June/July 2016


By Vince Morello, Kelsey Rolfe, Kate Sheridan, Kylie Williams

Northwest Territories’ diamond industry going strong as the 25th anniversary of Ekati discovery approaches

Chuck Fipke and Stewart Blusson’s discovery of diamonds in the Northwest Territories formed the basis of the Ekati mine | Courtesy of Dominion Diamond Corporation

Dominion Diamond’s expansion into the Jay kimberlite pipe at its Ekati property has completed another regulatory step, on the eve of the 25th anniversary of Chuck Fipke and Stewart Blusson’s landmark discovery of diamonds in the Northwest Territories in the autumn of 1991, which eventually formed the basis of the Ekati diamond mine and launched the diamond mining industry in the territory.

The territorial government accepted the Mackenzie Valley Environmental Impact Review Board’s recommendation to approve the expansion. The review board had required a few additional measures to mitigate public concern and potential negative environmental impacts, including a design that would minimize harm from roads and dust to local caribou populations; improve the proposed strategy to employ women; and use traditional indigenous knowledge to design and operate the mine.

The final step in the environmental review process is to file water license and land use permit applications. Dominion Diamond, which owns a majority interest in the Ekati mine, said in a May press release the applications would be filed “shortly.” The Jay Project could extend Ekati’s mine life by 10 to 11 years.

Ekati is not the only operation making strides in N.W.T. Mountain Province, a co-owner of the Gahcho Kué open-pit mine, announced in early May the project is 94 per cent complete and is on track for first production in the second half of the year. (De Beers owns 51 per cent of the mine.)

Gahcho Kué is expected to produce an average of 4.5 million carats per year. Over its 12-year mine life, it is expected to produce 55.5 million carats from a Probable Reserve of 35.4 million tonnes. Also in May, the Diavik Diamond mine reached the 100-million-carat milestone. The operation began in 2003 and work will begin next year to develop a fourth kimberlite pipe on the property.

“The impact of the Northwest Territories on the global diamond industry for the last 25 years has been significant, and De Beers is committed to continue our long-term presence with the opening of Gahcho Kué later this year,” said Tom Ormsby, a spokesperson for De Beers, which also operates the Snap Lake diamond mine. “It is well-positioned with its Proven Resources to ensure that N.W.T. remains a major player in the diamond industry.”

The industry had an impact on the territory over the past quarter-century, according to the territorial government’s 2015 report on community impacts. (Working with the territory to produce the annual report is one of the requirements the Ekati, Diavik and Snap Lake diamond mines must fulfill to operate in N.W.T.) Fewer residents rely on welfare programs, and more residents are continuing with their education, the report stated.

In the last tax year, diamond mines paid $44 million through corporate income tax, fuel, property and payroll tax; this amounts to about a third of the territory’s total tax revenue and an 11 per cent increase from the previous year. One eighth of resource revenues in the territory is sent to indigenous organizations. 

– Kate Sheridan

Police, labour ministry charge Detour Gold in employee’s death

The Ontario Ministry of Labour charged Detour Gold in late May with 15 violations of the province’s Occupational Health and Safety Act regarding the death of the company’s 52-year-old employee, Denis Millette, due to cyanide poisoning. Three supervisors at Detour also received two charges each. A month prior, provincial police charged the company with criminal negligence.

On June 3, 2015, Millette was repairing the inline leach reactor, a machine that uses sodium cyanide to help separate gold and rock, when a broken valve exposed the unprotected Millette to the cyanide. Despite help from on-site medical staff, Millette died of cyanide intoxication.

The ministry’s list of Detour’s offences include not making sure the inline leach reactor Millette was working on at the time of his death was properly maintained, and for not ensuring that the antidote for cyanide poisoning was stored near the working area. The company was also charged with failing to inform supervisors and employees about the dangers of working with cyanide.

The supervisors were charged for not ensuring that Millette was wearing proper gear, and not supervising or instructing him properly on the job site.

According to amendments made to the Criminal Code of Canada in 2004 a company can face criminal charges for workplace accidents and deaths and be fined if found guilty. Those changes were in response to the Westray mine disaster in Nova Scotia nearly 25 years ago, where a methane explosion killed all 26 miners working underground at the time, after multiple orders from the province’s Department of Labour inspectors were not heeded.

According to the Canadian Centre for Occupational Health and Safety eight companies, not including Detour, have been criminally charged in employees’ deaths since the legislation came into effect. One was Quebec paving company Transpave, which was charged and convicted of criminal negligence, and fined $100,000 plus a $10,000 victim surcharge, after one of its workers was crushed by a packing machine in 2008.

Detour Gold declined a CIM Magazine request for comment, but in a late-April press release the company’s CEO Paul Martin said, “We have and will continue to cooperate fully with both the Ontario Provincial Police and Ministry of Labour throughout their investigations and are taking these charges very seriously. In the meantime, we would like to express our sincere condolences to the family.” 

– Vince Morello

Goldcorp targeted by online extortionists

Goldcorp was the victim of a security breach, where hackers gained access to and posted the company’s private information online, the company confirmed in April.

The attack is believed to be random, according to Goldcorp spokesperson Christine Marks. Goldcorp CEO David Garofalo confirmed to Bloomberg that the company was asked for money in exchange for the data.

“My understanding is that they target a lot of companies,” Garofalo said. “They do it for money. In that case, the answer is obvious to me – you don’t pay criminals and then you call the police.”

According to Stephan Jou, a data scientist and security expert at cyber-security firm Interset, mining companies are not as prepared for cyber security threats as banks and other financial institutions because they are generally not targets for those types of attacks, and as a result are easier to hack. “Why not go after the easy guy?” Jou said.

The hackers were able to access 14.8 gigabytes of information in the breach, including private budget documents; payroll information; emails; employee phone numbers, email and home addresses among other data, according to the Daily Dot.

“The extent of the data breach is not of significant concern for us, because we’re a public company and anything of a material nature has to be in the public domain by law anyways. So we really don’t have any material undisclosed information,” Garofalo told Bloomberg.

While day-to-day operations were uninterrupted by the breach, Goldcorp dispatched security teams to work on modifying computer processes and network security to prevent future hacking attempts.

According to the Underground Hacker Markets Report from Dell SecureWorks, hackers can sell corporate emails for about $500 per mailbox.

“You see exactly why they’re doing this, because they can make really good money on this sort of stuff,” said Jou.

The incident is now a part of an ongoing investigation by the Vancouver Police Department and a “joint task force represented by multiple agencies,” said Marks.

Goldcorp is not the first Canadian mining firm to be attacked in recent history. Detour Gold was hacked last year by a group who claimed to be based in Russia. It is currently unknown if Goldcorp was attacked by the same group. 

– V. Morello

B.C. mining industry down in 2015, bracing for recovery: survey

It should come as no surprise that the annual PricewaterhouseCoopers Mining Industry Survey labeled 2015 “another tough year” for mining companies in British Columbia. With key commodity prices, particularly metallurgical coal and copper, on a downward trend for the fifth year in a row, gross mining revenues for the province fell to $7.7 billion in 2015, down from $8.2 billion in 2014.

Although the difficult market conditions saw seven mines in the province put on care and maintenance by the end of 2015, and one more in early 2016, there is also cause for optimism with other mining companies in B.C. raising money and advancing projects.

“B.C.’s mineral exploration and mining industry continues to prove its resilience,” said Bill Bennett, the province’s Minister of Energy and Mines. “One of the best indicators of success is seeing a mineral discovery move through permitting and into mine construction and production.”

Five new mines have gone into production in B.C. since 2011, Bennett said, and two more are currently under construction: JDS Silver’s Silvertip Mine and Pretium’s Brucejack gold mine, the latter featured in the report as “a shining example of B.C.’s mining might.”

The PwC report also noted how important a stable and supportive federal and provincial tax regime is to a recovering mining industry and for attracting new investment.

“B.C. recently implemented a program for operating mines to defer payment of BC Hydro electricity costs until commodity prices come back,” said Bennett. The program was announced in February to allow certain operating mines to defer up to 75 per cent of their power bills for two years.

The 2015 PwC report, released in mid-May, is the 48th annual snapshot of the impact the mining sector has on the provincial economy. The results are gathered from an in-depth survey of mining companies operating in B.C., recording economic indicators such as revenues, capital investment, expenditures, employment and total payments to government.

This year’s survey included 27 participants: 14 operating mines, 12 projects in the exploration or development stage and one smelter operation. 

– Kylie Williams

Goldcorp scoops up Kaminak Gold

Kaminak’s Coffee gold project in Yukon Territory has an estimated five million ounces of gold within the 60,000-hectare site | Courtesy of Kaminak Gold

Goldcorp purchased Kaminak Gold and acquired its Coffee gold project, located 130 kilometres south of Dawson City, Yukon, in a deal worth $520 million, the company announced in mid-May. This will be Goldcorp’s first development in the Yukon.

“Kaminak always viewed Coffee as a project that we could build ourselves,” Kaminak CEO Eira Thomas told CIM Magazine. “For us it came down to an offer that was so compelling, it made sense for us to think about selling rather than to assume the three years of execution risks that were in front of us.”

Kaminak estimated in January that there was five million ounces of gold within the 60,000-hectare site, and said it planned to mine 2.1 million ounces during Coffee’s 10-year mine life. The company expected to begin construction in mid-2018.

Thomas said she believes the sale was aided by the fact that there are not many quality development-stage projects because of the “challenges the industry has had in the last three years.”

Under the purchase agreement, each Kaminak share will be exchanged for 0.10896 of a Goldcorp share.

“This acquisition is consistent with our strategy of partnering with junior exploration companies to identify and develop mining districts with significant exploration potential that is expected to grow our net asset value per share,” said Goldcorp CEO David Garofalo in a press release. Goldcorp also acquired junior miner Probe Mines in March 2015 in a deal worth more than $525 million. Probe owned the Borden Gold project located 160 kilometres west of Goldcorp’s Porcupine mine.

Gold prices have increased 16.5 per cent since the beginning of the year. “There is interest by the majors to acquire projects and think about growth again for the first time in a while,” Thomas said.

The sale has already been approved by the boards of directors of both companies. Kaminak shareholders will vote on it by July 14, and the deal is expected to close on August 15.

Kaminak employees are expected to be offered positions at Goldcorp, Thomas said. While Thomas will help with the transition, she said she is not likely to continue working with the Coffee gold project “indefinitely.” 

– V. Morello

Raising the dough for charity

CIM past-president Garth Kirkham took a pie to the face from Mining Association of British Columbia CEO Karina Briño at the annual Teck Celebrity Pie Throw on May 12. The event, part of the Mining for Miracles campaign, raised $1,206,704 for the B.C. Children’s Hospital, smashing through the initial $600,000 goal.

Garth Kirkham Mining for Miracles pie throw
Karina Garth pie in face

In the lead-up to the event, 30 mining industry “celebrities” from associations and B.C. mining companies – including Kaminak Gold CEO Eira Thomas, PDAC president Robert Schafer and provincial Minister of Energy and Mines Bill Bennett – faced off in a head-to-head competition to raise the most money for the hospital. Whoever raised the least in each pair got their just desserts at the Vancouver Art Gallery plaza.

Proceeds from the event go toward expanding the hospital’s CAUSES Research Clinic, which diagnoses children with rare genetic diseases and identifies proper treatment. Mining for Miracles pledged to donate $3 million for the clinic in 2016, and planned to raise the money through events like the Pie Throw and the Slo-Pitch softball tournament.

– V. Morello

Cameo and Areva set up legacy trust fund

Uranium producers Cameco and Areva Resources Canada, along with community leaders in Saskatchewan, established a legacy trust fund for communities in northern Saskatchewan, the companies announced in mid-April.

Called the Six Rivers Fund, the trust fund is a non-profit corporation that will support various community activities and projects in the province’s Northern Administration District (NAD). The district includes about half of the province’s land mass and is home to 45 communities, mostly First Nations. It also encompasses the Athabasca Basin, where Cameco and Areva operate.

“We’re hoping that we can provide more for youth activities,” said Six Rivers Fund board chair Victor Fern. “Upgrading community facilities would be one of the priorities.”

According to Sean Willy, Cameco’s director of corporate responsibility, some of those priorities will be education, culture and community infrastructure.

The fund will raise money through interest from uranium sales from the Cameco-operated McArthur River/Key Lake mine, where Areva also owns a share of the operation.

“Northern Saskatchewan is very important to our uranium project for both Areva and Cameco and this fund provides a way to give back to these communities,” said Veronique Loewen, Areva’s manager of communications.

The fund’s trust currently has $200,000. Half of it will be available for investment in projects across northern Saskatchewan in 2016. The goal is to eventually reach $50 million in the coming decades.

The continued drop in uranium prices – which hit US$25.69/lb on April 15, the commodity’s lowest point in more than a decade – may have consequences for the trust fund.

“One of the realities that [the] group had to discuss was tying it to the market,” said Willy. “Hopefully the market comes back, but the market’s quite low right now.”

All funding decisions will be made by a board of four members from nearby First Nations communities: Victor Fern of Fond du Lac; Angie Merasty of Pelican Narrows; Isidore Campbell, an English River First Nation member from Beauval; and William Dumais of Southend. Areva and Cameco have non-voting members on the board.

Fern said the board is currently evaluating applications. Groups applying for funding will be required to raise 25 per cent of the funds to demonstrate an ability to complete the project. 

– V. Morello

OECD creates extractive sector-specific stakeholder engagement guidance

The Organisation for Economic Co-operation and Development launched a new guidance for stakeholder engagement within the extractive sector at the CIM Convention in May, advocating a focus on the stakeholders most vulnerable and affected by resource projects.

The guidance looks broadly at how to engage with all stakeholders, but also outlines how to engage with four specific groups: Indigenous Peoples, workers and trade unions, women, and artisanal and small-scale miners. It takes a “risk-based” approach to engagement, according to Barbara Bijelic, the OECD’s legal expert on responsible business conduct.

“Stakeholders are often best positioned to identify risk posed to themselves and also to help formulate strategies for how to prevent or mitigate it,” she said.

Bijelic said the OECD turned its attention specifically to the extractive sector because it saw a lot of cases brought before its national contact points (NCPs) – moderators stationed in each OECD member country that hear grievances between companies and stakeholders – specifically dealing with the sector and its poor stakeholder engagement.

“The extractive sector is one of the more challenging sectors that we work on. There’s a large environmental and social footprint that comes along with extractive operations,” she said. “So it was something where there seemed to be a need for additional guidance.”

The guidance, now available online, was in the works for three years, including a two-year drafting process, and was initially proposed by the government of Canada. An advisory group of 50 people, representing governments (among them Norway, France, the Netherlands, and Colombia), industry, indigenous groups and industry associations including PDAC and the Mining Association of Canada, contributed to the document.

Ben Chalmers, MAC’s vice-president of sustainable development, said the association saw the document as being “very complementary” to its own Towards Sustainable Mining program’s community engagement protocol.

Following the guidance is voluntary, but Chalmers said he believes companies will participate because “it really represents a multi-stakeholder consensus view of how to best conduct engagement activities.”

The OECD is currently translating the document into French and Spanish, and raising funds to implement it. The organization hopes to do a pilot project with a couple of companies, and workshops in partnership with its NCPs. 

– Kelsey Rolfe

B.C. government invests in expanded geological survey

Geoscience BC, a non-profit organization dedicated to generating and sharing public earth science data in British Columbia, received another $5-million investment from the provincial government in May. The funding will enable a number of new mineral, water and energy initiatives in the province, including geophysical surveys, geological mapping, energy research, water and seismicity monitoring projects to support the discovery and construction of new mines in B.C.

“When I ask exploration companies and prospectors what distinguishes B.C. as an attractive place to invest, the answer I get back most often is the quality and availability of geoscience information,” said Minister of Energy and Mines Bill Bennett in a press release.

Geoscience BC was created in 2005 during an industry downturn to stimulate mineral exploration and mining in the province. Over the past 11 years the non-profit organization has supported more than 135 earth science projects covering over half the province.

The May 18 announcement also included the launch of Geoscience BC’s largest airborne magnetic survey, which came out of last year’s funding. The Search Phase II project will cover a 24,000-square-kilometre grid in west-central B.C., between Fort Fraser and Smithers, to be flown in the summer of 2016. A number of mines and known deposits sit just outside the survey area.

Bruce Madu, Geoscience BC’s vice-president of minerals and mining said the new survey will be more detailed and reliable than previous surveys. Although the survey covers a wide area, exploration and mining companies will be able to review postage-stamp sections of the high-resolution geophysical data at exploration lease or mine scale with “full confidence” in its accuracy.

“The Search Phase II survey is a key piece of the puzzle that will bridge the gap between the Search Phase I geophysical survey [between Terrace and Kitimat, west of Smithers] completed last year and the TREK survey [south of Vanderhoof and Fraser Lake, west of Quesnel] in 2013,” said Madu. “Together, these three adjoining projects will provide a continuous modern survey of high-quality magnetic data covering a 55,500-square-kilometre area, equivalent to the size of Nova Scotia.”

All data and reports generated by Geoscience BC are available for download from their website and on the Earth Science Viewer, a new, web-based GIS tool the organization developed. 

– K. Williams

Cameco suspends production at Rabbit Lake


As uranium prices continue to drop – slumping to US$25.69/lb in April, the lowest point since May 2005 – Cameco announced on April 21 it would temporarily suspend production at its Rabbit Lake operation, located in Saskatchewan’s Athabasca Basin. Rabbit Lake began the transition to care and maintenance immediately, which is expected to be completed by the end of August. As a result, Cameco cut its 2016 production estimates for Rabbit Lake to 1 million pounds, down from 3.6 million pounds. At its United States uranium operations, production estimates have also been cut, dropping to 1.1 million pounds from 1.4 million. Cameco’s overall 2016 uranium production is expected to fall to 25.7 million pounds, down from an initial projection of 30 million.

– V. Morello

Impact and benefit agreements with indigenous groups may soon see light of day

TOC-button      CoverStory-button

Post a comment


PDF Version