Educational Trust the Company has assisted in building 11 new schools over the past 10 years and is involved in a programme aimed at reducing class sizes from the huge 60 pupils to one teacher ratio currently in existence in some schools.

Employees are afforded plenty of opportunities to develop their own skills and abilities through the on-site Skills Development Centre which carries out a wide variety of programmes in both technical and non-technical training.

The Company also adheres to the South African Mining Charter and is keen to promote employment equity programmes for all. “I am proud to say that I have a diverse management team representative of both gender and race with five women in the senior team of eleven,� said von Maltitz.

Safety first The General Manager is passionate about the health and safety of all employees and visitors to the operation. To achieve zero harm is the ultimate objective and this is underpinned by making safety a core value, showing care and respect and believing that zero harm is achievable.

He said: “We put a lot of time, money and effort into ensuring that our mine is both a safe and healthy place to work. We have a range of wellness programmes and every day, as

c o n s tru c ti o n

“We put a lot of time, money and effort into ensuring that our mine is both a safe and healthy place to work” – Ludwig von Maltitz

Xxxxxxxx

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Venetia Mine

Environmental management is taken extremely seriously

one part of our safety practice, every employee is tested and expected to test ‘zero’ for alcohol.

“We don’t put other people’s lives at risk, but practice the principle of care and respect, which is well aligned with the values of our company, employees, contractors, government and the union.”

Venetia cares about its surrounding environment

160

Environmental Environmental management is taken extremely seriously by the company. De Beers embraces the management of the nearby Venetia Limpopo Nature Reserve (VLNR) as a unique part of its business.

MINING An environmental monitor at Venetia Mine in South Africa empties samples from dust buckets that collect atmospheric dust for laboratory analysis

As well as having to comply with stringent government regulations, the mine’s Environmental Management Plan is aimed at meeting international standards and adopting leading practices.

Von Maltitz explained: “We are implementing a biodiversity action plan which aims to manage not just the area surrounding the mine but all that it impacts upon.” The intention of the plan is to undertake concurrent rehabilitation, where environmental work is carried out progressively in order to ensure that the mine is fully integrated with the Venetia Limpopo Nature Reserve once it reaches the end of life.

“We are implementing a biodiversity action plan which aims to manage not just the area surrounding the mine but all that it impacts upon” – Ludwig von Maltitz http://www.debeersgroup.com/ImageVaultFiles/id_2103/cf_5/DeBeers_RTS_Enviroment_feature.PDF

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Venetia Mine

Terex 50-tonne shovel is used at Venetia mine

5,618 Number of tonnes treated at Venetia mine in 2012

162

Big contractors While Venetia Mine uses the leverage of its parent group to purchase supplies through a centralised system, there is a concerted effort to buy products and services locally and nationally as a preference.

At present there are a number of major companies engaged, providing services and consumables at the site including the likes of Eskom for power supply, BP Masana for diesel requirements, services from Barloworld Equipment for earth-moving equipment and African Explosives Limited for explosives.

The engineering and design company, TWP and construction company, Murray & Roberts, have been brought on-board to assist with the development of the underground mine.

MINING

Company Information Industry

Mining headquarters

Johannesburg, South Africa founded

BP Masana supplies the mine’s diesel requirements

Von Maltitz, a Namibian who has lived in South Africa for the past 25 years and been employed at Venetia Mine since 2008, believes a diamond perfectly symbolises the values of a De Beers mining operation.

“You can link our unique product to its values,” he said. “A diamond captivates moments you want to remember and its brilliance is a reflection of what you want to be and what your impact can be on the world.

“You can be a shining example to others and we have to consider our impact on the people and places around us today and forever. If you are emotionally connected to what you do, then you are more committed to leaving a lasting legacy,” he concluded.

De Beers Consolidated Mines Pty Ltd in 1888, Venetia Mine was officially opened on 14 August 1992 employees

2,416 DBCM employees in South Africa revenue

Not disclosed products/ services

Diamonds

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