March-April 2016

Briefs

By David Chen, Tom DiNardo, Leah Kellar, Kelsey Rolfe, Kate Sheridan, Kylie Williams

Tahoe Resources’ friendly acquisition of Lake Shore Gold saw the miner adding the Bell Creek (pictured) and Timmins West gold mines to its portfolio | Courtesy of Lake Shore Gold

Tahoe Resources buys Lake Shore Gold

Tahoe Resources reached a merger agreement with Toronto junior miner Lake Shore Gold, the company announced in early February. This marks the Reno, Nevada-based miner’s first foray into Canada.

The friendly all-stock transaction, valued at $945 million, will see Tahoe adding Lake Shore’s Timmins West and Bell Creek gold mines in Timmins, Ontario to its portfolio. Tahoe currently has one mine in Guatemala and two in Peru.

At the joint press conference on Feb. 8, Tahoe’s executive chair Kevin McArthur said the merger will make the company stronger. “We believe this transaction brings strong mutual benefits to our respective shareholders and establishes the premier low-cost precious metals producer in the Americas.”

Lake Shore president and CEO Tony Makuch, who will head Tahoe’s Canadian division, added that the union will provide Lake Shore the tools to grow.

“The combined company will have the financial strength and balance sheet to optimize and advance our current assets,” Makuch said. “There is a greater ability to continue growing and developing the resources we have in Timmins.”

Lake Shore’s current board chair, Alan Moon, will join Tahoe’s board of directors when the companies merge. Tahoe and Lake Shore shareholders will each own 74 and 26 per cent of the new combined company, respectively.

Since being spun out of Goldcorp in 2010, Tahoe has been expanding aggressively. It merged with Rio Alto in 2015 for $1.2 billion in order to enter Peru.

– David Chen

B.C. allows miners to defer electricity bill payments

The Government of British Columbia, via BC Hydro, has provided a temporary life preserver of deferred electricity bill payments for mining companies in the province struggling to stay afloat in rough economic waters. The aid is worth a total of $330-million owing to BC Hydro if all mines in the province take advantage of the program, which gives companies the opportunity to defer 75 per cent of their power costs for 24 months.

Premier Christy Clark announced at the Association for Mineral Exploration British Columbia’s (AME BC) annual conference in late January that she is working on the plan with energy and mines minister Bill Bennett and finance minister Mike de Jong, which will be taken to cabinet this year.

Low commodity prices, particularly copper and metallurgical coal – the two main commodities in B.C. – contributed to the decision.

“It was pretty clear that companies were not going to be able to remain operating if prices went down any lower,” said Bennett. Continuing low copper prices forced Imperial Metals to announce it was closing its open-pit Huckleberry mine as of August 2016, and cutting the number of employees to 100, down from 260. In light of the recent announcement, Imperial Metals is now investigating ways to keep Huckleberry open.

Similarly, Teck Resources may benefit from the new measure after facing challenges to its cost-reduction program, owing in part to higher electricity costs.

“We appreciate any steps by the provincial government to support the mining industry during these challenging market conditions,” said Teck spokesman Chris Stannell in a statement to CIM Magazine. “Similar programs have been initiated in past mining down cycles, as electricity costs are one of the largest single costs for mines.”

A dropping dollar somewhat shielded B.C. companies from the low commodity prices that yielded low mineral tax profits, but not enough to make a difference.

“We landed on electricity costs because that’s about the only lever that the government of B.C. has to assist with operating costs,” said Bennett.

He stressed that granting the deferral is not a gift and will have no impact on the provincial budget. The legal relationship of the deal is between mining companies and the public utility of BC Hydro. The province is acting only as facilitator.

BC Hydro will charge any amount not paid in deferrals at an interest rate of prime plus 5 per cent, which is the rate BC Hydro charges for their plus-30 days overdue accounts. There is no payment schedule, but it is a five-year program. At the end of five years, direct commercial arrangements will have to be made with BC Hydro for payment terms of overdue accounts.

– Leah Kellar

Going for gold

Heads up, geoscientists: the computers are coming. Two proposals built with machine learning and artificial intelligence (AI) came in first and second place at Integra Gold’s Gold Rush Challenge finale, a Dragon’s Den-style pitch competition held March 6 at PDAC’s annual conference in Toronto, with one taking home the $500,000- first prize.

The five finalists, SGS Geostat, The Data Miners, the Goldcrushers, GoldRX, and Paul Pearson, were given seven minutes to sell their vision to industry titans Rob McEwen of McEwen Mining; Sean Roosen of Osisko Gold Royalties; Chantal Gosselin, a director at Silver Wheaton with a background in mining and finance; Brent Cook of Exploration Insights; and Randy Smallwood of Silver Wheaton.

The crowd-sourcing competition began in September when Integra released raw data from 75 years of previous explorations at the Sigma- Lamaque gold mine in Val-d’Or, Quebec for entrants to analyze in an attempt to focus the company’s future exploration efforts. Integra acquired the mine in October 2014. Over 1,300 participants from 83 countries submitted 100 entries.

SGS Geostat, a Quebec-based geological consulting team, won the competition with their pitch, integrating machine learning and AI technology with Oculus Rift, a virtual reality headset and tech start-up darling. (The Rift headset will be released to the public on March 28.) The judges appreciated how SGS mixed traditional and artificial intelligence. “It was not specific to one discipline, it was the most integrated idea of traditional understanding and artificial intelligence,” said Roosen.

McEwen also noted that the team factored in cost parameters to its platform. “It’s one thing to identify targets, another thing to estimate what it’s going to cost to determine if those targets are valid,” he said. Second-place team the Data Miners also used machine learning and AI. The team was a trans-Canadian partnership between researchers from the Institut National de la Recherche Scientifique in Quebec City and the University of British Columbia.

“It’s time that mining, and mining exploration specifically, moved to that aspect of multidisciplinary approaches that isn’t just about geology or geophysics or geochemistry or structural geology. It has to include that other arm, which is machine learning and AI,” said Integra chairman George Salamis.

Data mining, machine learning and AI are all distinct, though related, concepts. The ultimate goal for AI is a computer that can do everything a human can; most researchers working on machine learning and data mining projects aim to create a program that can notice a useful pattern or glean some useful insights from data.

Integra’s challenge was based on six terabytes of data, so Salamis said the company expected to get a few machine learning or AI-based submissions. “But certainly not of this quality,” he added. The combination of AI/machine learning and geoscientific reasoning made the two data-mining submissions stand out, Salamis said. “It’s one thing to run a bunch of algorithms on six terabytes of data, but it’s something quite different and good to back up those findings with actual geology and geoscience.”

– Kate Sheridan and Kelsey Rolfe

Anglo American exits coal, cuts iron ore assets

Anglo American revealed in mid-February the details of an “extensive, but essential” restructuring that will see the mining giant reduce global assets to 16 from 45 and downsize its workforce by 60 per cent.

The company will focus on its most competitive sites in diamonds, platinum group metals and copper, announced CEO Mark Cutifani in a video released by the London-based company on Feb. 16.

“We are taking decisive action to sustainably improve our cash flows and materially reduce net debt,” said Cutifani, detailing the plan to pull out of coal and iron ore in order to free up $3 to $4 billion in 2016. The company is attempting to cut its net debt to less than $10 billion this year.

However, financial ratings companies Standard & Poor’s Financial Services and Moody’s Investors Service downgraded Anglo’s debt to junk status following the news, citing concerns about selling assets in depressed commodities markets.

Canada will play a key role in Anglo American’s new strategic direction, said Tom Ormsby, director of external and corporate affairs for De Beers in Canada. “Two of the 16 global core assets named by the company include De Beers’ Gahcho Kué Project in Northwest Territories and Victor Mine in Ontario,” said Ormsby.

Anglo American Copper will hold onto two of the top 10 producing mines in the world – the Los Bronces and Collahuasi mines in Chile – and Anglo American Platinum will keep projects in South Africa and Zimbabwe.

The company’s non-core coal holdings will likely be sold or overhauled to improve their performance and value. “Peace River Coal in British Columbia, presently in care and maintenance, will continue to be managed by Anglo American as options to deliver value are assessed,” said Federico Velásquez, Anglo American Coal Canada’s director of corporate and external affairs.

The workforce will be dramatically leaner too. More than 68,000 jobs will go as sites are sold, and Anglo plans to cut managerial and administrative roles to 5,000, down from 11,500.

– Kylie Williams

B.C. government extends mining exploration tax credit

Christy Clark
Christy Clark announced the extension of B.C.’s mineral exploration tax credit to Jan. 1, 2020. The credit was set to expire on Dec. 31, 2016 | Courtesy of Velour Productions

This year’s Mineral Exploration Roundup, hosted by the Association for Mineral Exploration British Columbia (AME BC) at Vancouver’s Canada Place from Jan. 25 to 28, began with some positive news for the province’s struggling miners.

On the first day of the conference, Premier Christy Clark announced that the province’s mining exploration tax credit, which was set to expire on December 31, 2016, will be extended through to Jan. 1, 2020 at the regular rate of 20 per cent, and an enhanced 30 per cent rate for areas affected by the mountain pine beetle, which covers the vast majority of the southern two-thirds of the province.

AME BC president and CEO Gavin Dirom said the mood among the 5,400 attendees from 33 countries was fairly positive, describing it as “optimistic but realistic.”

“Given the conditions and the fact that it’s been such a tough market, the success was incredible,” Dirom said. He noted that while delegation numbers were down from last year, the exhibits were sold out and the sponsorship level was higher than expected.

The theme of this year’s conference, “Innovation in Exploration,” was a timely reminder that the industry ought to look towards the future for success. “We must innovate,” said Dirom, singling out the Canadian industry. “We need to reinvest back into R&D to maintain our position as a [leading] global explorer and developer.”

Dirom also pointed out that attendees paid a lot of attention this year to the Core Shack display, an annual showcase of new discoveries, leading prospects and advanced projects around the world. He said it is an indication that the industry is looking to exploration for opportunities.

Next year’s event is set to return to Canada Place in Vancouver from Jan. 23 to 26.

– D. Chen

Cold markets, warm receptions

Paul Blatter
CMP 2016 chair Paul Blatter said he was impressed with the conference’s turnout, despite two “difficult” years | Al Kuiper

Despite frigid conditions, both in the metals market and outside the Westin Hotel in Ottawa, close to 500 delegates attended the 48th annual Canadian Mineral Processors (CMP) conference Jan. 19-21. “We know that this was a difficult year – a difficult two years – and to have a turnout like this is impressive,” said CMP 2016 chair Paul Blatter.

The keynote speaker, Earl Sweet, managing director and senior economist at BMO Capital Markets, started the conference on a sobering but realistic note. “Our forecast is another tough year for the global economy in 2016,” he said. “It’s not a disastrous global economy, but it’s not one that’s going to underpin a huge jump in the consumption of commodities this year.”

Given the market, miners have had to find ways to improve their efficiencies. Jean-Francois Dupont of Detour Gold presented on Detour Lake’s discovery that an estimated 279,000 ounces of gold can be recovered from fine particles originally dumped in the waste ore stockpile for revenues of around $418 million. “If we look at the economics, it makes this project very strong,” he said. Other technical papers covered topics such as process control, flotation and mineralogy and hydrometallurgy.

But it was not all work and no play. As usual, the event was much more than its technical content, and included the Ray McDonald Hockey Challenge (won by the East team, 8-7) and the Chairman’s Reception. In addition, Johnna Muinonen, 2nd vice-chair of CMP, and Blatter led a group of five brave attendees out on the second annual morning jog through Ottawa at 6:45 am before the conference’s second day of sessions.

On the final evening of the conference, the mineral processors in attendance celebrated the best and the brightest among them at the annual banquet. The evening also included a tribute to the late Paul Semple, COO of Noront Resources, who passed away in the spring of last year. “Paul was an innovator, he was a leader, he was an accomplished mineral processor, he was a mine developer, and he was a mine operator,” said Pierre Julien of Outotec. “He was a good friend to many of us. Moving on, it’s going to be different coming to CMP and CIM without him.”

The 49th CMP conference will be held at the Westin Hotel in Ottawa from Jan. 17-19, 2017.

– Tom DiNardo

Awards

Mineral Processor of the Year Jennifer Abols
Art Macpherson Comminution Doug Farnell and Steve Thompson
Ray MacDonald Volunteer Award Stuart McTavish
Lifetime Achievement Award Brian Flintoff
Past Chair Tad Crowie
Best Presentation Ben Murphy
Student Technical Report Competition Award David Georges-Filteau
André Laplante Memorial Scholarship Graham Bonn
Byron Knelson Memorial Scholarship Anthony Clapperton
CIM Fellowship Erin Legault-Seguin and John Folinsbee

Taseko Mines launches suit against federal government

New Prosperity site
Taseko Mines is suing the federal government over a 2014 decision to block development of the company’s New Prosperity gold and copper deposit | Courtesy of Taseko Mines

Vancouver-based Taseko Mines filed a civil lawsuit against the federal government in the B.C. Supreme Court in mid-February, seeking unspecified compensation for a 2014 decision to block its New Prosperity project.

Taseko alleges the government failed to meet legal duties to the company when it followed the advice of the Canadian Environmental Assessment Agency (CEAA) and halted the development of the $1.5 billion gold and copper deposit in B.C.’s Cariboo region. Taseko claims that officials involved in the environmental assessment process for New Prosperity unlawfully held private and undocumented meetings with opponents of the project, including representatives of the Tsilhqot’in National Government in Williams Lake, B.C., and its six First Nations constituent bands.

“Given the conduct of the Government of Canada and its agents we have no other choice but to defend the interests of our shareholders and to protect their assets,” Taseko’s president and CEO Russell Hallbauer stated in a recent press release.

The company is suing for punitive damages plus interest. Its claim also includes more than $130 million in expenses it paid in its bid for New Prosperity’s approval.

The CEAA’s panel determined in February 2014 that the proposed development, located 125 kilometres southwest of Williams Lake, would result in the loss of Little Fish Lake for use as a tailings pond and was likely to contaminate the Fish Lake and upper Fish Creek system, comprising a total 27 square kilometres in the Fish Creek watershed. First Nations and environmentalists voiced opposition to the project and the provincial government’s approval of it.

The federal government blocked the project twice due to environmental concerns. The first time, in 2010, the CEAA rejected the project – then called Prosperity – based on the use of Fish Lake for tailings storage. The second review saw a revised project, called New Prosperity, which planned to avoid the use of Fish Lake. After its second rejection, Taseko claimed that the CEAA’s decision was based on flawed assumptions about a tailings pond design that it was in fact not planning to use.

– L. Kellar

MER Society boosts number of annual scholarships

Stephen Young and Jocelyn Patton
Stephen Young accepts the Edward Melville Patton Memorial Scholarship from Patton’s widow, Jocelyn Patton | Courtesy of MER Society

The Maintenance, Engineering and Reliability (MER) Society increased both the number of scholarships and awards and the amount given out for 2016. New to this year are: the Edward (Ed) Melville Patton Memorial Scholarship, created after Patton, a CIM Fellow, passed away in 2014 and given to a student at a Canadian university researching maintenance and reliability related issues; The MER Society Memorial Scholarship, open to a first-year post-secondary student in an engineering or maintenance discipline intending to pursue a mining career; and the MER Graduate Student Research Excellence Award, which covers the costs for a graduate student or recent graduate to attend a CIM or MEMO conference to deliver their peer-reviewed paper. The latter two will be given out later this year when submissions are closed. The society has also increased the monetary value of awards and scholarships to $2,500 each, bringing the total sum of post-secondary funding up to $15,000 annually.

– D. Chen

MER’s 2016 awards and scholarships

Centennial Scholarship Justin Plante, materials and metallurgical engineering, Université Laval; Antoine Sarrazin, chemical engineering, Université de Sherbrooke   
Edward (Ed) Melville Patton Memorial Scholarship Stephen M. Young, M.Sc. student at the School of Engineering, Laurentian University
J.D. Patterson Memorial Scholarship Kaelyn Pitre, aerospace engineering, Ryerson University
Ken Hildebrand Memorial Scholarship Claude Vallée, mining engineering, Université Laval

Despite reduced sanctions, experts advise miners to be cognizant of risks in Iran

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