Dec '08/Jan '09

Newfoundland and Labrador

Moving ahead in tough times

By K. Bradbury

Haul trucks await loading at IOC’s Lab West operation

Teck’s Duck Pond underground copper-zinc mine and associated processing mill officially opened on May 9, 2007. This central Newfoundland operation lies 30 kilometres south of the former Buchan’s mine. At startup, the deposit had proven reserves of 4.1 million tonnes at an average grade of 3.3% Cu, 5.7% Zn, 59 g/t Ag and 0.9 g/t Au. Production has been steadily increasing, nearing the projected capacity of 650,000 tonnes per annum. Annual employment at the mine is anticipated to average 192 people.

Anaconda Mining Inc.’s Pine Cove open pit gold mine and mill commenced operations on May 5, 2008. The operation, located on the Baie Verte peninsula, is currently under option from New Island Resources, with Anaconda holding a 60 per cent interest. The deposit, discovered in 1988, has delineated 2,332,676 tonnes of indicated ore grading 2.76 g/t Au and 66,700 tonnes of inferred resources grading 2.43 g/t Au. Design capacity is 500 tonnes per day with a projected mine life of six years. The project is expected to employ approximately 44 people during operation. The total capital investment was $7 million, and operating costs are expected to be $26 per tonne of ore. With the first gold pour occurring on July 23, 2008, the operation is currently working towards commercial production.

In 2008, Beaver Brook Antimony Mine Inc. reactivated its underground antimony mine and mill, located 43 kilometres southwest of Glenwood. Operations commenced after a ten-year low price-driven shutdown. Ore from the mine is fed to the 450 tonnes-per-day mill to produce a concentrate grading about 62%. Approximately 100 people are employed at the mine, which has an expected life of seven to ten years.

In March 2008, the Iron Ore Company of Canada (IOC) approved a $500 million expansion program for the Labrador City iron ore operation. A further $300 million were approved in August. Phase one of the program, currently underway, will address operating bottlenecks and improve winter performance. The program includes the purchase of new mining equipment, the installation of a new crusher station, grinding mill and a six-kilometre overland conveyor. New locomotives and rail cars will also be purchased to increase railway capacity. This will expand capacity to 22 million tonnes. Phase two of the program will take production to more than 25 million tonnes. During the construction phase, IOC expects the construction workforce to peak at 250 workers over the next three years. Once completed, the expansion will create an additional 200 operational jobs in addition to the 1,550 people currently employed.

The future of mining in the province

As part of the Voisey’s Bay Development Agreement, Vale Inco Newfoundland & Labrador Limited (VINL) is to construct a commercial nickel processing plant at Long Harbour. The first option for this plant is based on hydromet technology. Should this not prove feasible, VINL will build a traditional matte plant. The plant capacity will be 50,000 tonnes of finished nickel annually. Associated copper and cobalt products will also be processed. The project was released from environmental assessment on August 26, 2008. Construction will commence in 2009 and the operations are to begin in 2012. VINL will employ the Quadrum Global Supply Chain System for awarding supplier contracts for the new plant. Introduced to this system, local suppliers will be able to avail of opportunities not just at the new plant, but globally.

New Millennium Capital Corporation’s LabMag iron ore project lies in northwestern Labrador and Quebec near the provincial border at Schefferville. The LabMag claims contain direct shipping iron ore resources (DSO) of about 50 to 55% Fe. The project has been registered with federal, Quebec and Newfoundland and Labrador authorities. The later authority has required an environmental impact statement.

Phase one of the proposed two-phase project, expected to last three years, will produce about 5.4 million tonnes of DSO from NL deposits and about 2.6 million tonnes from Quebec deposits. Limited to crushing and washing of ore to produce lump and sinter fine ores, all processing will take place in Newfoundland and Labrador. Phase two will seek separate approval from federal and provincial government authorities. The project has a construction phase target date of mid-2009, with a required workforce of 150 people. The operational phase is expected to employ 150.

Labrador Iron Mines Holdings Ltd.’s Labrador West is a direct shipping iron ore project near the Quebec-Newfoundland border in western Labrador. Reserves are estimated at approximately 92 million tonnes at 50 to 55% Fe. However, these reserve statements are not compliant with NI 43-101 standards.The company anticipates starting the project in 2009 with about 150 people employed during construction and 75 during operations. The environmental registration document for the project outlines an initial four-year phase with possible extensions through the mining of other deposits. The capital cost estimate for the project is about $30 million.

Socioeconomic trends that impact mining

Higher commodity prices have enabled existing operations to enjoy increased cash flows and have made new projects viable. This, combined with progressive planning, enabled smaller projects to move into production.

A recent agreement between New Millennium Capital Corporation and Tata Steel Global Minerals Holdings Pte Ltd. of Singapore will fund a bankable feasibility study for New Millennium’s direct iron ore shipping project in western Labrador. This exemplifies how, despite tough economic conditions, it is still possible to move projects forward through progressive agreements.

In general, there is increased awareness of environmental and social issues. The province continues to implement the Mining Act, which requires that mining companies have adequate funds to finance the rehabilitation of mining operations. In September 2008, Newfoundland and Labrador and the Innu Nation signed a milestone agreement resolving issues relating to the Innu Rights Agreement, the Lower Churchill Impacts and Benefits Agreement and Innu redress for the Upper Churchill hydroelectric development. Companies operating, or planning to operate, in Innu and Inuit land claim areas continue to work towards establishing and meeting obligations in impacts and benefits agreements. VINL has exceeded the projected level of aboriginal employment at its Voisey’s Bay mine site. Labrador Iron Mines has signed an impacts and benefits agreement with the Innu with respect to their proposed western Labrador project.

Labour and human resources trends

Trade and labour shortages are a concern for all operations, like VINL and IOC, which have planned major projects next year. At smaller operations such as Pine Cove, local qualified tradespeople have met the general demand in the construction and operational phases. This is a legacy of the mining and other heavy industries that have historically operated throughout the province. However, for a project such as the commercial nickel refinery that will generate 5,000 to 5,700 person-years of employment over a four-year construction phase, human resources may be a challenge.

For the 12 months ended July 1, 2008, Newfoundland and Labrador’s population had increased by 1,436. This 0.3 per cent increase was a result of positive net migration and is the first annual population increase in 16 years for the province. New projects, such as the recently announced Hebron project, are anticipated to generate more employment, which will contribute to continued population growth. High-quality job opportunities in this province are now attracting people from abroad, including expatriate Newfoundland and Labradorians.

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