November 2006

Xstrata – Perseverance pays off

By H. Ednie

Construction of Perseverance

Quebec is definitely on the radar for Xstrata, as the company is fully committed to two major development projects in the province. At the Raglan nickel operation at the northern tip of the province, approximately $750 million in investment has been announced, to develop new mines, increase total mill output, and for overall update of the operation.Meanwhile, in the Matagami region, the Perseverance zinc mine is under construction, scheduled to enter production in the fourth quarter of 2008, bringing new life to a town struggling after multiple shutdowns in the minerals and forestry industries.

Perseverance-Xstrata Zinc

At the Perseverance project site, all permits are in place and tree cutting and land clearing completed, with the clearing for the haulage road underway. A ramp is being driven to access mine development, and plans are to be underground by winter. Late this autumn the power line access will be complete, and a power station erected on site.

Before winter, trailers for temporary offices and a temporary dry will be set up onsite. As well, a system to redirect run-off water to a catching basin is set up, and the water is pumped to the tailings area of a past operation, which boasts the capacity to hold all Perseverance’s tailings and run-off.

“Next year, we’ll erect the main offices, garage, and dry,”said Jean Desrosiers,vice president,mining operations,Xstrata Zinc.“We’ll construct our shop on surface, and plan only a small repair shop underground – most equipment will be brought to surface for repairs.”

The intent is to allow local employees and companies to maximize their return from the development of the operation in their region, so contracts were broken down to allow locals to bid. The major contractor onsite is Dumas Construction, who is responsible for all underground development until Xstrata Zinc employees take over in 2008.The surface work, including clearing and ground work,was contracted to Blais et Langlois, a local company.

Perseverance will use an open stope with daily backfill method, similar to previous mines in the region, for at least two orebodies. The Perseverance West orebody, however, has ground conditions that are more difficult to maintain, so primary stopes drift-and-fill methods will be used.

The existing mill onsite will have to be upgraded a bit, due to quality of ore and the need for a slightly higher throughput. Changes will be made mainly in the front end, adding grinding capacity and additional capacity in flotation for larger volumes of slurry, as talc in the ore makes the slurry frothy.

A major exploration program is being launched in the Matagami area, totaling $4 million per year. “We aim to find the next one after Perseverance,” Desrosiers said. Xstrata Zinc is partnering with Donner, from Vancouver, for the exploration program.

One of the major challenges of bringing Perseverance into production will be staffing the mine. “We want to get the right people,” Desrosiers said.“Matagami is not the easiest place to staff. It’s a community of 2,000, and not everyone wants to relocate to such a small community.” Incentives will be put in place to insure as many employees as possible relocate to Matagami.

Construction of Perseverance is scheduled to take two years, and the mine life is estimated at five and a half years, with ongoing exploration to extend that life. Once in production, Perseverance will provide 225 jobs, to produce 2,600 tonnes per day of zinc, copper, silver ore.

Raglan-Xstrata Nickel

Raglan has been a world-class nickel operation since it ramped up in 1998, and investments reaching $750 million are committed to maintain Raglan at the top of its class. Currently, the Raglan complex, located in the Ungava Peninsula in northern Quebec, includes three underground mines, one small open pit, a small airport to accommodate the company’s Boeing 737, and a port. The development plans will commit Raglan to an extension of its mine life.

The plans for Raglan include four main points. New ore resources will be developed to replace exhausted orebodies. Mill throughput and mine production will be increased from one million to 1.3 million tonnes by 2009. A new wharf at Deception Bay will be built, totaling $50 million, and finally, $45 million will be invested to construct 210 new bedrooms at the Raglan complex.

“Our workforce is expected to increase slightly, but the new residence rooms are mainly to improve the quality of life onsite,” said Denis Lachance, vice president, Raglan operations, Xstrata Nickel. “To date, contractors have had to share bedrooms, but this expansion will allow them their own rooms, which is certainly well-deserved. Contrary to what people think, we are not higher than elsewhere, as far as turnover of manpower in Abitibi, and the same goes for our contractors, most of which have been with us since 1999. They demonstrate commitment to us, and we want to return it.”

Development of Mine 2 will be completed next year, to replace exhausted orebodies. It will reach full production the following year, at 250,000 tonnes by 2008. Also,by the end of 2007 plans are to start the underground portion of the East Lake mine, located 15 kilometres west of Katinnik.

Development will start next year on the new 5-8 zone, which is appearing to be the biggest mine at Raglan to date, as far as tonnage and life of mine are concerned. “It is a very important part of our mine resource,” Lachance said. “Currently we’ve identified it below 400 metre elevation.We haven’t been mining below 250 metres, so now we have to plan deeper mining, extending to below 600 metres.”

That will mean mining below the permafrost level, and work is underway to determine the best mine design. “Until recent months, our preferred option was a decline, but now we see two large ore lenses, which challenge the ramp concept,” Lachance explained. “We may have a ramp and a shaft. We need to decide next year.”

The main drive for development of new bodies is to sustain the current rate—East Lake will be solely for that purpose, and 5-8 will be necessary to sustain rates as well, but it will provide what is needed to increase capacity on a long-term basis.With over 6 million tonnes of resource today and growing, 5-8 is “a company maker,” Lachance said. “It ensures we can sustain production for years at our present level, and even increases our capacity. This zone has changed our life of mine plan. Located four to five kilometres east of the concentrator, in our backyard, we knew it was there but were vague about it—it wasn’t a priority. Then in 2003-04, our exploration team looked in its belly—and found a bottomless cookie jar.”

The exploration potential of Raglan is now recognized as far more important than initially realized. “I foresee at least 40 years more mine life,” Lachance predicted. “In 1998 when it was built, Raglan had a 20 year mine life. Now, we still have a 20 year mine life at a higher mill rate. Last year we milled one million tonnes, and found two million tonnes of ore.”

To accommodate an increased throughput in the mill requires some modifications. The grinding circuit needs added capacity and small modifications, such as a SAG mill motor change. The flotation circuit, dewatering, drying, and concentrated tailings all require similar capacity work. The plan is to reach maximum capacity of the existing equipment, and then add some more—it’s optimization with some replacement.

Lachance is committed to Raglan—and excited about its potential. He said it is one of the greatest work opportunities in the industry.“We’re in a very harsh environment, but one of the most exciting sites,” he said. “At Raglan, you belong to an exciting team with a long future. Raglan allows you to plan up to retirement.”

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