February 2014

Industry at a glance

By Ryan Bergen, Peter Braul, Andrew Livingstone, Herb Mathisen

CEMI gets $15 million from feds

Anticipating a future where miners will need to go deeper and deeper to exploit mineral deposits, the Centre for Excellence in Mining Innovation (CEMI) will be better equipped to conduct research to make the processes involved in ultra-deep mining more effective and more comfortable for workers now that it has secured $46 million in public and private funding. On January 22, the federal government awarded $15 million to CEMI for its Underground Deep-Mining Network (UDMN) project proposal, under the Canadian government’s Business-led Networks of Centres of Excellence program. This amount was matched by a $31-million contribution from mining and oil and gas companies to develop new processes and technologies in four ultra-deep mining areas: safety and stability of drifts; energy reduction for ventilation; operational efficiency; and comfort for workers in deep mines, which includes developing personal protective equipment that addresses heat and humidity, along with improving communications. Ultra deep mines are defined as deeper than 2.5 kilometres, said Douglas Morrison, CEMI CEO and president. CEMI’s UDMN was chosen as one of four projects from a pool of more than 100 applicants.

“We had several small projects that we were beg­in­ning to pull together that ad­dressed individual issues but when we were made aware of this competition, we realized that we should tie it all together into one network,” said Morrison. “In fact, these themes are not really separate. If we don’t do the energy better, the productivity is affected. If we don’t improve the conditions for people, it will be difficult for us to attract new people to the industry.” The organization will coordinate the work between mining companies, suppliers and service providers, and universities, to be undertaken in Canada as well as in mine sites in Australia.

– Herb Mathisen

NRCan blundered New Prosperity assessment: Taseko

Federal Environment Minister Leona Aglukkaq has until February 27 to make a decision on the environmental assessment for Taseko Mines’ New Prosperity project in British Columbia. At the same time, a major portion of the information Aglukkaq is supposed to use to make her decision is under judicial review.

Taseko has alleged that findings from a federal review panel report, based on NRCan modelling, ignore the company’s plan to use a low permeability basin liner in the tailings facility. Those same findings hold that the mine would have “significant adverse environmental effects” on local fish habitats because of potential seepage from the tailings facility into Fish Lake.

“It’s the same design as for Mt. Milligan’s tailings storage facility,” said Brian Battison, Taseko’s vice-president of corporate affairs, who emphasized that Knight Piesold, which consulted for Taseko’s engineering, also designed the liners for Thompson Creek’s Mt. Milligan tailings facility.

If Aglukkaq approves the project, or if the federal cabinet decides that the project’s environmental risks are justified, Taseko has pledged to withdraw the request for judicial review. But if things swing the other way, Battison said, the government and his company will be tied up in Federal Court for “many months.”

– Peter Braul

Belarusian potash rift shakes Canada

With prices down 24 per cent from last year, Uralkali’s aggressive attack on potash markets since dropping out of Belarusian Potash Co. (BPC) is being felt in Canadian mines. The Potash Corporation of Saskatchewan laid off 18 per cent of its workforce in December, including 440 of its Saskatchewan workers, 130 in New Brunswick, and 475 outside of Canada.

“While these are steps we must take to run a sustainable business and protect the long-term interests of all our stakeholders, these decisions are never easy,” said PotashCorp CEO Bill Doyle. The company’s Saskatchewan potash production has stayed steady, at around eight million tonnes per year, while its workforce in the province has increased by more than 1,000 since 2007. The company had been adding workers to support expansion with the expectation of better market conditions.

Uralkali recently signed a deal with China for US$305 per tonne this year, setting the bar for potash prices very low. But whether the Russian company will continue to market its goods alone is uncertain. The Russian ambassador to Belarus, Alexander Surikov, claimed in a December press conference that Uralkali was prepared to begin cooperating again with Belaruskali, the remaining member of BPC.

– P.B.

Colossus tumbles

Frustrated by technical problems that exhausted its finances, Colossus Minerals filed for bankruptcy protection in January. Earlier in 2013, the company intended to begin producing at the Serra Pelada underground mine at the end of the year, but development work was slowed last summer when water inflow overwhelmed the mine’s dewatering system. The interruption pushed the start date for the mine to the second quarter of 2014, and by last November both the company’s CEO and CFO had resigned. On December 6, the company announced it would need another US$70 million to reach production. Shortly after, a mineral resource estimate for the project reported an Indicated Resource of a meagre 230,000 ounces of gold, crushing any hope that the company could inspire more investment in its Brazilian project.

The discovery of the Serra Pelada deposit sparked a decade-long gold rush in the early 1980s that attracted tens of thousands to the remote site in the Para state of northern Brazil. In 2007, Colossus formed a partnership with a Brazilian cooperative to develop the underlying resource. The company, boosted by impressive drilling results and strong gold prices, had raised US$380 million to build what its management had described as a 1,000-tonne-per-day, high-grade, underhand cut and fill mine without doing a resource estimate.

Toronto-based Colossus is now in the process of converting its debt into equity. The proposed restructuring would give company noteholders 51 per cent of the outstanding shares. Sandstorm Gold, which had a streaming agreement with Colossus for both gold and platinum, would take 38 per cent, and existing shareholders, who saw the company’s share price peak at $9.56 in 2010, would receive just over one per cent.

– Ryan Bergen

Yukon’s Peel plan panned

Following 10 years of discussion and contentious debate, the Yukon government has released its land-use plan for the Peel watershed, and both environmental and mining groups have concerns.

The Peel Watershed Planning Commission (PWPC) sent its recommendations to the government in July 2011, calling for conservation of 80 per cent of the region: 67,430 square kilometres of nearly pristine and potentially mineral-rich land, roughly equivalent to 14 per cent of Yukon’s territory. It is home to grizzly bears, Dall sheep and wolves and is important traditional and hunting grounds for the region’s First Nations.

The government’s plan, released January 20, converts 29 per cent of the region into a protected area, while opening the rest up to mineral claims staking. (A temporary ban had been in place.) Forty-four per cent of the land will become “restricted use wilderness area” which, according to the government, allows “for low levels of carefully managed land activity” with roughly 0.2 per cent of overall surface disruption. The remaining 27 per cent will be open for general land use.

Following the government’s an­nouncement, four Yukon First Nations released a statement, vowing to fight the government’s plan, based on its decision not to follow the PWPC recommendations. On January 27, a group comprised of local First Nations and environmental organizations filed a lawsuit against the government.

However, miners in the region might find the current plan too restrictive. “At first blush, it looks like a high level of environmental protection and that is a concern for our membership,” said Yukon Chamber of Mines executive director Samson Hartland. He added the plan is likely not final at this point: “We haven’t heard the last of this, that’s for sure.” According to chamber data from 2010, the region has been underexplored, but includes around 219 known mineral occurrences and 13 known deposits.

– H.M.

Miners slack on hacking protection

Mining companies in Canada need to take note of the increased threat of cyber attacks, according to a report released late last year by Ernst & Young outlining the growing risk across the industry.

The report “Cyber hacking and information security: mining and metals” found that 41 per cent of companies surveyed saw cyber security from outside sources like foreign governments and mining activists as an increasing threat, and 28 per cent saw internal vulnerabilities growing.

The largest threat, said Ernst & Young’s information security practice leader Rafael Etges, is due to the centralization of network infrastructure. This leads to a bigger dependence on the Internet and the use of smart phones and tablets by employees and management. Without proper security systems in place, and education of management and staff, companies are left vulnerable. This can eventually harm the bottom line if cyber-attacks result in operational shutdowns, or if information is accessed by the wrong people, he said.

Chronic underfunding of protection for information systems can lead to cyber attacks, said Etges. “If you’re implementing more sophisticated technology, you are becoming more like a bank and that protection is needed,” he added. “If they aren’t training people (on the issues of Internet security and proper handling of company information) then the risks will continue to remain.”

– Andrew Livingstone

Northern power play

The government of the Northwest Territories announced in late December that it hopes to lower energy costs by linking its two hydro power generation facilities – the Taltson and Snare plants – together on one grid. Finance Minister Michael Miltenberger said current energy costs create roadblocks for companies looking to make projects in the territory financially viable. He added that the plan would provide opportunities for current and future mines in the region to connect to the network and also improve the cost of living for northerners: many operations and communities rely on diesel for power generation.

However, to complete the estimated $700-million project in the five-year period that Premier Bob McLeod has laid out in recent interviews, the territorial government needs more borrowing power: its debt level is currently capped at $800 million, with more than $500 million already committed.

“Without the ability to do that, we’re going to stagnate and we will be stuck where we are right now and not be able to advance and do the things governments should do,” said Miltenberger. “We’ve been working with [the federal government and industry] for years to promote economic development, but if you want to be able to move to the next step, it’s about us being able to do it financially,” he added, noting the dialogue with the federal government is progressing.

– A.L.

Western Copper and Gold puts its cards on the table

A Canadian company is hoping to hit the jackpot in Yukon. In January, Vancouver-based Western Copper and Gold submitted a final project proposal to the Yukon Environmental and Socioeconomic Board for its Casino copper-gold-molybdenum project. The open pit mine, which Western Copper and Gold expects will cost roughly $2.45 billion to build and would become the largest mine in the territory, is projected to have a 22-year life, ac­cording to the company’s January 2013 feasibility study. Paul West-Sells, company president and COO, said once the proposal is deemed adequate by the board, it will begin detailed engineering work on the project, while also looking to secure the financing required for its construction. The mine, which would produce around 400,000 ounces of gold and 200 million pounds of copper per year, would employ 600 full-time workers. Based on the track record of the territory’s regulatory authorities in recent years, West-Sells said, “We expect to get a decision from the Yukon government by the end of 2015, or approximately two years from when the project proposal was submitted, and be in a position to begin construction at the beginning of 2016.”

– H.M.

Peter Munk hangs ’em up

As Barrick Gold hunkers down and recalibrates its reserves at $1,100 per ounce, down $400 from last year’s assumptions, the company is preparing for a new, more conservative era in gold mining. In a move symbolic of the profound changes in the gold space, the company’s founder and co-chairman, Peter Munk, is planning to step down at the annual general meeting this spring.

Board members Howard Beck and Brian Mulroney will also be leaving, joining Donald Carty and Robert Franklin who quit in December. Barrick had 13 members on its board before the resignations.

The company has tagged Ned Goodman, CEO of Dundee Capital, Nancy Lockhart, CEO of Frum Development Group, David Naylor, the former president of the University of Toronto, and Ernie Thrasher, CEO of Xcoal Energy and Resources, to replace those leaving at the AGM, when current co-chair John Thornton will officially take over the reins from Munk.

– P.B.

New life for Dufferin mine

Despite a nearly 20-per-cent drop in the price of gold in 2013, Quebec-based Resources Appalaches is eager to reach its initial 300-tonne-per-day-capacity goal at its refurbished Dufferin gold mine in Nova Scotia by mid-2014.

Company president Alain Hupe said he is not worried about the fluctuating price of gold – at least for now. When looking at the viability of reopening the mine, the company used a $1,200-per-ounce price in its cost analysis. (Gold hovered between $1,240 and $1,265 per ounce in late January.) The area has been explored since the 1860s, and the Dufferin property has changed hands over the years, with Resources Appalaches acquiring sole ownership in 2011. “We’re not starting from zero,” said Hupe, explaining that the milling buildings from previous operations are still in place and “in really great shape. The tailing ponds and roads are there and we just had to upgrade [the road].” All this reduced mine start-up costs. “It is a small production and it is easier to manage,” he said of the potential 70-employee operation. The company hopes to produce between 20,000 and 25,000 gold ounces per year and potentially ramp up production as it continues to explore the property.

– A.L.

CMP powers idea mill

The need for expanded front-end metallurgical work and more nimble process controls fuelled discussions at the latest Canadian Mineral Processors (CMP) Conference in January. Processors, explained conference chair Pierre Julien, will get better results as more effort is committed to understanding the ore being processed. “There are gains to be made by having a better understanding of the ore body at the feasibility stage, and how it will perform metallurgically,” said Julien. “Even just 10 years ago we were only looking at grade. But grade alone does not help you make proper investments. And in operations, we are seeing mineralogical equipment coming into the mills.”

The event, anchored by a technical program that featured 35 presentations on process improvements, innovations and challenges, concluded with an audience-generated panel discussion. Consultant Mike Ounpuu, Outotec’s Tatu Miettinen, Xstrata Technology’s Rodrigo Araya and FLSmidth’s Harley Schreiber spoke about scaling up flotation testwork to the plant, and explored what metrics beyond the rule of thumb for residence time could help mineral processors achieve more consistent results as flotation cells are scaled up.

At the event’s award banquet, Dominic Fragomeni, XPS Consulting director, spoke about how many in attendance that evening saw their career paths wind through the Brunswick zinc mill, detailing the history of the 50-year old operation and how many had cut their teeth there. Its closure in May, he said, marked “the end of an era.”

–  R.B.

Back to magazine home page | Next article

Post a comment


PDF Version