Dec '09/Jan '10

Newfoundland and Labrador

On the road to recovery and expansion

By the staff of the Mines Branch, Department of Natural Resources, Government of Newfoundland and Labrador

Iron Ore Company of Canada’s open pit mine in western Labrador

Mining is one of Newfoundland and Labrador’s largest and oldest industries, and a major contributor to the province’s economy. Six metal mines produce iron ore, nickel, copper, zinc, cobalt, antimony and gold. Other operations mine slate, limestone and barite, among other commodities. Direct employment in the Newfoundland and Labrador minerals industry is projected to account for 4,112 work-years in 2009, an increase of 99 work-years over the 2008 estimate. The forecast gross value of mineral shipments for 2009 is $2.2 billion. This is down from $4.7 billion in 2008 as a result of weaker commodity prices and decreased production due to scheduled shutdowns and labour disruption. However, this lower 2009 figure is still the fourth highest value on record for the province.

Resurgent investment

Despite the recent economic downturn, Newfoundland and Labrador is witnessing a resurgence of investment in its minerals industry. Vale Inco formally notified the province in late 2008 that it will construct a hydromet nickel processing plant at Long Harbour, Newfoundland. The plant is currently in the early stages of earthworks and construction, and is forecast to be completed in February 2013 at a total estimated cost of US$2.177 billion. Operational employment will be about 450 persons, and the plant will produce 50,000 tonnes of finished nickel per year.

In the first half of 2009, the Iron Ore Company of Canada (IOCC) appears to have maintained reasonable sales levels through the spot market in China. Following a scheduled five-week mid-summer shutdown, the company has hired 30 new employees. A decision on reviving the previously announced $800 million expansion program has yet to be made.

Wabush Mines announced in February that it will implement a $4 million project to complete the assessment and evaluation of manganese separation technology on a production prototype. This will determine if the technology can be transferred to a full facility rollout. The manganese separation process will allow the company to mine and process higher manganese ores and will extend the life of the mine. The project is expected to proceed, possibly in 2009, upon approval at the corporate level. The project has a total capital cost of $43 million. The company announced 160 employee layoffs for February and decreased production by about 50 per cent for 2009. However, 100 unionized employees have since been recalled.

Teck Resources Ltd. achieved a milestone at its Duck Pond operation by reaching the heart of the ore body at the 42 level. They are also in the middle of developing an underground service centre for mobile equipment, which will better position them for a safe, productive working environment.

Anaconda Mining Inc. began production at the Pine Cove gold mine in mid-2008, and in mid-2009, the company announced that it had entered into a 12-month toll processing agreement with Crew Gold Corporation. Anaconda delivers ore from Pine Cove to Crew’s Nugget Pond mill for processing. This arrangement will provide additional time to resolve challenges with Anaconda’s milling process.

Rambler Metals and Mining PLC continues to advance work on reopening the former Ming Mine on the Baie Verte Peninsula, Newfoundland. In 2009, Rambler announced that it will purchase the Nugget Pond gold processing facility from Crew Gold Corp. to process ore from the Ming project. The company plans to process 850 tonnes of copper/gold ore per day, and employ about 100 people during peak production. Rambler has stated that the milling agreement between Crew Gold and Anaconda Mining will continue without interruption.

In September, Canadian Antimony Mine Inc. and Beaver Brook Resources Ltd. announced an agreement to sell Beaver Brook Antimony Mine Inc. to Hunan Nonferrous Corp. Hunan is the largest antimony company in the world and currently Beaver Brook’s largest customer. The sale will ensure demand and stability for the mine’s concentrate sales and should prove to be a major contributing factor in the operation’s continued production.

Hurley Slate Works Company Inc. is developing automated splitting, grading and sorting equipment that it hopes will improve efficiency at its slate roofing tile production facility in Trinity Bay, Newfoundland. The company also has plans to market the technology to mid-sized slate producers worldwide.

New Millennium Capital Corp. and Labrador Iron Mines Holdings Ltd. are moving towards production at separate direct-shipping iron ore projects in western Labrador. Production from these proposed open pit mines, with target site dates of 2011 and 2010, respectively, would produce lump and sinter fines products for export markets. Combined production from these two projects will be between four and five million tonnes per year and will generate approximately 300 jobs during operations.

Canada Fluorspar Inc. is developing the former-producing fluorspar deposits at St. Lawrence, Newfoundland. The company plans to commence construction in the spring of 2010 and begin production in the late fall of 2011. A 2009 resource estimate reports 9.1 million tonnes indicated resources at a grade of 42.0% CaF2 and one million tonnes of inferred resources at a grade of 31.0% CaF2.

As these and other projects are developed within Newfoundland and Labrador, there is an increased awareness of environmental and social issues. The province continues to implement the Mining Act, which requires mining companies to have adequate financial assurance for the rehabilitation of their mining operations.

Continuing exploration

Expenditures on exploration and deposit appraisal in the province are projected to be about $58 million in 2009, down from about $146 million in 2008. This is in line with global trends during the current economic downturn.

In exploration highlights, Tenajon Resources Corp. (now Creston Moly Corp.) has reported a resource estimate at its Moly Brook Property. The Moly Brook Zone contains an indicated resource of 86.8 million tonnes grading 0.065% Mo and an inferred resource of 31.3 million tonnes grading 0.056% Mo.

Thundermin Resources Incorporated and Cornerstone Resources Incorporated announced a resource estimate for the Little Deer copper project. The deposit contains an indicated resource of 1,087,000 tonnes at an average grade of 2.9% Cu and an inferred resource of 1,950,000 tonnes at an average grade of 2.3% Cu.

Fronteer Development Group Incorporated has announced a positive preliminary economic assessment for the proposed Michelin Uranium project in Labrador. The study is based on an open pit and underground uranium mining operation at the Michelin and Jacques Lake deposits, and a milling facility at the Michelin site capable of processing 10,000 tonnes of mineralization per day, producing up to 7.3 million pounds of U3O8 per annum.

Northern Abitibi Mining Inc. continues to encounter new mineralization at its Viking gold property through an ongoing program of trenching and diamond drilling. Highlights of the work to date include a drill intersection of 27.0 metres grading 7.9 grams per tonne Au, within which are 4.8 metres of 41.4 grams per tonne.

Supporting the sector

The Department of Natural Resources assists exploration in the province with a range of programs and services. Along with field-based geoscientific surveys, internet-based services include online, real-time claim staking and GeoScience Online, a compendium of searchable databases and company assessment reports. A new initiative to be introduced in 2010 is an online exploration permitting system.

Through its Mineral Incentive Program, the province is encouraging exploration with a 2009 budget of $3.0 million for cost-shared funding of approved projects allocated to the three main components as follows: $400,000 for Prospectors Assistance, $2.2 million to Junior Exploration Assistance and $250,000 for Natural Stone Assessment. The department also supports the mining sector through its investment attraction program by displaying the province’s mineral potential at national and international mining conferences and other venues.

With commodity prices beginning to increase from recent lows, the provincial mining industry is poised to continue its recovery and expansion.

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