LP_Sask Mining Report_May 24

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R e g i n a L e a d e r - P o st & S a s k at o o n Sta r P h o e n i x

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Pam Schwann, president of the Saskatchewan Mining Association, is optimistic about the future of the industry which includes increased exploration investment and major projects on the horizon. But she says there are still challenges ahead. M AT T S M I TH

bright spots in tough industry Province’s potash, uranium and gold have good news stories to share A l e x M a c Ph e r s o n

It has not been an easy few years for Saskatchewan’s multi-billion dollar mining sector.

Persistently weak commodity prices have forced the province’s largest mining companies to cut costs and scale back production.

The uranium sector has been especially hard-hit, leading to the shuttering of two mines and a mill in northern Saskatchewan.

Investment in exploration — critical work aimed at establishing the next generation of mines — has also tumbled.

Cameco Corp. said earlier this year it has no plans to continue developing its three main uranium plays in 2019, for example.

The head of the province’s min-

ing association acknowledged that 2018 was another year of “mixed” results while at the same time pointing to growing optimism in potash, strong results in gold and hints of positive news in uranium.

“We’re going to have a full few years ahead of us,” says Pam Schwann, whose association — one of the province’s most powerful — represents dozens of mining and exploration corporations with investments in Saskatchewan.

P o ta s h Potassium chloride is Saskatchewan’s most abundant natural resource, and the one most closely linked to the province’s identity.

Three companies currently mine it at a total of 10 sites across the province, mostly around Saskatoon.

The industry has undergone significant change over the past year, after prices — which peaked at around US$900 per tonne in 2008 — collapsed to around US$200 per tonne amid an oversupplied global fertilizer market.

The most significant change was the merger that created Nutrien Ltd., which combines Potash Corp. of Saskatchewan Inc.’s potash mining business with Agrium Inc.’s sole mine and vast network of retail outlets.

Excluding a dust-up with the Saskatchewan government over the location of its most senior executives, Nutrien had a banner year, earning US$3.6 billion on sales totalling US$19.6 billion, with greater profits expected for 2019.

Mosaic Co., which operates three

of the province’s 10 potash mines, reported record production last year. Its chief executive similarly expressed optimism for 2019, largely due to the ramp-up of its massive K3 mine near Esterhazy.

K+S Potash Canada, meanwhile, said its new solution mine near Bethune — the province’s first greenfield potash operation in a generation — hit its 2018 production target and achieved positive earnings before taxes for the first time.

Schwann says those results appear to underscore the sense of optimism emerging from the sector last year, after a period marked by cost-cutting and, in PotashCorp’s case, the closure of a brand-new mine in New Brunswick.

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Uranium sector targets costs with hopes of recovery in prices m a c p h e r s o n f r o m H1

While prices have remained comparatively weak, they were strong enough to allow the mining companies to keep their operations running “fairly continuously” without flooding the market with excess fertilizer, she says. However, there are still challenges.

“We’re facing a lot of cost increases that we can’t pass on,” she says, referring to the federal carbon tax as well as the provincial government’s controversial decision to abruptly change the potash royalty regime, resulting in a $117 million hit to the industry.

“We have to somehow make sure that we are producing at a cost that is less than what our Russian and Belorussian competitors are producing at. If we can’t, we’re not going to keep that market share,” she adds.

K+S Potash Canada’s Bethune operation uses traditional solution potash mining.

T ROY F L E E C E F i L E s

Size doesn’t necessarily matter as much anymore Innovation, technology and exploration key to industry’s future, executive says Joel SchleSinger

Gensource Potash Corporation aims to be a small operation among giants in Saskatchewan’s mining industry. In fact, the would-be potash miner wouldn’t have it any other way.

To its chief executive, Mike Ferguson, bigger isn’t always better these days, especially with the risks involved in going huge, a strategy that had largely dominated thinking in the mining sector globally for several years.

“But now there is a trend to go smaller for a couple of reasons,” says Ferguson, who heads up Gensource, currently in a financing phase to build a project near Tugaske and Diefenbaker Lake.

“One, commodity prices have been relatively low, so to get things moving, this is what has to be done to facilitate financing.”

And two, existing megaprojects have shown how costs of construction can spin out of control, he says.

Certainly, the province’s largest miners — Nutrien with potash, and Cameco with uranium — have felt the sting of low prices for the commodities they produce, says Al Shpyth, executive director of International Mineral Innovation Institute, whose members include both companies.

“Potash and uranium are both challenged by the price they’re able to realize for their commodity,” he says. “You’ve seen the uranium industry respond to the low price environment by suspending operations.”

Amongtheclosuresare Cameco’s McArthur River mine and its Key Lake milling operations in 2017.

While recent times certainly bolster the notion that going big in today’s mining industry doesn’t always equate with big profits, Shpyth argues that companies such as Gensource are not necessarily proving smaller is better.

Rather, the firm’s efforts highlight the importance of innovation in the industry.

“We do see innovation and technology as critical to our industry surviving and thriving in the current and future marketplace,” says Shpyth.

More and more companies, large or small, are implementing new

technologies, including a growing array of connected equipment used underground to improve worker safety and automated vehicles for open-pit operations. As well, they are leveraging big data analytics throughout their operations to increase efficiency and reduce costs.

The potential savings for large companies are massive. According to a 2017 study by the World Economic Forum with Accenture Strategy, the mining sector could collectively realize about $190 billion in economic benefits over 10 years from digital transformation.

That’s about three per cent of all revenues the industry generates worldwide, Shpyth says.

Ferguson points to a number of innovation processes Gensource aims to implement. One is module mining involving selective solution mining.

Traditional solution potash mining was invented in Saskatchewan, and it’s still widely used, including at K+S Potash Canada’s Bethune potash mine. But this method involves tailings of salt waste. Selective solution mining does not, Ferguson says.

What’s more, the company plans to scale operations to meet customer demand. Even before putting a shovel in the ground to build a mine, Gensource has signed an agreement to supply a major fertilizer producer for 10 years. And for now, one customer is all the company needs.

“We could scale up these techniques for a big operation if we wanted to, but we purposefully entered this market to be small,” Ferguson says. “It’s all about scaling to the market conditions.”

Paul Benson, president and chief executive of SSR Mining Inc., a multinational firm that operates the Seabee Gold Mine in the northeast part of Saskatchewan, agrees innovation and technology are critical, as is exploration.

The company is investing US$6 million for underground and surface exploration activities at the Seabee gold operation, expected to produce more than 100,000 ounces of gold this year.

Size no longer matters as much, he says, but that doesn’t mean operations must be small to be via-

We could scale up these techniques for a big operation if we wanted to, but we purposefully entered this market to be small.

MikE FERgusOn

ble. Rather, projects must be more efficient.

“The key number to focus on is margins,” Benson says. “It doesn’t matter whether the mine is large or small. It’s about the ultimate cost per ounce, or tonne.”

Working in a supportive environment also helps.

“Saskatchewan is a very mining-friendly province and is supportive of mining,” he says of the province, which was rated the third most attractive jurisdiction in the world for mining investment by the Fraser Institute in February.

“From our perspective, the province’s mineral industry competes globally for sales and talent, and it will continue to do so in the future,” says Shpyth.

Adopting new technologies — from robotics to artificial intelligence — is pivotal in competing for the next generation of skilled workers as mining becomes more digitized.

“Firmswillneed,moreandmore, a technologically savvy workforce, combining technical mining skills with digital competencies, and at the same time we need to make mining more attractive to the younger generations.”

UraniUm Saskatchewan is also one of the world’s largest producers of uranium, which is used to fuel nuclear reactors around the world and is second only to potash in terms of its importance to the provincial mining sector.

All of the province’s uranium is mined by Cameco — the only major publicly traded company with its headquarters in Saskatoon — while Orano Canada Inc., a subsidiary of the French state-owned Orano SA, runs a uranium mill.

The sector has struggled mightily since the 2011 Fukushima Daiichi nuclear disaster forced the shutdownofeveryreactor inJapan,creating almost overnight a massive oversupply of uranium and a steep drop in prices.

Persistently weak prices led Cameco to temporarily shut down two mines and a mill in northern Saskatchewan and make deep cuts to its corporate office. Altogether, the company has shed around 1,300 jobs since 2016.

While there is little question the cuts have been hard on northern Saskatchewan, where Cameco’s operations are located, they also appear to be working. Earlier this year, the company reported its first annual profit since 2015.

Schwann points to that, as well as ongoing efforts to restart Japanese reactors and build new nuclear plants in countries such as China, as indications that the province will bewell-positioned when prices return to more normal levels.

“Once those come online, they’ll start really seeing demand for uranium increasing — and uranium prices going up as well,” she says.

Gold and Coal The Saskatchewan mining industry is most commonly associated with potash and uranium, but it also encompasses a gold mine north of La Ronge and a pair of coal mines in the province’s southeast, near Estevan.

SSR Mining Inc., which took over the Seabee mine in its May 2016 acquisition of Claude Resources Inc., reported another year of record gold production in 2018 — its fifth consecutive year in which records were set.

Partway through the year, the Vancouver-based company completed mining of the Seabee deposit while continuing work on the nearby Santoy deposit, which has been characterized as an extremely high-quality mine.

“That has been the vision for Seabee for a decade. It’s just that SSR Mining has been able to access more capital, to be aggressive on their exploration programs,” Schwann says of the newest player in Saskatchewan mining.

Schwann goes on to note that the province’s coal mines — operated

by Westmoreland Coal Co. — are “under a lot of pressure,” both from regulations and the move to replace coal-fired power plants with natural gas and renewables.

“They are maintaining the lights on, and thank goodness over the cold winter they were mining, but there’s a lot of cost pressures for our coal sector as well,” she says.

The FUTUre Schwann admits that the mining sector is still facing challenges, but she sees other positives beyond the province’s existing mining operations, including increased exploration investment and major projects on the horizon.

Those include BHP’s massive Jansen potash mine east of Saskatoon, where work on the shafts is about 80 per cent complete. The company’s board hasn’t given its final approval for the project yet, but work is continuing.

Star Diamond Corp., meanwhile, recently received its long-awaited environmental approval to build an open-pit diamond mine in the Fort a la Corne forest east of Prince Albert, while its partner, a Rio Tinto subsidiary, continues drilling on the site.

“They’re really giving this a good look,” Schwann says of the Anglo-Australian mining behemoth, whose involvement in the diamond mine project is widely regarded as a positive sign for its future development.

There is also interesting work happening on the uranium front, she says.

Schwann acknowledges that “exploration people are always the best optimists in the world,” but pointed to NexGen Energy Ltd.’s Arrow uranium project as another project that could be on the horizon.

“NexGen is being a bit more optimistic in that, in looking at the agreements with some of their partners … it’s a bit more vertically integrated. So that one we might not really be looking at decades for that.” amacpherson@postmedia.com twitter.com/macphersona

Contributing to a better world.

Today and tomorrow.

bhp.com SSR Mining Inc. expects to produce more than 100,000 ounces of gold this year out of its Seabee site.

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geologist digs his job Cameco analyst got his start exploring and mapping the north, writes Nadia Moharib.

Whether Shawn Harvey is examining deposits deep in the earth or volcano-hopping on family vacation — his love for geology runs deep.

The geoscientist, who works as a senior structural analyst of resource management with Cameco Corp. in Saskatoon, has been hands-on in his field since about 2005. And the 44-yearold can’t think of anything he would rather do. The pursuit of discovering what’s below the surface by following the clues, almost like you are blindfolded, still intrigues the man who says the “earth doesn’t like giving up secrets very easily.”

At the core of Harvey’s work is getting an understanding of what’s underground and determining if it is worthwhile to go in and mine it. Occasionally he returns to the wild (where he did mapping early in his career), but for the most part now his work travels take him to Cameco’s mine in northern Saskatchewan, with its nice kitchens and warm beds. Saskatchewan Mining Report chatted with Harvey about what makes him passionate about his work.

Q What led you to become a geologist?

A I went into engineering because I knew there were a lot of jobs out there for engineers.

I was going to the University in Regina and I took the introductory geology course and just found it was fascinating looking at how dynamic the earth is. Plate tectonics are constantly moving and generating earthquakes and volcanoes, which help form ore deposits — all the gold and diamonds and lead and zinc. I was just blown away by trying to help find other resources.

Q What is a top spot to combine your vacation and professional passions?

A One of them was Hawaii. We went there a few years ago. It’s very dynamic earth, almost always erupting. We went to three islands and visited quite a few volcanoes. My family was reluctant to come along, they weren’t as interested, but we went to the beach afterwards, so it was all good.

Another place is the Grand Canyon. There are millions and millions of years of Earth’s history there. I’ve yet to get there.

Q What are some things students thinking about studying to be a geologist should know?

A You certainly need sciences.

Chemistry and physics are the big two, but also having math skills helps, too. There are quite a variety of jobs within geology.

You have to be quite good at communications — talking to people or presenting thoughts or arguing with them and not getting into a fight is paramount. Also, being able to work closely with people is paramount. If you are in an exploration camp or mapping group and go into the field for weeks or months on end with just those people, you have to be able to get along with people or things get ugly.

Q What are some misconceptions about your line of work?

A Some people think we lick the rocks. We don’t run around licking rocks. As far as I know, geologists don’t do that.

Q How have your tools of the trade changed?

A The technology has been the big change in terms of what we can see in the earth. We’ve always been able to put down a tool into the earth to get an idea of what is there, but now we have better resolution. Probably the biggest thing since I started is 3D modelling. In the old days, you would have to do it on paper with

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Q What are some of the more interesting finds you’ve made?

A When I was working in diamonds — you usually find it in a rock called kimberlite. We were trying to drill away from kimberlite and needed to understand the rocks outside of it and accidentally hit more kimberlite and there was diamonds in that rock.

It was nice to find, that’s for sure.

Q What was it like doing field mapping up in areas like northern Saskatchewan early in your career?

A Usually you would take a helicopter or float plane and

from the nearest town. Being able to fish in some of those areas … the lakes and rivers are pristine and it is gorgeous.

On the downside, if you get some rain you are stuck in your tent for four or five days. You have to bring a lot of reading material to keep your sanity.

You’re leaving your family or loved ones behind — that is certainly a drawback. You lose connection with people — there’s nothing but trees and lakes.

When you go home, for the first few days it just seems weird — there’s so many people.

Usually a plane comes in every couple of weeks to bring you groceries, so you are quite well fed.

But the mosquitoes and black flies are horrendous. You have to make sure your tent is sealed up at night or you are waking up with a bleeding arm from black flies. The insects are a drawback and they are hungry, that’s for sure.

You see a wide variety (of animals), from bald eagles to foxes and beavers, and occasionally you run across a bear, which you don’t want to do. I’ve seen a lot of moose.

build a camp on an island or in the middle of a forest and spend weeks there. I think the longest I spent was 21/2 months straight.

You’re working with one person or four or five other people.

Generally, you walk through the forest looking for rock or you use a Zodiac and move around looking for rock exposures on the lakeshore. We usually document it by making maps.

Q Do you leave your work at the office all the time?

A If I’m walking in any new town or city and there is a rock facade on the outside of a building, I have to look at it and see what kind of rock it is.

I like telling people around me about it. It’s entertaining.

A lot of government buildings in Saskatchewan and Manitoba are made of Tyndall stone and have a lot of cool fossils. Tyndall stone was formed at the bottom of the sea in Saskatchewan and Manitoba 400 million years ago and now it’s up on the walls of government buildings. I just find that fascinating. Canada probably has some of the oldest rock in the world.

Q And the highlights and lowlights?

A You are literally in a place where a lot of people have never seen and some places where people have maybe never seen. You go on some lakes that are literally hundreds of kilometres away

Q What would you take from your house if you had to flee a fire?

A My geode in the living room.

We just bought it in North Dakota. It’s heavy, but I could probably carry it out. I wouldn’t like it to get smoke damage.

Shawn Harvey, a Cameco geoscientist, says the ability to communicate and get along with people is an important part of his job. M at t S M i t h

two dimensions and now we do it in 3D.

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saskatchewan mining report

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Members of the media make their way to the elevator underground during a tour at the Mosaic potash mine near Esterhazy.

L i a m R i c h a R d s / T h e c a na d i a n P R e s s f i L e s

Potash production still cost vs. market price Royalty tax credit adjustments just another curveball for industry to handle Pau l S i n k ew i c z

The simplest measure of the health of the potash industry is the price the nutrient commands on the world market.

But whether the price per tonne dips to US$150, as was seen in 2005, or skyrockets to US$900 like in the heady days of 2009, the true guarantor of success in the industry depends on cutting unnecessary expenses and benefiting from the long-term planning made possible by cost certainty.

Saskatchewan’s potash companies are waging a constant battle

of cost versus market price, all the while balancing expected demand. And while the year ahead looks upbeat for potash, with the price above US$380 per tonne at the time this story was written and forecast to continue its upward trend, unexpected challenges on the cost side of the ledger have the big players revising their calculations.

In March, the provincial government unexpectedly unveiled changes to its potash taxation scheme. Saskatchewan imposes a royalty on potash extracted from Crown lands, and also levies a pot-

ash production tax made up of a base payment and a profit tax.

The changes eliminate certain deductions, resulting in an effective increase to the base payment portion of the tax of about nine per cent, according to Energy and Resources Minister Bronwyn Eyre.

This is expected to generate $117 million in additional resource revenue for the province this year.

“The royalty tax credit adjustments were unexpected and has forced us to review some of our existing plans,” Nutrien spokesperson Will Tigley says. “Like any other global company, it is best when companies can operate in a stable and predictable regulatory and taxation environment.”

Mosaic Company’s Sarah Fedorchuk, vice-president of public

affairs and government relations, also sees other new regulations as stressors for the industry.

“There are a lot of different environmental files that we are consulting on now, and that leaves a lot of uncertainty,” Fedorchuk says.

“There’s also Bill C-69, which would be a different, and more uncertain, framework for us to get some of our projects greenlit, because to date we have been largely regulated by the provincial government.”

The bill, now before the Senate, seeks to overhaul both the National Energy Board Act and the Canadian Environmental Assessment Agency Act, changing how major infrastructure projects are reviewed and approved in Canada.

“It is a very challenging environ-

ment for the resource sector right now in Canada,” Fedorchuk says.

Despite those challenges, Mosaic Co. is celebrating milestones in the construction of its new K3 mine near Esterhazy.

“We commissioned the hoists — the buckets that bring the potash to the surface — in December, and we’re busy developing the mine right now, and we are seeing slight production this year from K3,” Fedorchuk says. “But our main focus right now is just developing that mine and getting it ready to go online full-time.”

K3 will replace the output capacity of 8.5-10 million tonnes at the existing K1 and K2 mines, and is going to be a showcase mine of the future, requiring fewer staff to operate and reducing costs.

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The Mosaic K3 project near Esterhazy will replace the output capacity of 8.5 million to 10 million tonnes at the existing K1 and K2 mines, and is going to be a showcase mine of the future. T ROY f L e e c e / f i L e s

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saskatchewan mining report Mosaic is planning for retirements and attrition to get it to the required staffing levels by the time it is fully operational in 2023.

“We’re really relying on mine automation and best-in-class technology to make that mine really efficient and really competitive.

“Butit’salsogoingtomeanthat our workforce is going to have to be retrained in new and different ways, and we think that’s really exciting, too, because there’s going to be a lot of opportunities for people to really home in on different skills than we’ve needed in the past.”

The outlook also is positive for K+S Potash Canada, which operates a solution mine at Bethune, with more than 400 employees on site as well as in Saskatoon and Vancouver.

“The Bethune mine has been successfully operating since June 2017,” spokesperson Michael Wudonig says. “We are progressing on projects that will assist in our gradual extension of the annual capacity to 2.86 million tonnes in future years.

“For 2019, we expect global potash demand to remain at least stable compared with 2018.

Following the significant recovery in prices for standard potash in the course of 2018, prices for fertilizer specialties should follow suit in 2019.”

Despite the challenges of the new tax regime, and other cost considerations, the world’s largest potash company, Nutrien, also sees a positive outlook for the year ahead.

The fertilizer giant was formed in 2018 after a merger of PotashCorp and Agrium.

“Market fundamentals remain firmwithstrongdemandgrowth.

Nutrien increased its potash sales by 1.3 million tonnes last year in response to favourable market conditions and has approximately five million tonnes of incremental capacity in Saskatchewan that can be brought online as global demand grows,” says Tigley.

“We expect strong potash consumption growth in Asia and Latin America, driven by rising crop production requirements.

We continue to grow our U.S. and Australian retail footprints and plan to further develop our retail network in Brazil.”

“In Saskatchewan, having passed our one-year anniversary, we’re pleased that we have helped generate $750 million of new economic activity in the province. We have over 4,000 employees throughout our operations in Saskatchewan and we’re currently constructing a new building for our Saskatoon corporate office scheduled for late 2021 or early 2022.”

One company with a stake in prices, cost and worldwide demand, is BHP. Decision time is approaching on the Jansen Project near Humboldt now that full depth has been reached on the production and service shafts. It will be up to the BHP board to make the approximately US$5 billion decision on the future of the project, in a new commodity for the global resources giant.

BHP takes a long-term view and, according to Paul Burnside, BHP’s manager, Potash Analysis. He says a growing world population, looking for more calories from a shrinking base of arable land, will mean fertilizers such as potash are necessary to increase agricultural production.

“It is these long-term trends that BHP can capitalize on with a phased development of its potash assets.

“We expect that by the mid2020s, rising demand will have absorbed the industry’s spare capacity and Jansen would be positioned to meet subsequent market growth.”

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DIGGING FOR DIAMONDS Star and Rio Tinto start trenching in spring to see what they have B r i a n Bu rt o n

Size matters. In diamond mining it matters a lot, and the folks at Star Diamond Corp. say their Saskatchewan properties are expected to produce some very large diamonds.

To prove the potential of their Orion South and Star claims, both about 60 kilometres east of Prince Albert, Star Diamond and partner Rio Tinto are aiming to begin trenching operations this spring.

If the results are positive, mine construction could begin within four years, says George Read, a Star Diamond geologist and vice-president of exploration.

Kimberlite formations beneath the Fort a la Corne forest “have shown the potential for very big diamonds,” Read says.

Exploratory bulk sampling done at the Orion South location from 2004-09 produced a fancy yellow stone of 10.53 carats, valued at more than US$84,000, and a 15.88-carat stone valued at US$47,300 due to lesser clarity.

Kimberlites, rock formations that have been found to hold diamonds, yielded an 11.96-carat, high-clarity, type IIa diamond worthUS$135,500intheStarclaim.

Much larger stones were recovered — 49 and 45 carats — but their lesser clarity yielded lower values.

Read says he’s expecting project-proving trenching operations this spring could recover stones up to 100 carats.

He adds that kimberlite formations in the area have shown a high proportion of type IIa diamonds — the clearest and most prized type of diamonds because they are free of nitrogen impurities.

While Star Diamond has federal and provincial environmental approvals in hand and has potential size and price on its side, the “grade” of the Fort al la Corne kimberlite formations is another matter. Grade is a measure of the average number of diamond carats per 100 tonnes of kimberlite ore that has to be mined and processed. Estimates so far place average diamond grade at 14 carats per 100 tonnes of kimberlite, with an average price of US$190 per carat.

This compares with an average ore grade of 150 carats per 100 tonnes at the Ekati mine and 280 carats per 100 tonnes at the Diavik mine, both in the Northwest Territories. Ekati stones are valued at half the price per carat of Star Diamond’s, on average, and Diavik diamonds average about two-thirds. But that still gives the two mines in the far north a big advantage in revenue per 100 tonnes of processed ore.

But a plus for Star Diamond when compared with the Ekati and Diavik mines, as well as the Renard Mine in northern Quebec, is its location, Read says.

Stones from the Ekati mine in the Northwest Territories are valued at half the price per carat of Star Diamond’s, on average, giving the mine a revenue advantage. B h P

“Those mines are all very isolated and our location is very accessible,” he says. That means it’s easier and therefore less costly to bring in heavy mining equipment, connect to the power grid and recruit and employ some 400 to 500 people for eventual open-pit mining operations.

“The greatest advantage of the accessibility of our project is that it’s only about 20 kilometres off the Saskatchewan power grid,” Read says. Also important, Saskatchewan power delivered around Prince Albert has a large hydro component that reduces the greenhouse gas footprint of a potential mine.

“Location is a very substantial cost savings for our project,” he says. “And while our ore grade is low, we have another very large advantage in the tonnage of kimberlite formations.”

Whether a project will actually go forward is likely to be determined by upcoming trenching operations. The largest-ever trenching machine built by Germany’s Bauer Maschinen GmbH for Rio Tinto, capable of digging to depths of 250 metres, has been delivered to the Star Diamond site.

Trenching is to begin as soon as frost is out of the ground, likely this month. A bulk processing plant is also being assembled on site to

process up to 30 tonnes per hour of kimberlite ore.

The Fort a la Corne kimberlites lie beneath about 100 metres of overburden and range between 120 and 220 metres in vertical height. Plans call for the Bauer machine to drill up to 20 holes into the Orion kimberlites and 10 on Star kimberlites.

“The aim of trenching is to produce results the same or better than those we got from underground bulk samples,” Read says.

If that happens, Rio Tinto and Star Diamond will decide whether to proceed with a mine. Rio Tinto would earn a 60-per-cent interest in revenues from the mine by completing 30 trenching holes and

spending some $70 million. The all-in cost of the mine is estimated at $1.4 billion.

Positive trenching results, according to Read, would trigger a mine feasibility study to determine the cost of exploitation on both the Orion South and Star kimberlites and the path to a development commitment would likely take about four years.

Weighing on the side of a goahead decision is the fact that Rio Tinto’s Argyle diamond mine in Australia is expected to close in 2020.

Rio Tinto also owns a 60-percent share of Diavik and currently ranks as the world’s third-largest diamond producer.

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SaSkatchewan mining report

F r i d a y, M a y 2 4 , 2 0 1 9

The safety payoff: drop in deaths, injuries

Underground but on top of tech Sensors, drones and data will be key to extraction of raw materials

Pau l S i n k ew i c z

Dale Ledoux has seen tragedy.

First as a young man when he was an emergency medical technician in Saskatchewan and later as a close observer of the mining industry in the province.

It’s his job as a safety trainer to help mining companies protect their workers from needless suffering — to prevent serious injuries and deaths. He said things are improving.

“I do see it happening,” said the owner of Victory Safety & Training in Saskatoon. “When I look at some of the sites we go onto, I’d much rather go on that site today than 20 years ago. The sites are getting safer.”

Instilling a culture of safety in the industry was a topic of conversation at the annual Saskatchewan Mining Supply Chain Forum, held April 3 and 4 in Saskatoon. It was part of the Indigenous Inclusion in the Mining Supply Chain sessions and was hosted by the Saskatchewan Mining Association, Saskatchewan Industrial and Mining Suppliers Association and the government of Saskatchewan.

Cameco’s Mark Sherwood, chair of the SMA safety committee, agreed that conditions are improving and said that is having a positive effect on the bottom line for companies.

“What I’ve personally seen over the last number of years in this industry is more and more openness on the topic of safety,” Sherwood said.

His committee gets together once a month to share incidents, best practices and how to prevent accidents. He touted the results in the statistics for 2018.

There were 102 injuries over the past year across the mining industry in Saskatchewan for 14.2 million hours worked, which is the equivalent to about 7,200 full-time employees.

The severity of injuries is also trending down.

“We’re really proud of that performance, but, of course, all of those injuries were preventable,” he said. “We know the mining industry is inherently hazardous.

But we control those hazards through mature safety systems and various controls.”

Over the years, the industry has also realized that although companies are achieving better safety performance with their staff, contractors are a big part of their safety culture on site and so firms have started to talk about how to integrate and work with contractors on better safety outcomes.

“We realized we needed a standardized approach to safety training, and so after a lot time and development, we partnered with Saskatchewan Polytechnic and we developed a general mine safety awareness course,” Sherwood said.

More than 2,200 contractor personnel have completed the course since it ramped up two years ago.

“A lot of mine sites in the province now require that course for access to the site.”

Sherwood said the SMA is striving to encourage a mindful workforce, one that will pay dividends.

“It’s difficult to quantify, but there’s a cost to an injury. There’s the direct cost, the indirect cost such as the investigation and the followup, but further to that, when you build a strong safety culture, I believe you have, really, a workforce that’s planning its work really adequately to do it safely. And if you have a workforce that’s always thinking 10 steps ahead, you’re going to get a lot of secondary benefit from that. You’re going to get less property damage, less equipment damage, jobs will be more efficient with less waste produced.”

Walter Smith, program manager for Pinehouse Business North, said it’s critical for companies to have safety champions.

“You have to have a passion for it because at the opposite end, when it’s the day after, that is not a good day for any one of us because somebody’s family is suffering because of something that’s preventable.”

Those champions have to be role models and have to be credible with experience in safety training, Smith said.

Pau l S i n k ew i c z

The fully connected mine is coming.

Mines of the future will employ sensors along every step of the production chain, use drones to keep humans out of harm’s way, and be overseen from central control rooms where artificial intelligence and big data are as important as drill bits and conveyor belts.

And in the new digital age of mining, suppliers are going to be expected to be ready to link up, according to a panel of experts at the annual Saskatchewan Mining Supply Chain Forum, held in Saskatoon April 3-4.

The two-day forum was hosted

by Saskatchewan Mining Association, Saskatchewan Industrial and Mining Suppliers Association and the Government of Saskatchewan.

“Technology is changing the way mining companies are operating today,” said Mike Dirham, vice-president, engineering, technology & capital, Potash at Nutrien.

“Digitalization has been, and will be, a source of transformational change for the mining sector, not only affecting everything from the culture of a company and their interaction with employees, communities, government, safety and environment, but in every step of the value chain.”

According to Dirham, the coming wave of digitalization will include automation and robotics, operational hardware, a digitally enabled workforce, virtual and augmented reality and integrated enterprise platforms and ecosystems.

These systems will link information technology and operational technology, cybersecurity, supply chain procurement, advanced analytics, simulation modelling and artificial intelligence.

“For companies that are digital leaders, embracing digitalization will offer more nimble and profitable business, allowing us to remain globally competitive. For the digital laggards, perhaps they will become the next Blockbuster Video,” said Dirham.

Theuns Roux, director of operational excellence, engineering, technology & capital, Potash with Nutrien, said predictive maintenance is one area of mining’s digital revolution where his firm sees strong value.

“As you move toward more predictability about when you will have a failure, you’re reducing your variability within the system,” he said.

“We see a significant amount of

Theuns Roux, director of operational excellence, engineering, technology & capital at Nutrien, says predictive maintenance is in its infancy but is expected to grow by 30 per cent per year. p h o t o s : M At t s M I t h

For companies that are digital leaders, embracing digitalization will offer more nimble and profitable business, allowing us to remain globally competitive.

Tom Olson, director, technical services, Mosaic Potash Business Unit, says his company has a three-pronged approach to new technology: advanced analytics; process digitization; and robotics and automation.

safety being driven from that specific application.”

Predictive maintenance will help companies plan required maintenance and manage inventory on hand, while also helping to schedule the workforce more efficiently.

Roux said from a change management standpoint, the mere perception of impending digital change causes disruption, so it must be handled with a degree of sophistication.

“The question is, how is the mining industry, and our suppliers, working toward managing this digital change? Nutrien plans to set expectations and be transparent, celebrating success and making sure employees and partners understand where the journey is going.”

At Mosaic, the vision is for a totally connected, integrated operation that is all monitored from one

Saskatchewan potash grows the jobs that builds the communities that make a province. www.sppa.ca

central operation centre, said Tom Olson, director, technical services, Mosaic Potash Business Unit.

“To achieve this vision, there are three main technology driver areas: ■ Advanced analytics — machine learning or neural networks, but essentially getting value out of very large and complicated data sets; ■ Process digitization — big data, network connectivity, and mobile devices providing a real-world view of what’s happening; ■ Robotics and automation — basically eliminating the need for human intervention to improve safety conditions and improve the speed and precision of routine tasks.

“At the end of the day, we’re talking about fewer assets running with greater up time and less variability.”

Four years ago, Mosaic created

an automation department with small, focused teams.

Currently it has a mine automation team, a mill automation team and one looking at drone applications.

“They don’t have operating responsibilities, said Olson.

“Their job is to focus on research and developing applications we can use.”

The teams were tasked with making a mining machine run by itself — a totally reasonable request, according to Olson.

A spinoff benefit of that project wasimprovedautomatedoregrade sensing, steering controls and robotic conveyor construction.

As the company goes forward, one of the things it is challenged with is the need for new skill sets.

He only half-jokingly put out a recruitment invitation to the attendees at the forum.

“Currently there is a real need for instrumentation electronics technicians and technologists. We also need people with multiprogramming skills, and people that are very hands-on, because that’s where we’re at right now is installing a lot of instrumentation,” he continued.

saskatchewan mining report

F r i d a y, M a y 2 4 , 2 0 1 9

Brian Michasiw, second from right, from Brainsport demos shoes for Cameco employees before a lunchtime run as part of their Step Up for Mental Health initiative on April 30.

stepping up

7

M at t S M i t h

Mining firms put their money where their mouths are when it comes to philanthropy

Pau l S i n k ew i c z

Saskatchewan’s mining companies are extremely resourceful at prying treasures from the ground.

They also believe in giving back, using revenues from that natural bounty to support charities, employees and organizations in the province. Many groups in Saskatchewan have come to rely on the financial and human support of these companies, with connections going much deeper than names attached to high-prestige projects.

“I often say that we don’t get involved in community projects, whether we’re sponsoring them or having our volunteers be a part of them, because we are trying to sell more uranium,” said Jonathan Huntington, vice-president of sustainability and stakeholder relations at Cameco Corp.

“It’s not going to raise our stock price one bit. We’re doing this for all the right reasons. We want to make Saskatchewan an even better place to be. We value where we work, we value the communities we live in and we want to roll up our sleeves and give back.”

And it’s clear that listening closely to the priorities of employees has become a key part of the giving programs at Saskatchewan mining companies.

Earlier this month, Cameco and Brainsport held the first Step Up for Mental Health run and walk. It came about because Cameco’s employees asked to be part of an initiative to support mental health, says Huntington.

“Mental health has really struck a chord inside our company. It opened our eyes three years ago when we got involved in a mental-health project and we were just overwhelmed with our employees wanting more information about it and wanting to be involved.”

Cameco was approached to help shine a light on mental health and some of the help that was available. It was quickly realized that this was an area of great need in Saskatchewan, so the company came up with a three-year plan to raise $2 million for mental-health programs and projects in the province. The first mental health run, in Saskatoon May 11, sold out weeks before the event with 2,000 participants signing up. The run itself will raise more than $300,000 to be distributed to organizations offering projects that promote or protect mental health.

More than 100 Cameco employees and their family members volunteered to help organize the run, while another 200-plus employees and family members are participating in the five- or 10-kilometre run/walk.

Uranium mining, milling and exploration company Orano also took cues from its employees when deciding where to put its financial support. In 2018, it unveiled an accessible playground at the Saskatoon Forestry Farm Park and Zoo. It was a passion project for the company, said Tammy Van

Carla Delgado takes part in a lunchtime run as part of Cameco Corp.’s first Step Up for Mental Health initiative, which supports mental-health programs in the community. M at t S M i t h

Members of K+S Potash Canada participate in the MS Bike tour in Waskesiu to raise funds for multiple sclerosis research and services. Employees also pitch in with the ongoing Volunteer Plus+ program. K + S P o ta S h C a na da

Lambalgen, vice-president of corporate affairs.

“We had one employee whose daughter was never able to use the playground there, so for Orano to be able to put a wheelchair-accessible playground at the zoo is very close to our hearts.

“We like the initiatives where we know it’s going to contribute to the children of the community and, as well, our employees who have children can have a source of pride about our company and our industry because we do give back

to the community.”

Another Orano fundraiser benefits the neonatal intensive care unit (NICU) at Royal University Hospital. A personal challenge faced by one employee spurred the company to lend its support.

“Her daughter is a thriving seven-year-old now, but she got to see the importance of NICU first-hand and took it upon herself to start organizing this annual fundraiser and it has grown to be a significant fundraiser to the unit at Royal University Hospital,” said

Van Lambalgen.

K+S Potash Canada is a newcomer to the province, holding the grand opening of its Bethune-area solution mine located about 70 kilometres northwest of Regina in 2017. But since arriving in 2012, the company has been active in the field of philanthropy and has involved its employees in deciding where funding and volunteer hours should go.

About 30 per cent of the company’s workforce of 430 chose to participate in the Volunteer Plus+

program, which designates $300 per calendar year per employee to the organization of their choice after they have volunteered eight hours with that organization.

Being a good corporate citizen and giving something back to the province in which they do business is a responsibility K+S takes seriously, said Maeghan Dubois, manager of communications and corporate affairs. But there is another aspect to community investment.

“It’s really important for our employees, too, to feel that their employer is doing good work outside of our area of business.”

A new program will give those employees even more opportunities to make a difference. The Youth+Us initiative was launched this year after talking with key stakeholders and employees and looking at what areas of support were in critical need. As a company with a youthful workforce experiencing its own little baby boom, K+S was excited to learn that supporting children and youth emerged as a priority.

“We want to think less about traditional sponsorship and more about purposeful partnerships that empower organizations to do what they do best: help young people in our community,” said Dubois.

Sarah Fedorchuk, vice-president of public affairs for Mosaic Company, said she believes caring about Saskatchewan’s communities is part of the company’s DNA. “And even when the market dipped a few years ago, we ensured our community partners were still being supported at the same levels that they were when we were getting a lot more for a tonne of potash,” says Fedorchuk.

“We have a lot of long-term partners and we go beyond just writing a cheque. We make sure our partners are supported and try to do a lot of leveraging through social-media channels and being a little nimble if they have an urgent need.”

Four years ago, Mosaic launched a program where employees are able to vote on grants.

The company receives nominations each year for charitable organizations that could use support, but don’t formally partner with Mosaic. Then the employees at the potash company vote for the charities they would like to see supported.

“We actually started it thinking it would be a one-year thing, but people rallied around it and so we’ve kept it and now we have increased the amount of giving,” Fedorchuk said.

Mosaic is well-known in Saskatchewan for having its name on the side of Moose Jaw’s multi-purpose arena and the Regina home of the Canadian Football League’s Saskatchewan Roughriders.

But it also makes sure it supports the charitable endeavours of its individual employees by offering in-kind donations of Roughriders gear for fundraisers.

8

saskatchewan mining report

F r i d a y, M a y 2 4 , 2 0 1 9

Members of the Estevan Mine rescue team show off their skills during one of the exercises at the 2017 Mine Rescue Skills Competition at Prairieland Park.

Rescue teams ready to answer call Emergency responders put life-saving skills on display during competition G e r a l d Va n d e r Py l

The public will have a chance to see experts tackle realistic emergency scenarios during the Saskatchewan Mining Association’s 51st annual Emergency Response Mine Rescue Skills Competition on Saturday, June 1 at Prairieland Park in Saskatoon.

Men and women from 16 emergency response teams at mines throughout the province will compete for honours in both aboveground and underground mining

The Sask. Mining Association’s Emergency Response Mine Rescue Skills Competition is now in its 51st year.

categories, in a test of the skills and knowledge that could save their co-workers’ lives.

Chris Stansfield, event chairman, says the seven members of each team spend countless hours preparing for the competition — which can bring real-world benefits to their companies.

“Those seven people have got those skills honed, and they take that back to their (other) team members and it leaches on to them,” says Stansfield.

“And it gives the public a chance

to come and see what’s actually involved in an emergency response at a mine site.

“For the families and public watching, I imagine this gives them reassurance that their family members who work (in a mine) are well looked after.”

The teams start the competition Friday with a closed-door exam, testing their knowledge of emergency response techniques such as firefighting, first aid and other topics.

On Saturday morning the teams move into action, tackling scenarios that recreate a possible mining incident to test their response and abilities.

The challenges are tailored for

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either underground or aboveground mines.

It’s a gruelling day, Stansfield says of the competition that adds some realism to the emergency response team’s usual training regimen.

“We can train at work but when you put (the teams) in a competitive scenario it really adds some stress into it, and that tests all the individuals.”

Last year, K+S Potash Canada won the overall surface division title in its first appearance at the competition, which company vice-president of health, safety and security Colin Braithwaite credits to having built their ERT from scratch.

p h o t o s : K ay l e N e is fi l e s

“We’ve only been in operation for two years,” says Braithwaite, “so we’ve had the chance to spend a lot of time building our program — recruiting our members from brand new and training them from the very beginning.”

The team is keen to try to defend its title, Braithwaite says, adding that the company recently held its first in-house competition to give the team additional practice before the provincial event.

The Emergency Response Mine Rescue Skills Competition is a great way to raise public awareness of the work done to protect mining workers, Braithwaite adds.

“I think that’s really the whole purpose of the competition, to show the public the skills needed, and that there are these teams in the workplace performing this job.”

saskatchewan mining report

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9

Sask. mines win awards for safety G e r a l d Va n d e r Py l

M AT T S MI T H

time for shop talk John Sampish, centre, senior program manager with APTIM, chats with members of the community and industry during the Saskatchewan Mining Supply Chain Forum, held at Prairieland Park in Saskatoon in April. The 11th annual event, which is aimed at connecting suppliers with customers, attracted more than 1,300 delegates.

Each year, the Canadian mines with the most impressive safety records are honoured with John T. Ryan Awards — and Saskatchewan mines were well represented for their 2018 performances.

Mosaic Esterhazy K1 was awarded the National Select Mine Award for the second year in a row for working more than 1,131,000 hours with a reportable injury rate of zero.

Westmoreland Coal Poplar River received the National Coal Mine Award for working more than 275,000 hours without a reportable injury.

Also for a second year in a row, Cameco Cigar Lake received the Regional Metal Mine award for the Prairie provinces and territories after working almost 600,000 hours with a recordable injury rate of 0.34.

Brad Sigurdson, vice-president of environment, safety and regulatory affairs with the Saskatchewan Mining Association, says the strong showing highlights its members’ commitment to safety throughout their organizations.

Sigurdson says achievements such as Mosaic Esterhazy K1 repeating as a winner are truly remarkable.

“Over this two-year period, the Mosaic Esterhazy K1 site worked over two million hours with no lost-time or modified-duty injuries.”

He adds that while mining is an inherently dangerous activity, companies have worked hard to mitigate the risks to the point where it is safer than many other industries.

“In fact, looking at the Workers’ Compensation Board premium rates for 2019 you will see that the blended mining rate is only 58 per cent of the all-industry rate,” adds Sigurdson.

LET’S GROW TOGETHER K+S Potash Canada is planting seeds for future success, which is why we’re going to continue cultivating opportunities for employment and economic growth in Saskatchewan for years to come.

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SaSkatchewan Mining RepoRt

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We help the world grow the food it needs.

As one of the world’s largest suppliers of potash, we consider this mission one that carries a vast responsibility.

At Mosaic, we took charge of our future.

Since 2012, the Potash Business Unit has achieved reductions in three major areas:

mosaicco.com

20%

Decrease of freshwater used per tonne of finished product

10%

Decrease of total energy use per tonne of product

10%

Decrease of GHG emissions per tonne of product

Canadian potash GHG emissions are only 29% of the global average – leading the world in terms of low GHG output.

Source: Carbon Footprint for Canadian Potash Production, Cheminfo Services Inc., 2018.