May 2014

Industry at a glance

By Tom DiNardo, Herb Mathisen and Anna Reitman

Putting the parts in place

Copper_Mountain_Raptor_2000The 100-tonne lower main frame of the Raptor 2000 rock crusher, the largest piece of Copper Mountain’s $40-million secondary processing unit, is lowered into place in late March. The new unit, which the operation hopes will be completed this summer, will push throughput from 32,000 tonnes per day (tpd) at the British Columbia copper mine to at least 35,000 tpd and potentially 40,000 tpd.

– Herb Mathisen

New majority government promises stability for Quebec’s mining industry

The Liberal Party of Quebec’s resounding victory in April’s election may finally bring some stability to the Quebec mining industry. Miners had been on shaky ground since the September 2012 election of a minority Parti-Québécois (PQ) government, which had campaigned on recouping more revenues from the sector and later worked hard to push through mining reforms. After a failed attempt in May 2013, the government passed a new, albeit watered-down, mining act that added permitting requirements, lowered environmental assessment triggering thresholds and gave more power to municipalities to oppose mining developments.

This past March, then-PQ-leader Pauline Marois called a snap election, seeking a majority government, but was soundly defeated by the Liberals, which instead took a majority in the National Assembly. “Obviously, a majority government will ensure at least some stability in policy over the next four years,” said Quebec Mineral Exploration Association chairman Philippe Cloutier, adding this certainty should quell investor anxieties. “Investors don’t like to know that they’re investing money and the government’s going to pull a 180 on them.”

Newly elected Premier Philippe Couillard spoke to the importance of mining and exploration during the campaign, said Cloutier, adding he announced some commitments during the election that could benefit Quebec’s mining industry. “One of his main proposals is to come back with what is a Plan Nord Plus, and invest in infrastructure, which is a good thing for companies,” Cloutier explained. Couillard also stated his intentions to start a small business ministry, which Cloutier said could help many of the service providers on which the industry depends.

– H.M.

Capstone extends Pinto Valley mine life

Vancouver-based Capstone Mining Corp. has extended the mine life of its Pinto Valley copper mine, 125 kilometres east of Phoenix, Arizona, by eight years to 2026.

Management had a hunch that it could bolster reserves when it purchased the mine from BHP Billiton in October 2013 and immediately started work on a prefeasibility study. “BHP had a lot of the data already available as they were embarking on something similar for the mine,” said Cindy Burnett, vice-president of investor relations. “We were able to take advantage of much of that work, and started gathering it even before the sale was finalized.”

Under the new plan, production will increase from 22.6 million tonnes this year to 42.3 million tonnes per year in 2016 through to 2019, at which time production will gradually decrease until the end of operations in 2026. Capstone will continue to mine out of the same pit, but it will have to move its explosives facilities and some powerlines and pipelines in the next two years in order to accommodate the new phase. The company will spend US$48 million on new drills, shovels and haul trucks to meet the production increase.

Burnett said Capstone management is aiming to extend the mine life beyond 2026 through the continued conversion of mineral resources to reserves. To do so though, the tailings facility would need to be larger, and this is the limiting factor to any further expansion, she explained.

– H.M.

CSA adopts existing shareholder exemption

Listed companies on Canada’s public markets can now raise money from existing shareholders thanks to new exemptions approved in March by the Canadian Securities Administrators (CSA).

Under the new rules, an existing shareholder in a company can invest an additional $15,000 per year to purchase shares directly from the company without having to pay brokerage fees. Representatives of the mineral industry had advocated for higher limits, particularly for individuals holding more than $15,000 worth of stock already, but the restrictions are not expected to present a major barrier, said Nadim Kara, senior program director at the Prospectors and Developers Association of Canada. “By allowing retail investors to participate in private placements, regulators are increasing the investor base in the exempt market and really facilitating capital-raising,” Kara said.

He points to statistics showing that an alarming number of juniors are facing desperation financing in the mining sector. In 2013, the number of financings in Canada was down 17 per cent, and the value of financings was down more than 50 per cent. Many of these financings were for very small amounts – 12 per cent of financings on the TSX Venture Exchange were for $100,000 or less and 52 per cent of all financings in 2013 were for less than $500,000. More than 50 per cent of the financings last year were priced at $0.10 per share or less versus 13 per cent in 2010.

The only jurisdictions not included in the CSA’s prospectus exemption are Ontario and Newfoundland. The Ontario Securities Commission recently presented its own existing shareholder exemption proposal, which is now in a comment period ending June 18. Newfoundland is expected to take up Ontario’s finalized regulation.

– Anna Reitman

World Bank to release geological map covering African continent

The World Bank is planning to launch the African Mineral Geoscience Initiative (AMGI), dubbed the Billion Dollar map, this summer to level the playing field between African countries and mining companies negotiating land concessions. This project aims to compile geological data on mineral prospectivity in Africa in a public geographic information system (GIS) available online.

Right now, geodata mapping in Africa is piecemeal, done in a country-by-country fashion, making it difficult to compare information. “In the first phase of the project, we will compile, collate and analyze the data available from geological surveys funded by the European Union, the United Nations Development Programme and the World Bank, among others,” said Paulo de Sa, sector manager of the oil, gas and mining unit of the World Bank’s Sustainable Energy Department. “Once this is complete, we will advance to the integration of airborne geophysics, geochemistry, available drilling data and field work.” African countries will opt into the project, and the World Bank will conduct surveys regionally, without considering borders in volunteer countries.

The primary aim of this initiative is to help African countries when they sit down with mining companies to negotiate land concessions. Due to a lack of geological knowledge of the mineral resources available within their borders, African governments are selling their mineral assets at too deep a discount, according to the World Bank. The Democratic Republic of Congo, for example, lost out on at least US$1.36 billion between 2010 and 2012 by underpricing mining assets sold to foreign companies, as outlined in the 2013 Africa Progress Panel report. The World Bank also hopes to attract foreign investment by making geological information readily available.

To complete the map, the World Bank needs to raise $1 billion – as the project’s name suggests – for which it is looking to countries, private sector mining companies and even technology enterprises as donors. “We have already secured 50 per cent of the funding needed for the first phase of the program, with $40 million committed from various donor countries,” said de Sa. The Billion Dollar map project will start in southeast Africa and is expected to take roughly 10 years to develop.

– Tom DiNardo

China loses WTO battle over REE exports

On March 26, the World Trade Organization (WTO) found that China’s export duties and restrictions on rare earth elements (REE), tungsten and molybdenum contravened trade agreements it had previously signed, and ordered the country to bring its policies in line with its WTO obligations.

Back in 2010, China imposed taxes and quotas that limited the amount of rare earths for export. The country, which produces more than 90 per cent of the world's REEs, also put restrictions on the enterprises allowed to export rare earths.

The United States filed a complaint in March 2012, insisting that China’s REE export practices violated previously signed agreements including various articles of the WTO’s General Agreement on Tariffs and Trade. During the panel hearing, China argued “that the restrictions [were] related to the conservation of its exhaustible natural resources,” and were in place to protect the environment by preventing over-mining, according to the WTO report. The complainants, which also included the European Union and Japan, insisted “the restrictions [were] designed to provide Chinese industries that produce downstream goods with protected access to the subject materials,” the report outlined. Not surprisingly, on April 17, China announced its intention to appeal the decision.

– H.M.

OSC proposes equity crowdfunding rules

Ontario’s securities regulator released equity crowdfunding guidelines in its latest proposals to help Canadian companies raise venture capital from a greater pool of eligible investors. Currently companies in the province are not permitted to equity crowdfund from non-accredited investors.

A swath of measures from the Ontario Securities Commission (OSC) detail issuer requirements and other guidelines in the interest of investor protection. Under the current proposal, a company would be limited to raising $1.5 million per year through crowdfunding, and investment limits include a maximum of $2,500 in a single investment and not more than $10,000 in a calendar year. Crowdfunding portals will also be required to register as dealers with the OSC, perform background screenings on company directors and block potentially fraudulent issuers to offer further protection to investors.

“The mining sector will greatly benefit,” said Oscar Jofre, chief technology officer of the equity crowdfunding mining portal Klondike Strike and co-chair of the Equity Crowdfunding Alliance of Canada. “Regulators are also allowing private and public-listed issuers to participate, which is very unique to Canada.”

“Exempt market dealers are [still] needed and the fees the portals will be charging are no different from when mining companies seek capital through prospectus or private placement,” Jofre said. “This guideline will be more transparent and beneficial to everyone investing in the mining sector.”

– A.R.

The new gold standard

With gold slumping late last year and yo-yoing again in 2014, gold miners readjusted their reserves with more conservative gold prices in mind. Here are the reserve pricings some of the big players have set versus their 2012 standard: (figures in US $/ounce)

Barrick - $1,100 (from $1,500)
Kinross - $1,200 (unchanged from 2013)
Eldorado - $1,250 (from $1,700) not for all operations 
Newcrest - $1,250 (from $1,400)
Goldcorp - $1,350 (from $1,600)
Newmont - $1,300 (from $1,400)

SOURCES: Company financials

– T.D.

Mining Family Matters helps mining families cope

Families of miners often deal with particular challenges like the isolation of living in small mining towns or the loneliness of having a parent who works at a fly-in/fly-out (FIFO) operation. To help Canadian mining families cope with the many stresses that come from having one or both parents working away from home for extended periods of time, Australian organization Mining Family Matters (MiningFM) launched a Working Away survival guide at this year’s PDAC. This 32-page resource guide, available in both English and French, explains to readers what to expect when they first work away, and provides advice on parenting and discipline, sex and relationships, overcoming loneliness and helping children cope.

Alicia Ranford created MiningFM in February 2010 while she and her children were dealing with her husband’s FIFO schedule in Australia. Four years later, she and fellow co-founder Lainie Anderson decided to launch Canadian-specific content after receiving an increasing number of enquiries from companies and families in North America. “We focused on Canada initially because of the similarities in the issues facing mining families, particularly those working around FIFO rosters,” said Anderson.

MiningFM also provides a free online resource for Canadian families in the mining and oil and gas industries. The website features columns by psychologist Angie Willcocks and contributions from Canadian workers to provide a personal perspective on issues in mining families. Additionally it offers career advice and resources to those considering work in Canada.

Anderson says the reaction from Canadians has been fantastic so far, especially from corporations. “It’s great that family well-being and emotional resilience are so clearly on the radar for so many Canadian mining companies.”

– T.D.

First Nations and Ontario sign Ring of Fire agreement

The Ontario government and nine First Nations in the province’s Ring of Fire region took an important step toward developing the mineral-rich area in late March by signing a Regional Framework Agreement.

The agreement between nine Matawa-member communities and Ontario defines the role of First Nations in future Ring of Fire negotiations. “The agreement will help ensure that Matawa-member communities are active participants in important discussions around enhanced environmental assessment processes and regional long-term monitoring, social and economic supports, regional infrastructure planning, and resource revenue sharing,” said Julia Bennett, a ministry of northern development and mines spokesperson.

The agreement followed an early February announcement by Michael Gravelle, Ontario minister of northern development and mines, that Deloitte would act as a neutral third party for Ring of Fire partners to create a regional development corporation. It would partner First Nations with industry, as well as the provincial and federal governments with the aim of aligning the interests of all parties and spur the construction of infrastructure in the region – one of the biggest setbacks thus far for developing projects in the Ring of Fire. Deloitte has begun discussions with partners and will continue to work to create a legal framework and outline the governance of the corporation.

– T.D.

Property File gives exploration companies more resources in B.C.

A free mineral exploration database hit an impressive milestone this spring. Property File, an online information trove of long-archived and recently donated files and reports from large companies, independent prospectors and exploration geologists, surpassed 50,000 documents at the PDAC Convention in early March.

The project, funded and hosted by the provincial government, started when the British Columbia Geological Survey (BCGS) decided to put the paper mineral occurrence documents filed away in its archives online. “These files were only available in Victoria, in the library, by appointment and under supervision because they were stored in the locked part of the library,” said Nicole Barlow, owner of Purple Rock, the company hired to catalogue and upload the material. “It wasn’t very accessible, but it was useful information and something that you couldn’t find anywhere else.”

Now these documents, along with a growing number of donated files – ranging from prospectuses and drill core records from Falconbridge, Placer Dome, Chevron and other companies that have left the region, to hand-drawn maps and field trip guidebooks from geologists – are being added to the searchable system. “It’s capturing everything that would otherwise be lost,” she said. “That’s kind of the main objective of Property File: to have a collection of completely unique documents.”

With exploration money tight, Barlow said this is another resource that junior companies can use to help zero-in on mineral occurrences, as it provides an additional layer onto the BCGS mapping interface, which ties together all the province’s mineral information. “It’s completely free,” she said. “You can overlay all the databases, the assessment reports, the mineral occurrence files and create your own map.”

Property File contains information and research not available in any other public resource. Barlow added one Property File document they came across noted “great values of gold and silver” with a full property evaluation, including location data, assays, and trenching information, but there were no previous assessment reports on BCGS maps for the property. “You could almost put an ‘X’ on the map of where this high mineral occurrence was,” she said, adding that no claims have currently been staked at that location.

– H.M.

Goldcorp establishes Dalhousie mining professorship

With warnings of looming labour shortages in the mining industry, Vancouver-based Goldcorp donated $300,000 to Dalhousie University’s mineral resource engineering program in April. This money will establish the Goldcorp Professorship in Mineral Engineering, to be held by Donald Jones, senior professor in Dalhousie’s mineral resource engineering program. Part of Jones’ role will be to develop and design curricula.

In recent years, enrolment in Dalhousie’s mineral resource engineering program has spiked from around 20 students per year to 40, which has put a greater strain on the university’s faculty and resources. Goldcorp’s annual donation of $100,000 over three years will help alleviate some of those issues. This year’s portion has already gone toward the hiring of two professors, the most immediate need for the university.

The professorship extends the already good relationship between Goldcorp and Dalhousie. Dalhousie students often work at Goldcorp for co-op terms and Goldcorp has a history of hiring students from the Halifax university’s mineral resource engineering program. “They’re pleased with the quality of graduates,” said Dalhousie’s faculty of engineering dean, Joshua Leon. “We see it as a big vote of confidence.”

“There is a looming skilled-labour shortage in the mining industry,” said Brent Bergeron, senior vice-president of Goldcorp, in a press release. “We are working to increase the number of new graduates entering this field and we’re confident that Dalhousie can expand on its current track record of graduating top-notch mining engineers.”

– T.D.

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