May 2015

Industry at a glance

By Ryan Bergen, Tom DiNardo, Sahar Fatima, Kelsey Rolfe, Katelyn Spidle, Michael Yang

Looking ahead

While it is impossible to predict the future, it did not stop anyone from trying at the keynote session of the 2015 Society for Mining, Metallurgy and Exploration conference, where industry sages speculated on the challenges and opportunities for the industry in the coming years. The discussion kicked off the annual event, which welcomed more than 6,000 attendees to over 100 technical sessions, along with 670 exhibiting companies, to the Colorado Convention Center in Denver in February.

All speakers agreed that technology would drive innovation in the “mine of the future.” However, session moderator Peter Bryant, senior fellow of the Kellogg Innovation Network, pointed out that the mining industry has provided relatively little fuel. “The [mining] industry invests, by most studies, somewhere between a quarter to a half of one percent on R&D,” he said, compared to industrial companies at 1.5 to two per cent, oil and gas at five per cent and aerospace at eight to 10 per cent.

Gwenne Henricks, vice-president of product development and global technology and chief technology officer at Caterpillar, emphasized the role big data and data analytics have had on mining innovation, a trend she said she believes will continue. “[The] exponential growth in computing power and data storage provides us with the opportunity to collect and analyze data that can be used to ensure our productivity across the entire value chain,” she said. “With infinite computing via the cloud, coupled with the explosion in networking sensors, data can be analyzed and provide real-time decision support from the mine planner to the operations manager to the equipment operator.”

Dean Gehring, president and CEO of Rio Tinto Minerals, agreed that data will play a large role not only in technology, but also in governmental regulation. He predicted a day in which the vast amounts of data that are captured today by mining companies will be sent in real time to regulatory bodies. “That starts to bring transparency to a different level than what we’re accustomed to,” he said.

Bryan Galli, group executive and chief marketing officer for Peabody Energy, highlighted the importance of continued innovation by looking back. “Since 1970, coal used for electricity has increased more than 170 per cent as GDP has doubled and key emissions per kilowatt hour have decreased nearly 90 per cent,” he said. The dramatic improvements, he noted, have been spurred mainly by clean coal technologies and initiatives.

Next year’s SME conference will be held Feb. 21 to 24 in Phoenix, Arizona.

– Tom DiNardo

Industry association reviews tailings management guidelines

An independent task force commissioned by the Mining Association of Canada (MAC) to review the association’s tailings management requirements held its first meeting on April 8. The initiative was launched on the heels of a B.C. government investigation into last year’s Mount Polley tailings dam breach, which sent 13.8 million cubic metres of tailings slurry into nearby Hazeltine Creek.

The task force, headed by former MAC Board of Directors chair Doug Horswill, is examining MAC’s tailings management guidelines and requirements under its Towards Sustainable Mining (TSM) program and will make recommendations where it determines rules could be strengthened to avoid another large-scale breach. Imperial Metals, which owns Mount Polley, has been a member of MAC since late 2012 and is in the early stages of implementing the TSM initiative, with its first company profile appearing in the 2014 TSM Progress Report.

The current TSM tailings management guidelines outline best practices including assigning accountability for tailings management to a company executive, conducting periodic inspections to manage risk and having solid policies in place to ensure compliance with laws and the TSM guides.

“There are areas on the design and build side that are not covered in the protocols,” Horswill said. “I don’t know whether they can be, but we have to understand whether or not that’s feasible.”

The task force is also reviewing the report and recommendations released in January by the three-person panel appointed by the province of B.C. to investigate the Mount Polley breach. The report blamed a design flaw in the tailings dam that did not account for an unstable foundation.

“An event occurred, which none of us feels good about or wanted to have happened,” Horswill said. “So we need to understand, based on the information now available to us […] whether or not there are ways to strengthen the TSM tailings management process.”

MAC’s seven-member task force includes Peter Lighthall, an independent consultant who formerly worked for AMEC and Klohn Crippen; John Sobkowicz of Thurber Engineering; Nalaine Morin of the Tahltan Heritage Resources Environmental Assessment Team; Alan Young with the International Boreal Conservation Campaign and a member of MAC’s Community of Interest Advisory panel; Craig Ford of Corporate Responsibility Solutions; and Teck Resources’ Michael Davies, chair of MAC’s Tailings Working Group.

TSM is a mandatory program launched in 2004 for all MAC member companies to encourage them to operate in a more socially and environmentally conscious manner. Member performance is assessed against 23 indicators and results are publicly available in annual TSM Progress Reports.

In a news release, MAC president and CEO Pierre Gratton touted TSM’s success in ensuring the safe operation of tailings facilities but acknowledged there are opportunities for further development. “We believe there is always room for improvement and we are committed to learning from the Mount Polley incident with the goal of ensuring we never have another one,” he said.

The task force will submit a report with recommendations to MAC by the end of 2015, and the organization will then decide how to proceed.

– Sahar Fatima

Junior achiever

The 2015 TSX Venture Exchange top mining performersNioCorp Developments’ share performance in 2014 earned it the distinction of leading mining company on the TSX Venture Exchange’s annual top 50 list.

On Feb. 11, when the company made the announcement, its shares were valued at 83 cents, up from 25 cents the same day one year ago. It also had a market capitalization of $102.68 million, up from $24.1 million on Feb. 14, 2014. Earlier in the month, NioCorp announced it had more than tripled the Indicated Resource of niobium pentoxide at its Elk Creek, Nebraska project to 572,000 tonnes, up from 177,000 tonnes.

As further proof of its strong performance, NioCorp’s common shares were listed on the TSX on March 9.

The top 50 list is compiled by the TSX Venture Exchange and includes 10 companies from each of five sectors: mining, oil and gas, technology and life sciences, diversified industries, and clean technology. The rankings are based on performance in four categories: share price appreciation, trading volume, analyst coverage and market capitalization growth.

– Katelyn Spidle

Court rules Pascua-Lama caused no damage

Barrick Gold’s embattled Pascua- Lama project received some good news recently.

Chile’s Environmental Court ruled on March 23 that the project in the high Andes has not damaged glaciers within its immediate area of influence.

“We are pleased that the court has confirmed what the technical and scientific evidence demonstrates, that these ice bodies have not been damaged by activities at the Pascua-Lama project,” said Eduardo Flores, Barrick’s executive director for Chile.

In October 2013 Barrick halted construction at the gold-silver-copper mine, which straddles the Chile- Argentina border, in the wake of legal and financial issues. Earlier in the year, the Supreme Court of Chile ruled that the company was required to address an incomplete water management system at Pascua-Lama. Falling gold prices and rising costs also factored into the company’s decision to suspend work on the project, which was originally set to begin producing last summer.

The Toronto-based mining company has maintained it is committed to advancing its $8.5-billion mine in an environmentally responsible manner. Apart from working with local communities to ensure environmental requirements are met, Barrick has also implemented a glacier monitoring program at Pascua-Lama that captures data from 27 different points and provides the results directly to regulatory authorities.

Once in operation, Pascua-Lama is expected to produce an average of 800,000 to 850,000 ounces of gold per year in its first five years.

– Michael Yang

Feds appoint CSR counsellor

CSR Counsellor
Jeffrey Davidson (right), Canada’s new corporate social responsibility counsellor
for the extractive sector | Courtesy of Foreign Affairs, Trade and Development Canada

Jeffrey Davidson was named Canada’s new corporate social responsibility (CSR) counsellor for the extractive sector in early March.

International Trade Minister Ed Fast made the announcement on the opening day of this year’s PDAC Convention in Toronto.

“I’m pleased that we’ll have someone as highly qualified and experienced as Jeffrey Davidson as our new CSR counsellor,” Fast said at the announcement.

Davidson is approaching the end of a five-year contract at Queen’s University, where he is a professor of applied mineral economics and sustainability and the academic coordinator of the department of mining’s graduate certificate in community relations for the extractive industries.

Davidson previously worked in community relations for the World Bank and several mining companies, including Rio Tinto, and taught mining economics at McGill University.

Throughout his career, Davidson has been committed to working with communities and companies to “Find better ways to account for the social and environmental concerns of communities and allow mining to occur in a responsible way,” he said. “[The position] looked very interesting, and I thought, maybe I can make a difference.”

An updated CSR strategy for mining companies operating abroad, released in November by the federal government, expanded the powers of the CSR counsellor’s office to include working with the extractive industry to encourage miners to adopt CSR best practices, as well as identifying and resolving early-stage disputes between companies and neighbouring communities. The counsellor position has been vacant since October 2013 when Marketa Evans resigned after four years on the job.

Davidson will begin his three-year tenure in mid-May.

– Kelsey Rolfe

Noront purchases Ring of Fire assets from Cliffs

U.S.-based Cliffs Natural Resources has decided to step away from the Ring of Fire. Noront Resources announced in March it would purchase Cliffs’ chromite properties in the area as the latter company exits the resource-rich but distant region.

The US$20-million deal was expected to close mid-April, subject to court approval of Cliffs’ restructuring of its Quebec iron operations. Franco- Nevada Corporation will loan US$22.5 million to Noront at a seven per cent interest rate to finance the transaction in return for a small percentage of royalties from Noront’s Ring of Fire properties.

“This purchase consolidates the world-class discoveries made in the Ring of Fire,” said Noront president and CEO Alan Coutts. “We have made significant investments in the Ring of Fire and our team has become experts in the region from both a technical and a social point of view.”

A crescent-shaped area located northeast of Thunder Bay, the Ring of Fire is considered to possess significant mining potential due to its rich deposits of chromite, platinum, nickel and other metals. But the area is not accessible by road, and Cliffs halted its operations in the area in 2013.

The sale will transfer ownership of about 100 claims to Noront including all of the Black Thor and Black Label chromite deposits. The deal also includes a 70 per cent interest in the Big Daddy chromite deposit and 85 per cent ownership of a copper-zinc resource near McFauld’s Lake. Noront already owns the polymetallic Eagle’s Nest project in the region and will now hold about 65 per cent of the land included in mining claims in the Ring of Fire, according to a news release.

“The sale of these assets to Noront, an experienced mining company with a strategic interest in the Ring of Fire region, further demonstrates execution of Cliffs’ strategy which includes divesting non-core assets and focusing on being the major supplier of iron ore pellets to the North American steel industry,” said a Cliffs news release.

Last November Cliffs announced it was also pursuing exit options for its eastern Canadian iron ore operations. This includes the Wabush Scully mine in Newfoundland and Labrador, which implemented a permanent closure plan in November due to a high cost structure, and the Bloom Lake mine in Quebec, which Cliffs is placing under bankruptcy protection.

– S.F.

Mining’s rite of spring

Like the gold price that animates the event, attendance numbers at the annual PDAC Conference have come off their historic highs of a few years ago. The gathering still attracted an estimated 23,500 people in early March, however.

Federal Finance Minister Joe Oliver used the occasion to extend the mineral exploration tax credit for another year. It allows companies that issue so-called flow-through shares to pass a percentage of expenses from exploration to shareholders who in turn can deduct them from their taxable income.

The credit, first created in 2000, sweetens the deal for investors who might otherwise not take a risk on earlystage exploration projects. The annual renewal of the credit has become a spring ritual since its initial three-year period expired. The finance minister did, however, offer something new, adding that the costs of certain aboriginal and environmental consultations required before exploration permits are eligible for the Canadian Exploration Expenses deduction.

The addition “is pretty significant because those costs are getting higher. Twenty years ago they did not exist,” noted PDAC president Rodney Thomas in an interview with CIM Magazine.

The federal government also committed to splitting the cost of a $785,000 study with the Ontario government for an east-west all-weather road that would connect the Ring of Fire and a number of First Nations communities to the existing road that ends at Pickle Lake – around 300 kilometres to the southwest.

The current tight market thinned the number of companies at PDAC, but some specialists said they were seeing increased business. For example, a profusion of exhibitors were marketing the services of unmanned aerial vehicles (commonly called drones) this year. Mike Reed, mining account manager for drone manufacturer Leica Geosystems, explained that miners’ imaginations ignite once they see what imaging equipment attached to drones can do, whether it is monitoring previously inaccessible highwalls, providing an alternative to time-expensive inspections or offering cost-effective surveying.

Nonetheless, market watchers did not tout 2015 as a breakout year, though they remain optimistic for the longer-term prospects of the metals markets.

Martin Murenbeeld, Dundee Capital’s chief economist, suggested forces, such as a sluggish world economy and a strong U.S. dollar, balanced against bullish influences, would keep gold prices in the US$1,250 range for the near future. Speaking of the broader metals markets at a wellattended forum, Murenbeeld argued, “We are in a very long-run commodity cycle. Today is a mid-cycle correction.”

At a separate session, Patricia Mohr, commodity market specialist at Scotiabank, predicted, “Commodity prices will bottom later this year but won’t bounce back. Wait until 2017 or 2018 for the ‘bull run’ to continue.”

PDAC’s Thomas highlighted Goldcorp’s friendly takeover of Probe Mines as a development that should add some skip to the step of junior miners. Probe’s Borden project near Chapleau, Ontario, attracted a $526-million bid from the gold major earlier this year.

Next year’s PDAC Conference will take place March 6 to 9 at the Metro Toronto Convention Centre.

– Ryan Bergen

Greece adds hurdle for Eldorado’s Skouries project

Sag Mill Skouries
 Installation of the SAG mill at Eldorado’s Skouries project in Greece | Courtesy of Hellas Gold

Greece’s new radical left-wing government revoked the approval required for Vancouver-based Eldorado Gold to complete construction of its Skouries processing plant, the company announced in early March.

The newly elected Syriza party government had previously stated its opposition to the mine, a gold-copper project operated by Eldorado’s subsidiary, Hellas Gold S.A.

“We are absolutely against it and we will examine our next moves on it,” Energy Minister Panagiotis Lafazanis told Reuters in January.

The revocation prompted a furious response from Eldorado. “The recent decision of the Ministry of Energy – if not reversed in a timely manner – may force Eldorado to reconsider its investment plans for Greece,” Eldorado CEO Paul Wright said in a statement.

Eldorado also asserted the ministry’s decision “has no legal basis” and said it will “act to protect the legal rights of the company, employees and stakeholders” if necessary.

The notice Hellas Gold received from Energy indicates the decision may be reversed once the ministry finishes an internal review process of Eldorado’s application to construct the processing plant, but has not been clear on the timing of the review.

Eldorado has spent more than US$450 million since 2012 on the construction and development of the Skouries and Olympias mines on the Chalkidiki Peninsula in northeastern Greece. It also operates a silver-leadzinc mine in the area (see Project Profile). The company announced plans earlier this year to invest another US$310 million in the development projects in 2015.

Eldorado said the approval revocation has so far caused “no material impact” to the construction schedule of Skouries.

– K.R.

Better results through design: Metallurgical Plant Design created to fill knowledge gap

Book cove thumbnailChris Twigge-Molecey, former CIM president and current senior advisor at Hatch, gave a sneak peek into Metallurgical Plant Design, a new book he helped draft and edit with metallurgical engineers Rob Boom, Frank Wheeler and Jack Young. The book contains chapters written by 13 other metallurgy experts from Japan, the United States, and Australia. “It’s truly a global view of the projects business,” he said. The 200-page hardcover book will be launched at CIM’s annual convention hosted this year in Montreal, May 9-13.

CIM: Why was it important to put this book together?

Twigge-Molecey: We felt there was a significant gap in the literature, particularly in the metallurgical field, where there seems to be nothing at all. There are many books on the fundamentals of engineering, project management and construction management of projects, but there is very little on the design function itself of transferring fundamental knowledge to a workable plant.

CIM: How do you account for this gap?

Twigge-Molecey: It’s a gap by default. Plant design is not something that professors typically do research on; they would be doing research on the fundamentals. And professionals in the field don’t typically write books.

CIM: Why is this book particularly relevant now?

Twigge-Molecey: It’s been in the works for a couple of years. The methodology we’ve laid out in this book is well known and has been proven over and over again. It’s time to take stock of what we’ve learned. It’s also time for people and practitioners in the business to digest it before we get going on the next cycle, since metallurgy is in a highly capital-constrained situation at the moment.

CIM: What do you hope this book achieves?

Twigge-Molecey: Understanding. A lot of projects have been unsuccessful over the past few decades because people made decisions when they didn’t understand the consequences. This book is targeting people who make the decisions but who don’t come from a projects background. They don’t understand how the engineering part – even though it’s a small part of the cost – influences the total project: its capital cost, operability and ability to meet the performance standards it’s expected to, like safety, productivity, environmental impact and sustainability.

– K.S.

Tough competition at annual Mining Games

Canadian Mining Games 
Participants at the Canadian Mining Games in February | Courtesy of Tanner Edwards

The University of Saskatchewan hosted teams from 10 universities across the country in February for the 24th annual Canadian Mining Games.

From Feb. 18 to 22, 150 students competed in 25 events and were judged by representatives from many of the games’ corporate sponsors, including PotashCorp, Cameco and Imperial Mines.

Events were designed to be tough, explained co-chair Tanner Edwards. In one challenge, teams were asked to design a mine in seven hours. “It’s basically an impossible task, so the trick is to see how much you can get done,” he said.

Other events tested a range of skills, not just those pertaining to engineering: public speaking, finance, math and the ability to work under pressure were all on the table. Most events finished within three hours.

In the past, judges awarded teams a percentage-based grade for their performance in a given event. This year, however, teams were given a rating between one and 10 to make it easier to determine the winner. The results were an nounced at the final banquet: Queens University took first place, the University of Toronto was second, and École Polytechnique de Montréal came in third.

While stressful, the games were a lot of fun this year, according to Edwards. A banquet dinner and an excursion to nearby pubs were planned for each evening. “It was just a really good weekend,” Edwards said.

CIM was a silver sponsor of the event.

– K.S.

Judging jurisdictions


Go to Table of Contents

The Fraser Institute released its annual survey of mining companies recently. The institute received more than 480 responses to its survey, which was sent to exploration, development and other mining-related companies to evaluate 122 jurisdictions around the world. To determine investment attractiveness of each region, the Fraser Institute combined its index rating of jurisdictions by their geologic attractiveness and its Policy Perception Index, which is designed to measure the effect of government policy on a company’s attitude toward exploration investment. Here are some of its findings:

– T.D.

Fraser Institute graph

Fraser Institute graph

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