cim magazine may 2007

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February/février 2006 www.cim.orgMay • mai 2007 www.cim.org

mining can’t live withoutMoney&Law

Expertise

Inside:

etVos droits

n FNX Mining brings new lifeto Sudbury

n Jim Carter’s retirementinterview

n Highlights from this year’sCMP Conference

vos affairesles activités minières

ne peuvent s’en passerLes experts

A D D R E S S M E TS O M I N E R A L S - M I N I N G , 2 4 0 A R C H S T R E E T, YO R K , PA 1 7 4 0 3 U S A P H O N E + 1 7 1 7 8 4 3 8 6 7 1 FA X + 1 7 1 7 8 4 5 5 1 5 4 E - M A I L M I N E R A L S . I N F O @ M E TS O. CO M

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Editor-in-chief Heather [email protected]

Assistant Editor Andrea [email protected]

Technical Editor Joan TomiukPublisher CIM

Published 8 times a year by CIM855 - 3400 de Maisonneuve Blvd. West Montreal, QC, H3Z 3B8Tel.: (514) 939-2710; Fax: (514) 939-2714 www.cim.org; Email: [email protected]

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This month’s coverLonghole driller at McCreedy West Mine.

Layout and design by Clò Communications.

Copyright©2007. All rights reserved. ISSN 1718-4177. Publications Mail No. 09786. Postage paid at CPA Saint-Laurent, QC. Dépôt légal: Bibliothèque nationale du Québec.The Institute, as a body, is not responsible for statements made or opinions advanced either inarticles or in any discussion appearing in its publications.

Printed in Canada

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February/février 2006 www.cim.orgMay • mai 2007 www.cim.org

mining can’t live withoutMoney&Law

Expertise

Inside:

etVos droits

■ FNX Mining brings new lifeto Sudbury

■ Jim Carter’s retirementinterview

■ Highlights from this year’sCMP Conference

vos affairesles activités minières

ne peuvent s’en passerLes experts

4 CIM Magazine n Vol. 2, Nº 3

The suits of the mining industry

The Canadian minerals industry has a major impact on the national econ-omy. Contributing $42 billion to the nation’s GDP, this industry accountsfor 14 per cent of annual Canadian exports. Some 388,000 people work in

this sector directly—and that number would appear incredibly larger if itincluded the numerous professionals whose work with mining isn’t included.

CIM membership covers a broad range of professionals of varying occupa-tions—all the knowledge required to find, develop, operate, and close a mineoperation. This issue of CIM Magazine takes a look into some of the areas cov-ered by the legal and financial professionals serving the industry. Their roles arevast, from funding, through certification, community relations, risk manage-ment, and closure issues.

The Law and Money section, beginning on page 16, touches on some of theways mining and exploration companies must rely on the financial and legalexperts, with suggestions of how to ensure a successful endeavour. I’d like tothank Mike Paduada, a consultant in the mining industry on financial and riskmanagement issues and sometimes contributor to CIM Magazine, for puttingtogether the section.

Building a mine operation is an incredible project, often with huge capitalrequirements. The feature article on FNX Mining’s multiple operations inSudbury demonstrates a strategic approach that minimizes start-up costs, andallows the company to flourish, based on contracts and agreements with com-panies such as CVRD Inco and Dynatec. The FNX Mining model allowed a juniorcompany to ramp up three operations within four years. Turn to page 52 tolearn how they did it.

On a final note, I would like to thank François Pelletier, CIM president for thepast year, for being a terrific contributor to the magazine—not only was he reli-able when it came to deadlines, I know I learned from his words.

Happy springtime, CIM!

Heather EdnieEditor-in-chief

May 2007 5

Feature52 New wealth out of Sudbury—

FNX Mining demonstrates the continuingpotential of the Big Nickel by C. Hersey

News9 Budget 2007 in review by H. Ednie

10 Carter says goodbye after 29 years by H. Ednie12 Dancing closer—Junior miners and the financial world take

a closer look at each other by M. Wunder14 Diavik recognized for aboriginal relations14 CMHF nomination time15 Safer roads in Alberta

Law and Money16 Commentary on the financial state of mining by D. Zlotnikov20 The creation of Diavik—Keen savvy saw a junior finance a major

project by D. Zlotnikov22 Seeking effective legal council in the mining industry

by H.E. Robinson24 Increases in mergers and acquisitions within the mining industry

by H.E. Robinson25 Fundraising stages for junior firms by D. Zlotnikov26 Aboriginal consultation from the courts to the ground: challenges

in implementing effective engagement by H.E. Robinson30 A brief overview of free entry by H.E. Robinson

Vos droits et vos affaires31 Recherche de conseils légaux efficacies pour l’industrie minière32 Les consultations avec les Autochtones : les difficultés à mettre

en place des engagements efficace33 Accroissement des fusions et des acquisitions

dans l’industrie minière34 Les étapes de collectes de fonds pour les sociétés junior34 Le libre accès à la ressource : un bref survol35 La naissance de Diavik : Vivacité et débrouillardise à l’origine d’un

important projet de financement de junior36 Commentaires sur la condition financière

Columns38 Mining Lore by A. Nichiporuk39 HR Outlook by P. Hébert40 MAC Economic Commentary by P. Stothart42 Engineering Exchange by H. Weldon44 Standards by G. Gosson and D. McCombe46 Student Life by M. Jaworski48 Eye on Business by G. Ho Yuen and A. Enica49 Innovation Page by G. Winkel50 The Supply Side by J. Baird82 Voices from Industry by C. Plummer

CIM News58 CIM welcomes new members58 Obituaries59 Canadian Mineral Processors Conference wrap-up62 MEMO 200864 Thanks to sponsors/Merci à nos commanditaires65 CIM Distinguished Lecturers wrap-up the 2006-07 season

54

46History

66 The Basalt Controversy III (Part 17) by R.J. Cathro69 Muslim Mining in the Iberian Peninsula—Part 2 by O.

Puche Riart, L.F. Mazadiego Martinez, and P. KindelánEchevarria

Technical Section72 This month’s contents73 Executive summaries78 Exploration and Mining Geology Journal—Volume 15,

Nos. 3-4 preview

DepartmentsEditor’s Message 4 President’s Observations/Mot du président 6 Letters to the Editor 8 Calendar 61Bookshop 80 Professional Directory 81

More often than not, the questionthat I am asked is “What value isthere in CIM for my company, or forme as an individual?” The answer isvery simple: knowledge sharing, pro-fessional development, and network-ing.

I take my case as an example.When I look at the last year, I have

had the opportunity to touch base with many senior represen-tatives of our industries to discuss the upcoming convention inMontreal (networking). I have tried to share some of my expe-riences and learning opportunities with members through ourmagazine in the President’s Observations (knowledge sharing).Through various meetings of the Institute, lunches and dinnersorganized by local branches, discussions with my peers in CIM,and through occasionally accessing the library of knowledgedeposited in CIM, I have kept learning and developing myselfas an individual (professional development).

I feel that I have progressed as an individual in the last year.My company has and will continue benefiting from this pro-

6 CIM Magazine n Vol. 2, N° 3

Je me fais souvent demander «Que peut apporter l’ICM àma compagnie ou quels avantages puis-je en tirer person-nellement?» La réponse est bien simple: le partage des con-naissances, le développement professionnel et le réseautage.

Je cite mon cas comme exemple. Lorsque je passe enrevue la dernière année, je constate que j’ai pu établir descontacts avec de nombreux représentants importants denos industries et discuter du congrès qui se tiendra bientôtà Montréal (réseautage). J’ai tenté, par le Mot du présidentde notre Magazine, de partager avec les membres quelques-unes de mes expériences et de mes possibilités d’apprentis-sage (partage des connaissances). Grâce aux diverses réu-nions de l’Institut, aux déjeuners et aux dîners organiséspar les sections locales, aux discussions avec mes pairs del’ICM et à l’accès occasionnel à la bibliothèque des con-naissances colligées à l’ICM, j’apprends constamment et jeme développe en tant qu’individu (développement profes-sionnel).

Je constate qu’au cours de la dernière année, j’ai pro-gressé en tant qu’individu. Ma compagnie a déjà bénéficiéde ce progrès et elle continuera à en bénéficier. On récoltede l’ICM dans la mesure où on a semé.

Nos industries changent et l’ICM a reconnu, par sonprocessus de révision de la planification stratégique, qu’ildevait aussi changer. L’ICM se positionne pour faire faceaux défis et saisir les possibilités qui se présenteront. Il fautune bonne base de bénévoles. Nous ne sommes plus uneorganisation dominée par des spécialistes. L’ICM est uneorganisation d’individus provenant de divers milieux tra-vaillant dans des industries diversifiées. L’ICM le reconnaîtet répond à cette diversification des membres.

Rétrospective de l’année écouléeD’excellentes possibilités de développement personnelsont offertes aux bénévoles qui veulent les saisir.

Puisqu’il s’agit de la dernière chance que j’ai de partagermes observations, j’aimerais profiter de l’occasion pourremercier les présidents des sociétés, les vice-présidents dedistricts, notre président sortant Russ Hallbauer, notrenouveau président Jim Popowich et le personnel de l’ICM,l’organisation et les bénévoles de m’avoir enduré et dem’avoir fourni ces possibilités de développement personneltout en travaillant avec des gens extraordinaires.

François PelletierPrésident

Retrospect of the past year

president’s observationsmot du président

gression. But there is no free lunch. One will only reap bene-fits to the extent one invests in CIM.

Our industries are changing and CIM has recognized,through its strategic planning review process, that it also hasto change. CIM is positioning itself to face the challenges andopportunities that will present themselves. It needs a strongvolunteer base that is evolving. We are no longer an organiza-tion dominated by specialists. CIM is an organization of indi-viduals of varied backgrounds working within varied indus-tries. CIM recognizes this and caters to its evolving member-ship base. There are great opportunities for personal develop-ment awaiting volunteers who wish to grasp them.

In conclusion, given that this is the last opportunity that Ihave to write my observations, I would like to thank societypresidents, district vice presidents, Past President RussHallbauer, Incoming President Jim Popowich, and the CIMstaff, organization, and volunteers for having put up with meand given me this opportunity to develop myself and workwith a great bunch of people.

François PelletierPresident

thank you

merci

CIM offers a great “thank you”to François Pelletier for anincredible yearwith him at the reins.

L’ICM tient à remercier chaleureusementFrançois Pelletier pour

une année exceptionnellesous sa gouverne.

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Salutations François,

L'année de ta présidence se terminerasous peu, et je voudrais d'abord t'offrirmes meilleures félicitations pour lastature avec laquelle tu as occupé ceposte de prestige.

Je veux aussi t'indiquer que j'airarement apprécié les éditoriaux de laprésidence autant que les tiens quej'ai presque tous lus avec intérêt. J'aiparticulièrement aimé celui de févriersur l'ADT qui est une réalité d'aujour-d'hui et davantage pour les plusjeunes.

Félicitations et meilleur souvenir,Raymond Raby,retraité

Kind words for the president

CIM is evolving with you

CIM is in a period of change,

and you can help.

Have you attended a conferencerecently? Walked through the CIM Exhibition or MIS show? Read something of interest, or made contacts at a branch event?

Let us know what you think.Let us know how we're excelling, and how we can do better.

Email CIM Director of Marketing andPrograms with all your ideas [email protected] today!


letters

“I’ve retained the firm of Trench, Rockburst, Stope, Nickel, Blast, Campcook, Gold, and Rusting… they seemed to be a good choice

for resolving my mining claim dispute.”

Giving backPartnership pays off

Barrick Gold committed to donatingUS$1.3 million over five years to WorldVision Canada. The funds will gotowards improving the quality of life offamilies in communities near Barrick’sLagunas Norte mine.

Funding sustainability initiativesSuncor committed to donating over

$1 million over three years towards thelaunch of the Suncor SustainabilityCentre at Lambton College in Sarnia,which will serve, among other things, asa student/community resource centreand house the Bluewater SustainabilityInitiative. The development of an edu-cational site for alternative energysources will also be funded through thisinvestment.

Dear François,

Your mandate as president is comingto an end and I would like to first con-gratulate you for the great presence youshowed holding this prestigious posi-tion.

I also want to say that yourPresident's Observations were so verymuch appreciated and I read most ofthem with great interest. I particularlyenjoyed the February one on "ADT"(attention deficit trait), one of today'srealities, especially for the youngergeneration.

Congratulations and best wishes,Raymond Raby,Retired

Following the presentation ofMinister of Finance James Flaherty’sbudget on March 19, the MiningAssociation of Canada and theProspectors and Developers Associationof Canada shared their support andtheir disappointment for Budget 2007.

Both welcome measures in the budgetrelated to regulatory reform that acknowl-edge the federal government’s critical rolein ensuring good governance in regulat-ing appropriate development, andapplaud the government’s commitment tocut in half the average time period for reg-ulatory review of large natural resourcesprojects, from four to two years.

“MAC enthusiastically supports thegovernment’s attention to improving theproject review process and its commit-ment of $60 million (over two years) toimprove accountability and timeliness,”noted Gordon Peeling, president andCEO of the Mining Association ofCanada. “While the resource sectors aredriving economic growth in Canada,federal project review has become themost significant disincentive to futureinvestment. This boost will ensureimproved efficiency of the regulatoryprocess, without lessening the role ofenvironmental review.”

Other positive measures of particularinterest to the Canadian minerals indus-try include tax incentives for the manu-facturing and processing sector for invest-ment in eligible machinery and equip-ment. As well, the federal governmentplans to work with interested provincesand territories to examine how artificialbarriers to labour mobility and otherimpediments to internal trade might berelaxed. Using the British Columbia-Alberta Trade, Investment and LabourMobility Agreement as a model, the fed-eral government plans to work with itsprovincial and territorial counterparts onmeasures to promote the free flow of peo-ple and goods within the country.

The Aboriginal Skills andEmployment Partnership (ASEP) initia-

tive, which fosters partnerships withprovincial and territorial governments,aboriginal organizations, and the privatesector to help aboriginal Canadiansreceive the skills and employment train-ing for the workforce, will get a boost.ASEP’s current budget of $85 million oversix years supports nine projects acrossCanada, including training for aboriginalCanadians at the Victor diamond mine,which are expected to result in trainingfor some 7,000 aboriginal Canadians. Thenew budget includes provisions for anadditional $105 million for ASEP over thenext five years to provide skills training toan additional 9,000 aboriginals.

The Mineral Exploration Tax Credit,commonly referred to as ‘super’ flow-through, will be extended to March 31,2008. With the application of the ‘look-back’ rule, funds raised up until March31, 2008, can be spent on eligible explo-ration activity up until the end of 2009.

MAC, however, did express disap-pointment that Budget 2007 eliminatesthe accelerated capital cost allowance foroil sands mining. While the grandfather-ing of ACCA for existing projects lessensthe impact of this proposed measure, it

Budget 2007 in reviewby Heather Ednie

May 2007 9

newsstill puts a chill on oil sands investmentand development—a major economicengine of the Canadian economy.

Both associations share disappoint-ment that Budget 2007 failed to expandits investment in geoscience. In spite ofintense lobbying from the PDAC, MAC,and others, the federal governmentagain did not fund the CooperativeGeological Mapping Strategies. This hasbeen on the books since 2000 when allof Canada’s mines ministers made acommitment to this federal-provincial-territorial initiative and agreed thatfunding from the federal government($25 million per year over ten years)would be matched by the provinces.

“Renewed investment in geoscienceis long overdue and critical in addressingthe looming crisis in declining base metalreserves, which is placing Canadiansmelters and refineries at risk,” statedPeeling. “Successive governments havefailed to address the need for re-invest-ment in minerals science research andmapping, which is integral to creatingopportunities in northern Canada aswell as in maintaining Canada’s globalleadership position in mining.” n

news

Jim Carter, perhaps the most influen-tial personality of the oil sands over thepast 30 years, has retired from his long-time position as president and COO ofSyncrude Canada Ltd. Credited as thedriving force behind the success of thegiant oil sands producer, Carter wasinstrumental in a number of the tech-nology changes that enabled the growthof today’s major industry. With him atthe helm, Syncrude has produced “over1.3 billion barrels under my watch,”Carter said. Now, that’s something to beproud about.

A mining engineer by training,Carter has demonstrated a commitmentto people and his community thatmatches his drive for low-cost, high-producing operations. He has been therecipient of a number of awards, and isrecognized for his efforts to grow part-nerships with aboriginal communitiesand businesses, as well as his dedicatedservice to the prosperity of the miningengineering program at the Universityof Alberta in Edmonton.

“It’s been a tremendous journey atSyncrude over the last 29 years,” Cartersaid. “I’m a miner by background, andthe most intriguing part about the oilsands and Syncrude, in particular, hasbeen the pioneering challenge to getsuch a huge operation like this to workin sync. We’re talking about the largestoperations in the world here, in FortMcMurray—huge processing facilities,and so on. And it’s north of the 55th par-allel, which offers its own interestingchallenges. I’ve enjoyed a great deal ofpersonal gratification from my workwith Syncrude, and I foresee a realopportunity for success as Syncrude,and the oil sands, move forward.”

Looking to tomorrow, Carter saidtechnology development will continueto be a key focus for the oil sands patch.One area developments are expected inthe near future is reduction of trans-portation distances in the pit—withpotential developments such as at-facemining. “Remember, in the oil sands,

Carter says goodbye after 29 yearsby Heather Ednie

we mine as much waste as oil sands,”Carter said. “Systems currently beingproposed will bring the operation closeto face, reducing transportation dis-tance. Overburden removal will con-tinue to be done with truck and shovel,and much of the oil sands productionas well, but these new methods demon-strate much potential for lowering costsof production.”

Carter said the oil sands industry willhave some major challenges to addressin the coming years. For starters, theindustry needs the current governmentto reflect on what got the industry to itsstatus today, “the support of past gov-ernments was necessary to unlock thepotential of the oil sands,” he explained.

Another major challenge already fac-ing the industry is the human resourcescapital required to undertake all theprojects on the books—both construc-tion and operations. “Syncrude’s successhas lain with our highly trained, capableworkforce,” Carter said. “We’ve enjoyeda low employee turnover for manyyears, but are undergoing a bit of a

renewal now, as retirements are becom-ing more common.”

Another constant challenge is thedemand for feed. At a rate of 30,000tonnes per hour of oil sands processed,with the same amount of waste to bemoved, that’s a major undertaking. “Weproduced 11 million barrels for themonth of March,” Carter added.

Having multiple owners, all success-ful in their own right, has meantSyncrude was able to weather the stormwhen crude oil prices were low. Today,the industry is looking forward to highcosts, with relatively flat prices, whichmeans the oil sands players must con-tinue their efficiency efforts.

“We always have to remind our-selves—in the commodity business, youmust be able to manage costs,” Cartersaid. “I’m a firm believer in technol-ogy—look what’s happened to date. Ibelieve Syncrude will continue to findnew ways to extract oil from the sandswhile lowering costs going forward.”

Looking back over his career,Carter said he wouldn’t have done any-thing different, except possibly whenit comes to public outreach. “We needto have industry better understood inthe broader community—I’m con-cerned about that. We did try, butmaybe not enough.”

Having lived in Fort McMurray foralmost three decades, Carter plans tomove south to Edmonton now. He willcontinue his work with the miningengineering program at the Universityof Alberta, and will sit on a number ofcorporate boards, such as Epcor. Mostimportantly, he plans to spend moretime with his family. Retirement is apositive move for him, but as with anychange, it’s an emotional journey.

“Any time you’ve been with anorganization for almost a full career,leaving it is a big step,” he explained. “Ileave with a bit of sadness. But I canalso look back on my career, at howinvolved I’ve been—and I feel verygood about that.” n


Photo courtesy of Syncrude Canada Ltd.

The Syncrude Project is a joint venture operated by Syncrude Canada Ltd. and owned by Canadian Oil Sands Limited, ConocoPhillips Oilsands Partnership II, Imperial Oil Resources, Mocal Energy Limited, Murphy Oil Company Ltd., Nexen Oil Sands Partnership, and Petro-Canada Oil and Gas.

The slow,cautious, don’t-get-too-closedance betweenjunior explo-ration-miningcompanies andthe financialworld seems to be gettingfaster and hot-ter, and it’s notjust due to high

commodities prices. Recent trendsmean that resource-based companiesseeking financial backers are receiving awarmer welcome on Bay Street, WallStreet, and other places where deals aredone.

These factors point to ways that indi-vidual exploration-mining companiesand the industry as a whole can makesure that their request for a dancereceives a nod and a smile rather than ashake of the head.

Investment risks are well-managedby the banks, pension funds, mutualfunds, and other financial institutions;however, the Bre-X assay fraud of adecade ago negatively impacted themining sector, particularly juniors, formany years after.

The Bre-X aftermath helped sparksome far-reaching changes to the indus-try, particularly in Canada, impactingthe reliability of information and reportsreleased to the public by mineral explo-ration and mining companies.

QA, QC… and the QPSome of these changes have been leg-

islated by provincial governments andimplemented by the Ontario SecuritiesCommission and Toronto StockExchange. Others have been industry-driven, such as the need for companiesto manage in-house databases to pro-duce high-quality presentations that uti-lize the latest technology.

Legislated changes include therequirement for exploration-miningcompanies and consulting firms (such asGolder Associates) to carry out qualityassurance (QA). This has resulted inmore early-stage oversight and due dili-gence to ensure adherence to propercontrol procedures for taking, transport-ing, and analyzing samples, to weed outopportunities for fraudulent behaviour.Quality control (QC) procedures arerequired for all aspects of mineral explo-ration projects to minimize the possibil-ity of errors. Data validation protocolsmust be adhered to, onsite visits must bemade by a qualified person (QP), anduse of accredited facilities for analysis isrequired – all of which are creating morereliable information than ever before.

For added control, most provincesand territories across Canada have legis-lated minimum high standards of edu-cation and experience for individualspractising geology. The “ProfessionalGeoscientist” designation (P.Geo., inOntario) allows professional geologiststo act as QPs and oversee geologicalwork performed. Additionally, the QPmust have sufficient knowledge andexperience beyond their professionalregistration to be “qualified” to author atechnical report and company pressreleases. The QP is also required to pro-vide certificates on the sections of tech-nical reports they have authored, put-ting the QP in a position of risk that wasnot normally required before.

TechnologyTechnology improvements help. This

starts right at the beginning of theexploration-mining cycle, in locatingand delineating mineralization, rightthrough to mine closure.

There is increased availability andaffordability of remote-sensing imageryfrom satellites and aircraft with higherresolution than ever before; geoscientificcompilations from multiple sources,

which can be readily assembled; globalpositioning satellite (GPS) technology,which now supports extremely accuratesurveying and has become standardthroughout the industry; and reductionof data transcription errors through thecollection of field data, using hand-heldelectronic devices.

In-hole surveying and drill orienta-tion technologies have improved andcan provide more accurate informationduring drilling, and assay equipmenthas improved, partly through the elec-tronics revolution, so that more high-quality, cost-effective analysis can beperformed, with more dependableresults.

Management of large volumes of geo-logical data is easily handled by GISsoftware, which allows three-dimen-sional integration and visualization ofmultiple geo-referenced data sets for amore complete understanding of miner-alizing systems. Processed satelliteimagery, surface geological data, drillhole data, geophysics, geochemical data,etc., can be incorporated with, anddraped over a 3D digital elevationmodel (DEM) allowing mineralizingsystems to be evaluated in three dimen-sions, providing new targets and vectorstowards better mineralization. Resourceblock models and resource calculationscan be generated with multiple cut-offgrades and directly incorporated intomine modelling software, and minedesigns can be applied. The result is thatresource evaluation consultants can cre-ate iterative models and perform analy-sis with changes to input parameters, inreal time.

And let’s not forget the Internet withits World Wide Web. Now, we can doearly research on all sorts of remoteprojects. We can find out the who, thewhat, and the where—quicker than everbefore. We can research companies,properties, countries, commodities,people, environments, and legislation.

Dancing closerJunior miners and the financial world take a closer look at each otherby Matt Wunder

news


news

Risk–RewardEarly-stage mineral exploration

projects are considered high risk asthe chance of discovering an ore bodyis low; however, if a discovery ismade, the rewards can be quite signif-icant. As a project proceeds from anearly-stage discovery through to aproduction decision, there is a signifi-cant amount of work required to sup-port a positive decision. This includesgarnering support from the local com-munity, stakeholders, and governingbodies, completing environmentalstudies, applying for and receivinggovernment approvals and permits,metallurgical studies, mine and tail-ings design, geotechnical studies, andinfrastructure requirements, not tomention confirmation of the resourceitself. At any point along this path, thedeposit may be deemed uneconomicand work can be put on hold indefi-nitely or until the socio-economicoutlook is more positive.

If, however, a sufficient measuredand indicated resource is defined in anarea with manageable social-political-environmental-permitting concerns,and the project’s economic model pro-vides sufficient return on investment tomeet the corporate risk requirements,

the threshold will be crossed and a pro-duction decision will be pending. Othersuccess factors such market timing,access to financing, core business focusand strategy, etc. will impact the ulti-mate production decision taken.Investors should understand thatproper exploration can result in findinga deposit; however, mines are made by amultitude of steps and proper decisionsalong the way.

Additional considerationsThe experience, qualifications, and

track record of the management teamand board members is one of the factorsto be considered when reviewing apotential investment opportunity. Thisis particularly important with the cur-rent sharp increase in the metals sector,where individual investors may bejumping into the momentum of the sec-tor without properly screening theopportunities.

In addition, investors should reviewkey company docu-ments and projectdetails. All miningcompanies arerequired to reportinformation mate-rial to the company

May 2007 13

AchievementsOne of 10 green giants

Suncor Energy made Fortune magazine’s Top Ten list ofcorporations that surpass the requirements to operate in anenvironmentally responsible way. Among other Top Tenachievers is Alcan.

Gratton receives Nature Canada awardMAC’s Pierre Gratton received the 2007 Nature Canada’s

Volunteer award. He was recognized for his contribution intime and effort. Fifteen years have passed since the two, MACand Nature Canada, began a collaboration.

Being involved paysOntario’s chief energy conservation officer awarded the

Ontario Mining Association, CVRD Inco’s South Mine, andFNX Mining’s McCreedy West mine with certificates of recog-nition for their roles in Ontario Power Authority’s SustainableLeak Protection Program.

and related projects that can help indi-viduals make informed investmentchoices.

Project-specific information releasedby companies can be accessed on theSystem for Electronic DocumentAnalysis and Retrieval (SEDAR,www.sedar.com). SEDAR is an elec-tronic filing system and repositorydeveloped for the Canadian SecuritiesAdministrators, and hosts the electronicfiling of securities information, asrequired by the securities regulatoryagencies in Canada.

Some members of the investmentcommunity, who may have had a nega-tive experience with junior miningcompanies in the past, may not be awareof these improvements. n

Matt Wunder is a senior geologist withover 20 years of experience in explo-ration and resource evaluation, and cur-rently works in the Mississauga, Canada,office of Golder Associates Ltd.

news

Diavik Diamond Mines Inc. wasamong six companies recognized asleaders in working with the aboriginalsector of the Canadian economy thispast February. The ProgressiveAboriginal Relations (PAR) recipientsreceived the honour from theCanadian Council for AboriginalBusiness (CCAB).

“The companies in PAR are makinga significant contribution to the pros-perity of aboriginal Canadians,” saidCCAB President and CEO JocelyneSoulodre. “They are showing leader-ship in employment, business develop-ment, individual capacity develop-

Diavik recognized for aboriginal relationsment, and community relations—thefour sectors that PAR examines.”

PAR provides a framework for busi-nesses and organizations to self-assesstheir approach to the emerging aborig-inal marketplace, and tools to improvetheir performance. PAR is a long-termprocess that will allow participatingcompanies to expand their knowledgeand interaction with the community.

Since the program’s inception ear-lier this decade, two other miningcompanies, Syncrude Canada Ltd. andCameco Corporation, have both beenrepeat recipients of the GoldAchievement level of the program. n


Movin’ on upFillion named director

Abcourt Mines Inc. appointed MarcFillion a director of the company. Hewas senior vice president, investmentsfor mines, minerals, and materials, atSGF before becoming a consultant.

New assistant deputy ministerStephen Lucas was named assistant

deputy minister, Minerals and MetalsSector, of Natural Resources Canada.Lewis was formerly with HealthCanada.

CMHF nomination time

The deadline for nominations to theCanadian Mining Hall of Fame, June 1,is fast approaching. Now is the time tonominate the stellar individuals thathave had a major impact on theCanadian minerals industry.

Conceived by Maurice R. Brown,retired editor and publisher of TheNorthern Miner, in 1988, the CanadianMining Hall of Fame is a vehicle to rec-ognize and honour the legendary minefinders and builders of Canada’s greatindustry. Currently, the CMHF has over120 members.

Candidates for the CMHF must havedemonstrated outstanding lifetimeachievements to the benefit of theCanadian minerals industry in one ormore of the following categories: explo-ration; building the corporation; techni-cal contribution; supporting contribu-tion; or mining in society. A “lifetime” ofservice will normally be evaluated afterthe individual has retired and hasreached the age of 65 years.

CIM is a sponsoring organization,along with the Mining Association ofCanada, the Prospectors and DevelopersAssociation of Canada, and TheNorthern Miner. To nominate someone,please contact CIM Executive DirectorJean Vavrek at [email protected]. nHow do you

build sustainable practices into

mining projects?

We see solutions where others don’t. For over 45 years Golder has been providing the mining industry with integrated engineering, environmental and social services for all types of exploration, development, operation, closure and post-closure activities. We have built a rock-solid reputation on client service, innovative thinking and cost-effective solutions. Solutions that work. A world of capabilities delivered locally.

Africa +27 11 254 4800

Asia +62 21 252 1975 Australia +61 7 3721 5400

North America +1 800 275 3281 South America +55 21 3095-9500

Europe +44 1628 586 213 [email protected]

www.golder.com

Giving backCANstruction—A creative twist on fundraising

As part of a food fundraiser held in Vancouver, 27 sculptures were built out ofnon-perishable food in a "Survivor"-style competition. AMEC’s team spent weeksconceptualizing their entry and finally built “CANzilla Strikes!”—a replica ofGodzilla accidentally puncturing the BC Place Stadium roof—out of 6,212 cans.Following the competition, the sculptures were disassembled and the food wasdistributed to food banks across the country.

Interested in getting your company involved in such an event? Visit theCANstruction website at www.canstruction.com for upcoming events acrossCanada and the United States.

news

May 2007 15

Alberta’s highways may be a little safernow, thanks to University of Calgaryresearch that resulted in changes toprovincial trucking laws that limit trafficon highways, due to concerns pavementis being damaged by heavy trucks.

The Alberta Road Research Initiative(ARRI) was a five-year study led byLynne Cowe Falls, a civil engineeringprofessor in the Schulich School ofEngineering. A specialist in road designand pavement performance, Cowe Fallsis using a 300-metre test road in LeducCounty’s Nisku Industrial Park, south ofEdmonton, to study how mobile cranesand other heavily loaded vehicles affectthe pavement of highways under a vari-ety of loads, vehicle speeds, and weatherconditions.

Such loads are particularly linked tothe northern Alberta oil sands projects.

Safer roads in AlbertaThe ARRI began after Syncrude CanadaLtd. took part in an initial three-monthexperiment in which the company waspermitted to use Highway 63 north ofFort McMurray without the extra trail-ers and dollies normally required forvehicles weighing upwards of 100-tonnes. The initiative is a public-privatepartnership involving the University ofCalgary, Alberta Infrastructure andTransportation, Syncrude, LeducCounty, Liebherr, Grove/Manitowac,Spierings, and the Canadian OilwellDrilling Contractors.

Preliminary results show that length-ening loads by using dollies does little toreduce strain on the roads in winter,prompting the government to relax itsregulations requiring mobile cranes touse dollies on February 1 this year. Thechange improves safety on roads that

are used to transport cranes to and fromjob sites, while reducing the costs asso-ciated with moving the cranes.

The study is also examining howheavy vehicle traffic impacts roads inthe spring, when they are most vulnera-ble to excessive weight, and in the sum-mer after they have stabilized from thespring thaws. n

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factsTrading activity

of TSX stocks in 2005

exceeded $167 billion.

law&moneyTake a look at the state of today’s

mining industry and you will see ahealthy industrial sector, set to continuegrowing and bringing in money. Cashflow is up, commodity prices are reach-ing record highs, and the analysts saythis state of affairs will continue. Butwill investors continue to view the min-ing boom favourably or are there con-cerns about a possible bust soon to endthe current boom?

PastTo find the reasons for the sector’s

current success, one need merely look atthe business section of the daily paper.The nation making daily headlines isChina. “The Chinese are quicklybecoming the largest consumers ofpretty much everything metal,” saidBart Melek, senior economist, BMOCapital Markets. “You also have theemergence of India that’s playing largeon the minds of investors, and you havethe developing world doing well at thesame time.”

But to see the cause for the sector’sdifficulties, one needs to look in a differ-ent direction. The biggest problems theindustry faces today are a shortage ofqualified labour and a lack of major newdiscoveries. And the root causes of bothlie in the past.

“The mining sector was sufferingfrom chronic under-investment inexploration and development,” Melekexplained, “especially following theAsian financial crisis.”

The bust part of the cycle meant com-panies cutting less essential programsand expenditures. Financial focusshifted from exploration and R&D toutilizing the already establisheddeposits, using existing, proven methodsand techniques. Investors were reluctantto buy into new projects unless theywere clearly able to turn a profit. Withcommodity prices low, projects that oncewould have been feasible were suddenlysliding off the edge of the balance sheet.

Just as exploration and R&D budgetsshrunk, so did the salaries for new hiresand funding for mining schools. Thingsgot so bad, according to Ferri Hassani,professor, mining, metals, and materialsengineering, McGill University, that“when you look at mining schools fromthe last four to five years, you see insome of the schools there were no stu-dents whatsoever. Some of them wereon the verge of shutting down, andthere are still a couple where there’s agood possibility they will shut down.”

PresentBut in 2001, the interest came back,

with a vengeance. Jamie Strauss, manag-ing director for UK Equity Products,BMO Capital Markets, cites the amountof cash raised by the LSE AIM(Alternative Investment Market) alone:since 1995, the market has raised£32 billion. Of that amount, 54 per cent

was raised in the last two years. Straussis far less concerned with the continua-tion of current demand for commoditymetals; his worry is the continuingshortfall in their global supply.

Just how great is the demand, any-way? We’ve already mentioned highcommodity prices, but to fully appreci-ate the scope of the situation, considerthe graph from Scotiabank’sCommodity Price Index. Since the lastbig dip during the US recession of2001, nickel has gone from US$2/lb toUS$19/lb, a 950 per cent increase. Andnickel is far from alone. “Gold is trad-ing a couple of hundred dollars off itsnominal high,” said Jeff Kowal, direc-tor of risk management, Foster-KowalGroup, ScotiaMcLeod. “Tin is at a 20-year high. Even copper, which hasretreated 20+ per cent since its high inMay last year, is priced two to threetimes its historical normal.”

Commentary on the financial state of miningby Dan Zlotnikov


Nickel Prices

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72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

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LME cash settlement price since 1980.

– Shaded areas represent U.S. recession periods.

U.S. dollars per lb.

law&money

With prices so high, it’s no surprisethe investors are attracted to the indus-try. “Last year was a great year,” saidDavid Kaiser, senior manager, GlobalResources at TSX. “Our mining compa-nies raised a total of $12.5 billion, and ifyou look at the number for all of 2005,it was only $7.9 billion.”

But where is that money going?On the one hand, previously unat-

tractive deposits are once again worth-while. Properties that were previously“high graded” are now being moreextensively developed. On the otherhand, however, new resource finds arefew and come with their own new chal-lenges.

The first of these challenges ispolitical: new deposits are in volatile,high-risk countries, where politicalclimate shifts frequently. “You havegovernments in resource-rich parts ofthe world who increasingly subscribeto a sort of resource nationalism,which is not alwayswell defined, and youdon’t often know whatthey will do next. And,of course, that increasesthe risk profile ofinvesting in theseplaces and it increasescosts,” Melek said.

Another challenge isthe size of new finds.New deposits have to beof a comparable size toones already beingdeveloped, Strauss said,to be of interest to theseniors. “And these com-panies are getting biggerand bigger, so they haveto find bigger deposits orfind more of them. Andif they can’t do that, theyhave to merge, which infact is what you’ve beenseeing.”

The third major chal-lenge is a continuingshortage of qualifiedlabour, which hasaffected the miningindustry worldwide.

“That is why,” Hassani explained, “at thepresent time, our students have at leastfour job offers from around the worldvarying from a $75,000 and $100,000starting salary at 23 years old.”

But despite the hurdles, junior firmsare taking on these higher-risk projects,Melek said. “High prices are a goodmotivator. People are going where theyhaven’t been before. Luckily, places inAfrica are also getting a bit more stable.Some places are, anyway.”

Senior firms are looking for a some-what lower degree of risk, but are alsoactively seeking new opportunities.“You have developments, for example,in Mongolia where seniors are gettinginvolved as well,” Melek added.

At the same time, the senior firmsare developing “watch lists” of juniorswho are taking on the high-risk proj-ects. Kowal explained the seniors’ rea-soning: “One of the popular strategiesof the big mining concerns—because

everyone has a bit of cash flow rightnow—is to take small stakes in smallcompanies, for a number of reasons.Teck Cominco, for example, took asmall stake, a few tens of millions inone of the diamond explorers—andthey’re not in the diamond business.Their position is: we need the know-how. So they can get access to that bymaking a small (for them) investmentin this diamond company. Moreover, ifthe area turns out to be quite prolific,they’re already in a position where theyhave an equity stake and they’re notgoing to miss out on a major find.”

FutureSo what does the future hold for

today’s flourishing mining sector? WillBay Street and its foreign counterpartscontinue to view this growth in a posi-tive light, or will they shy away, in expec-tation of the bust that has previouslyalways followed each mining boom?

May 2007 17

First Canadian Place, the Bank of Montreal tower in the heart of Toronto's financial district

law&money

The overall projection, said Melek,is positive. “We think [China’s] growthcertainly isn’t going to be north of tenper cent for any length of time, but wethink certainly six or eight per centover a longer term is certainly withinthe realm of possibility. That’s not onlywhat we think, but judging by othereconomies in Asia when they were intheir development phase...that’s cer-tainly feasible for a prolonged period.”

China’s sustained growth, coupledwith the emergence of India and otherdeveloping countriesonto the world markets,makes it highly unlikelythat metal prices willdecrease over themedium to long term.Jim Fitzgerald, nationalmanager for derivativeproducts forScotiaMcLeod, agreed.“The major event affecting worldwideprices is the state of demand andgrowth right now in Asia, specificallyChina and India. It’s reasonable toassume that the prices will remainstrong and possibly continue to grow,everything else remaining the same.”

But while the demand will remainstrong, numerous experts have voicedconcerns over the supply side of theequation, which is not growing as fastas it did in the past and is fallingbehind. The supply, said Melek, “is notresponding to prices as quickly as inthe past. Since the Asian crisis, we’vehad chronic under-investment in large-scale projects in the mining industry ingeneral, and fewer explored and dis-covered properties, which makes it dif-ficult to accumulate excess reserves ofbase metals.” The high prices, headded, are further strengthened by therelatively small number of truly bigplayers in the metal commodities sec-tor and more market discipline. “Youdon’t have a lot of players capable ofdeveloping large projects on their own,who could bump up supply meaning-fully and erode everybody’s prices.”

High prices mean that knownreserves, previously exploited for theirmost economical ore, are once more

profitable. Such projects are attractiveto investors because of their relativelylow risk. In most cases, a significantportion of the capital investment hasalready been made during the originaldevelopment, regulatory approval hasbeen secured, and the ore body hasbeen assayed. The ore might not be ashigh grade as that in a new find, but thelower investment ensures profitability.A significant portion of the sector’sexploration budgets will most likelycontinue to be expended on develop-

ing and expanding existing resourcesas a lower risk alternative to newexploration projects.

But new projects are something JimMoore, CEO, Inter-Citic, a gold miningfirm operating in China, believes firmswill have to move towards. “Some ofthese companies’ resource require-ments are so significant—and most ofthem already know the projects thatare out there—that they’re going tohave to make new discoveries in orderto guarantee their growth.”

With prices high and new finds lack-ing, an exploration firm has excellentincentive to continue seeking out poten-tially higher risk ventures. The potentialof high return is attracting investorstoday, both among the senior miningfirms and on the stock exchanges. Theexpectation is that investor interest willremain high as long as commodity met-als remain in demand.

Not all potential exploration sitescome coupled with political instability,though. China, aside from being a majorimporter of virtually all commoditymetals, is poised to become a major pro-ducer of minerals as well. According toMoore, whose company has been devel-oping two gold projects there since2003, China is “very much under-

explored, particularly in its westernregions.” Despite having only been trulyopen to mining investment and partner-ships since 2003, China is attractingmore and more investor interest, andMoore believes it will continue to do so.

Nonetheless, there are a few cau-tions that must accompany this opti-mism. The demand and prices mayremain high in the long term, but thatdoes not guarantee stability of eitherfrom the day-to-day point of view.Prices may be high, but there’s a grow-

ing sentiment that they are too high. “Ifyou go back for the last five years,”agreed Strauss, “it doesn’t matter whichexchange you’re looking at—TSX,AIM, or whatever—you’ve seen a sig-nificant correction each and every yearat some stage, and then we go to newheights. Usually it has been a regularexcuse that China is slowing down.”But aside from the cautionary reminderthat nothing in markets moves in astraight line, Strauss’ opinion of thelong term matches Melek’s: things lookgood and, barring some sort of major,unpredictable event, will generallycontinue in that fashion.

The labour shortage, however, is asubject of some debate. Moore spokevery highly of his team at Inter-Citicbut “in terms of the next generation? Ihaven’t been able to find it. I don’t seeit very readily.” When asked about thefuture, however, he is not very wor-ried. “I think the laws of supply anddemand will work their way out. Ibelieve as the market continues on ina cycle of high prices and demand thatour universities are going to start gen-erating more people.”

Professor Hassani disagrees strongly.He said there is more to solving the HRshortage than high wages and job avail-


It’s reasonable to assumethat the prices will remain strongand possibly continue to grow

law&money

ability. “When we ask our first year stu-dents ‘why did you choose mining,’they say ‘because the professor came tomy school and told me about it.’”

This year, McGill University usedradio advertising (paid for by dona-tions from mining companies) to pro-mote its mining engineering program.The results, according to Hassani, werevisible almost right away. “By doingthis, we increased our applicationnumbers from last year by 25 per cent.”

Would the increased demand andhigher salaries without the promo-tional efforts be sufficient to meet therising demand? Hassani doesn’t believeso, “because if I don’t promote our pro-gram, I will have maybe five students.By making an extra effort, I will have25 students per year.”

The last major point of concern is thegrowing “resource nationalism,” men-tioned earlier by Melek. The developingcountries where many new deposits arelikely to be found in the future havebeen attempting to claim a greater shareof the proceeds from any mining donewithin their borders. To see an extremeexample of such a situation, one needonly look at Venezuela’s recent seizuresof the country’s last four privately con-trolled oil projects.

But the issues need not be soextreme to cast doubt over the finan-

cial feasibility of a project. Risingenergy costs, lack of infrastructure,environmental concerns— these arejust a few examples of hurdles thatcan push a potentially profitabledevelopment into the red. In the end,said Fitzgerald, each potential clientapplication reviewed by a bank—in amining or other enterprise—is

decided on a case-by-case basis onthe merits of that client. What is theone most important thing, though?“Having a very sound financial plan,sound assets, competent manage-ment, and the ability to demonstratecontinuity of cash flow year overyear, irrespective of the boom-bustcycle.” n

May 2007 19

MAC

facts

While the industry is importantat the local community level,it also generates significant

prosperity for our larger cities.Toronto is the world’s leading city

for mining finance,Vancouver is home to the world’s

leading cluster of explorationcompanies and expertise,

while mining continues to beof prime importance

to the transportationsector in Montreal.

law&money

Aber Diamond Corporation is anunusual case in the world of mining ina number of ways. First, it began its lifeas a junior mining firm with a signifi-cant stake in a diamond mine project.Second, the senior partner in that mineis not De Beers. But most significantly,Aber’s success in raising funding forthe mine project was exceptional,despite occurring at a low point in themining industry.

Aber started as a staking syndicatecalled West Viking Syndicate, inNovember 1991. Shortly following thediscovery of diamonds in Canada byDia Met Minerals (acquired by BHPBilliton in 2001), West Viking stakedclaims near the area of discovery and,in 1992, approached Rio Tinto with ajoint venture proposal. Rio Tintoaccepted and provided $10 million infunding in exchange for a 60 per centshare in the project. At the same time,West Viking, a privately held company,was rolled into a shell company calledAber. Exploration efforts began and, in1994, the first discovery of diamondswas made.

“The first $10 million didn’t go veryfar once the discovery had been made,”recalled Aber CEO Robert Gannicott.“We were only halfway through theprocess of taking the bulk samplewhen Rio (Tinto) completed theirexpenditure of the $10 million, whichhad perfected their 60 per cent interest.From then on, we had to pay $0.40 ofevery dollar that was being spent. Sowe had to go and raise money.”

Aber approached a major diamondretailer, Tiffany & Co., for the neces-sary funding. An agreement wasreached, and Tiffany took a privateplacement of eight million shares inthe company in exchange for $100 mil-lion. “It was me, actually, who wentdown [to Tiffany],” Gannicott said. “I’dbecome aware that the diamonds wewere going to be producing at Diavik

The creation of DiavikKeen savvy saw a junior finance a major projectby Dan Zlotnikov

had this sort of white quality, andbecause they were coming fromCanada, there was a certain politicalcleanliness to them as well. I thoughtthey [Tiffany] might be interested. Andindeed, they were.”

This money lasted through the feasi-bility study, which was completed in2000, but now the mine had to bebuilt. The location of the deposit, aswell as unique logistical and construc-tion challenges, meant a very expen-sive mine. To raise its 40 percent of the $1.4 billion totalcost, Aber used up theremainder of the $100 mil-lion from Tiffany, and sold itsone-third stake in the SnapLake diamond project to DeBeers for $173 million. Withthat money in hand, theywere able to obtain financingfrom a group of banks.

It was a very long, difficultprocess, taking two years.“Diamonds are a veryunusual commodity; they’renot exchange-traded. We did-n’t have control; the controlwas with the 60 per cent part-ner. We’d never sold dia-monds before; they doubtedour ability to sell diamonds in compe-tition with DeBeers,” said Gannicott.

N.M. Rothschild was the junior’sbanking advisors and Gannicott callsthem “very good, and very important.”Rothschild brought with them expert-ise and credibility, the firm also servingas the banking advisor to De Beers.CIBC served as the key technical advi-sor on the project, on whom the otherinstitutions relied to check the qualityand worth of the deposit.

The one place Aber didn’t go formoney was the stock exchange. “Wedidn’t want to dilute the equity in thecompany further if we could avoid it,”Gannicott explained. “The value of the

ore was three to four times the operat-ing cost, so it was going to throw offcash quite quickly and could thereforesupport the repayment of debt.”

But the other reason for avoidingthe exchange was the comparativelylow share price of the company. A dia-mond deposit’s quality remains uncer-tain much longer than that of a base orprecious metal. The variation in thegems is so great, Gannicott said, that“you don’t have a representative sam-

ple until you’ve done ayear’s mining.”

When asked for advicefor today’s juniors goingthrough the same process,the CEO points to the verybeginning of the journey. Ifthere’s one thing he’d havedone, Gannicott said, “it isto take a lot of care over theconstruction of the early-stage joint venture agree-ment. And I would urge anyjunior company that’s sign-ing a joint venture with amajor, with whomever, totake the document past a

Robert Gannicott


law&money

qualified banker and say, ‘are the provi-sions in the document going to be ableto support debt financing if a mine isdiscovered here.’”

After the funding was secured, ittook two years to build the mine andanother year before the first diamondwas sold. Tiffany & Co. accounted for23 per cent of that sale, as per the off-take agreement.

Exactly a year after that first parcelof diamonds, Aber announced it hadpurchased a majority stake in a dia-mond jewelry retailer, Harry Winston.

Today, Aber owns 100 per cent ofthe retailer and is seeking new poten-tial diamond mine sites.

Are there any restrictions on thepotential locations? Yes, but not due togeography. “We don’t wish to be theowner of a diamond deposit in a placewhere abusive regimes, either political orsocial, are in place. The basic tenet is, wedon’t want to operate anywhere wherethere can be a risk to the brand name ofHarry Winston,” explained Gannicott.

In the meantime, Aber continues toenjoy the proceeds of its share in the

Diavik mine, and Diavik employeescontinue to enjoy their company-pro-vided complimentary soft ice cream.

Gannicott offers one last insight fortoday’s juniors: “Take care at the begin-ning that the joint venture and legalagreements you make are constructedin a way that let you go the whole way.Whether you need to or not, whetheryou do what Aber did and end up beingin production, or sell out along theway, the strength of that agreement isgoing to be very important to you. Youshouldn’t rush up and sign things.” n

The island-based Diavik Diamond Mine. Foreground is the A154 dyke, which allows open pit mining of the A154 South and A154 North diamond-bear-ing kimberlite pipes. Left is the new A418 dyke, which encircles the A418 pipe. Taken last September, this shows the A418 pool being dewatered. Clearwater is pumped to Lac de Gras while silty water is pumped on-land for sedimentation and silt removal through the mine's water treatmentplant. Photo by Jiri Hermann; courtesy Diavik Diamond Mines Inc.

May 2007 21

law&money

Legal expertise is required for manydifferent aspects of the minerals indus-try. Mining law tends to be viewed as justpreparing agreements and doing devel-opment contracts, when in fact itinvolves everything. Whether it is regu-latory frameworks that govern explo-ration, foreign risk mitigation, mergersand acquisitions, or consultation withaboriginal rights, the firms that work inthe mining sector have lawyers with awide range of specialties. These are someof the particular skills that lawyers whohave worked with the industry for yearsrecommend to seek in legal council.

It is important to establish a relation-ship with a firm that works in the min-ing sector. A minerals company is notgoing to be able to find one singlelawyer who does all the things requiredand has all the experience. Industrymembers need to go to firms that haveknowledgeable and experienced teamsworking in mining.

“Mining law touches on almost everyaspect of the law with the possibleexception of criminal and family law,”stated Brian Abraham, a partner atFraser Milner Casgrain (FMC), whospecializes in international and domes-tic mining matters. “Having an industrybackground is helpful; when you speakthat ‘language,’ [a client] does not haveto describe what their project looks liketo you. I can read it and understandwhat they are trying to do, and showsome genuine interest.”

Taxation and foreign explorationHaving a lawyer who is knowledgeable

about taxation in the mining industry isparticularly useful for foreign exploration.In different countries, there are differenttax codes and different sets of rules. Someplaces have very large value-added taxes(VATs) that are chargeable when buildingmines, and chargeable on equipmentbeing brought into the country.Negotiations are necessary to receive theappropriate tax exemptions while your

Seeking effective legal council in the mining industryby H. Eve Robinson

company is bringing money into thecountry and investing in development,and then, in negotiating the right kind oftax regime in order for your organizationto make a profit. Recently, countries suchas Vietnam have imposed a tax on export-ing commodities where there isn’t furtherbenefit to the country. Taking raw ore out

of the country, when it has not beenthrough some sort of processing, results inextra taxation when those processingfacilities exist in that country. These extrataxes are not recoverable, which can affectprofit significantly.

John Sabine, who specializes in busi-ness transactions in the mining sector atFMC, explained, “There is this wholecottage industry of tax law becausesome countries will let you take themoney out and some will not. Taxationand dealing with international flow offunds is very important.”

It is also important, when you aresending workers overseas, to know thatyou are paying them properly, with allthe necessary paperwork, so that theyare not being over-taxed.

“There are all kinds of tax issues, andit becomes extremely complicated tomake sure you are in compliance with amyriad of laws within each jurisdic-tion,” said Sabine. “For example, coun-tries in French West Africa are all civillaw jurisdictions, which is differentfrom those countries that grew out ofthe British tradition who have commonlaw. So you need to have [legal] peoplewho are knowledgeable about different

legal systems and who speak differentlanguages.”

Putting contracts together anddoing corporate work also plays a largerole in mining. In addition, peoplework in securities, so they are not onlyworking on mergers but also doingfinancing. There is a lot of corporate

finance work in Canada that comes outof the mining industry.

Environmental regulationsOne of the largest changes in legal

issues within the mining sector over thepast few decades has been in the envi-ronmental area. Previously, industry didnot realize the implications of develop-ment on the environment; whether itwas forestry, mining, or even residentialdevelopment.

“The result was that the industry hashad to make a lot of adaptations,” saidAbraham. “British Columbia andCanada probably have some of the high-est environmental standards in theworld because of that. With time, we getmore knowledge.”

The global mining industry is some-times questioned by organizations con-cerned that mining activities are harm-ing the environment. Their concernscan also extend to what will happen ifthe mine closes or is abandoned, andwhether or not a company intends todevelop projects that are sustainableand give wealth to the local people whoare going to be left with the site after themining company leaves.


Having a lawyer who isknowledgeable

about taxation in themining industryis particularly usefulfor foreign exploration

law&money

Being able to address concernsabout the environment and knowingthe environmental laws, regulations,and how environmental law interactswith what you are doing in your oper-ations is essential. This can benefitplanning sustainable project develop-ments and whether or not a portion ofincome is going to be devoted to socialprograms for local people who work inthe communities.

Delays in mining projects have con-sequences on the market. As projectsget delayed, the demand for the com-modity increases as it is not being met.The delays in bringing projects intoproduction are affecting what is ordi-narily seen in a commodity cycle.Once you get copper and other com-modities very high, marginal proper-ties that are not really resource-rich arebrought into production, and thencompanies scramble to sell their prod-uct in order to pay for their operationand to stay profitable.

Eventually, the expected productionis delayed further because the equip-ment to build the mine is no longeravailable and companies have to strug-gle to maintain a workforce to build themine. Adhering to environmental regu-lations and maintaining best practiceswithin an organization can reduce nega-tive attention and prevent delays.

Aboriginal consultationIn this industry, knowledge about

aboriginal peoples is crucial. Familiaritywith the principles of aboriginal rightsand the duty to consult indigenousgroups makes understanding the his-tory and basic parameters of impactbenefit agreements clear.

“At the end of the day,” said JohnHurley, partner, FMC, whose expertiseis in natural resource, environmental,and aboriginal law, “there is going tohave to be some sort of modus vivendiestablished between the promoter andFirst Nations, and it is the task of thelawyer to facilitate that arrangement.”

Charles Willms of Fasken Martineauis an experienced lawyer in aboriginalmatters. “There are two important stepsto help project development and com-munity partnerships go smoothly. First,build relationships with the FirstNations in the area you hope to exploreor develop a project. Second, maintainthese relationships. There is no singleprecedent on how to achieve thatfriendship-building, because each proj-ect and each aboriginal group across thecountry is different.”

The ability to problem-solve is anasset in this industry. Sabine advised, “Ifthere is a problem, what you need areproblem-solvers. The key is not match-ing yourself up with a lawyer who is just

May 2007 23

able to say ‘No, you can’t do that.’ Youneed to find someone who is capable offiguring out how to do it, or how to getaround that problem.”

Having skilled lawyers on your teamthat are experienced in the above-men-tioned aspects of the mining industrycan only strengthen your project devel-opment. The regulations encompassingmining are going to continue to changeto meet growing needs. Establishing agood relationship with a firm willpotentially keep you prepared for unan-ticipated foreign policies, taxation, envi-ronmental regulations, or aboriginalconsultation matters.

“At the end of the day, this is a peo-ple business,” Sabine concluded. “Inthe service industry, you have to under-stand what your client’s needs are.Frequently we have to deal with a broadrange of companies—companies whosemarket capital are in the billions andthen companies that are start-ups. Theway you get an oak tree is you plant anacorn. So too in legal relationships; ifyou have a good relationship with peo-ple who are out there planning todevelop, acquire, and finance projectsthat will eventually become mines andbe taken over by other mining compa-nies, you can start at that grassrootslevel and be pragmatic about the wayyou deal with issues.” n

law&money

Canada has an excited mineralsindustry market because everyone isconsolidating. The high price of com-modities has led to an upward move-ment in share prices. Most large min-ing companies have to grow, and thisgrowth cannot rest on explorationalone. Instead, there is a need forthese companies to perform in themarket to demonstrate their growth.Shareholders look to the management.One way for an organization to expe-rience growth is through mergers andacquisitions.

Toronto has a sophisticated andhighly developed marketplace for com-panies. Over 50 per cent of mining com-panies are listed in the city.

“We have a very thriving equity mar-ket in Canada for mining companystocks,” explained John Sabine, a part-ner at Fraser Milner Casgrain, withover 30 years of experience in miningand complex business transactions. “Itis the most attractive place to raiseequity money.”

Mergers and acquisitions haveincreased in recent years. In the past, itwas more difficult to affect some ofthese mergers. Target opportunities arenow based in companies that operateglobally. The increased value of thecommodities that are being extractedfrom the ground means there is aheightened appreciation, which youcan use as currency to acquire fromsmaller producers.

Increases in mergers and acquisitionswithin the mining industryby H. Eve Robinson

“There is a built-in expectation thatmid-tiered producers in mining willbe acquired by larger companies,” saidSabine. “[A company] can use stock tobuy a smaller company to enhancegrowth prospects, as well as enhanc-ing the return for shareholders.Current commodity prices have madeit very lucrative for companies to doacquisitions.”

Many of these companies estimatethat commodity prices will be higher inthe future than present values. In arecent transaction involving nickel, for

example, acquisition of the nickel com-pany was done at a price that was lowerthan prices today. So companies are tak-ing the risk that the commodity pricesare going to increase.

In addition, some companies aremerging because the reserve life of theminerals they are actively extracting isshort term. In order to improve theirreserve life, they acquire companiesthat have greater reserves. Thisimproves a company’s own operatingcapabilities—using the value of com-pany stock where shareholders havebeen investing in order to pick up com-panies that have a lag in their sector.These companies might have goodproperties, but they just have not beenproducing the shareholder returns thatwere expected.

The resource extraction industry hasa lot of challenges. Some mining compa-nies are based in parts of the world that

make it very difficult to operate, so theyneed a large amount of capital todevelop. Many expectations are raisedwith new projects but it becomes diffi-cult to go out and acquire the basicequipment you need to build and oper-ate a mine.

People who are knowledgeable aboutthe industry are also in high demand.The mining industry has changed in thepast couple of decades. A lot of peopledid not train to become geologists orengineers, or they did not specialize inskilled trades and the mining industry.

Sabine noted, “Another reason forpeople to do acquisitions is to pick up aworkforce that knows how to develop,build, and run mines.”

A challenge facing mining compa-nies is governmental rules and regula-tions that prevent the mining industryfrom development in particular coun-tries. Places like China and India aregrowing very rapidly. Their demandsfor commodity products are high, par-ticularly in the metals industry. Agrowing middle class in those jurisdic-tions is purchasing refrigerators,stoves, automobiles, and other thingsthat have metal content. The industrystruggles to keep up with the ever-increasing need.

“What people [in the industry] arelooking for is long-life reserves in rea-sonably politically secure regions of theworld,” Sabine said.

A lot of mergers and acquisitionshave been happening in the mineralsindustry. In the past four to five years,most of the major mergers haverequired a great deal of input fromlegal teams or firms working withcompanies across international bor-ders. Canada is in a unique position asa principal player in mineral explo-ration investment for many of the largemining companies whose operationsare global. n


“We have a very thrivingequity market in Canada

for mining company stocks.”— J. Sabine

for potentially high returns. Anotherequity fundraising round may be under-taken at this point.

An alternative to the stock market isa private partnership, such as the oneformed between Aber Diamond Corp.and the jewelry retailer Tiffany & Co.,

during the early stages of Aber’s Diavikproject. Such an arrangement ensuresfunding and an off-take agreement forthe junior firm, and provides thejunior’s partner with a guaranteed sup-ply of the mined resource, atfavourable terms. The off-take agree-ment is vital if the junior firm laterseeks bank financing.

Jim Fitzgerald, national manager forderivative products for ScotiaMcLeod,explains that for a banker, one veryimportant consideration is to see anestablished market for the productonce it’s out of the ground. One way todo this, Fitzgerald said, is “to be able toestablish a market for [the product] byselling it forward (hedging) before it’seven out of the ground. That [hedging]is one step towards giving bankerscomfort.”

Once the size and grade of thedeposit have been established, the jun-ior firm is no longer a high-risk invest-ment. At this stage, major financialinstitutions may be convinced to takean interest in the company. However, abank would only be interested infinancing a project if the deposit is suf-ficiently large. “Whether you look at asmall deposit or a big deposit,” says

law&money

Fundraising stages for junior firmsby Dan Zlotnikov

May 2007 25

The beginning of an explorationfirm’s life is always the riskiest point inits existence. In most cases, the com-pany has a promising property in a pre-viously untouched location and needsmoney to conduct exploratory drilling.At this point, the management team’sexperience andtrack recordcount for a lot,but even withproven veter-ans in the lead,the company isstill a veryh i g h - r i s ki n v e s t m e n t .Most firms atthis point intheir life turn to the stock exchange toraise initial capital. In recent years, andespecially since the mining boom, theexchanges have restructured them-selves to accommodate this type ofyoung venture. The LSE AIM (LondonStock Exchange AlternativeInvestments Market), for example, hasexempted junior companies from aprofitability clause, mandatory for list-ing on the London Stock Exchangeitself. With the same goal in mind, theTSX Venture exchange gives Venture-listed firms more time to file financialstatements than TSX-listed ones.

Alternatively, a junior company mayseek to enter into a joint venture with asenior firm, who will fund all or part ofthe exploration costs in return for adirect ownership interest in the projector the junior itself.

Once initial drilling and assays arecomplete, and assuming the results war-rant it, a company will generally seekfurther investment. At this stage, thedeposit size and grade are usually stillunclear. The ore body might be worthten thousand or ten million dollars, andonly time (and more digging) will tell.At this stage, the firm may attract pri-vate investors willing to take on the risk

Jeff Kowal, director of risk manage-ment, Foster-Kowal Group atScotiaMcLeod, “you’ll find that a lot ofthe expenses on the bank’s part aregoing to be pretty similar. So it justdoesn’t make economic sense to getinvolved in a smaller deal, even

though the prospects of being repaidare sound—it just diverts resourcesfrom the bigger deal.” For a majorbank, a project must be worth at least$100 million, and frequently even thatmay prove too small.

But even if the size is sufficient toattract a bank’s interest, great impor-tance is placed on the firm’s ability toservice its debt even if the mineproves less profitable than expected. Ifhe were a mining executive applyingfor financing, Fitzgerald said, hewould “want to be able to demon-strate continuity of cash flow, irre-spective of the boom/bust nature ofthe business.”

It should be mentioned that atmany points along the way, the juniormay prove sufficiently attractive to oneof the senior firms and receive a buy-out offer. “That’s often how the ecosys-tem works,” said Ungad Chadda,director of listed issuer services, TSXVenture Exchange. “The juniors aretrying to be the prettiest gal at thedance so that the seniors come andbuy them. Some will go to production,but many are hoping a major willcome out and write them a cheque andtake them over.” n

“It just doesn’t makeeconomic sense to get involvedin a smaller deal, even though the prospectsof being repaid are sound—it just diverts resources from the bigger deal.”

— J. Kowal

law&money

First Nation communities play animportant role in mineral developmentin Canada. Exploration efforts areoften focused in areas that overlap withaboriginal titles or land claims. In thenext 15 years, up to 30 per cent of landarea in Canada could either be con-trolled or have recognized interests byaboriginal groups. As the demand formining exploration increases, it high-lights the need for cooperationbetween First Nations and the mineralsindustry.

Changes in the legal frameworkresponsible for governing these rela-

Aboriginal consultation from the courts to the ground: challenges in implementingeffective engagementby H. Eve Robinson

tionships are most effectively pro-pelled by movements at the grass-roots level. Industry members areencouraged to integrate participationand communication with aboriginalgroups in the project developmentprocess. It is these innovative andcooperative agreements betweenmining companies and First Nationsthat demonstrate the potential forefficient and nationally applicablelegislation.

This resource-rich country plays adominant role in exploration activity.The increasing demand for commodities

offers excellentopportunities forCanada’s growingminerals explo-ration industry. Tokeep up withintense global com-petition, the successof mining explo-ration is dependentupon the discoveryof new mineraldeposits. Aboriginalconsultation andland access are per-tinent issues to min-ing companies seek-ing to explore landin Canada for thesec o m m o d i t i e s .Industry memberscan benefit byengaging aboriginalcommunities in thisprocess in order tosuccessfully moveforward with min-ing exploration anddevelopment inpartnership withFirst Nations.

When to begin the processThe legislation in Canada that deter-

mines the legal steps required for min-ing companies to consult with aborigi-nal groups continues to be developed.At present, there is some confusion forcompanies wondering if they shouldconsult with First Nations, and at whatpoint in the exploration and projectdevelopment process they might beginto dialogue with these groups. Therehave been a number of court cases thathave given impetus towards changingpolicy to reflect the importance of abo-riginal consultation. In November2004, the Supreme Court of Canadaruled that the government has a dutyto consult with First Nations whoassert aboriginal rights or title in a ter-ritory, particularly where the govern-ment is proposing a course of actionthat might have a negative impact onthose rights. Although it is the govern-ment’s responsibility to consult withaboriginal groups, companies are stillencouraged to be involved.

“It is strongly recommended goodbusiness practice to consult with theFirst Nations at the earliest stage possi-ble in order to address any of their con-cerns and to make them aware of thepotential impact of an exploration proj-ect,” said Brian Abraham, a recognizedlawyer in The International Who’s Who ofMining Lawyers, and a partner at FraserMilner Casgrain. “While there may beno legal obligation of the proponent toconsult, other than when the projectreaches the environmental assessmentstage, it is good practice to do so.”

In 2002, the government of Quebecreached a new agreement with theQuebec Cree Nation called ‘La Paix desBraves’ (The Treaty of the Brave). Thislandmark agreement is not only basedon a sustainable development partner-


law&money

ship with the Cree Nation, but alsodetails the value of mining and hydro-electric revenues that will be returnedto the First Nations communities overthe next 50 years. Under the agree-ment, the Cree Mineral ExplorationBoard was established. This regulatorycorporation has already improved rela-tionships between the minerals indus-try and the Cree Nation, and increasedthe number of deals made between thetwo groups.

“I think these relationships betweenthe mining industry and First Nationsare in recognition of the changinglandscape,” explained John Hurley, apartner at Fraser Milner Casgrain whohas worked in energy and naturalresources law and aboriginal law foralmost 30 years. “People recognize thatone cannot simply disregard FirstNations in developing significantresource projects in lands subject toclaims of aboriginal rights or title. If [acompany] were to do so, there could berisks involved. Project proponents donot like risks; bankers do not like risks.So it makes a good deal of sense to beproactive and go out to establish a rela-tionship with First Nations.”

These recent decisions by theSupreme Court and groundbreakingagreements between First Nations andprovincial governments show how thelaw is a work in progress and movingtowards effective partnerships. “Peoplewill be looking at these [agreements]to see what features are common, howthey can be improved, and how theyshould be adapted to the special cir-cumstances of any given case,” saidHurley. While this seems promising,what does this mean for projects cur-

rently conducting exploration in areaswith First Nations interests?

Land claims and accessCanada consists of a patchwork of

treaties and land claims. The Britishcolonists recognized First Nations hadtitle to the land in Canada, so theCrown was only able to acquire landthrough treaties. In most of Canadaagreements were made with FirstNations, though there were differences

between each province and territory. InBritish Columbia, for example, theprovince joined Confederation beforeresolving aboriginal titles to the land.With the exception of Treaty 8 innortheastern British Columbia, theNisga’a Treaty (or Modern Day Treaty),and 14 treaties on Vancouver Island,collectively called the Douglas Treaty,aboriginal rights continue to be unde-fined and ambiguous. Mining compa-nies seeking to involve First Nations inthe development process can face chal-lenges identifying all the communitieswho feel responsible for the land,though they potentially have no legal‘ownership.’

Land ownership is not the onlycomplication affecting mineral explo-ration and aboriginal consultation.Interestingly, in the Delgamuukw casein 1997, the Supreme Court of Canadadetermined that having an aboriginaltitle is right to the land itself. Somecommentators argue that this includesownership of mineral resources. Landaccessibility for the purpose of miningis typically managed by the Crown.The federal and provincial govern-ments combined own 90 per cent ofCanadian land, so the Crown owns and

controls a vast amount of potentialmineral resources. The governmentcan grant interested parties access tothat land for the purpose of explo-ration. This free entry system is one ofthe principles upon which Canada wasfounded. The assertion is that miningis the best use of land, and thatresource extraction is the highest prior-ity. However, there are groups thatargue societal values have changedsince the free entry legislation was firstpassed (for more information on thefree entry system, see article on p. 30).

Susan Rutherford, a lawyer withWest Coast Environmental Law,explained that “there are people whoare questioning free entry, askingwhether it’s a system consistent withtoday’s values and what ought to bedone with the land.”

Although the minerals industry hasa legal right to access land, companiesmight encounter barriers within thecommunity who view mining as alower priority to forestry, parks, con-servation land, watersheds, or otherdevelopments. In some cases, prospect-ing permits are not granted to potentialproponents, which can frustrate indus-try members with unexpected landwithdrawals. One of the recommenda-tions regarding the free entry law is tomodify the boundaries of availableland. These boundaries could excludelands deemed important to communi-ties, other natural resources, andecosystems. Although this wouldreduce the areas open to mining explo-ration, the land that remains accessiblewould be available in reality. Thiscould reduce the unanticipated delaysand wasted finances invested on min-ing exploration in lands that turn outto be restricted.

Consultation and relationship building

Many areas of the world haveindigenous land access and interestissues that are similar to Canada. Inresponse to these global challenges, theWorld Bank has published criteriarelating to community consultationthat specifically includes indigenous

May 2007 27

“It is strongly recommendedgood business practice to consult withthe First Nations at the earliest stage possiblein order to address any of their concernsand to make them aware of the potentialimpact of an exploration project.”

—B. Abraham

law&money

population consultation. While thechallenges facing aboriginal groups aresimilar in many countries, the legalregimes are different.

“Canada is unique,” said CharlesWillms, a partner in Fasken Martineau

DuMoulin LLP, with considerableexperience in aboriginal, forestry, andmining matters, “because the aborigi-nal rights are constitutionally pro-tected. In other countries in the world,such as Australia, [these rights] are

statutorily protected, but not constitu-tionally protected. Consultation is aconstitutional obligation in Canada.”

Consultation can occur during anypart of the mining exploration ordevelopment process. This initial step

is often case-specific; companies can beuncertain of when it is appropriate tostart meeting with an aboriginal group.Beginning dialogue with a communitytoo early in a project can falsely raiseexpectations, whereas trying to include

a First Nationsgroup too late canmake building afuture relationshipdifficult.

Opening thelines of communi-cation can be rela-tively simple. Forexample, juniorcompanies thatlack capitalresources are find-ing ways to dia-logue and consultin meaningfulways. Represen -tatives that attendthese discussionswith sincerity andrecognize aborigi-nal groups as landowners are oftenmore successful.

“Nothing beatsthe president orsenior executive ofa company meet-ing with FirstNations represen-tatives as part of

the relationship-building process,” saidWillms. Investing the time to addressconcerns early in the process can buildtrust and establish support for a proj-ect, which reduces the risks for thecompany.

Impact and benefits agreementsOne of the products of these unique

negotiations is an impact and benefitsagreement (IBA). IBAs are private con-tracts between a particular FirstNations community and a mining com-pany. These agreements often addressthe legal rights, environmental impactsof a mining development, and socio-economic benefits. Employment oftenplays a large role in IBAs from bothperspectives. Aboriginal workers inCanada are among the fastest growinglabour pool. Abraham said in somecases currently, they represent between30 to 40 per cent of the minerals indus-try workforce. In addition, the popula-tion, as a whole, is increasing andmany communities are located in closevicinity to areas of mineral explorationand mine development.

It is in the mining companies’ bestinterest to hire locally, to reduce trans-portation costs of moving staff to andfrom sites.

In an IBA, First Nations can outlineemployment and contractor agree-ments to secure jobs. They can alsonegotiate equity interests, payments,training and educational programs, orupgrading medical/school facilities.

Environmental monitoring and reg-ulatory committees are established toobserve any environmental damages.Baseline studies are necessary to quan-tify general ecosystem health beforemining activity begins. IBAs caninclude the right to claim damages.This is particularly important regard-ing mine closures. Drainage from aban-doned sites can affect the local environ-ment many years after operations haveceased.

Impact and benefit agreements serveto facilitate participation in the minedevelopment process while addressingconcerns, minimizing potential nega-tive impacts, and ensuring local bene-


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“Canada is uniquebecause the aboriginal rights are constitu-tionally protected. In other countries in theworld, such as Australia, [these rights] arestatutorily protected, but not constitutionallyprotected. Consultation is a constitutionalobligation in Canada.”

—C. Willms

law&money

fits. Obviously, because these agree-ments are not drafted according to anyuniform laws or policies, there arepotential difficulties with IBAs.Including environmental regulations inIBAs may potentially lower the incen-tive to develop more robust regulationsthat would be applicable on a nation-wide scale. Also, the strength of eachindividual agreement can be dependentupon that particular community’s abil-ity to bargain, which results in a widevariation between contracts.Negotiations are often time-limited,which may not allow members of thecommunity enough time to seek exter-nal expertise in order to makeinformed decisions. Conversely, somenegotiations take years to complete.Finally, unless a revenue-sharing agree-ment is included, the economic benefittends to be localized within a particu-lar community.

Hurley explained, “Impact and ben-efit agreements are one way for indus-try and First Nations to work out howtheir relationship should evolve in thefuture. It is clear that resource compa-nies and First Nations are going to beneighbours, and both are increasinglyrecognizing that it is in their best inter-ests to be partners.”

As an alternate and more proactivemeasure, the Taku River Tlingit FirstNation produced a mining policy forpotential mining proponents thisMarch. Instead of waiting for miningcompanies to approach them with aproposal, this community clearly out-lined their own standards, expecta-tions, and rules of engagement for

interested min-ing companies.Their policyreflects theiraboriginal rightsand prioritizesthe decisionsthey havereached regard-ing explorationin their tradi-tional lands,env i ronmenta lassessments, and

impact and benefit agreements.

Resource revenue sharingAnother method of encouraging

aboriginal participation is resourcerevenue sharing. This has the poten-tial for First Nations communities tobecome economically self-sufficient.They would have the capacity to dealwith mining exploration and devel-opment companies on their own.Junior companies, that would other-wise be unable to produce enoughcapital to fund environmentalreviews, might be able to considerprojects that involve revenue shar-ing. In turn, more developmentscould become financially viable.

A greater recognition of aborigi-nal rights in Canada has produced achanging regulatory regime. Theinclusion of First Nations involve-ment and participation has resultedin community consultation, impactbenefit agreements, regulatoryboards, and resource revenue shar-ing within the minerals industry. Inthis emerging landscape, investorsand project proponents are caughtbetween the absence of legalrequirements and the expectation ofaboriginal consultation. What isbeing determined in the courts maybe difficult to enforce on the ground,or it may take years to develop.Instead, the practical experiences ofthese new partnerships betweenFirst Nations and mining companiesare able to provide functional exam-ples of where legislation will eventu-ally follow. n

May 2007 29

“Resource companiesand First Nationsare going to be

neighbours, andboth are increasingly recognizing that it isin their best intereststo be partners.”

—J. Hurley

law&money

The free entry law in Canada grantsthe mineral industry privileged access toCrown land, and top priority is placed onresource development. This hasprompted arguments from both support-ers and critics, who both claim that thislaw provides an unfair advantage to theother side. As neither the industry, norcommunities, nor the government appearto be satisfied with the ramifications offree entry, it is appropriate to look at thevarious issues shaping this debate.

The free entry system originates fromthe ‘frontier mentality’ that suggestsmining is the first and best use of land.A prospective miner only has to pur-chase a license to have access to almostall public and private lands, with theexception of cemeteries, agriculturalland, houses, and buildings. Most landownership, even private, does notinclude control over the mineral rights.Property owners have rights over thesurface of their land but, typically, min-eral resources are under the jurisdictionof the Crown. Staking claims for themineral rights can be made without theconsent or knowledge of the surfaceproperty owner. This is a source of ten-sion among landowners and mineralclaim holders.

This system allows mining to prevailover other land uses, private propertyrights, and aboriginal rights. Essentially,almost all land under the control of theCrown is available for potential mineralexploration. Only by getting a landwithdrawal is that area off limits.Withdrawals are accomplished by min-isterial order and are often for alternateuses such as parks. Otherwise, the gov-ernment has no reason to deny a claimand is obliged to permit mining.Surprisingly, if mineral claims have beenstaked at a land prior to its being with-drawn, the miner could be entitled tocompensation.

Free entry is a non-discretionary lawso that the government is unable todecide how and whether tenures should

A brief overview of free entryby H. Eve Robinson

be granted. This appears to give explo-ration companies a seemingly limitlessrealm in which to seek mineral deposits.However, the mining industry defendsthis preferential treatment on the basisthat there needs to be some incentive formining companies to invest. The widerthe area of exploration is, the better thechance of discovering mineral resources.Some supporters reason that the freeentry is necessary or mineral explorationwould not be eco-nomically viable.

Canada is a prin-cipal destination forboth investment andexploration in theminerals industry.Local companiesfinance approxi-mately 8,000 exploration projects andover 55 per cent of them are in Canada.During declines in exploration expendi-tures, tax credits were implemented andthe government introduced new incen-tives for exploration. Recently, almosthalf the total global equity financing wasraised in Canada.

There has been a shift of societal val-ues in the past centuries. Since the freeentry beginnings during the gold rush,mining is no longer seen by many com-munities in Canada as the singular mostimportant use of land. However, thegovernment is limited in its ability todesignate parks, protected areas, andother resource extraction such as timberif exploration is an option. In contrast,members of the mining industry haveexpressed frustration that adverse gov-ernment actions such as land with-drawals and stringent environmentalregulations are inhibiting mineral devel-opment in Canada.

One of the concerns about free entryis that this law has not been modified toaccount for changes in mining opera-tions over the years. When it was firstestablished, mines operated on a muchsmaller scale. Currently, mining devel-

opment is a large undertaking that isable to extract or process vast quantitiesof natural resources, leaving a biggerecological footprint. Giving the miner-als industry free license to the land withvery few options in designating areas foralternative use can compromise envi-ronmental integrity.

The early stages of acquiring mineralrights do not have to abide by any envi-ronmental monitoring, according to the

West Coast Environmental Law reportson the subject. The use of Crown landduring exploration is unregulated. Ifdamage is done, the surface propertyowner will be compensated. Beyondthat, however, the free miner is able tomove up to 1,000 tonnes of waste rockwithout a permit (in British Columbia).

There are many examples of sustain-able and environmentally sound miningdevelopments in Canada. One sugges-tion regarding the free entry law is tocharge mining companies financialreturns on public properties. Anothersuggestion is to establish some bound-aries of available land for mining explo-ration. This would give communities theopportunity to articulate the importanceof other resources, parks, or protectedhabitats that could be spared from min-ing-accessible land. Although this wouldlimit the areas available for miningexploration, these new boundarieswould reduce the occurrence of landwithdrawals or other adverse govern-mental actions. Increased predictabilityin legislation for mining explorationprojects could be enough to mediate therisks in searching for mineral deposits ina narrower field of exploration. n


… members of the mining industryhave expressed frustration

that adverse government actions…are inhibiting mineral development

in Canada.

May 2007 31

vos droitset vos affaires

De nombreux aspects de l’industrieminérale ont besoin d’expertisejuridique. On a tendance à considérer ledroit minier comme l’établissementd’ententes et de contrats, mais c’estbeaucoup plus. Que ce soit pour laréglementation encadrant l’exploration,l’atténuation des risques à l’étranger, lesfusions et acquisitions ou les consulta-tions quant aux droits des autochtones,les firmes œuvrant dans le secteurminier ont des avocats très spécialisésdans de nombreux domaines.

«Le droit minier touche presque tousles aspects légaux à l’exception dudomaine criminel et de la famille »,affirme Brian Abraham, associé chezFraser Milner Casgrain (FMC), unefirme spécialisée dans les domainesminiers nationaux et internationaux.« Une expérience industrielle est utile;lorsque vous parlez “le langage”, lesclients n’ont pas besoin de décrire leursprojets.»

Avoir un avocat connaissant bien lataxation minière est particulièrementutile pour l’exploration à l’étranger carles règles et les codes de taxation dif-fèrent entre les pays. Certains ont destaxes sur la valeur ajoutée très élevéespayables lors de la construction de lamine et sur les équipements importés.Des pays tels que le Vietnam imposentaussi une taxe sur les produits exportés.Sortir le minerai brut du pays engendreune taxation supplémentaire, nonrécupérable, si le pays possède desinstallations de traitement.

John Sabine, spécialiste des transac-tions minières chez FMC, explique: « Ily a tout le côté artisanal du droit fiscal :certains pays permettront de sortir del’argent et d’autres pas. Il existe toutessortes de questions fiscales et il devienttrès compliqué d’être certain de se con-former à la multitude de lois propres àchaque juridiction. Par exemple, despays de l’Afrique de l’Ouest franco phonesont sous la juridiction du code civil,alors que d’autres sont sous la tradition

Recherche de conseils juridiques efficacespour l’industrie minière

britannique du “Common Law”. Vousaurez donc besoin de personnes qui con-naissent les différents systèmes légaux etqui parlent plusieurs langues. »

Les plus grands changements desdernières décennies dans le domaineminier a été l’aspect environnemental.« L’industrie a dû s’adapter », dit M.Abraham. «La Colombie-Britannique etle Canada ont probablement les normesenvironnementales les plus sévères aumonde. Avec le temps, on acquiert plusde connaissances.»

Les organisations craignent parfoisque les activités minières soient dom-mageables pour l’environnement. Elless’inquiètent aussi de ce qui arrivera si lamine ferme ou est abandonnée; ellesveulent savoir si la compagnie a l’inten-tion de développer des projets durablesqui enrichiront les habitants locaux carce sont eux qui hériteront de ce site unefois la compagnie partie. Il est essentielde traiter ces craintes au sujet de l’envi-ronnement et de savoir comment les loisenvironnementales interagissent avecles exploitations.

Les délais dans les projets miniersont des conséquences sur le marché. Lademande pour le produit augmente et lecycle normal du produit est affecté.Lorsque le prix du cuivre et d’autresproduits est très élevé, des propriétésmarginales qui ne sont pas tellementriches entrent en production; les com-pagnies se dépêchent alors à vendre leurproduit afin de payer leur exploitationet demeurer rentables.

La production planifiée est retardéeencore plus en raison de la non-disponibilité des équipements et lescompagnies ont de la difficulté à garder

la main-d’œuvre requise pour bâtir lamine. Le respect des normes environ-nementales et le maintien de bonnesrelations avec les organisations peu-vent réduire les attentions négatives etprévenir les retards.

« Il est essentiel de bien connaîtreles peuples autochtones et leurs droits;il faut aussi les consulter », dit JohnHurley, un expert dans le domaine deslois sur l’énergie et l’environnement etsur les Autochtones. « Il faudra établirun certain modus vivendi entre le pro-moteur et les Premières Nations et c’estla tâche de l’avocat de faciliter cetteentente. »

Charles Willms, de la firme FaskenMartineau, est un avocat chevronné,spécialiste des questions autochtones.« Deux étapes importantes sont requi-ses pour faciliter le développement duprojet et le partenariat communau-taire : établir un partenariat avec lesPremières Nations là où vous espérezexplorer ou développer un projet etensuite maintenir cette relation. Il n’ex-iste pas de recette unique, les commu-nautés et les projets sont différentsd’un bout à l’autre du pays. »

« En bout de ligne, ce sont les gensqui comptent », conclut M. Sabine.« Dans une industrie de service, vousdevez comprendre les besoins de vosclients. » n

Avoir un avocat connaissant bienla taxation minière est particulièrementutile pour l’exploration à l’étranger carles règles et les codes de taxation diffèrent entre les pays.

vos droits et vos affaires

Les Premières Nations jouent un rôleimportant dans le développementminéral au Canada. L’exploration ciblesouvent des secteurs qui chevauchent desterritoires revendiqués par lesAutochtones, soulignant le besoin decoopération entre les Premières Nationset l’industrie minérale. Cette dernière estencouragée à intégrer les groupesautochtones dans le développement deprojets. Les ententes innovatrices et decoopération entre les compagniesminières et les Premières Nations démon-trent le potentiel pour une législation effi-cace applicable à travers tout le pays.

La demande croissante pour lesmétaux de base est à l’avantage de l’in-dustrie de l’exploration et, pour y satis-faire, de nouveaux gisements doiventêtre découverts. Les consultations avecles Autochtones et l’accès aux territoiressont des enjeux clés pour les compa -gnies d’exploration.

La législation qui détermine les étapeslégales requises des compagnies minièreslors de la consultation des groupesautochtones est encore en développe-ment. Pour le moment, certaines com-pagnies se demandent à quel momentelles doivent commencer à dialogueravec les groupes des Premières Nations.En novembre 2004, la Cour suprême duCanada a statué que le gouvernementdoit consulter les Premières Nations quirevendiquent des droits ou un territoire,surtout lorsque le gouvernement proposedes actions qui pourraient avoir unimpact négatif sur ces droits. Bien que laconsultation des groupes autochtonesrelève de la responsabilité du gouverne-ment, les compagnies minières sontencouragées à s’impliquer.

« C’est une bonne habitude d’affaire,fortement recommandée, de consulter lesPremières Nations le plus tôt possibleafin d’aborder leurs préoccupations etleur expliquer l’impact possible d’un pro-jet d’exploration», dit Brian Abraham, un

Les consultations avec les Autochtones:les difficultés à mettre en place desengagements efficaces

avocat reconnu dans le InternationalWho’s Who of Mining Lawyers et un asso-cié chez Fraser Milner Casgrain. « Bienqu’il n’existe aucune obligation légale deconsulter avant que le projet n’ait atteintl’étape de l’évaluation environnementale,il s’agit là d’une bonne pratique.»

En 2002, le gouvernement du Québeca conclu une entente avec les Cris duQuébec, « La Paix des Braves. » Cetteentente historique est non seulementbasée sur un partenariat de développe-ment durable avec la nation crie, ellestipule aussi la valeur des retombéesminières et hydroélectriques qui serontremises aux communautés des PremièresNations durant les 50 prochaines années.L’entente prévoyait aussi la création duConseil cri sur l’exploration minérale,confirmant ainsi la volonté commune dela nation crie et du gouvernement duQuébec d’agir en faveur du développe-ment du potentiel minier.

« Les gens reconnaissent qu’il n’estplus possible d’ignorer les PremièresNations dans le développement de pro-jets importants concernant lesressources sur des territoires touchéspar des revendications de droits territo-riaux. Il est bon d’être proactif etd’établir des relations avec les PremièresNations », explique John Hurley, unassocié chez Fraser Milner Casgrain quitravaille dans le domaine des lois surl’énergie, les ressources naturelles et lesAutochtones depuis près de 30 ans.

Le système canadien est un ensemblede mesures disparates. Les colons bri-tanniques reconnaissaient que lesPremières Nations détenaient des droitsterritoriaux au Canada; les terres étaientdonc acquises par des traités. Desententes avec les Premières Nations ontété conclues dans la plupart des régionscanadiennes, elles variaient cependantselon les provinces et les territoires.

Les droits fonciers ne constituent pasla seule complication touchant l’explo-

ration minérale et les consultations avecles Autochtones. En 1977, la Coursuprême du Canada a déterminé qu’untitre ancestral constitue un droit au ter-ritoire même. Selon certains, cela com-prendrait aussi la propriété desressources minérales.

En tant que propriétaire du territoire,le gouvernement peut accorder un droitd’accès à des parties intéressées, aux finsd’exploration. Selon le système d’accès àla ressource, datant du début de lacolonie, l’exploitation minière représentela meilleure utilisation du terrain et l’ex-traction de la ressource est prioritaire.« Certaines personnes questionnent lelibre accès à la ressource, se demandant sice système est compatible avec lesvaleurs actuelles de la société concernantl’utilisation des terres », dit SusanRutherford, une avocate chez West CoastEnvironmental Law, (pour plus d’infor-mations sur le système de libre accès à laressource, voir l’article à la page 34).

Bien que l’industrie minérale ait ledroit d’accès légal aux terres, les com-pagnies peuvent rencontrer des obstaclesdans les communautés qui perçoiventles mines moins prioritaires que lesforêts, les parcs, les bassins versants oud’autres développements. Une recom-mandation concernant le libre accès à laressource est de modifier les limites desterritoires disponibles. Ces limites pour-raient exclure les territoires jugés impor-tants aux communautés. Bien que celaréduise les secteurs ouverts à l’explo-ration minière, les territoires restantsseraient véritablement disponibles,réduisant ainsi les délais et les investisse-ments inutiles pour explorer dans desterritoires qui s’avèrent restreints.

D’autres régions du globe ont desenjeux d’accès semblables à ceux duCanada; par contre, les régimes légauxvarient. En réponse à ces défis, la Banquemondiale a publié des critères concer-nant les consultations communautaires.



«Le Canada est unique en ce que lesdroits autochtones sont protégés par laconstitution », dit Charles Willms, unassocié chez Fasken MartineauDuMoulin. Les consultations peuventavoir lieu à tout moment du processusd’exploration ou du développement. Lespremières étapes sont jugées cas parcas : un dialogue trop tôt dans un projetpeut soulever de fausses attentes et l’in-clusion tardive d’un groupe desPremières Nations peut nuire aux rela-tions futures.

Ces premiers pas peuvent être trèssimples. « Rien ne vaut une rencontreentre le président ou un cadre supérieuret les représentants des PremièresNations pour établir des relations », ditM. Willms. Le temps investi, tôt dans leprocessus, à répondre aux préoccupa-tions établit la confiance et le supportpour le projet, ce qui en retour réduit lesrisques pour la compagnie.

Les ententes sur les répercussions etles avantages (ERA) découlent de ces

négociations uniques. Ce sont des con-trats privés entre une communauté desPremières Nations et une compagnieminière. Ces contrats couvrent souventles droits, l’environnement, les béné-fices sociaux et les emplois; ils peuventaussi porter sur des programmes d’édu-cation et de formation. Dans certainscas les travailleurs autochtonesreprésentent de 30 à 40 % de la main-d’œuvre de l’industrie minérale. C’estdans l’intérêt des compagnies minièresd’embaucher localement, entre autrespour réduire les frais de relocalisationet de transport.

Les ERA peuvent aussi comprendredes clauses sur le droit de réclamer desdommages. C’est un point particulière-ment important car le drainage minieracide des sites abandonnés peut affecterl’environnement local pour plusieursannées après la fermeture de la mine.Des études de références auront quan-tifié la santé générale des écosystèmesavant le début des activités minières.

Ces ententes n’étant pas conçuesselon des lois ou des politiques uni-formes, le fait d’inclure des réglementa-tions environnementales pourrait nuireau développement de lois plus sévèresqui seraient applicables à la grandeurdu pays. La portée des ententes peutêtre fonction de la capacité d’une com-munauté à négocier. Les ententes peu-vent aussi être conclues trop rapide-ment sans que la communauté n’ait eule temps de consulter des expertsexternes ou elles peuvent prendre desannées d’être avant d’être ratifiées.Comme les compagnies minières et lescommunautés autochtones serontvoisines, il va de leurs intérêts d’êtrepartenaires.

Une autre façon d’encourager la par-ticipation des Autochtones est par lepartage des revenus; les communautésdes Premières Nations pourraient alorsdevenir autonomes et négocier elles-mêmes avec les compagnies d’explo-ration et de développement. n

May 2007 33

L’industrie minière canadienne est desplus dynamiques en raison des nom-breuses consolidations récentes. Lesgrandes sociétés minières doivent croîtreet cette croissance, en plus de l’explo-ration, passe par la réussite sur lesmarchés boursiers.

Les fusions et les acquisitions ontaugmenté au cours des dernières années;les cibles sont maintenant des compag-nies qui ont des exploitations à travers lemonde. « C’est presque donné que lesgrandes compagnies acquerront les com-pagnies de taille moyenne », dit JohnSabine, un associé chez Fraser MilnerCasgrain avec plus de 30 ans d’expéri-ence dans les transactions minières et lestransactions d’affaires complexes. « Unecompagnie peut utiliser des actions pouren acheter une plus petite dans le but derehausser les perspectives de croissanceet ainsi augmenter le rendement pour lesactionnaires. Les cours actuels des biensrendent les acquisitions très lucratives.»

Accroissement des fusionset des acquisitions dans l’industrie minière

Certaines compagnies se fusionnenten raison des réserves minérales à courtterme. Elles augmentent ainsi leursréserves et par le fait même leur capacitéd’extraction. Ces compagnies, seules,ont peut-être de bonnes propriétés maiselles ne produisent pas les rendementsattendus par les actionnaires.

Certaines compagnies peuventaussi se retrouver dans des régionsprésentant des conditions d’exploita-tion très difficiles où il faut beaucoupde capitaux pour se développer. Lesnouveaux projets suscitent parfois degrandes attentes mais il peut être diffi-cile d’acquérir les équipements debase requis pour construire etexploiter la mine.

Les spécialistes de l’industrie minièresont aussi fortement recherchés. « Uneautre raison pour les acquisitions estd’obtenir une main-d’œuvre formée, quisait déjà comment bâtir, exploiter etgérer des mines», dit M. Sabine.

Des pays comme la Chine et l’Indeconnaissaient une croissance fulgu-rante et la demande pour des biens,surtout les métaux, est forte. Leurclasse moyenne cherche à se procurerdes biens à base de métaux, parexemple des réfrigérateurs, descuisinières et des voitures. L’industriea de la difficulté à répondre à lademande.

« Les compagnies minièresrecherchent des réserves à long termedans des pays politiquement stables »,ajoute M. Sabine. Au cours desdernières années, la plupart desfusions et des acquisitions ont néces-sité beaucoup d’intrants des équipeslégales ou des bureaux travaillant avecdes compagnies à l’extérieur du pays.Le Canada jouit d’une position uniqueen tant que principal financier de pro-jets d’exploration minérale pour degrandes compagnies exploitant dans lemonde entier. n


Les débuts d’une compagnie d’explo-ration sont toujours critiques. Souvent, lacompagnie possède une propriétéprometteuse et a besoin d’argent poureffectuer des forages d’exploration.L’expérience et la réputation de l’équipecomptent alors pour beaucoup mais ils’agit encore d’un investissement à trèshaut risque. Les compagnies se tournentdonc vers les bourses pour obtenir desfonds d’établissement. Au cours desdernières années, les bourses se sontrestructurées pour accommoder ce genred’entreprise. À la Bourse de Londres,l’Alternative Investments Market exempteles sociétés junior de la clause de rentabil-ité pour les introduire à la cote. Le VentureExchange de la Bourse de Toronto (TSX)donne aux compagnies inscrites plus detemps pour déposer leurs états financiersqu’à celles inscrites à la TSX.

Une compagnie junior pourrait aussiconclure une entente de coentrepriseavec une grande société minière quifinancerait les coûts d’exploration, entotalité ou en partie, en échange d’uneparticipation au projet ou dans la com-pagnie junior elle-même. À cette étape,l’étendue et la teneur sont encoreindéterminées. Le gisement peut valoirdix mille ou dix millions de dollars.

Une alternative à la bourse est lepartenariat privé, comme celui entreAber Diamond et le bijoutier Tiffany,aux premiers stades du projet Diavik.Une telle entente assure du financementet un accord d’exploitation pour la com-pagnie junior et garantit au partenairedes termes favorables pour la ressource.

L’accord d’exploitation est essentiel sila compagnie junior avait besoin definancement bancaire plus tard. JimFitzgerald, directeur national, produitsdérivés, ScotiaMcLeod, explique quepour un banquier, il est importantd’avoir un marché établi pour le produit.Une façon de faire est par les opérationsde couverture (hedging).

Une fois que la taille et la teneur dugisement ont été établies, la compagnie

junior ne constitue plus uninvestissement à risque élevé.Cependant, une banquefinancera un projet seulementsi le gisement est suffisammentgros. « Que vous ayez un petitou un gros gisement, lesdépenses encourues par labanque seront à peu près lesmêmes », dit Jeff Kowal,directeur de la gestion durisque pour le Groupe Foster-Kowal,ScotiaMcLeod. « C’est contre le bon senséconomique de s’impliquer dans unepetite affaire, même si les perspectives deremboursement sont bonnes. Pour unegrande banque, un projet doit avoir unevaleur minimale de 100 millions. »

Tout au long du cheminement, lacompagnie junior peut être achetée parune grande compagnie et c’est, dans lefond, ce qu’elle souhaite, selon UngadChadda, directeur des services émet-teurs listés au TSX VentureExchange n


Les étapes de collectes de fonds pour les sociétés junior

Au Canada, le libre accès à laressource confère à l’industrie minéraleun accès privilégié aux terres publiqueset le développement des ressources estconsidéré prioritaire. Les supporters etdes critiques de ce libre accès stipulenttous deux que l’autre a des avantagesinéquitables. Il convient donc d’exami -ner les divers enjeux de ce débat.

Le principe de libre accès à laressource découle de « l’esprit de fron-tière » selon lequel l’exploitationminière représente la meilleure utilisa-tion du terrain. Avec un permis, unprospecteur a accès à presque toutes lesterres publiques ou privées à l’exceptiondes cimetières, des terres agricoles, desmaisons et des immeubles. Les droitsdes propriétaires fonciers, même privés,ne comprennent pas les droits miniers.Un claim peut être jalonné sans le con-sentement ni même la connaissance dupropriétaire de la surface, d’où certainessources de tension.

Selon ce système, l’exploitationminière prévaut sur toutes les autresutilisations du terrain. Par arrêté mini -stériel, un territoire peut cependant être

Le libre accès à la ressource: un bref survolsoustrait au jalonnement, souventpour la création d’un parc. De plus, sides claims ont été jalonnés avant quele terrain ait été soustrait, l’exploitantpourrait avoir droit à une compensa-tion. Ces faits semblent donner auxcompagnies minières libre champpour rechercher des minéraux.L’industrie minière défend ce traite-ment préférentiel en stipulant que lescompagnies minières doivent pouvoircompter sur des mesures incitativespour investir. Durant les périodes dedéclin des dépenses d’exploration, descrédits d’impôt ont été mis en place etle gouvernement a introduit de nou-veaux incitatifs pour la recherche.

Les valeurs de la société ont changéavec le temps. Depuis la ruée vers l’oret les débuts du libre accès à laressource, les communautés neperçoivent plus l’exploitation minièrecomme la meilleure utilisation des ter-res. De son côté, l’industrie minière setrouve frustrée par des actions tellesque la soustraction de territoires aujalonnement et les réglementationsenvironnementales sévères qui, selon


Aber Diamond Corporationreprésente un cas inusité; cette compa -gnie a commencé comme minière junioravec une participation importante dansun projet de mine de diamants et le parte-naire senior n’était pas DeBeers. Le succèsd’Aber à lever des fonds pour le projet aété exceptionnel et, qui plus est, lors d’unralentissement dans l’industrie minière.

Aber a commencé en 1991 commeconsortium de jalonnage appelé WestViking Syndicate. Peu après la décou-verte de diamants au Canada par DiaMet Minerals (acquis par BHP in 2001),West Viking a jalonné des claims près dela zone de découvertes et, en 1992, aapproché Rio Tinto avec une propositionde projet conjoint. Rio Tinto a accepté et

La naissance de DiavikVivacité et débrouillardise à l’origine d’un important projet de financement de junior

a investi 10 M$ millions en échange de60 % des parts dans le projet. Au mêmemoment, West Viking, une compagnieprivée, a été intégrée dans une société defaçade appelée Aber. L’exploration acommencé et les premiers diamants ontété découverts en 1994.

«Les premiers 10 millions de dollarsn’ont pas fait long feu », se souvientRobert Gannicott, PDG de Aber.« L’échantillon brut n’était qu’à moitiéprélevé quand Rio (Tinto) a épuisé soninvestissement de 10 M$, ce qui com-plétait leur participation de 60 %. Il fal-lait donc lever des fonds.»

Aber a abordé Tifffany & Co et con-clu une entente; la transaction consistaiten huit millions de parts de la compa -gnie contre 100 M$. « J’ai moi-mêmeapproché Tiffany. Je m’étais renducompte que les diamants Diavik avaientune bonne qualité de blancheur et,parce qu’ils venaient du Canada, ilsavaient aussi une certaine “propreté”politique», dit M. Gannicott.

Cet argent a duré le temps de l’étudede faisabilité; il fallait ensuite construirela mine. La localisation du dépôt, lesdéfis logistiques et de constructionuniques présageaient une mine très dis-pendieuse. Pour recueillir les 40 % des1,4MM$ du coût total, Aber a utilisé labalance des 100 M$ de Tiffany et avendu sa part du tiers du projet de lamine de diamants Snap Lake à DeBeerspour 173 M$. Avec cet argent, il a étépossible d’obtenir du financement d’ungroupe de banques.

Ce furent deux années très longues etdifficiles. «Les diamants sont un produittrès particulier, on ne peut les transigersur la bourse. Nous n’avions pas le con-trôle; le partenaire à 60 % avait le con-trôle. Nous n’avions jamais vendu de dia-mants auparavant; les banques doutaientde notre capacité à vendre des diamantsen compétition avec DeBeers…»

Les banquiers conseillers étaientN.M. Rothschild, apportant expertise etcrédibilité, et CIBC a servi de conseiller

technique; les autres institutions s’yfiaient pour vérifier la qualité et lavaleur du gisement.

Aber n’est pas allé vers les boursespour amasser de l’argent. «La valeur duminerai représente de trois à quatre foisles coûts d’exploitation; les entrées defonds se feraient rapidement et la dettepouvait être remboursée », dit M.Gannicott.

L’autre raison pour éviter le marchéboursier était le bas prix des actions dela compagnie. La qualité d’un gisementde diamants demeure incertaine beau-coup plus longtemps que s’il s’agit demétaux de base ou précieux. La varia-tion dans les gemmes est telle que« vous n’avez pas d’échantillonreprésentatif avant d’avoir extrait pen-dant un an» dit M Gannicott.

Une fois le financement assuré, il afallu deux ans pour bâtir la mine et uneautre année avant de vendre le premierdiamant. Une année plus tard encore,Aber a acquis les intérêts majoritairesdans Harry Winston, une bijouterie audétail de diamants. Aujourd’hui, Aberpossède la totalité du détaillant etcherche de nouveaux sites potentiels demines de diamants.

Y-a-t-il des restrictions aux sitespotentiels? Oui, mais ce n’est pas en rai-son de la géographie. «Nous ne désironspas être le propriétaire d’un gisement dediamants à un endroit où des régimespolitiques ou sociaux abusifs sont enplace. Nous ne voulons opérer nullepart où il y a risque pour la marque decommerce Harry Winston.»

Gannicott a un conseil pour les ju niorsd’aujourd’hui, «Assurez-vous dès le débutque les ententes légales sont ainsi faitesque vous pourrez aller jusqu’au bout, quevous en ayez besoin ou non, que vousfassiez ce qu’Aber a fait et vous vousretrouviez en production ou encore quevous vendiez en cours de route, la portéede l’entente sera très importante. Ne vousdépêchez pas pour signer; consultez unbanquier qualifié. »n

May 2007 35

elle, nuisent au développementminéral au Canada.

Une préoccupation concernant lelibre accès à la ressource est que cetteloi n’a pas été modifiée pour tenircompte des changements survenus aucours des années, surtout quant à lataille des mines.

Des suggestions de modificationsconcernant le libre accès à la ressourcecomprennent des paiements par lescompagnies minières pour le rendementfinancier sur les terres publiques oul’établissement de limites aux territoiresdisponibles. Cela donnerait aux com-munautés la possibilité de se prononcersur l’importance d’autres utilisations etpourrait limiter le nombre de territoiressoustraits au jalonnement.

Il faudra des changements dans lesystème de libre accès à la ressourceafin de mieux refléter les valeurs com-munautaires. L’extraction desressources est une partie importante del’économie canadienne, mais l’exploita-tion minière à elle seule ne devait pascompromettre nos efforts de gestion etde protection des écosystèmes. n


L’industrie minière actuelle projettel’image d’un secteur industriel en santé.Les entrées de fonds sont à la hausse etles prix des biens atteignent des som-mets inégalés; de plus, les analystesprévoient la prolongation de cet état dela situation. Est-ce que les investisseurscontinueront à percevoir favorablementcette période de prospérité? Sont-ilsinquiets quant à une éventuelle baissebrutale de l’activité économique?

Le passéLes raisons du succès actuel se trou-

vent facilement dans les pages finan-cières des journaux quotidiens. LaChine vole la vedette. «Les Chinois sonten voie de devenir les plus gros consom-mateurs de tout ce qui est fait de métal;les investisseurs suivent de près l’émer-gence de l’Inde et des pays en voie dedéveloppement», dit Bart Melek, écono-miste principal, BMO Marchés des capi-taux.

Les difficultés se retrouvent ailleurs.Les plus gros problèmes de l’industriesont le manque de main-d’œuvre quali-fiée et la pénurie de nouvelles décou-vertes. Il faut se retourner vers le passépour trouver les causes fondamentalesde ces deux problèmes. « Le secteurminier souffrait de sous-investissementchronique en exploration et endéveloppement», explique M. Melek.

La phase de récession du cycle signi-fie moins de dépenses et moins de pro-grammes essentiels; l’emphase sur l’ex-ploration et la R&D est diminuée. Leconservatisme des méthodes et destechniques prévaut. Les investisseurshésitent devant les nouveaux projets, àmoins d’être assurés d’y trouver profit.

La réduction des budgets d’explo-ration et de R&D s’est effectuée enmême temps que la réduction dessalaires des nouvelles recrues et dufinancement des écoles de mines. SelonFerri Hassani, professeur auDépartement des mines, des métaux etdes matériaux de l’Université McGill etdétenteur de la chaire Webster en génieminier, « La situation était telle que cer-

Commentaires sur la condition financièretaines écoles n’avaient aucun élève;quelques-unes étaient sur le point defermer. Cette dernière possibilité existetoujours.»

Le présentL’intérêt pour le secteur minier est

revenu en force en 2001. Jamie Strauss,directeur général de UK EquityProducts pour BMO Marchés des capi-taux, cite les 32 milliards de livres ster-ling levés uniquement par l’AIM(Alternative Investment Market) de laBourse de Londres depuis 1995.Cinquante-quatre pour cent de cettesomme a été levée au cours des deuxdernières années. M. Strass s’inquiètemoins de la demande actuelle que dumanque d’offre.

Quelle est cette demande au juste?Selon l’Indice du prix des marchandisesde la Banque Scotia, le prix du nickel aaugmenté de 950 %. « L’or se trouveaussi à quelques centaines de dollars deplus que son prix nominal; les prix del’étain et du cuivre sont aussi trèsélevés », dit Jeff Kowal, directeur de lagestion du risque pour le GroupeFoster-Kowal, ScotiaMcLeod « Avec detels prix, il n’est pas surprenant que lesinvestisseurs soient attirés », dit DavidKaiser, directeur principal de GlobalResources à la bourse de Toronto. «Noscompagnies minières ont réuni desfonds pour une valeur de 12,5 milliardsde dollars en 2006, comparativement à7,9 milliards en 2005.»

Mais où va l’argent?Des propriétés à haute teneur font

l’objet de développement extensif et desgisements auparavant peu attrayantssont de nouveau intéressants. Ces nou-velles ressources comportent cependantde nouveaux défis qui leur sont propres.

Le premier défi est d’ordre politique.«Vous avez des gouvernements qui prô-nent la nationalisation des ressources;ce n’est pas toujours bien défini et il estparfois difficile de savoir ce qui sepassera par la suite. Le risque d’in-

vestissement est donc accru et les coûtsaugmentent», dit M. Melek.

Un autre défi est la taille des nou-velles découvertes. « Les compagniesgrossissent et elles veulent des gise-ments de plus en plus gros ou plus degisements. Si ce n’est pas possible, ils’ensuit des fusions et c’est ce que nousvoyons», dit M. Strauss.

Le troisième grand défi est le manquede main-d’œuvre qualifiée; cela touchetoute l’industrie minière mondiale.« C’est pourquoi nos étudiants ont aumoins quatre offres d’emploi à dessalaires initiaux de 75000$ à 100000 $et ils n’ont que 23 ans», dit M. Hassani.

Malgré ces difficultés, les compa -gnies junior prennent des projets àrisques élevés et les grandes compa -gnies, bien que cherchant moins derisque, recherchent aussi de nouvellesoccasions. Ces dernières « surveillent »les compagnies junior. M. Kowalexplique leur raisonnement : «L’une desstratégies des grandes compagniesminières est d’investir des petitessommes dans des petites compagnies.Par exemple, Teck Cominco a pris desintérêts, quelques dizaines de millionsde dollars, dans une junior quirecherche des diamants. La compagnie abesoin du savoir-faire; pour un petit(pour eux) investissement, ils y ontdonc accès. Si la région s’avère pro-lifique, ils y seront déjà et ne passerontpas à côté d’une découverte majeure.»

L’avenirQue réserve l’avenir? Les financiers

considéreront-ils cette croissance demanière positive ou s’éloigneront-ilsdans l’attente de la période d’effon-drement qui suit toujours chaqueboom minier?

« Nous croyons que la croissance enChine sera de six à huit pour cent àlong terme » dit M. Melek. La crois-sance soutenue en Chine et l’émer-gence de l’Inde et d’autres pays rendtrès peu probable une baisse des prixdes métaux à moyen ou à long terme.Jim Fitzgerald, directeur national, pro-



duits dérivés, ScotiaMcLeod, est d’ac-cord. « L’événement principal touchantles prix mondiaux est l’état de lademande et de la croissance, plus spé-cifiquement en Chine et en Inde. Il estraisonnable de penser que les prixdemeureront forts et même qu’ils aug-menteront. » De nombreux expertss’inquiètent toutefois du côté offre del’équation, lequel ne croît pas aussirapidement qu’auparavant.

Les prix élevés signifient que lesréserves connues, et dont le minerai àhaute teneur a déjà été exploité, serontde nouveau profitables. De tels projetssont intéressants en raison des risquesmoindres : les immobilisations sont enplace, les approbations réglementairesont été obtenues et le gisement a déjàété évalué.

Selon Jim Moore, PDG d’Inter-Citic,une compagnie minière exploitant enChine, les compagnies devront trouverde nouveaux projets. « Certaines com-pagnies ont des exigences enressources si importantes qu’ellesdoivent faire de nouvelles découvertespour garantir leur croissance.» L’intérêtdes investisseurs devait demeurer élevétant que continuera la demande pourles métaux.

Les sites potentiels d’exploration nesont pas tous associés à des pays poli-tiquement instables. En plus d’im-porter de grandes quantités de métaux,la Chine est bien placée pour devenirun producteur majeur de minéraux.Selon M. Moore, dont la compagnie ydéveloppe deux projets aurifèresdepuis 2003, la Chine est «grandementsous-explorée, surtout dans les régionsoccidentales. » La Chine attire de plusen plus l’intérêt des investisseurs et latendance devrait se poursuivre.

Cet optimisme doit s’accompagnerde prudence. La demande et les prixpeuvent demeurer élevés mais cela negaranti pas la stabilité. Les prix sontélevés, mais pour certains, ils sont tropélevés. « Si vous considérez les cinqdernières années, il y a eu des correc-tions annuelles importantes sur toutesles bourses, puis une remontée. » Maisà part ce rappel que les marchés

n’évoluent pas en ligne droite, l’opi -nion de M. Strass quant au long termerejoint celle de M. Melek : à moins d’unévénement majeur imprévu, les chosesdevaient continuer de la mêmemanière.

La pénurie de main-d’œuvre soulèvetoutefois des débats. M. Moore dit qu’iln’est pas inquiet. « Je crois que les loisde l’offre et de la demande règleront lesproblèmes. Dans la mesure où lesmarchés poursuivront leur cycle deprix élevés, les universités sortirontplus de diplômés. » Le professeurHassani n’est pas du tout d’accord.Selon lui, il faudra plus que des posteset des salaires élevés pour régler lapénurie de main-d’œuvre.

« Lorsque nous demandons à nosétudiants de première année pourquoiils ont choisi les mines, ils nous répon-dent qu’un professeur est venu leur enparler. » Cette année, l’UniversitéMcGill a passé des annonces à la radio(payées par des contributions des com-pagnies minières) pour promouvoirson programme de génie minier. Lesrésultats ont été ressentis presqueimmédiatement; les inscriptions ontaugmenté de 25 % par rapport à l’andernier.

May 2007 37

La dernière préoccupation majeureconcerne la « nationalisation desressources », tel que mentionné plushaut. Les pays en voie de développe-ment, où se trouvent plusieurs nou-veaux gisements, tenteront de réclamerune plus grande part des produits del’exploitation faite chez eux. Un exem-ple extrême d’une telle situation est lasaisie par le Venezuela des quatrederniers projets pétroliers privés dupays.

Les enjeux ne sont pas nécessaire-ment assez critiques pour faire subsis-ter un doute quant à la faisabilité finan-cière d’un projet. Les coûts croissantsde l’énergie, le manque d’infrastructureet les préoccupations environnemen-tales ne représentent que quelquesexemples d’embûches qui peuvent faireéchouer un développement potentielle-ment profitable. Selon M. Fitzgerald,chaque demande de client potentiel estrévisée par une banque au cas par cas,selon le mérite du client. « Les aspectsles plus importants sont un bon planfinancier, des avoirs solides, des ges-tionnaires compétents et la capacité dedémontrer la continuité des entrées defonds année après année malgré l’alter-nance des périodes de croissance et desrécessions. » n

The mining industry is alive andthriving in Manitoba. It employs closeto 4,000 people, as well as an additional11,000 to 13,000 indirectly. The secondlargest primary resource industry in theprovince is mining, and its averageannual production is valued at around$1 billion. Today’s facts and figures areeasy to come by, but what do we reallyknow about the origin of mining inManitoba?

When mining actually began inManitoba is hard to say. A safe guess isanywhere between hundreds and thou-sands of years ago. Not the small rangeyou were expecting? The first to mine inthe province were aboriginals, whoquarried ochre/hematite and used it inbody and rock painting for tribal rituals.

Jumping ahead to the early 1800s,salt was the first mineral to be commer-cially developed in the province. Animportant commodity in the fur trade,salt was extracted from brine springs onthe west side of lakes Manitoba andWinnepegosis. Hudson’s Bay Companyfreemen began manufacturing salt inlarge iron kettles. And, up until 1874,over 1,000 bushels of salt were preparedannually to supply the posts and settle-ments on the Assiniboine, Red, andSaskatchewan rivers.

In 1830, Tyndall stone was the mate-rial of choice for workers building thebastion of Lower Fort Garry. However, itwas only 55 years later that limestonewas being commercially produced.

Gypsum was discovered in theInterlake area during the 1850s; thefirst plant opened around the end of thecentury.

The second half of the 19th centurywas significant for the mining industryin Manitoba. The Geological Survey ofCanada grew increasingly interested in

Mining in Manitoba: the beginningby Andrea Nichiporuk

the province’sP recambr i anareas in theearly 1870s.Reconnaissancework was car-ried out by Bell,Cochrane, andother geolo-gists, but it wasonly in them i d - 1 8 8 0 s that Dawson,Tyrrell, andothers carriedout detailedinvestigationsin the West.

In 1870, theprovince ofManitoba wascreated. That same year, Section 26 ofThe Manitoba Act stated that the federalgovernment would carry out and payfor a geological survey of the province.Also, a provision in the Bill of Rightscalled for the appointment of aCommissioner of Engineers who wouldexplore and report on the newly createdprovince’s mineral wealth within fiveyears of joining the Confederation. Onthe flipside, joining Canada also meantthat all mines, minerals, land, and royal-ties now belonged to the federal govern-ment. It would take Manitoba 60 yearsto regain control of these areas.

The 1880s marked a busy time forthe mining industry in Manitoba. Aniron, hematite, and limestone deposit onBlack Island was the first to draw signifi-cant attention, and numerous compa-nies were formed to exploit the Lake ofthe Woods area. The first DominionMining Regulations were created in1884, a year prior to the completion of

the Canadian Pacific Railway to BritishColumbia. In 1887, a Manitoba OilCompany drill reached 743 feet whilesearching for petroleum on theVermillion River. A year later, theInternational Mining and SmeltingCompany further explored the BlackIsland deposit and mined hematite.And, in 1889, gypsum was discoverednorthwest of Lake St. Martin. A secondproducer was later discovered inAmaranth.

Approaching the end of the century,prospectors began arriving in the WestHawk Lake area in the southeast, aswell as in the north of Manitoba.However, interest in prospecting wasdiminishing. In fact, the discovery ofgold in the Klondike in 1896 led to amass exodus of people to theNorthwest. But, for a core group offaithful Manitobans, their belief in theprovince’s mineral resources could notbe swayed. n


Galena limestone quarry at East Selkirk. Natural Resources Canada imageproduced with permission of Natural Resources Canada. Her Majesty theQueen in Right of Canada.

HR outlook

May 2007 39

through contributions made by corpo-rate and individual donors, and atfundraisers such as golf tournamentsand auctions.

In March 2007, the Mining IndustryHuman Resources Council received$2.5 million of federal governmentfunding for the Mining IndustryAttraction, Recruitment and RetentionStrategy, or MARS. One importantobjective of the multi-pronged MARSproject is to raise awareness and under-standing among Canadian youth aboutthe mining industry and the wide vari-ety of careers it provides.

Working in conjunction with suc-cessful education programs such asMREPBC and Mining Matters, MARSwill help deliver earth sciences and min-ing-related curricula to students inother provinces across the country.

MiHR’s existing mining career web-site, www.acareerinmining.ca, will alsobe enhanced to provide a web-basedportal on mining careers, educationalresources, and training tools. The MiHR“Explore for More” career informationpackage will continue to be distributedat career fairs and educational institu-tions across the country.

If we want young people to choose acareer in mining, those young peoplefirst need to be aware that our industryexists, and they need to understand theimportant role that mining plays in oursociety. Before making any decision,people want to be informed. MREPBC,Mining Matters, and now MARS, areproviding young people with the infor-mation they need to choose a rewardingand long-lasting career in Canada’smodern mining industry.

For more information about theMREPBC program, please contact SheilaStenzel, at [email protected]. Forinformation about Mining Matters,please contact Laura Clinton, [email protected]. For information onthe MARS project, contact Paul Hébertat [email protected]. n

Founded in 1991, the MREPBC wasconceived of and designed byMaureen Lipkewich, initially workingwith the Mining Association of BritishColumbia, and a group of classroomteachers who wanted to provide cur-rent and useable classroom materialsthat supported curricula related to min-erals and mining.

Over 15 years later, the program hasgrown to include five comprehensiveresource kits for students in kinder-garten to grade 12, four educationalvideos, an educational website, andfield trips for teachers. The work hasalso resulted in the involvement of stu-dents and teachers at many industryconferences. The program has assistedmore than 6,800 teachers who have

taught minerals, mining, and geo-sciences units in their classrooms toover 580,000 students.

The Mineral Resources EducationProgram of BC was so successful that in1994, the Prospectors and DevelopersAssociation of Canada decided to createa similar program for the Ontario cur-riculum, called Mining Matters. Thisprogram initially targeted grade sevenstudents, in both English and French.Initially, 600 kits were distributed toteachers and school boards in Torontoand Ottawa. In order to receive the kits,the teachers had to agree to attend an in-service workshop to learn how to usethe materials, and commit to use theunit for one year.

Since Mining Matters began, an esti-mated 400,000 teachers and studentshave learned about the importance ofrocks, metals, minerals, mining, andCanada’s geology. The program nowincludes materials for grade four andseven students, and the recentlylaunched “Discovering Diamonds,” forgrade 12 students, outreach to FirstNations communities, and field tripsubsidies for schools.

Both the Mining Matters andMREPBC programs are funded

Some challenges call for long-term solutions. Most of SheilaStenzel and Laura Clinton’s

work is founded on that very premise.They are among those at the forefront ofefforts that will yield very importantresults for the Canadian minerals andmetals industry – but no one will seethose results for many, many years.Sheila is the director of the MineralResources Education Program of BC(MREPBC), and Laura is the projectcoordinator for the Prospectors andDevelopers Association of CanadaMining Matters. Their work is theembodiment of industry’s investment inits own future. Sheila and Laura providethe resources that teachers need toinform and educate young people aboutthe important role that our industryplays in modern society.

Children begin to formulate opinionsabout careers at a very early age – prob-ably even before they begin school.Those preconceptions are then rein-forced, supplemented, or debunkedonce they begin along their academicjourney. That’s where the MREPBCcomes in.

Reaching out to the futureby Paul Hébert, executive director, Mining Industry Human Resources Council

mac economic commentary


Impact 1 – Driver of world mineral prices

First, China remains the prime driverof world mineral prices. China is build-ing a domestic infrastructure for 1.3 bil-lion people and is concurrently expand-ing its role as the world’s manufacturingcentre for many product areas. The coun-try simply cannot meet its own needs forcopper, zinc, nickel, and other coreingredients of a transportation, power,and communications infrastructure.

In response to this growth, Chinanow imports $100 billion worth of basemetals annually. It presently buysaround 25 per cent of the world’s basemetals versus a 5 per cent share in the1980s. As one specific example, whereChina accounted for 10 per cent ofworld zinc consumption in 1996 (one-third of Europe’s share), a decade later itaccounted for 28 per cent (versus 25 percent for Europe). The US and Japaneseshares have fallen from 16 to 10 per centand from 10 to 6 per cent, respectively,during this period.

With the emergence of India in thenear future—perhaps on a scale compa-rable to China—and with a constrainedavailability of new global reserves, thesupply and demand conditions are suchthat many forecasters feel the world’smining industry will enjoy an extendedcommodity price boom. It is worth not-ing, for example, that while China isnow the world’s largest consumer of allmajor metals, its metal consumption perperson is still low in comparison withdeveloped Asian economies.

Drawing on these fundamentals,metal prices have increased verystrongly in recent years. During 2005,copper prices grew 50 per cent, gold 20per cent, silver 31 per cent, and zinc 46per cent. In 2006, these prices grew by afurther 48, 30, 55, and 118 per cent,respectively, while nickel pricesincreased 142 per cent.

This price growth, in turn, translatesinto record company profits, large exec-utive compensation packages, andmulti-billion dollar mergers and acqui-sitions. The takeovers of Inco andFalconbridge by CVRD and Xstratawere each driven, in no small part, byviews on how best to take advantage ofthe Chinese reality.

Impact 2 – Canadian trade and investment partner

A secondary impact on the Canadianmining industry relates to the simplefact that Canada and China have anactive trade and investment relationshipthat will likely become more significantin the future.

Most Canadian trade with China isone way—Canada’s trade deficit hasrisen from $1 billion in 1995 to some$15 billion a decade later. The ports,highways, and railroads of Canada arestrained to capacity with containers car-rying east-bound Chinese-made elec-tronics, machinery, clothing, and toys.Containers moving in the other direc-tion are often empty or half-filled withresource-related products. Mining prod-ucts, pulp, other forest products, wheat,fertilizer, and chemical products arenoteworthy Canadian exports to China.

The Canadian mining and metalsindustry exported some $60 billion worthof metals and nonmetals worldwide in2005, including around $13 billion iniron and steel, $4 billion in each of gold,copper, and nickel, and $2 billion in bothuranium and iron ore. The United Statesis the main destination for Canadian min-ing products, receiving 70 per cent,although China is an important destina-tion for mineral products such as iron andsteel, nickel, copper, potash, and sulphur.Canada supplies an estimated 17 per centof China’s nickel requirements.

While important, it is nonethelesspossible that the trade relationship will

China as an economic superpower—implications for the Canadian mining industryby Paul Stothart, vice president, economic affairs, Mining Association of Canada

There is no shortage of printer’s inkbeing spilled in recent years writingabout the emergence of the Chineseeconomy. This is, without question,one of the top global news stories ofthe past decade. After 15 years of dou-ble-digit annual growth, the size of theChinese economy has now reached astate where continued double-digitgrowth has very meaningful implica-tions for many industries and coun-tries. Where 10 per cent growth in1990 may not have had much impacton a global scale, similar growth in2007 on a much larger economic basehas reverberations throughout theglobal economy.

The emergence of China as a worldeconomic power, and its continuedgrowth, will have direct implications forthe Canadian mining industry in threeimportant areas.

become secondary to the investment relationship overthe coming years. The Canadian mining industry hashistorically had a significant global investment reach. Asof 2005, Canadian mining companies had $50 billioninvested abroad—aimed primarily towards the UnitedStates and South America. Investment in China couldincrease as the country continues to modernize, partic-ularly if downstream investment policies are liberalized.

It is also possible, if not probable, that Chineseinvestment in Canada’s mining industry will grow overthe coming years. China presently holds US$1 trillion inforeign exchange reserves. While investment abroadwas discouraged by Chinese authorities until only a fewyears ago, this is no longer the case—China is investingactively in Africa and is increasingly seeking opportuni-ties in Western countries. A Chinese company has madea modest investment in a Canadian oil sands project andmore investment may be on the horizon. Given theprospect of increased investment flows, the govern-ments of Canada and China are presently negotiating aForeign Investment Protection Agreement.

Impact 3 – Potential source of future disputes

In line with its emerging position as a world eco-nomic super-power, it is likely that China will alsoemerge as a potential source of future global disputes, inareas such as trade, investment, and the environment.

The existence of a $200 billion trade surplus with theUnited States has already raised concerns in Congressand a dispute over the valuation of China’s currencyraises the possibility of US countervailing duties. TheUS may have limited leverage on these issues, given theinfluence that China exerts on the value of the US dol-lar. However, it is worth noting that a first formal panelagainst China under the World Trade Organization hasbeen struck—by the US, Europe, and Canada—chal-lenging Chinese auto parts tariff policies.

With respect to mining, many economic observersbelieve China is becoming increasingly protective of itsraw material supply. For example, China has a permitsystem for copper concentrate and an export dutyapplied on unwrought copper—both of these policiesare aimed at protecting critically important raw materialsupplies for domestic use. The effect is to keep theseraw material flows out of the global trading system. Asimilar effort is being seen in energy. Countries such asGermany and Japan are themselves reliant upon rawmaterial supply to feed large domestic manufacturingneeds and are increasingly concerned about this prac-tice. The OECD has recently agreed to study this generalissue in greater detail.

Other disputes will likely emerge in other areas, suchas the environment and climate change. This theme willbe the subject of a future column. n

May 2007 41

Bulletin

Peer-reviewed technical papers published by the Canadian Institute of Mining, Metallurgy and Petroleum

Technical PapersFebruary 2006 to January 2007

Knowledgeyou can takeeverywhere

To order, contactAnne Brosseau3400 de Maisonneuve Blvd. W.Suite 855Montreal, Quebec H3Z 3B8Tel 514.939.2710, ext. 1313Email [email protected] 514.939.2714

engineering exchange

Golder Associates, founded by HughGolder, first put down roots in Torontoin 1960. Since then, the company hasquickly expanded, with more than 140offices worldwide, boasting a skilledand experienced workforce 5,300strong.

The Montreal Golder office, includ-ing their subsidiary Golder AssociatesInnovative Applications (GAIA), hasrecently expanded to take up an entirebuilding, giving everybody a little moreelbow room as they go about their busydays. The Montreal group is made up ofa young, vibrant workforce that enthusi-astically takes on new projects aroundthe world as well as in their own back-yard.

One of the keys to Golder’s success isits access to an international pool of tal-ent. “We have the ability to pull inexperts,” from all areas of engineering,earth and environmental sciences, andcomputer sciences, stated VeroniqueFalmagne, associate. These experts maybe located either in Montreal or inGolder offices in Canada and aroundthe world, depending on the needs ofthe project. Collaborations with univer-sities and participation in researchgroups provide additional avenues foraccessing the necessary talent.

The geo-engineering group inMontreal is busy working on a widevariety of exciting projects. In 1995,Golder Associates was retained byBarrick Gold Corporation to provideconsulting services for the closure of LesTerrains Aurifères tailings facility innorthern Quebec. The project requireda significant amount of R&D invest-ment on the part of Barrick. “They werevery keen,” Mayana Kissiova, associatewith Golder, said, “and enthusiastic onundertaking a project of this magnitudein a way that had never been donebefore.”

Les Terrains Aurifères, or LTA, wasoriginally an old non-acid-generatingtailings pond when Barrick added on

Engineering for a safe environmentby Haidee Weldon

their own tailings, which proved to beacid generating. Golder took on thechallenge of the closure and devel-oped the first multi-layer oxygen bar-rier soil cover done on such a largescale. The cover was constructed overthe winter of 1996. The first layer, 50centimetres of thick sand, keeps mois-ture from escaping from the overlay-ing layer by the capillary barriereffect. Layer two is 80 centimetres ofnon-acid-generating tailings, whichare fine low-permeability materialswith good water retention capacity.These two layers are capped with acompacted layer of sand and gravelacting as an erosion protection layer.Golder collaborated with ÉcolePolytechnique Professor MichelAubertin in the design of the coverlayout, and Université du Québec enAbitbi-Témiscamingue (UQAT) isresponsible for continuous monitor-ing of the site. The multi-layer design

proved to be a success and hasreduced the tailings oxidation rate byan average of 95 per cent over a periodof five years. Others are now applyingthe same technology and using thistype of rehabilitation at other sites.

In 2000, Golder was retained byAurizon Mines Ltd. to conduct a geo -technical and geomechanical investi-gation of the crown pillars of nearsurface stopes at the Beaufor mine,Val d’Or, Quebec. The old Beauformine had recently been reopened butthe discovery of thinner thanexpected crown pillars in the old areaof the mine triggered a detailedinvestigation. The stope crown pil-lars were assessed and instrumented.Risk was further mitigated by divert-ing a creek flowing over one of thetargeted areas and by backfillingsome of the old stopes. Golder con-ducted an inventory of aquaticspecies and, with government


Work on the Beaufort project

engineering exchange

approval, was able to redirect thecreek away from the mine, with min-imal impact on the native fish andother aquatic life. For the mine itself,bulkheads were constructed in driftsand around the mine shaft.Innovative technologies, such asenergy-absorbing barriers, wereinstalled to further protect the shaftagainst potential mud flows thatcould be associated with failure of acrown pillar located below liquefi-able soils. An advanced monitoringsystem was designed with exten-someters and adjacent TDR cableinstallations throughout the mine.The system can detect movementand/or displacement in critical zones.For their assessment and remediationmeasures at the Beaufor mine, Golderwas nominated for the Grands Prixdu genie-conseil québecois.

Golder Montreal has been engagedwith IAMGOLD’s Mine Doyon for anumber of years in areas of rockmechanics and tailings management.The mine experienced ground controldifficulties in 2004 associated with rockmass degradation and rockbursting.Golder is providing ongoing geome-chanics expertise and assistance withground support design and miningstrategy in order to help the mine con-tinue to operate safely during the latestages of extraction in some criticalareas.

Golder was involved with HydroQuébec’s Eastmain 1 project in JamesBay, Quebec. Golder engineering per-sonnel with experience in dyke con-struction assisted the CreeConstruction and DevelopmentCompany Ltd. (CCDC) on the project.Nine dykes were constructed byCCDC, with a cumulative length of 2.6kilometres, as part of a larger networkof dykes to create a 600 square kilome-tre artificial lake. The main challengeof the project was building the dams onthe bedrock base. “The rock wasfaulted and fissured, which requiredcleaning and grouting the base toreduce permeability,” said MichelLemieux, an associate with Golder.These operations are similar to those

used for tailings ponds, so the samebasic technology can be applied.

Golder Montreal is made up ofthree main groups: geo-engineering,which accounts for the bulk of mining

engineering, geomechanics, and geot-echnical engineering; geoscience, withexpertise in contaminated sites, cleanup, and groundwater; and the environ-mental management team, who takescare of EIA, audits, and ISO 14000

implementation. People from the threeareas coalesce and together are capableof taking on mining projects from thefeasibility stage straight through toclosure and reclamation. “Utilizing

tools such as sophis-ticated numericalmodels and 3D mod-elling tools likeGOCAD, coupledwith solid engineer-ing experience,allows Golder to beone of the top engi-neering consultingfirms in mining andindustry around the

world,” Falmagne stated.Their motto is “Glocal.” Think glob-

ally, act locally. No matter where Golderlands, they hire locally and carry outtheir work with utmost respect of thepeople and community. n

May 2007 43

Dyke construction with CCDC

Their motto is“Glocal.”

Think globally, act locally.

standards


Under Canadian Securities law,qualified persons (QPs) are calledupon to provide their written consentto the scientific and technical contentin disclosure documents being filed bypublic mining and exploration compa-nies. Most often the consent is pro-vided by the qualified persons that pre-pared a technical report under NI 43-101 Standards of Disclosure forMineral Projects. In this article, weexplain the different triggers for con-sents under securities law, the timingfor filing, and the required content ofthe consent. We also provide our viewson the purpose of requiring miningcompanies to obtain a QP’s consent totheir disclosure, and the importance ofwritten consents under the civil liabil-ity provisions of securities law.

When a technical report is filed withthe Canadian Securities Commissions,the written consent of each qualifiedperson responsible for preparing thetechnical report must be filed asrequired by section 8.3 of NI 43-101. Itis the company’s responsibility toobtain the consent from each QP andfile it with each of the CanadianSecurities Commissions. The NI 43-101 consent requires the QP to:• consent to the public filing (on

SEDAR) of their technical report;• consent to extracts from, or a sum-

mary of, their technical report in a

specific disclosure document filedby the company;

• confirm that the QP has read thatparticular document; and

• confirm that the document fairlyand accurately represents the infor-mation in the technical report thatsupports the disclosure.A consent filed with a technical

report supporting a news release dis-closing, for example, a new mineralresource estimate, should reference thenews release that triggered the techni-cal report. The QP must consent to thescientific and technical information inthe news release that is extracted orsummarized from their technicalreport. The QP must confirm that theyread the news release and that it fairlyand accurately represents the informa-tion in their technical report. To avoidproblems with obtaining the QP’s con-sent, the company should involve theQP in the drafting of the content of thenews release that is based on theirtechnical report.

In the case of a prospectus, it is thepreliminary prospectus that triggersthe technical report and the QP mustconsent to the scientific and technicalinformation in the preliminaryprospectus that is supported by theirtechnical report. CSA Staff Notice 43-306 clarified that NI 43-101 requiresthe technical report, certificates of QPs,

and the consents of the QPs to be filedon SEDAR at the same time as the pre-liminary prospectus.

In the case of the filing of a finalprospectus, a different consent isrequired from the QPs. Both the LongForm and Short Form prospectus rulesrequire consents of experts with thefiling of the final prospectus. Therequired statements from the expertsare different from the NI 43-101 con-sents. For the final prospectus, theQPs must:• consent to being named in the

prospectus;• state the name and date of their

report;• consent to the use of their report in

the prospectus;• confirm that they have read the

prospectus; and• confirm that they have no reason to

believe that there are any misrepre-sentations in the information in theprospectus that are derived fromtheir technical report.QPs should be careful when con-

firming the last bullet. A misrepresen-tation can be the omission of a mate-rial fact that must be stated to makethe information not misleading. QPsshould perform their due diligence toensure there has been no materialchange on the property since theycompleted their technical report. Theymay be correct in confirming in the NI43-101 consent that the prospectusfairly and accurately represents theinformation in the technical report.However, if there has been significantnew work on the property since theycompleted their technical report, theomission of the new scientific andtechnical information, in itself, couldbe a misrepresentation.

Canadian securities law encouragesofficers and directors of public compa-nies to have experts prepare informa-tion for public disclosure. It does this

Making sense of consentsby Greg Gosson, technical director, geology and geostatistics, AMEC Americas Ltd.,and Deborah McCombe, chief mining consultant, Ontario Securities Commission

by providing a defence to managementand the company against civil liabilityif there is a misrepresentation in thedisclosure based on the report or opin-ion of the expert. However, one of therequirements for the defence to beavailable is that the expert’s writtenconsent to the disclosure was obtained.

QPs providing written consentsshould be aware that Canadian securi-ties law provides a statutory right ofaction to investors if there has been amisrepresentation in certain disclosuredocuments and they have suffereddamages. Under certain circumstances,investors have a right of action fordamages against an expert who hasprovided their written consent to thecontent of disclosure documents.There are checks and balances in thecivil liability regime, and securities lawprovides defences against civil liability

for the expert as well. For example, theexpert has a defence if they conducteda reasonable investigation to providereasonable grounds for a belief thatthere had been no misrepresentation intheir report or opinion.

There are also written consentrequirements for Canadian miningcompanies that file forms with theUnited State Securities and ExchangeCommission (SEC). For example, theSEC may require the written consentof engineering companies and QPsthat are referenced in a Form 40F(annual report by Canadian incorpo-rated companies). The consentrequirement is under GeneralInstruction D (9) to Form 40F, whichrequires the QP and their engineeringfirm to consent to being named, and tothe use of their report in the registra-tion statement.

Finally, the TSX Venture Exchangerequires written confirmation frommining companies that the QP respon-sible for the information read andapproved the scientific and technicaldisclosure (Section 5.2 of Appendix 3F– Mining Standards Guidelines).

Securities regulators have recog-nized the importance of having QPsreview and consent to scientific andtechnical disclosure before it is dissem-inated to the public. In this way, QPswill apply their professional standardsand ethical responsibilities whendetermining whether they can consentto the disclosure by mining and explo-ration companies. This should improvethe quality of the scientific and techni-cal disclosure and credibility of thecapital markets serving the miningindustry. n

This past March, in Toronto, CIM,through its Special Committee onValuation of Mineral Properties(CIMVal), signed a cooperation agree-ment with the Chinese Ministry ofLands and Resources through its agency,the Chinese Association of MineralResources Appraisers (CAMRA).Chinese Vice Minister of The Ministry ofLands and Resources Wang Min, CIMValCo-chairs Keith N. Spence and WilliamE. Roscoe, together with CIM ExecutiveDirector Jean Vavrek were signatories tothe agreement. Other attendees includedZhao Xian Liang, Deputy DirectorGeneral, and Siguang Wang, ViceSecretary General of CAMRA. The agree-ment was the culmination of over twoyears of developing relationships withthe relevant Chinese parties.

The CIMVal Canadian Standards andGuidelines for the Valuation of MineralProperties were adopted by CIM inFebruary 2003. The CIMVal Standardsand Guidelines form part of “APPEN-DIX G” to Policy 5.4 of the TSX VentureExchange (TSX-V), and are recom-

mended for use bythe mining industry.

The agreementcalls for CIMVal andCAMRA to cooper-ate in the followingareas:• Standards and

Guidelines forthe valuation ofmineral rightsand properties

• Methods andtechniques formineral propertyvaluation

• Exchanges, meet-ings, seminars,exchange ofinformation, con-tinuing educa-tion, and workshops

• Organize conferences on mineralproperty valuation both in China andCanada

• Exchange publications and paperson mineral property valuation.

CIMVal is among the various CIMinitiatives where it continues to be aleader in developing and disseminatingmining standards and guidelines inCanada. n

Cooperation agreement on valuation of mineral properties signed with China

standards

May 2007 45

Left to right: William E. Roscoe, CIMVal Co-chair; Keith N. Spence,CIMVal Co-chair; Wang Min, Vice Minister of The Ministry of Lands andResources, China; and Jean Vavrek, CIM Executive Director

student life

The 17th Annual Canadian MiningGames took place at McGillUniversity in Montreal, Quebec, fromFebruary 15 to 18, 2007. The eventdrew competitors from ten universi-ties across Canada. The three-daycompetition consisted of numerousphysical and practical events includ-ing materials handling, mine rescue,

2007 Canadian Mining Gamesby Maria Jaworski, mining engineering student, McGill, and chair,2007 Canadian Mining Games

and the pivotal mine design competi-tion. McGill University hosted 150students, the largest Mining Gamesparticipation in the competition’s 17-year history. Participating universitiesincluded the University of Alberta,University of British Columbia,Dalhousie University, LaurentianUniversity, Université Laval, McGillUniversity, École Polytechnique,Queen’s University, University ofSaskatchewan, and the University ofToronto.

The Opening Banquet, sponsored bythe Rio Tinto Group, played host to theseminar competition,where a member fromeach team had one hour ofpreparation and eight min-utes to discuss howemployers can make thecommunities in which they operatemore attractive and discuss whatemployers are overlooking in therecruitment process. Each team lookedespecially sharp, wearing team uni-forms of custom-made hockey jerseys,matching sport coats, rugby jerseys,and the like.

The first night proved to be a sort ofinitiation, with the GijimaASTAmericas Inc. boat race competitiontaking place at a local pub. After muchrevelry and catching up with oldfriends, the late night soon turned intoan early morning as the Boart Longyearjackleg competitors travelled to theLafarge quarry in Boisbriand, Quebec.The rest of the students headed to theMcGill campus for the first day ofevents: equipment selection, blasting(sponsored by Dyno Nobel Inc.), mys-tery event I (stick welding), mineralseparation, AutoCAD design, rock

A student keeps his eye on the prize during the Games

PLATINUMBarrick GoldDyno NobelGijimaAst Americas Inc.Golder AssociatesKinross Gold CorporationNorthgate Minerals CorportationPetro Canada – Oil SandsSuncor EnergyTeck ComincoThe Rio Tinto Group - Diavik, IOC, QIT

and QMPXstrata Zinc Canada

GOLDAgnico-EagleBoart LongyearElk Valley CoalGoldcorp CanadaJ.S. RedpathThyssen

SILVERCIM Montreal BranchCIM Toronto BranchHewittKiewitMcGill Mining DepartmentMet-Chem

BRONZEAMQ (Association minière du Québec)Hatch & AssociatesMolson

Great appreciation goes to allthe sponsors that made this year’sGames a smashing success


student life

mechanics (sponsored by GolderAssociates Ltd.), and mineral identifi-cation. Any spare time was spent work-ing on the GijimaAST Americas Inc.mine design event as participantsscrambled to investigate the possibilityof extending the life of an open pit goldmine. Sponsor Appreciation Night washeld that evening at the MolsonBrewery Banquet Hall where partici-pants and sponsors alike wereimpressed with the venue, as well asthe food and beverages. With one dayof competition under their belts, andfirst-day nerves subsided, all attendeeswere able to enjoy the night life thatMontreal has to offer.

Day two involved more hands-onevents as Kiewit Construction hostedthe materials handling and remoteequipment handling events. Back atMcGill, the surveying event was metwith mixed reactions as participantshad to measure one angle using a tran-sit from the 1920s. Scattered through-out the day were the environmental,mineral economics, and ventilationevents as well as the lengthy problemset. The mine rescue event was held inone of the school’s tunnels and over-seen by representatives from Elk ValleyCoal and Suncor Energy Inc. The two

most crowd-pleasing events took placesimultaneously: mechanical design,where student had to design a func-tional skip and frame out of popsiclesticks; and mystery event II—paddedsumo wrestling.

With the competition over, the par-ticipants returned to the host hotelwith a sense of accomplishment. Themining games were over, but all werestill looking forward to the evening’sfinal banquet and awards ceremony.Golder Associates hosted a superbclosing reception, followed by the TeckCominco Closing Banquet & Awards

Presentation at the prestigious OmniHotel in downtown Montreal. As theindividual event winners wereannounced, the overall championcould not be predicted as each teamwon at least one event and five schoolswon as many as three. The intensity ofthis year’s competition was seen withthe top three placing universities fin-ishing within three percentage pointsof each other. The 2007 CanadianMining Games Championship went tothe University of Alberta, followed byrepeat second place finishers Queen’sUniversity, and Laurentian Universityin third place. The evening concludedwith Suncor Energy Inc. and TeckCominco announcing their commit-ment to be sustaining sponsors for allten teams for the next three and fiveyears, respectively. This gives all theuniversities a head start for the 2008Games, especially next year’s host, the

University of British Columbia, whoare already taking pride in bringing theGames back to the West after threeconsecutive years in the East.

Industry support this year was phe-nomenal and many company represen-tatives made the voyage to Montreal towitness the Games first-hand. Thankyou to the devoted 2007 CanadianMining Games sponsors, as well as theMcGill Mining Faculty and this year’sorganizers. Please visit www.mining-games.com for a complete listing ofsponsors and their involvement as wellas complete results. n

May 2007 47

DID YOU SCORE GOLD?

Were you a participantin the University Mining Games back in your school days?

Share your memories—let’s see how the event has evolved and shaped lives.

Contact the editor at [email protected]

Jackleg drilling event

eye on business

Toronto iscurrently thelargest miningfinance market-place in theworld. The sta-tistics for theToronto StockExchange (TSX)and the TSXVenture Ex-change (TSX-V)over the firsthalf of 2006were impressivewith approxi-

mately 1,200 listed mining issuers and53 per cent (US$6 billion) of the miningequity capital raised globally.

Concurrently, the AlternativeInvestment Market (AIM) of theLondon Stock Exchange (LSE) enjoyeda year of remarkable progress in 2006.Over 2,500 companies were admitted toAIM and a significant number werenon-UK companies. Liquidity on AIMincreased, with market turnover in 2006of £58 billion and average funds raisedat £21.5 million.

Obtaining a listingTSX and TSX-V

An application for a TSX or TSX-Vlisting is made by completing the pre-scribed form or, if in conjunction with aprospectus filing, the prospectus servesas the basis for the application. Theapplication is reviewed and consideredby the exchange, which applies criteriasuch as the stage of development, work-ing capital, proposed work programs,and the experience and background ofthe applicant’s directors and manage-ment. Sponsorship by a broker-dealer isa significant factor considered by staffand is mandatory for all but the mostsenior of applicants. Technical reports,

The TSX and AIM—the investment landscapefor Canadian exploration companiesby Gregory Ho Yuen, Fasken Martineau DuMoulin LLP, Torontoand Anca Enica, Fasken Martineau Stringer Saul LLP, London

prepared in accordance with NationalInstrument 43-101, and title opinionsare required to supplement the applica-tion for listing. A management-prepared18-month projection of sources anduses of funds must also be submitted.An applicant must be able to satisfy cer-tain minimum requirements relating tothe number of shares held by the publicand number of shareholders, typicallynot less than 300, each holding at leastone board lot (100 shares).

AIMOn the other hand, AIM is simple to

join as there are no prescribed mini-mum criteria. There is no requirementfor a minimum trading record, numberof shares in public hands or market cap-italization, and no shareholders’approval is required, apart from majoracquisitions and disposals. An AIMadmission normally takes around 12 to24 weeks, and a fast-track route is alsoavailable for companies who have a list-ing record on other international mar-kets such as the TSX, for at least 18months prior to the AIM application.

A successful flotation on AIM isachieved with the help of an expertteam of advisors. The team usually con-sists of a nominated adviser (NOMAD),solicitors, brokers, auditors, and report-ing accountants. The NOMAD will actas an intermediary between the appli-cant and the LSE, advising and guidingthe company through the applicationprocess, but also ensuring that the com-pany is commercially viable to join themarket.

AIM-listed shares must be freelytransferable and, unlike the TSX andTSX-V, eligible for electronic settlement.A set of documents will need to be pre-pared including an admission docu-ment, long and short form accounts,and a working capital review. In addi-

tion, a mining company must also pro-vide a Competent Person’s Report(CPR) on its assets and liabilities.

If the company’s business has notbeen independent and earning revenuefor at least two years, AIM rules requirethat all related parties enter into “lock-in” agreements pursuant to which theyagree not to dispose of any interest intheir shares of the company for oneyear after the company’s date of admis-sion to AIM.

Ongoing obligationsOnce a company has obtained a list-

ing on the TSX/TSX-V or AIM, it has anongoing obligation to make accurateand timely disclosure of all materialdevelopments, whether financial, geo-logical, or of another nature. TSX/TSX-V-listed companies are required tonotify the regulator responsible formarket surveillance and provide it witha copy of any proposed announcementprior to dissemination. AIM-listedcompanies are required to retain aNOMAD throughout the term of theirAIM listing and keep the market up-to-date with all significant developmentsin its business.

The TSX and TSX-V have benefitedfrom Canada’s long history in miningand finance and have become themost mature stock exchanges in theworld for mining companies.However, in the 12 years since its for-mation, AIM has evolved into a viablealternative, which offers access todeep capital pools in London and aninvestor base that seems to demon-strate a greater interest in miningprojects. As AIM investors increasetheir appetite for mining companiesand trading liquidity on AIMimproves, we anticipate that AIM mayquickly close the gap on its Canadiancounterparts. n


Gregory Ho Yuen

innovation page

Across the globe, industries havecompleted a lot of work to define stan-dardized key performance indicators tobenchmark their relative performance.It’s an objective way to gauge your com-pany’s progress in key dimensions ascompared to leaders in your industry.

Over time, industry sectors like refin-ing and utilities operations have usedbenchmarking to promote innovationand kindle continuous improvementefforts. Benchmarking provides a per-spective on what’s possible when bestpractices are applied to successfullyboost performance.

In the past few years, surface mininghas also been making inroads intobenchmarking. With the support of theSurface Mining Association forResearch and Technology (SMART), anorganization with some 25 miningfirms worldwide and four universitiesparticipating, benchmarking was seenas an opportunity to improve overallmining industry performance. Mininghas continued to employ ever moreadvanced technologies in increasinglycomplex and integrated operations thatdefine new levels of performanceachievement and best practice. Foreach participating mining firm, bench-marking supports learning about bestpractice achievement in a performancedimension as a means to augment thosedimensions where best-in-class per-formance has already been achieved.

Benchmarking and miningSupporting continuous improvement by Gord Winkel, vice president, Aurora Bitumen Production, Syncrude Canada Ltd.

The SMART Benchmarking Projectwas initiated in 2003 with three oilsands surface mining firms from north-ern Alberta, Canada. The vision for thisinitial effort was to provide a means forlow-cost continuous benchmarking thatwould expand to include all types ofsurface mining operations.

The first step in this process was toengage a third party consulting firm withmine engineering and mine planningexperience to manage the benchmarkingdata and confidentiality of informationfor the participants. This firm operatesin North America and Australia.

To support a sustainable benchmark-ing effort that would easily accommo-date new mining participants over time,an innovative approach was devised.The project development is designed ina staged format, so that new miningfirms can join the already participatingmining firms at any time. This has keptcosts to a minimum and enabled ongo-ing expansion of the program capabilityto ensure viability for all participants.

So how does the benchmarkingactually work? Every quarter, partici-pating mining firms submit monthlymining information related to produc-tion, availability, utilization, and othertime-based metrics as determined bythe participants.This incomingdata for trucks,shovels, and sup-port equipment isnormalized basedon agreed-to com-mon definitionsfor key perform-ance parameters.The informationis summarizedand reportedquarterly, toenable partici-pants to deter-

mine their relative standings andexplore opportunities to achieve bet-ter performance. Provision has beenmade within the benchmarking frame-work for firms to network with eachother in areas of interest.

This benchmarking has reallytaken off. The current database nowhas nine participating mines repre-senting operations in iron ore, gold,diamonds, coal, and oil sands. Thedatabase now regularly reports on theperformance of approximately 300haul trucks and 70 shovels across themining industry.

The figure shows a newly designedweb-based reporting format, wheremember companies can compare theirperformance data to others.

As can be seen in this article, surfacemining has now entered the bench-marking field with a sustainable processthat supports continuous improvement.Benchmarking data raises the bar onwhat’s possible when mining firmsacross the world continue with theirinnovative efforts.

Benchmarking can also provide yourcompany with the means to leveragebest practices in mining. For moreinformation visit http://www.smart-mines.com/. n

May 2007 49

Comparison of Mine Equipment

Performance Data

My Location vs. Avg. My Location vs. Hi & Lo

Showing a metric for an equipment fleet or class over a time frame

the supply side

program. The best designer will do youno good if your service is sloppy or yourproduct is not up to the competition.

If you have a USP or logo, ask your-self and your employees what it standsfor. If they cannot relate them to somekey values that your company espouses,you likely do not have much of a brand-ing program.

Remember, your brand is built andconveyed with every action you take,with every product or service youdeliver, your every communication.While branding may be seen by someas something that major companieshire specialists to do, it should be anintegral part of the life of small- andmedium-sized firms that want to pros-per and grow. While it is a good idea tohire specialists to help you with facetsof your branding program, such aswebsite, brochure, logo, and exhibitdesign, their efforts will not be opti-mized if the corporate brand is notdeveloped, understood, and supportedby everyone in the company, particu-larly top management. n

Prioritize those values that are reallystrong, the ones that clearly differentiateyou from your competitors. Now youhave defined your brand.

To support the brand, make a list ofthe qualities that you, your employees,and your premises must display to cus-tomers in order to portray the image.For example, if safety is primary, yourshop had better be neat and tidy. If fastdelivery is key, the phones need to beanswered promptly, quotes issuedimmediately, and inventory properlykept. If precision is your game, thinkabout how people dress, answer thephone, and communicate in writing.

Some people think that their uniqueselling proposition (USP, otherwiseknown as ‘value statement’ or ‘companyslogan’) is their brand. While a goodUSP may assist in conveying the brand,it is only a part of your branding strat-egy. Other people place much impor-tance on developing a corporate logo,believing that attractive art will coverover whatever other weaknesses theremay be in the brand or the branding

The terms ‘brand’ and ‘branding’ arebecoming more and more popular;however, I believe that they are oftenmisused or misunderstood. These con-cepts are not something reserved for bigcompanies; they are the key to the suc-cess of any organization.

Your brand is everything that you are.It is your product, your service, andyour company, all rolled into one. Iwould say that, given the competitivenature of the mining supply business,most Canadian firms in our sector havestrong brands in that the products andservices that they offer are high quality,reliable, and competitively priced. Ingeneral, they offer a satisfying experi-ence to those that purchase them.

Branding really is part of marketing.It is the communications program thatis used to define and build the brand.Successful brands are well defined andare understood and supported by every-one in the company. Begin by decidinghow you want to be seen by your cus-tomers. Decide what your key valuesare. For example, these may includeinnovation, safety, dependability, one-stop shopping, fast service, high valuefor money, low price, and more.

What is a brand and what is branding?by Jon Baird, managing director, CAMESE

A page for and about the supply side ofthe Canadian mining industry

MAC

factsDid you know�

… Canada ranks first in the world

in exploration expenditures hosting

19 per cent of world spending, followed by

Australia at 13 per cent and the United States at 8 per cent.

… The Toronto Stock Exchange (TSX) lists 60 per cent of the

world’s public mining companies.

… As of the end of 2005, there were 1,192 mining companies listed in

Toronto, 484 in Australia,

183 in London, 55 on the American Stock Exchange,

and 50 in Japan.


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Longhole drilling rig operating at the McCreedy West Mine

Sometimes, you just get lucky. It’s all a matter of timing, and FNX Mining couldn’t have struck

while the iron was hotter—or in this case, nickel. They have recentlybeen exploring the long-established Sudbury Basin and, in their case, alittle curiosity has come a long way.

FNX Mining (originally named Fort Knox Gold Resources) began in1983 as a syndicate. In 1997, Terry MacGibbon retired from some 30years as geologist and director of international exploration at Inco,and was appointed president and CEO of Fort Knox Gold. His strate-gy was to find non-core assets owned by major companies becausehe thought he’d get the most value out of them—turns out he wasright. In 2001, Inco had no plans to bring any new deposits intoSudbury, so they announced that they were auctioning off five oftheir current Sudbury properties (Levack, McCreedy West, Podolsky,Kirkwood, and Victoria—all former producing properties) because oflow nickel prices at the time. Inco would hand over the properties tosomeone else who would in turn explore, develop, and bring theminto production, providing Inco with additional ore for their mill. Thatsomeone turned out to be Terry MacGibbon, along with FNX Mining,and they’ve been reaping the rewards since. Two of theirfive properties are already in production, with anotherto produce ore next year.

MEET THE PROPERTIES

The McCreedy West property, which began produc-tion in 2003, is now producing about 2,000 tons a day—1,000 tons of nickel ore, and another 1,000 from the PM(footwall) deposit. Luckily, much of the infrastructure,was already in place when FNX arrived on the scene—hundreds of millions of dollars worth of infrastructureactually. In McCreedy West’s case, all that was neededwas a little refurbishing of the mine access ramp andinfrastructure, re-establishing surface facilities, andbuilding a new ramp for the newly discovered (by FNX)Inter Main Deposit.

The Levack mine property, which is adjacent to theMcCreedy West mine, was up and running from 1920until 1999 when it was closed down. Levack beganproducing again in December of 2006 and now haswhat Inco used to call the “Levack Complex” in pro-duction again. Over 74 million tons of nickel-bearingore was mined from the Levack and McCreedy Westmines before FNX acquired them. The Levack mineproperty is a contact (nickel and copper) deposit, andFNX plans to steadily increase production this year upto about 1,500 tons a day, with an expected 15-yearmine life. In 2005, they made a discovery of a footwalldeposit below the mine. They are presently accessingit from underground from both Xstrata Nickel’s Craigmine and from their Levack mine. The high-gradeLevack footwall deposit is located midway betweenthe two; it still remains open and they continue todrill it off. As with the McCreedy West mine, there wasa lot of infrastructure already in place at the Levackmine, in this case leaving only the No. 2 shaft hoist-ing plant, ore handling facilities, and six mine levels tobe reconditioned to 2,900 feet, and new offices to bebuilt on surface.

Podolsky mine, on the other hand, was a different situationentirely. Named after Terry Podolsky, who was vice president ofexploration for Inco, the property was an open pit with absolutely nounderground infrastructure. When FNX discovered the 2000 Depositin 2002, which is a mix between a footwall and an offset deposit, itwas nothing but an array of surface roads, leaving the workers tostart from scratch. Not wanting to impose a new footprint on top ofthe previous open pit mine, FNX moved to the other side of the hillin a completely different drainage area and sunk their own verticalcommercial shaft to about 2,700 feet, which was completed inAugust of last year. The work didn’t stop there—they’ve also had toinstall skips and cages, establish underground ore-handling systems,crosscut across on two levels, put up ventilation systems in the sec-ond escape way, and ore passes between the levels. After all the hardwork, Podolsky is expected to produce some pre-production materi-al by the last quarter of this year, eventually reaching about 1,250tons a day later in 2008.

The Podolsky mine is being developed on the watershed thatflows into the Wahnipitae Lake (one of the main sources of waterfor the Sudbury area). It is occupied by the Wahnipitae FirstNations. In 2005, FNX signed a Memorandum of Understanding


GIS technician surveying the ore bin at Levack Mine

May 2007 55

with the Wahnipitae First Nation, one of the conditions being thatan Impact and Benefits Agreement is prepared for the Podolskymine. It outlines what opportunities and cooperations between themine and First Nations people (including things like identifying con-tracts and employment opportunities) would be available throughthe mine for the Wahnipitae people.

THE FNX MODEL

Home to all these properties, the Sudbury Basin wasn’t alwayspulsing with mining activity. It had been active for over 100 years, butbefore FNX came along, the basin wasn’t seeing much new develop-ment; Inco (CVRD Inco) and Falconbridge (Xstrata Nickel) operationswere well-established and the companies had other project prioritiesoutside of Sudbury, and the area seemed to be facing a decline in min-eral wealth. When FNX started out, they had one employee (TerryMacGibbon) and $300,000 in the bank. From this, they built their ownexploration team. Drilling started on April 1, 2002, and by June of thesame year, they had made their first discovery and began productionby the following spring.

The main advantage for FNX is that all properties were formerproducing mines. Extensive infrastructure was already in place(both surface and underground), including ramps, shafts, and minelevels, eagerly awaiting a fresh start. Normally, mining companiesgo through a certain process before seeing progress. They go outand explore, hope to discover something, and if they’re luckyenough to hit pay dirt, they’ll take years to drill it off, study it,raise the money for it, and then start the construction. They’ll con-struct a mine and a mill complex, providing all the necessary

licences are in place. Greenfields mine operations are massiveundertakings.

The FNX model is different—they recycle old mines. And in thisday and age where recycling’s all the rage, they couldn’t have jumpedon the bandwagon sooner. The best place to explore for new depositsis right beside an existing one—or even underneath it. The footprint isalready there. They own the mineral rights, and the surface rightsbelong to CVRD Inco. FNX is only responsible for their own footprint,which is designed to be a walk-away solution.

The FNX model is simple and efficient; they explore deposits thatCVRD Inco already had in the area or find new deposits and exten-sions, drill them off, develop them from the existing underground andsurface workings, mine them, and then ship the ore off to CVRD Incofor milling, smelting, and refining. A little teamwork goes a long way,and this is a great partnership. FNX explores, finds, and mines the ores;CVRD Inco processes it to extract the metal and then sells it in themarketplace. This method lowers the exploration risk because they’reexploring in areas that are known-producing properties.

In 2001, Inco had no plans to bring any new deposits into Sudbury,

so they announced that they were auctioning off five of their current

Sudbury properties… because of low nickel prices at the time.


FNX originally partnered with Dynatec to mine the deposits,although they now have their own mining team, further lowering theirrisks and costs. There are also no long-term environmental liabilitiesbecause all the waste material resides with CVRD Inco. All in all, it is alow-risk approach, with shortened time and capital expendituresneeded to bring the mines into production, while avoiding long-termenvironmental liabilities. And no, there is no catch.

RESPONSIBLE MINING

With all their progress, you’d think FNX would have let their suc-cess go to their heads, but the mining company has stayed true totheir Sudbury community. As COO for FNX Tony Makuch puts it,“there are things to consider as a good neighbour… we all drink thesame water and we all breathe the same air.” Once a year a commu-nity meeting is held where people are free to voice any concerns, andFNX shares their plans for the coming year.

Being a very mine-oriented area, there hasn’t been any majorresistance to a new company setting up shop in Sudbury. The main

issues involved noise and dust, both of which have been addressed.There are restricted crushing hours agreed to by both FNX and thecommunity in Levack, crushing equipment has been moved indoors toinsulated buildings, and workers are careful to avoid loud machineryearly on Saturday mornings. FNX has also developed a dust collectionsystem, and they make sure that no powder delivery trucks are run-ning during school hours. They support local charities in the commu-nity and support the people that work for them. FNX is otherwise justoccupying the existing footprint.

With so much invested in the area, you can bet that FNX is com-mitted to a strong environmental performance, as is detailed in theclosure plans prepared for each property.

An example can be found at the Podolsky mine site, from whichwater is released into a system that drains into drinking water. Ratherthan just meeting discharge requirements set by the Ministry of theEnvironment, Podolsky releases water that meets Ontario’s drinkingwater quality standards. They do this using a specially designed watertreatment plant, constructed by FNX.

Safety is a primary focus of any good mining company.Everybody wants to go home after work, and the FNX team inSudbury has proven that they are firm believers in mining safety. TheFNX exploration team just received the first PDAC Exploration

Twin boom jumbo drilling nickel ore at McCreedy West Mine

“There are things to consider as a good neighbour…

we all drink the same water and we all breathe the same air.”

— T. Makuch

May 2007 57

Safety Award at the PDAC (Prospectors and Developers Associationof Canada) conference this winter for having approximately 350,000hours without a lost workday accident. FNX revolves around theideal that the success of a company is based on the people who workthere. No matter how rich a deposit, the workers are the drivingforce behind FNX’s progress.

RICH DEPOSITS WITH RICH HISTORY

The basin also has an interesting little background story. Here’s alesson in history: the basin itself is actually a meteorite impactcrater; it hit about 1.85 billion years ago and vapourized a hole in theground (the rock that was there vapourized as well because of theintense heat). The impact shattered everything down to the earth’score and magma flowed to the opening, coating the inside of thebasin (including the metals that are now mined). The metals, beingheavier, settled down to the bottom as the magma was cooling.Originally, they were rich in copper, nickel, platinum, palladium, gold,and cobalt. Over time, the copper, some of the nickel, and all of theplatinum, palladium, and gold became mobile and moved down intothe sponge rock (Sudbury breccia), creating what is called a footwalltype of deposit. No one knew at the time, but the footwall depositswere very high grade and appear to lie behind the main nickel-richdeposits of the Sudbury Basin.

There are only three known types of deposits in Sudbury, two ofwhich have been known for over 100 years. The first type, contactdeposits, are found at the bottom of the basin. They’ve been minedfor about 120 years. These are rich in nickel, with minor amounts ofcopper and cobalt. The second type, offset deposits, are rich in cop-per, nickel, platinum, paladium, and gold. Offset dykes are a distincttype of dykes that radiate outward from the main basin. The thirdtype of deposit is known as a footwall, whose development is men-tioned above. This type of deposit has only been known to man forabout 25 years.

FNX believes that, potentially, behind every nickel mine in Sudbury,they can now go back and look for footwall deposits. Footwalls arevery rich in copper, contain a significant amount of nickel, and are veryhigh in platinum, palladium, and gold. These deposits were firstbrought into production in Sudbury around 1988. The cash operatingmargin for a footwall deposit is about $1,000 per ton of ore—anincredible asset for any mining company. The deposit size is usuallybetween six to eight million tons, which translates to about $6 to $8billion in operating margins—a decent profit for any lucky miner whohappens to find one.

STRENGTH IN NUMBERS

Since FNX’s arrival, Sudbury has been buzzing with business.Obviously, there’s been an increase in employment opportunities.The company has approximately 704 people as direct employees,plus 22 additional contractors working on site, and for every oneperson working, another three indirect jobs are created. FNX’s totalpayroll is about $60 million a year. Their total annual expendituresweigh in at $230 million, half of which is labour-related and goestowards workers, the other half towards supplies, sourced mostly inSudbury. From 2002 to the end of 2006, they spent over $80 mil-lion in exploration, and drilled over 1.5 million feet of core in theSudbury Basin.

Currently, FNX Mining is the third major operating company in theSudbury Basin, and the only Canadian-owned one. Sudbury is one ofthe largest base metal mining camps in the world and has a total min-ing value of about $2 billion a year. Not bad—for a crater. n

Measures of Our Success..........Profits, Growth and

Successful Exploration

FNX Mining Company Inc.Ste. 700,

E-mail: [email protected]

55 University Ave., Toronto, Ont, Canada M5J 2H7Tel: (416) 628-5929 Fax: (416) 360-0550

Website: www.fnxmining.com

TSX : FNX

Terry MacGibbonPresident and CEO

David ConstableVice President Investor Relations

and Corporate Secretary

Profits (for the full year 2006)

�

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Net earnings of $68.7 million or $0.82/share

Cash flows of $81.8 million and EBITDA of $97.1 million

Average cash cost per lb of nickel sold - US$0.77

Average operating margin per ton of ore - $167

Growth�

�

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Levack Mine startup announced in Q4-2006

Podolsky Mine on schedule for Q4-2007 startup

Initiated access to Levack Footwall Deposit

By 2010, nickel production forecast to triple, copper

production increase tenfold and PGE metals

production grow by a factor of six

Successful Exploration�

�

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Expended more than $80 million on exploration from

2002-2006

Announced the discovery of the high grade Levack

Footwall Deposit in February 2005

Increased our Sudbury area land position eightfold

through the acquisition of Aurora Platinum

Discovered Main Depths Deposit at Levack Mine in

early 2007

Antonioli, Chris, AlbertaBachelder, Clinton, AlbertaBailey, Kirk, AlbertaBallard, Paul, OntarioBamsey, Nathan, OntarioBanks, Murray, AlbertaBeaton, Danny, AlbertaBell, Maxime, QuébecBell, Trent, SaskatchewanBergey, Keith, AlbertaBertoli, Christine, OntarioBertrand, Marc, QuébecBlake, Scott, Nova ScotiaBouliane, Nicolas, AlbertaBray, Neil, AlbertaByrne, Greg, AlbertaCairns, Brian, SaskatchewanCampellone, Stephan, QuébecCarey, Robert, SaskatchewanChausse, Robert, OntarioChisholm, Colin, Nova ScotiaClark, Benjamin, USAClelland, Josh, OntarioCourtorielle, Leni, AlbertaCulleton, Michael, AlbertaDeng, Xiaohui, AlbertaDoll, Michael, AlbertaDonnelly, Nichole, SaskatchewanDoucette, Neil, AlbertaDoucette, Tim, AlbertaDuhaime, Mario, QuébecDuyzer, Ben, British ColumbiaErixon, Trevor, AlbertaFauquier, Robin, AlbertaFlaherty, Ken, AlbertaFuhr, Greg, Alberta

Furzer, Jeremy, AlbertaGoodfellow, Ryan, QuébecGould, Daniel, Nova ScotiaGranson, Vince, AlbertaHall, Leanne, OntarioHansen, Erik, USAHannah, Tedford W., AlbertaHarder, Lee, AlbertaHarrington, Charles, Nova ScotiaHayman, Chris, AlbertaHenke, Leonard, AlbertaHudson, Brian, AlbertaHughes, Elizabeth, AlbertaHumphrey, Sebastian, QuébecHuse, Gene, AlbertaHutson, Rick, OntarioHynes, Lana, OntarioIvanov, Rosen, QuébecJalil, Muhanad (Ned) Abdel, OntarioJeffrey, Dean, AlbertaKarlsson, Stefan, USAKhan, Muhammad S., OntarioKlingbeil, George, OntarioKlironomos, Theodore C., QuébecLane, Greg, AustraliaLaplante, Marc, AlbertaLavallée, Chris, British ColumbiaLinden, Christine, USALizee, Maurice, AlbertaMacDonald, Wayne, SaskatchewanMadsen, Erik, Northwest TerritoriesMady, Bob, AlbertaMallen, Richard, AlbertaMann, Ryan, Nova ScotiaMark, Gordon, AlbertaMattos, Rodrigo, Ontario

McClure, Robert, USAMcGaw, Devon, AlbertaMcJunkin, Dennis, British ColumbiaMcManaman, Terry, AlbertaMcNeil, Stanley, AlbertaMehta, Rajiv, QuébecMilstead, David, OntarioMitchell, Lynda, AlbertaMohr, Patricia, OntarioMorrison, Daniel, OntarioMueller, Kevin, AlbertaMurray, Brett, OntarioO’Keefe, Christian, USAParent, Ron, British ColumbiaParodi, Renzo, OntarioPatel, Anish M, QuébecPenswick, David, OntarioPowell, Grant, SaskatchewanPratt, Gerald, AlbertaRennick, Paul M., New BrunswickRichardson, David, AlbertaRidley, Rodney, AlbertaSammut, John, United KingdomSandhu, Parminder, British ColumbiaScherbiuski, Ed, AlbertaSchmale, Dave, British ColumbiaSchwarz, Richard, OntarioSlater, Ian P., British ColumbiaSmith, James R., AlbertaSmith, Kevin, AlbertaSteedsman, Dave, AlbertaSteen, Todd, OntarioStoklossa, Martin, AlbertaTeymouri, Shervin, British ColumbiaTriginer, Keith, AlbertaTrombley, Brian, SaskatchewanWalker, David, PEIWalliser, Greg, SaskatchewanWallster, Ashley, SaskatchewanWang, Qian, OntarioWatkins, Craig, OntarioWelyhorsky, Rick, OntarioWenaus, Carter, SaskatchewanYarmuch, Matthew, AlbertaYeung, Steven, OntarioYu, Tao (Tony), Ontario

Corporate MembersBoulons et Forge Industriels

Emgold Mining CorporationGarierRichwood

CIM welcomes new members

ObituariesCIM expresses its sincere condolences to the families and friends of the follow-

ing members:

Robert William Bruce joined CIM in 1966 and became a life member in 1990.He passed away on November 6, 2006.

James Sutherland Drake first joined CIM in 1974. He passed away on October22, 2006.

Wyatt Hegler became a member of CIM in 1937, and in 1976, he attained lifemember status. He passed away on February 2, 2007.

cim news


cim news

The Canadian Mineral Processors39th Annual Operators’ Conference washeld in Ottawa, January 23 to 25, 2007.Chairman Colin Hardie welcomed 416delegates from 13 countries, anotherrecord attendance.

The technical program, organizedby John Folinsbee, featured 36 presen-tations, including CIM DistinguishedLecturer and this year’s plenary lecturerPaul Hébert, executive director, MiningIndustry Human Resources Council,who spoke on “Prospecting the Future:Meeting Human Resources Challengesin the Canadian Minerals and MetalsIndustry.”

The rest of the technical programwas separated into six main sections.Under New Projects and OperatingImprovements, papers on the Voisey’sBay mill, grinding mill design for theTenke Project, the Paracatu gold mine,ore characterization of the Aqqalukdeposit at Red Dog, and the improve-ment of circuit performance at BHP-Billiton’s Minera Escondida wereshared. The next section,Comminution, covered grinding cir-cuit modelling and design, SAG milloperation at Cortez, matching motor tomill torque, interactions betweenslurry density and grinding media size,replacement of diatomaceous earth fil-ter aid with alpha-cellulose at theLaronde Refinery, and the Turbo PulpLifter (TPLTM).

The Precious Metals section hostedpapers on reduction of free gold lossesat the Kemess mine, lead nitrate con-trol in cyanidation, effect of operatingvariables in Knelson concentrators,Kelsey centrifugal jig, Gekko’s gold oretreatment plants, and the gravity recov-erable gold test. Next, in the ProcessApplications I section, undergroundmilling of uranium ores, infraredrecognition of high sulphide and car-bonaceous rocks after microwave heat-ing, iron control in mineral processing,frother analysis, development of new

Canadian Mineral ProcessorsConference wrap-up

frothers, the Derrick Stack Sizer™, andapplication of passive sonar was cov-ered.

The Process Modelling andMineralogy section included papers onvalidation of high-fidelity simulationwear, the use of computational fluiddynamics and discrete element flota-tion circuit design for Adanac MolyCorp., mineralogical evaluation of Au-Sb-As mineralization from the AD-MWzones, Clarence Stream Property, NewBrunswick, and principal componentsanalysis of ToF-SIMS data and MLA.

The final section, ProcessApplications II, offered papers on theEl Mochito mine, developments andnew applications for biogenic sulphidereagent in hydrometallurgy and min-eral processing, analytical surfacechemistry, and improvement of massand value balance data from the statis-tical benchmark model.

As is tradition at the CMPOperators’ Conference, the 7thEast/West Hockey Challenge was held,with the Kilborn Cup going to the East.On the final evening, the AnnualReception and Awards Banquet cele-brated the accomplishments of a num-ber of excelling professionals in min-eral processing, including the CMPMineral Processor of the Year Awardgoing to Ron Colquhoun, vice presi-

dent technical services, Centerra GoldInc.

The CMP would like to thank thefollowing sponsors that helped makethe conference a success:Barrick GoldCanadian Process Technologies Inc.CANMET (NRCan)CIBA Specialty Chemicals Canada Inc.CVRD IncoCytecFFE MineralsG&T Metallurgical Services Ltd.GE Water TechnologiesGL & V Dorr-Oliver EimcoHeath & Sherwood (1964) Ltd.Lochhead Haggerty Eng.

& ManufacturingKinross Gold CorporationMagotteaux CanadaMetso MineralsMinerals Engineering InternationalMolycopMultotec CanadaNorcastOutokumpu TechnologyQuadraSGSShell CanadaSNF Canada Ltd.Starkey & AssociatesUnivar CanadaWestin Hotel

May 2007 59

A look back in time35 YEARS AGO…• The Petroleum Society of CIM held their 23rd Annual Technical Meeting.• Gardner-Denver Canada was looking to reward a few students with $1,000

scholarships.• Seeding programs were underway at some of Placer Development Ltd.’s

mines, in areas no longer in use.• A charcoal sample taken from primitive mine workings in Swaziland car-

bon-dated at 41,250 BC, making it the earliest ever obtained for an actualmine.

The above was taken from the May 1972 issue of CIM Bulletin.

www.cim.org/edmonton2008

CIM Conference and ExhibitionCongrès et Salon commercial de l’ICMEdmonton, AlbertaMay 4 to 7, 2008 — du 4 au 7 mai

Technical program of excellence in mining,

covering the major focuses today

to build best practices and make the leap

in performance improvement.

Un programme technique axé

sur l’excellence en exploitation minière,

couvrant les principaux enjeux d’aujourd’hui

afin de développer les meilleures pratiqueset d’améliorer le rendement.

CIM Exhibition 2008: Salon commercial de l’ICM :Canada’s premier le principal événement mining event! minier au Canada !

Booth space is going fast, Les espaces s’envolent,so book your spot today. réservez le vôtre sans tarder.

2008

CIM EVENTSTournoi de golf de la section Harricanale 2 juinVal d’Or, QuébecContact: Francine FontaineTél. : 819.825.4274Fax : 819.824.1514Courriel : [email protected]

First Annual PDAC Mining Matters Diamond in theRough Golf ClassicIn conjunction with Ontario Mining Association, CIM TorontoBranch, Mining Association of Canada, Ontario Stone andGravel AssociationJune 7Newmarket, OntarioContact: Martin HardingTel.: 416.258.1670Email: [email protected]: www.pdac.ca

The 46th Conference of Metallurgists (COM 2007)and the 6th International Copper/Cobre Conference(Cu2007) August 26-29Toronto, OntarioContact: Brigitte Farah, MetSoc of CIMTel.: 514.939.2710, ext. 1329Fax: 514.939.9160Email: [email protected]

World Gold 2007In conjunction with AusIMM and SAIMMOctober 22-24Cairns, AustraliaContact: Alison McKenzie, AusIMMTel.: +61.3.9662.3166Fax: +61.3.9662.3662 Email: [email protected]: www.ausimm.com

CMP40th Annual Canadian Mineral Processors Operators’Conference/40e Conférence des minéralurgistes du CanadaJanuary 22-24, 2008Ottawa, OntarioContact: Janice Zinck Tel.: 613.995.4221Fax: 613.996.9041Email: [email protected]: www.c-m-p.on.ca

MEMOMaintenence Engineering-Mine Operators’ Conference/Colloque sur l’ingénierie de maintenance et les exploitationsminièresFebruary 24-28, 2008Val d’Or, QuébecContact: Chantal Murphy, CIMTel.: 514.939.2710, ext. 1309Fax: 514.939.2714Email: [email protected]

CIM Conference and Exhibition—Edmonton 2008May 4-7, 2008Edmonton, AlbertaContact: Chantal Murphy, CIMTel.: 514.939.2710, ext. 1309Fax: 514.939.2714Email: [email protected]

AROUND THE WORLDPlanetary & Terrestrial Sciences SymposiumJune 10-13Sudbury, OntarioContact: Dale BoucherTel.: 705.521.8324, ext. 202Fax: 705.521.1040Email: [email protected]: www.ptmss.com/images/Header01.gif

GIFA—METEC—THERMOPROCESS—NEWCASTJune 12-16, 2007Düsseldorf, GermanyContact: Stefan EggeTel.: 416.598.1524Fax: 416.598.1840Email: [email protected]

23rd International Applied Geochemistry Symposium(IAGS)June 14-19Oviedo, SpainContact: Jorge LaredoEmail: [email protected]: www.appliedgeochemists.org

9th SGA Biennial MeetingAugust 20-24Dublin, IrelandContact: Gerry StanleyTel.: +353.1.6677188Email: [email protected]

Discrete Element Methods ‘07August 27-29Brisbane, AustraliaContact: B.A. WillsTel.: +44.7768.234121Fax: +44.1326.318352Email: [email protected]: www.min-eng.com/conferences

Equator Principles & IFC Performance StandardsImpacts on Mining Projects & FinanceAugust 29London, United KingdomContact: Mehrdad NazariTel.: 715.355.0141Email: [email protected]

Precious Metals ‘07August 30Brisbane, AustraliaContact: B.A. WillsTel.: +44.7768.234121Fax: +44.1326.318352Email: [email protected]: www.min-eng.com/conferences

Modular Course in Structure, Tectonics, and MineralExploration (field-based)September 1-15Sudbury, OntarioContact: Bruno LafranceTel.: 705.675.1151, ext. 2264Fax: 705.675.4898Email: [email protected] C

AL

EN

DA

R

May 2007 61

February 24 to 27, 2008| Val-d’Or, Québec |

du 24 au 27 février 2008

www.cim.

Technical Program |

Trade Show |

Sponsorship |

Social Events |

A full slate of technical sessions will be held Monday, February 25, throughWednesday, February 27, offering insight into potential solutions forefficiency improvements and cost savings. Technical tours to Quebec minesites will be offered.

Contacts: Sylvie Poirier [email protected] andDenis Gourde [email protected]

A trade show at the main venue will showcase the latest technologies,equipment, and services for mine operations on the market today. Itprovides the opportunity to renew established contacts and make newones while exploring the booths.

Contacts: Marie-Claude Bruneau [email protected] andJean-Marc Demers [email protected]

MEMO is an ideal environment to relax and have fun with colleaugues andfriends. Social events include:

• The Welcoming Reception in the Trade Show, February 24• The Gala Dinner, February 25

Companies are invited to participate in the official evening for hospitalitysuites on February 26, mainly at the Forestel (819.825.5660,www.forestel.ca)

Contacts: Francine Fontaine [email protected] andJohanne Voyer [email protected]

A wide variety of corporate sponsorships are available.

Contacts: Carol Plummer [email protected] and Paul-Henri Girard [email protected]

Programme technique |

Commandites |

Salon commercial |

Programme social |

Toute une série de présentations techniques s’échelonneront du lundi 25février au mercredi 27 février, offrant des pistes solides vers des solutionspossibles visant à améliorer l’efficacité et à réduire les coûts. Des visites desites miniers au Québec seront également offertes.

Contacts : Sylvie Poirier [email protected] etDenis Gourde [email protected]

Un salon commercial se tiendra sur le site et présentera les dernièrestechnologies en matière d’équipements et de services pour l’exploitationdes mines d’aujourd’hui. Il offre la possibilité de renouer contact et d’enétablir de nouveaux tout en visitant les stands.

Contacts : Marie-Claude Bruneau [email protected] etJean-Marc Demers [email protected]

Le colloque MEMO constitue un environnement idéal pour relaxer et avoirdu plaisir entre collègues et amis. Les activités sociales comprennent :

• La réception d’ouverture dans le salon commercial le 24 février• Le dîner gala le 25 février

Les entreprises sont invitées à participer à la soirée des salons d’accueil le 26 février dont la plupart sont situés à l’hôtel forestel (819.825.5660,www.forestel.ca)

Contacts : Francine Fontaine [email protected] etJohanne Voyer [email protected]

Un vaste éventail de commandites corporatives est offert.

Contacts : Carol Plummer [email protected] et Paul-Henri Girard [email protected]

org/memo

2020towardsWorking together

2020versTravailler ensemble

Hosted by the Harricana Branch, the Metal Mining Society, and the Maintenance and Engineering Society of CIMOrganisé par la section Harricana, la société des Mines et métaux et la société de l’ingénierie et de l’entretien de l’ICM


PREMIER SPONSORS | COMMANDITAIRES NIVEAU PREMIER

DIAMOND SPONSORS | COMMANDITAIRES NIVEAU DIAMANT

GOLD SPONSORS | COMMANDITAIRES NIVEAU OR

SILVER SPONSORS | COMMANDITAIRES NIVEAU ARGENT

COPPER SPONSORS | COMMANDITAIRES NIVEAU CUIVRE

MINING IN SOCIETY SPONSORS | COMMANDITAIRES LES MINES DANS LA SOCIÉTÉ

Canadian Royalites Inc.

Media Partner/Partenaire média:

Partner/Partenaire:

Thanks to our Sponsors! Merci aux commanditaires!CIM Conference and Exhibition 2007

Congrès et Salon commercial de l’ICM 2007

FRIENDS SPONSORS | COMMANDITAIRES NIVEAU AMI

Arthur Foley

Canadian Mining andMetallurgical Foundation

TURNING DATA INTO GOLD

cim news

Each year’s new slate of CIMDistinguished Lecturers isannounced at the awards gala of theCIM Conference and Exhibition, sothis May marks the passing of thetorch. The Distinguished Lecturers ofthe past year represented a broadrange of expertise from industry—from geology to human resources,these presenters offered a wealth ofinformation.

CIM Distinguished Lecturers wrap up the 2006–07 seasonMany CIM branches and societies

took advantage of the program, hostingDistinguished Lecturer talks at theirevents. Both Thompson and Red Lakebranches deserve special recognition—their members had the opportunity tolisten to every Lecturer this year.

Being a CIM Distinguished Lecturerrequires a commitment of time that isdifficult to manage in these busy days.But thank goodness people are willing

to take it on—this program is a strongvenue for knowledge sharing, part ofCIM’s mandate, and of absolute impor-tance to industry.

The program also requires funding.Some is provided by certain partici-pants’ companies. But it is the generos-ity of Atlas Copco and the CanadianMining and Metallurgical Foundation,who sponsor the program, that make itpossible.

Sponsored by:

Canadian Mining and Metallurgical Foundation

Douglas BoydQueen’s University

Mimoun ElboujdainiResources naturellesCanada

Paul HébertMining Industry HumanResources Council(MiHR)

Ryan MontpellierMining Industry HumanResources Council(MiHR)

Wulf MuellerUniversité du Québec à Chicoutimi

G. Ward WilsonUniversity of British Columbia

Thank you to the CIM Distinguished Lecturers2006–07 for a wonderful season. We appreciate it.

May 2007 65

historyTHE BASALT CONTROVERSY III(Part 17)by R.J. “Bob” Cathro, Chemainus, British Columbia

Except where noted, the information that follows on Werner and Hutton is from Adams(1938), Dean (1998), and Repcheck (2003).

Most geologists are unaware that Edinburgh played a major role in the history of eco-nomic geology. The last of Werner’s disciples to carry the Neptunist flame was a Scot,Robert Jameson (1774-1854), who joined the University of Edinburgh in 1804, two yearsafter studying under Werner for a year, and became Regius Professor of Natural History andKeeper of the Museum until his death.

While many professors have managed to drive outstanding students into other fields ofstudy, none can equal the influence of Jameson. One scientist recalled that he had attendedJameson’s lectures on geology and zoology in 1826, at the age of 17, and found them sodull that he determined “never as long as I lived to read a book on geology or in anywayto study the science.” He was also present on a field trip to Salisbury Crags (on the edge ofEdinburgh), when the professor showed them “a trap-dyke, with amygdaloidal marginsand the strata indurated on each side, with volcanic rocks all around us, and (declared) thatit was a fissure filled with sediment from above, adding with a sneer that there were menwho maintained that it had been injected from beneath in a molten condition. When Ithink of this lecture, I do not wonder that I determined never to attend to geology.”

Unfortunately for Jameson’s reputation, the student’s name was Charles Darwin, whorecalled these events in his autobiography (1887). Fortunately for geology, Darwin went onto make many valuable contributions and even considered himself a geologist (Herbert,2005). Jameson’s sneer was directed at James Hutton (1726-1797), often referred to as ‘thefather of modern geology,’ who laid the scientific foundations of Plutonism. It led to thedemise of the Neptunist theory, several years after Hutton’s death, and also resulted inrecognition that volcanic and plutonic rocks, and hydrothermal fluids were generated bythe melting of rock from the upper crust.

Since both Hutton and Werner were Deists who believed in a God who created the uni-verse and then abandoned it, assuming no control over life and exerting no influence on

natural phenomena, their disagreement was not religious. Oneof the few traits they had in common was that neither was aprolific writer, although Werner’s students disseminated hisideas widely. Otherwise, their scientific careers and personali-ties could not have been more different. Even though he taughtfield techniques, Werner did little fieldwork himself because ofhealth problems. He was an expert mineralogist whose experi-ence was limited to the mining districts of Erzgebirge and Harzin Saxony. Hutton, on the other hand, thrived on fieldwork andtravelled widely throughout Great Britain, but had no knowl-edge of mining. Living for much of his life in Edinburgh, whichis built on basalt, and being a frequent visitor to SalisburyCrags, Hutton was much more aware of volcanic rocks and hada more worldly view because of his close contact with leadingscientists and philosophers. Whereas Werner was an influentialprofessor who spent his career in an academic setting, Huttonused his scientific training to become a self-taught geologist.

Hutton was born in Edinburgh, enrolled at the university atthe age of 14, and apprenticed for a year in a law office aftergraduating in 1743. When he realized that he wasn’t suited for

“Having, in the natural historyof this earth, seen a succession

of worlds, we may from thisconclude that there is a system

in nature; in like manner as,from seeing revolutions of theplanets, it is concluded, that

there is a system by which theyare intended to continue those

revolutions … . The result,therefore, of our present enquiry

is, that we find no vestige of a beginning, -

no prospect of an end.”(Hutton, 1788, p 304).

Fragments of limestone floating in whinstone (the Scottish word forbasalt) at ‘Hutton’s section,’ a famous geological exposure alongthe Salisbury Crags, on the edge of Edinburgh (Cunningham, 1838;Ashworth, 2004). Reproduced with permission of the Linda Hall Libraryof Science, Engineering & Technology.


May 2007 67

economic geology

office work, he decided to studymedicine because it was theonly field that offered to satisfyhis growing interest in chem-istry. Receiving his degree in1749, following a year in Parisand three more at LeidenUniversity in Holland, hereturned to England and, with apartner, James Davie, perfecteda method for manufacturing themetalworking-flux sal ammo-niac (NH4Cl) from chimneysoot. This proved so successfulthat it provided him with thefinancial security to switch his interest in 1752 to a farm hehad inherited from his father, located in Berwickshire, 65kilometres southeast of Edinburgh.

In order to become knowledgeable about animal hus-bandry, he lived for two years on a farm in Norfolk and trav-elled widely, during which time he began to recognize thesignificance of erosion in the formation of soil and the dep-osition of sediments. This interest continued to grow afterhe returned to the family farm and he gradually emerged asa leading Scottish geologist. After touring the diverse geol-ogy, rugged topography, and abundant outcrop in theHighlands in 1764, he began to think seriously about theorigin of different types of rock. That led him to put histhoughts on paper in an unpublished essay titled NaturalHistory of the Earth. It focused on two key observations, nei-ther of which was original—that most rocks are composedof eroded materials and that all surface exposures are sub-jected to constant erosion. It was linking the two into acycle that made Hutton’s ideas important. He was beginningto recognize that the earth must be very ancient.

This was an unorthodox, even dangerous, position totake at a time when the age of the earth was generallyacknowledged to be about 6,000 years. Using thegenealogical chronology laid out in the Bible, MartinLuther had calculated in 1541 that creation had occurredin 3961 BC. By 1650, the calculation had been refined byBishop James Ussher to give a date of October 23, 4004,which was generally supported by Sir Isaac Newtonbefore his death in 1727. A proposal by Georges-LouisLeclerc, Compte de Buffon, in 1749, that the earth was75,000 years old aroused little interest. While Huttonaccepted the conventional estimate as the age of human-ity, he felt that the earth itself must be much older. To betaken seriously, Hutton would have to overcome theaccepted wisdom that the earth was quite young, an enor-mously difficult challenge.

Having turned the farm into a model operation, Huttonmoved back to Edinburgh in 1767, at a time when it wasemerging as the ‘Athens of the North,’ and became part of acircle of Scottish scientists and intellectuals called the

‘Scottish Enlightenment’ that wascentred around the university. Itincluded the philosopher DavidHume, the economist AdamSmith, the sociologist AdamFerguson, the historian WilliamRobertson, the chemist JosephBlack, and the inventor JamesWatt, as well as the polymathBenjamin Franklin and the writ-ers Robbie Burns and Sir WalterScott. This circle, which wasmore creative than any group inEngland at the time, was the

moving force behind thecreation of the Royal Societyof Edinburgh in 1783.

By 1785, Hutton had syn-thesized his 30 years ofobservations into a theoryabout the history of theearth. His two-part papertitled Concerning the Systemof the Earth, Its Duration,and Stability was deliveredto the Royal Society inMarch and April of thatyear. Joseph Black, who isrecognized as one of thefounders of modern chem-istry because he isolated

carbon dioxide and showed that the atmosphere is actuallya mixture of several gases, read the first lecture becauseHutton was sick. It described erosion and the formation ofstrata, while the second paper discussed the elevation ofstrata from below sea level to form new land, with internalheat and upwelling molten rock and mineral veins postu-lated as the cause. The conclusion that he left with his audi-ence was “this world has neither a beginning nor an end.”In other words, the world was ancient, of immeasurableage, which was a direct challenge to the teachings of theChristian church.

The 1785 lectures generated strong criticism, largely forreligious reasons, that was led by the Irish chemist and min-eralogist, Richard Kirwan. Deciding that he needed morefield evidence to support his theory and answer his critics,Hutton embarked on a series of field trips between 1785 and1788. Starting at Glen Tilt, a stream northwest of Edinburghnear Blair Athol, he observed many sill-like fingers of red-dish granite intruding along the bedding of black micaceousquartzite. The following year, at the age of 60, he went toGalloway, on the west coast south of Glasgow, and foundmore granitic dykes cutting older sediments. In 1787, he vis-ited the Isle of Arran, in the Firth of Clyde, southwest ofGlasgow, where he collected a 270-kilogram specimen from

Salisbury Crags with Edinburgh in the background

James Hutton, the father of mod-ern geology (1726-1797)

time worst writer among the great thinkers” (Gould, 1987, p.64). He had been in great pain with kidney disease during itspreparation, which may have contributed to the problem. Itwas not translated into other languages until 1815, andHutton’s ideas were not widely available in Europe for yearsbecause of the French Revolution and the Napoleonic wars.Although Hutton’s last book was published at almost thesame time as Werner’s main publication, neither referred tothe other and they never met or corresponded.

Several of Hutton’s influential champions, notablyArchibald Geikie and Charles Lyell, spread the myth thathis theories were the result of empirical study and observa-tion. However, the truth is that he formulated most of hisimportant ideas based on general observations and onlyconfirmed them with his field work after the presentation ofhis 1785 paper (Gould, 1987). n

economic geology


a similar intrusive contact. He also found a poorly exposedunconformity at Loch Ranza, at the north end of the island.Later in the year, he observed another example in the TweedBasin, on the east coast near the English border.

The most important trip was made by boat in 1788 alongthe coast southeast of Edinburgh, accompanied by twosceptical friends, John Playfair, a university professor whospecialized in Euclidian geometry, and Sir James Hall, ayoung chemist. At Siccar Point, he found what he was look-ing for, an excellent exposure showing the unconformitybetween vertical Silurian greywacke and overlying flat bedsof Devonian Old Red Sandstone. He believed that this rep-resented a gap in time separating two cycles of deposition.This was clear evidence that the earth had been elevated, acrucial step in proving his theory.

He had concluded from his field mapping that basalt wasderived from volcanoes and granite from magma, that themechanical and chemical weathering of rocks producedsedimentary particles, and that these were transported bywind, water, and gravity and deposited on the sea floor assediment in essentially horizontal attitudes. Also, he inter-preted steeply inclined beds as evidence of uplift throughcrustal movement, and suggested that mineral depositswere formed by crystallization from comparatively drymelts. Inexplicably, he still believed that there was a dis-tinction between basalt and lava.

When the 1789 publication of his 1785 lectures failed tostop the criticism, Hutton began to write a more detailedexpansion of his theory, including the field evidence col-lected in the interim. Although he was a great conversation-alist, the two-volume, 1,000-page, rambling book publishedin 1795, two years before his death, has been roundly criti-cized as virtually unreadable and dense, with endless quota-tions in French (a third volume was unfinished in manu-script form). It left Hutton with the reputation as “the all-

REFERENCES

Adams, F.D. (1938). The Birth and Development of theGeological Sciences. Baltimore: Williams & Wilkins.

Ashworth, W.B. Jr. (2004). Vulcan’s Forge and Fingal’s Cave:Volcanoes, Basalt, and the Discovery of Geological Time.Catalogue for an exhibition of rare books from the collec-tions of the Linda Hall Library of Science, Engineeringand Technology, Kansas City, Missouri, 95 p. available atwww.lindahall.org/events_exhib/exhibit/exhibits/vulcan/about.shtml.

Cunningham, R.J.H. (1838). Essay on the Geology of theLothians. Edinburgh: Neill & Company.

Darwin, C. (1887). Autobiography. John Murray, London,F. Darwin (Ed.). Reprinted in 1958 by W.W. Norton &Co., London, 253 p., N. Barlow (Ed.).

Dean, D.R. (1998). Plutonists, Neptunists, Vulcanists. InSciences of the Earth: an encyclopedia of events, people, andphenomena. New York: Garland Publishing, Inc.

Gould, S.J. (1987). James Hutton’s theory of the earth: amachine without a history. In Time’s Arrow, Time’s Cycle:myth and metaphor in the discovery of geological time.Cambridge: Harvard University Press.

Herbert, S. (2005). Charles Darwin, Geologist. Ithica:Cornell University Press.

Hutton, J. (1788). Theory of the earth, or an investigationof the laws observable in the composition, dissolution andrestoration of land upon the globe. Transactions of theRoyal Society of Edinburgh, 1, 209-304.

Hutton, J. (1795). Theory of the Earth, with Proofs andIllustrations (2 Volumes). Edinburgh: William Creek.

Repcheck, J. (2003). The Man who Found Time: JamesHutton and the Discovery of the Earth’s Antiquity.

Hutton's famous unconformity at Siccar Point, Scotland. Photo credit: Dr. Clifford E. Ford.

metallurgy

METAL PRODUCTION IN IBERIA

Gold

Gold was obtained in the alluvial deposits of rivers scat-tered through the Iberian Peninsula. Rivers like Segre(Lerida), Darro (Granada), and Tajo (near Lisbon), as men-tioned by the chronicler Ahmed Arrazi, the geographer AlEdrisi, and the poet Ibn Hazim. Surface mining was alsofound in the area of Elvira (Granada) and probably in the vil-lage of Navas de Ricomalillo (Toledo), as can be inferred fromits closeness to the Muslim mining area of Los Vascos wheremining tools were discovered. In addition, gold was importedfrom Africa and was shipped to Malaga, which was the com-mercial centre of gold. According to a book on Lapidary,translated from Arabic to Spanish at the time of Alfonso X,we know that borax was used as flux in gold metallurgy. Themetal obtained was employed in jewelry, gilding, and textiles,as well as to mint the so-called “dinares” in the Spanish Mus-lim period. According to Ibn Hawqual, minting—by virtue ofits monopoly—was one of the main sources of income for theState.

Silver

Silver was obtained from mines located in the area of Hor-nachuelos-Posadas (Cordova), Herrerias (Almeria), Loja yPechina (Granada), Almaden de la Plata y Guadalcanal(Sevilla), and also in the Muslim provinces (‘kuras’) of Bejaand Ocsonoba (Portugal), among others. According to VallvéBermejo, at the time of emirAbd Allah in the ninth andtenth centuries, silver minesnear the coast of Tudmir inMurcia produced 30 pounds ofmetallic silver per day. Thismetal was used in jewelry, deco-rations, crockery, and also tomint money.

Lead

Lead mining is often relatedto the exploitation of silver-bearing galenas. According toIbn Hawqal, iron, mercury, and

lead mining were abundant in Spain. There were miningworks near Cabra, Hornachuelos, and Los Pedroches (Cor-dova), Baza (Granada), Bellmunt (Tarragona), Sierra deCartagena (Murcia), among others. According to VallvéBermejo (1996), Daysam Ben Ishaq from Murcia extracted athousand cavalry charges from his mines annually. This leadwas used for piping, roofing, and in pottery. Finely groundgalena was used as makeup for women, taking advantage ofits dark colour.

Mercury

Mercury wasprincipally minedin Almaden in Ciu-dad Real, althoughthere were alsomines in otherplaces such asOvejo (Cordova)and Las Alpujarras(Granada).

According tothe geographer AlEdrisi, in the 12thcentury, Almaden’smining site had about 250 webs (420 metres), which mostprobably made it the deepest mine at that time. A labourforce of more than a thousand men was employed in mining,

mine water drainage, metallurgy,wood collecting, pot manufac-turing, and as master builders(alarifes). Mercury was producedfrom cinnabar in a xabeca (pro-nounced shabeka, an Arabicword) which is a furnacedescribed by Alvaro AlonsoBarba in his book Arte de los Met-ales, published in Madrid in1640. Ceramic pots were filledwith cinnabar, sealed with clay,then placed in the holes in theupper part of the furnace wherethey were heated from below. Amodel of this furnace is on dis-

Muslim Mining in the IberianPeninsula (Part II)by O. Puche Riart, L.F. Mazadiego Martínez, and P. Kindelán Echevarria, Mining Engineering School, Universidad Politécnica de Madrid

Xabeca mercury recovery furnace as illus-trated in Arte de los Metales (1640)

A model of an xabeca furnace on display at the Almadén Mines

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play at the Almadén Mines.Mercury was used in gild-ing by amalgamation, andalso in medicine. Groundcinnabar or vermilion wasemployed as a pigment.Mercury and vermilionwere exported to theMediterranean countries.

Iron

Iron, a necessity in themanufacture of swordsand agricultural imple-ments, screws, etc., wasexploited in the mountainsof the northern valley ofthe River Guadalquivir,around the areas of Con-stantina and Cerro delHierro (Seville), as well asin Alquife (Granada),Sierra Filabres and SierraAlmagrera (Almeria),Otero de Herreros(Segovia), Montes deToledo, and in many other

places. We have not heard of the existence of hydraulicforges, introduced in the Christian territories of northernSpain by Europeans in the 12th century. However, we knowabout the existence of low fur-naces, sometimes half buried,where several layers of ironoxide ores were mixed withcharcoal and flux. A natural draftin the mountain, or artificial ven-tilation, was created by means ofbellows. The doughy massobtained was beaten out (bymanual hammering) to removethe iron slag. The iron couldthen undergo some type of treat-ment (annealing, quenching,cementing, etc.) to get thedesired product.

According to the geographerAz Zuhri, there were Indian steel factories called ‘alhinde’ inSeville, Spain, that exported this metal all over the world. Inthe 12th century, Al Idrisi also points to the island of Saltes,near Huelva, as the place where an important iron and cop-per factory was found. There was also an important arma-ments industry in Huesca and a siderurgy factory in Malaga,though the most valued steel came from Damascus.

Zinc

In his encyclopedia of Natural Sciences and Geography,Ancari Katobi mentions the mineral ‘calamines’ in Salobrena(Granada). We do not know if this archaeological site coin-cides with that of Cerro del Toro mine in Motril, Granada.Brass and other alloys like azofar and ceni were obtained byalloying zinc (atutia) with copper. Brass was probably manu-factured near the mines of Riopar (Albacete).

Copper

In 1318, the geographer Al Dimashqui wrote aboutSpanish copper in El Cairo. Copper was obtained nearRio Tinto (Huelva), Cerro Muriano (Cordova), as well asin Granada, Almeria, the Toledo’s mountains, Aljustrel(Portugal), and others. Copper sulphate (blue vitriol,known as ‘aceche’ by Muslims) and other sulphates, suchas ‘jebe’ (alum = aluminium-potassium sulphate) werealso exploited in the Iberian Pyritic Belt. Copper wasobtained by smelting oxidized ores in Castilian furnaces,and was used for boiler forge, alloys (brass and bronze,known as wash copper), and manufacturing verdigris forpainting. Aceche or blue vitriol had important applica-tions in agriculture.

Other Metals

Tin needed to manufacture bronze came from the Her-cynian Massif, the mines of the province of Ocsobona (Por-tugal), and other mines in Extremadura and Lumbrales

(Salamanca) in Spain. According to Arie (1984), AlAndalus exported a great deal of tin and especially copper.On the other hand, high-quality antimony and alum wereimported from Morocco. Antimony was exploited in theMuslim province of Lisbon, and according to the geogra-pher Katobi, there was also an antimony mine in Jaén(Spain). n

Clay pots, sealed at the top, in whichmercury is recovered from cinnabar

... we know about the existenceof low furnaces, sometimes half buried,

where several layers of iron oxide ores weremixed with charcoal and flux…

The doughy mass obtained was beaten out(by manual hammering) to remove the iron slag.

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Suggested Readings

Arlé, R. (1982). España musulmana, s. VIII-XV. In M.Tuñón de Lara (Ed.), Historia de España. Barcelona, T.III.Carbonell Y Trillo-Figuerola, A. (1929). La minería y lametalurgia entre los mususlmanes en España. Revista Min-era, Metalúrgica y de la Ingeniería, 80, 193-196, 217-220,231-234, 254-257, 277-279. Cossin Corral, Y. (1996). Un ejemplo de minería islámica:La ciudad hispano musulmana de Los Vascos (Naval-moralejo, Toledo). In B. Calvo, J.C. Guisado, & M.J.Bernáldez (Eds.), Arqueología e Historia de la Minería y de laMetalurgia Escuela de Ingenieros de Minas, (pp. 107-119),Madrid. Cressier, P. (1998). Observaciones sobre fortificación y min-ería en la Almería islámica. In A. Malpica (Ed.), Castillos yterritorio en Al-Andalus. Granada: Athos-Pérgamos. Fagnan, E. (1924). Extraits inédits relatifs au Magreb. Géo-grafie e Histoire. Argel.Fuentes Guerra, L. (1957). La metalurgia andaluza.Resumen histórico. Industria Minera, 99, 29-44.

Lévi Provenzal (1950). Histoire de l’Epagne musulmana.París (Spanish translation by E. García Gómez, 1950). In R.Menéndez Pidal (Ed.), Historia de España. Espasa-Calpe,Madrid, T. IV.Lévi Provenzal (1953). La description de l’Espagne d’Ah-mad Al-Razzi. Al Andalus, 18, 51-108.Martínez San Pedro, M.D., & García Pardo, M. (1996). Lariqueza minera en la Almería medieval. Proceedings of I Jor-nadas sobre Minería y Tecnología en la Edad Media Peninsu-lar (pp. 274-281). León: Fundación Hullera Vasco-Leonesa.Molina López, E. (1981). La cora de Tudmir según Al-Udri(s. XI). Aportaciones al estudio geográfico descriptivo del SEpeninsular. Cuadernos de Historia del Islam.Vallvé Bermejo, J. (1996). La minería en Al-Andalus. Pro-ceedings of I Jornadas sobre Minería y Tecnología en la EdadMedia Peninsular (pp. 50-64). León: Fundación HulleraVasco-Leonesa.Vallvé Bermejo, J. (1980). La industria en Al-Andalus. Al-Qantara, 1, 209-241.

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INDUSTRY KNOWLEDGE

Physical and mechanical behaviour of various combinations of minefill materialsF.P. Hassani, M.R. Nokken, and A. Annor

Estimating haul truck dutymeters using operational dataC.K. Mechefske and C. Campbell

Environmental impact of blast-emitted noise and air overpressure: prediction andcontrol measuresR.K. Singh, C. Sawmliana, and P. Pal Roy

Air overpressure and noise vis-à-vis detonating fuseS.K. Mandal, M.M. Singh, and S. Dasgupta

Online monitoring system for mining shovels focused on vibration analysisP.N. Saavedra and C.J. Molina Vicuña

Peer reviewed by leaders in their fields

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GUIDETO

Complete papers are posted in the CIM Bulletinsection of the online Technical Paper Library

www.cim.org72 CIM Magazine n Vol. 2, N° 3

Physical and mechanical behaviour of various combinations of minefill materials

This paper presents the results of a laboratory study onfactors influencing the strength of backfill. Strength is vitallyimportant to the design of backfill mixtures for mining appli-cations. The strength developed in the backfill will ultimatelyaffect the remaining stope sequencing and the recovery of orein the areas adjacent to backfill. Many factors influence thestrength of backfill mixtures. Mining backfill is generally pro-duced by a mixture of a number of components. In this study,the amount and composition of binder, the amount of sand inblended tailings/sand backfill systems, and the influence ofspecimen geometry were examined. Tailings, sand, and wasterock were used in various proportions with Portland cementor other binders to form a structurally competent material.Originally, the term compost fill was used in the late 1980s ina study of the tight filling of Kidd Creek mine rockfill stopes,by Hassani and Farsangi.

Both full-plant and classified tailings pastefills wereinvestigated, as well as sand and blended tailings/sand mix-tures. In addition, mixtures utilizing rockfill with and withoutthe addition of tailings were studied. All mixtures containedbinders, most with Portland cement. Selected tailings werestudied with alternative binders including a 50% Portland,50% Class C fly ash (with and without anhydrite) and one oftwo proprietary binder blends. Test variables included theamount and type of binder, the quantity of sand in theblended tailings, and the specimen size.

As expected, increases in binder amount increasedunconfined compressive strength, regardless of the type ofbackfill. For the Portland cement mixtures, the amount ofbinder required to achieve a specified target strength wasfound to be primarily dependent on the constituent materialsof the backfill. Of the mixtures investigated, those containingclassified base metal mine tailings exhibited higher strengthsthan other backfill types at similar binder compositions. It wasalso determined that mixtures containing a high percentageof fine sand gave relatively low strength. Regarding thebinder composition, the use of 50% fly ash as a replacementfor Portland cement generally gave strengths exceeding thatof Portland used alone when tested at 28 days. The addition

F.P. Hassani, Department of Mining, Metals and MaterialsEngineering, McGill University, Montreal, Quebec,M.R. Nokken, Building, Civil and Environmental Engineering,Concordia University, Montreal, Quebec, andA. Annor, former manager of CANMET lab, Sudbury, Ontario(deceased)

of anhydrite to Portland/fly ash blends gave increasedstrength at lower binder contents, but may not be beneficialat higher binder contents. The two special binder blends gavesubstantial strength increases compared to other types ofbinder when compared at the same binder content. Furtherresearch in the development of alternate binder systems foruse in backfill is warranted.

For blended tailings/sand systems, the addition of sanddid not consistently improve the mechanical properties. Thefiner sand gave no additional strength to the backfill andshould only be considered for use if the sand is at hand andis not suitable for other applications. Sand with larger sizeparticles gave increased strength with increased sand addi-tions.

The specimen size used for the determination of uncon-fined compressive strength was found to give varied results.Research to date indicates that the strength is expected todecrease as the specimen size increases. In this study, thestraight tailings and rockfill specimens clearly showed thistrend. However, for the blended tailings/sand samples and thecomposite-aggregate samples (tailings and waste aggregate),the trend was not as apparent. The blended tailings exhibitedan increase in strength up to a size of 152 mm, but subse-quently decrease.

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Estimating haul truck dutymeters usingoperational data

Even within the bounds of normal machinery operationand with ideal maintenance practices, it is inevitable thatmechanical devices will eventually fail. The consequences offailure include the physical cost of repairing the failure, thecost of additional machine damage incurred during the fail-ure, and lost production revenue. The magnitude of theseexpenses over a given period of time can be minimizedthrough the implementation of careful machinery operationand effective maintenance programs. However, mining envi-ronments present a unique problem. A large amount of thecritical mining production equipment is mobile in nature, andthese machines operate almost continuously.

An efficient maintenance program for machines critical toproduction ensures availability by performing all appropriatemaintenance activities, including replacing components beforethey fail, thereby avoiding the high costs of excessive lost pro-duction and secondary damage induced by the initial failure.This is accomplished by estimating the component condition,based on observable indicators or following predefined preven-tative replacements. The replacement intervals or ‘benchmarks’are defined based on knowledge of typical machine wear, man-ufacturer recommendations, and experience. Machine weartypically occurs at a gradual rate, which continues over time toa point at which the accumulated wear causes a failure. Thisassumes that the accumulated wear is a function of time orthat the rate of wear is constant with respect to time. This is notthe case when considering the operation and loading of mobilemining equipment. The majority of mobile mining equipment issubjected to widely varying and sometimes unpredictable oper-ating conditions. Loading variations, operator practices, oreproperties, and environmental factors all have a significanteffect on machine reliability.

Many critical mobile mining equipment components arereplaced when they reach the specified time-based replace-ment benchmark. When a reliable component reaches thisreplacement benchmark, it is replaced, regardless of condi-tion, which may be unnecessary considering the effects ofduty. Premature maintenance can in fact increase the proba-bility of failure with the installation of potentially defective

components and the introduction of faults during the mainte-nance process. Preventative component replacement deci-sions should consider the effect of machine duty oncomponent life, not only the hours of service.

The development of a dutymeter that relates the severityof operational loading history to component reliability couldsupplement component replacement decisions with an addi-tional measure of condition. This would allow componentsapproaching a preventative replacement benchmark to beevaluated for the possibility of continued utilization, therebyreducing replacements and maintenance expense. It would notfunction as a failure prediction tool, but as an indicator ofincreased or decreased risk of failure. An effective dutymeterwould also highlight which particular aspects of machine load-ing or overloading have the greatest effect on component life.This would provide a better understanding of the relationshipbetween loading practices, driven by production requirements,and the corresponding associated maintenance costs.

Haul truck payload data obtained from an onboard datacollection system was used to describe unique duty histories.The payload data was used to determine which operationalloading parameters were related to component reliability bycomparing machine operational data and component reliabil-ity histories. The average ‘percent overload’ for unreliable(failed before preventative replacement) hoist cylinders withat least 5,000 hours of operation was 14.4%, compared withan average ‘percent overload’ of 12.7% for cylinders replacedby preventative maintenance. This suggests that cylinders thatwere overloaded more than about 14% of the time were his-torically less reliable. Reliable final drives had an average ‘per-centage overload’ of 16.2%, while unreliable final drivesaveraged 20.7%. This indicates that final drives that wereoverloaded more than about 19% of the time were less likelyto be reliable.

In summary, it was found that ‘percent overload’ wasstrongly related to the reliability of both the hoist cylindersand final drives. This suggests that the number of times atruck is overloaded is more significant than the amount of theoverload. The intended application of this method is to deter-mine the feasibility of reliably extending component replace-ment benchmarks for lightly loaded components. This wouldhave the effect of reducing maintenance operations whilemaintaining an acceptable risk of failure. Trustworthydutymeters could also help quantify the incremental damage,and the associated maintenance expense, caused as a resultof increased haul truck loading practices.

C.K. Mechefske and C. Campbell, Department of Mechanical andMaterials Engineering, Queen’s University, Kingston, Ontario

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executive summaries

Environmental impact of blast-emittednoise and air overpressure: prediction and control measures

Blast-emitted noise and air overpressure (AOP) oftenaffect the peace of the surrounding environment. Air over-pressure is the energy transmitted from the blast site withinthe atmosphere, in the form of a series of pressure waves. Thevarious factors affecting generation of noise/air overpressureinclude blast design parameters; topographical and meteoro-logical conditions, such as direction and speed of wind, tem-perature, cloud cover, and humidity; use of detonating cord;weight of explosive charge per delay; total quantity of explo-sive used in a round of blast; etc.

Noise/air overpressure control has become one of themajor concerns for opencast projects near the sensitive envi-ronment where a blasting operation is inevitable. The initialplanning phase of a mining project should recognize thepotential for adverse impacts due to noise and airblast emis-sions. The construction and operational staging of the projectshould be designed and managed to best minimize theseimpacts. The extent of noise and airblast emissions should bequantified during the execution phase of the project. Predic-tions of the levels of noise and air overpressure at potentiallysensitive locations form the basis on which the project designmay be modified to mitigate any impacts to within acceptablelimits.

This paper discusses case studies at three different coalmines in India: Parej (East) Opencast Project, Central Coal-fields Limited; Chandan Opencast Project, Sudamdih, BharatCoking Coal Limited; and South-East (SE) Quarry, WestBokaro, Tata Iron and Steel Company Limited. Fifteen experi-mental blasts were performed with varying design parametersand charging patterns at Parej (East) OCP, and 34 sets of AOPdata were recorded at different distances from the blastingsite. At the Chandan Opencast Project, 11 experimental blastswere performed and 28 sets of AOP data were recorded,

Regression plot of AOP data of all three mines

R.K. Singh, C. Sawmliana, and P. Pal Roy, Central MiningResearch Institute, Dhanbad, Jharkhand, India

whereas at SE Quarry, 11 experimental trials with 33 sets ofAOP data were recorded. The blast-induced noise/air over-pressure levels were monitored at various distances from theblasting site. These distances varied between 25 to 365 m atParej (East) OCP, 30 to110 m at Chandan OCP, and 75 to275 m at SE Quarry. The maximum explosive weight per delayvaried between 50 to150 kg, 25 to 62.5 kg, and 120 to 508kg at Parej, Chandan, and SE projects, respectively. The AOPdata generated were analyzed to form a generalized predic-tor equation. Cube root scaling of maximum charge per delayto the distance of measurement was adopted for predictingthe level of air overpressure. In total, 95 data sets were com-bined to form the following generalized predictor equation:

D –0.146AOP = 191.73 (–––––––)3

\/Qmax

––––

Correlation coefficient = 67.1 %

The regression plot of AOP data with respect to the cuberoot scaled distance is depicted in the figure.The measuredvalues of air overpressure at different mines and that pre-dicted by the generalized predictor equation at respectivescaled distances were also compared.

Minimizing air overpressure at source such that, evenunder unfavourable weather conditions, all such energy iswithin acceptable criteria at distance, is the best practicableapproach. The case studies of three different coal mines con-cluded that the levels of noise and air overpressure can besignificantly controlled by taking proper care and attentionwhile designing the blast and the judicious implementation ofit. The level of air overpressure can be predicted by the pre-dictor equation. Although the correlation coefficient of theequation is not very high, it can provide a guideline to mineowners to modify their mining activities, to minimize theadverse impact of noise and air blast.

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executive summaries

Air overpressure and noise vis-à-visdetonating fuse

The word “noise” is generally used to convey a negativeresponse or attitude towards a sound. A person’s response toa noise depends upon position, age, education, and conditionof involvement with source. In general, high-magnitude blast-induced air overpressure (AOP) and audible noise, along withground motion, intensifies people’s response and becomes themain cause for complaint by those residing around excavationwork. Considering the measured magnitude of AOP from plas-ter shooting and different methods of initiation viz. detonatingcord and the NONEL system of initiation, the paper illustratesthat plaster shooting generates a very high magnitude of AOP.As well, the magnitude of AOP generated from plaster shoot-ing can be reduced by detonating the same quantity of explo-sive in different delays. In comparing the difference between amagnitude of AOP generated by a NONEL tube and a detonat-ing cord system of initiation, the paper experimentally andmathematically illustrates that mud-capping of a trunk linedetonating cord can effectively reduce the magnitude of AOP.

In general, the horizontal component of an externalforce is responsible for the amplification in magnitude ofvibration. The magnitude also increases with an increase inthe height of the structure. Air overpressure, travelling by rar-efaction and compression waves, acts horizontally on struc-tures and may cause damage to them. Unnatural to theimpact of ground vibration, AOP magnitude affects only thewindward side of a structure; the magnitude increases withan increase in exposed surface area. The impact dependsupon the surface area exposed to AOP and is equal to PBHand pPDH/2 for planar and circular wall structures, respec-tively (P is pressure due to AOP, KPa; B and D are width anddiameter of wall, m; H is the height of wall, m). The differen-tial force generated between two structural members causesstrain in the structure and damages it when the magnitudeexceeds the strength of the members. Hence, to minimize theimpact of AOP, the structures should be of low height withsmooth and circular or angular shape towards the windwarddirection of AOP.

For plaster shooting, the magnitude of AOP/noise dimin-ished from 0.229 KPa to 0.103 KPa when the explosive quan-tity was altered from 100 kg to 25 kg. Similarly, for the sametotal charge fired in delay and varying charge per delay (total

charge 50 kg; explosive per delay 50 kg and 25 kg), the mag-nitude of AOP diminished by about 24 dB(L) at a distance of1 km. The magnitude of AOP/noise for the NONEL system wasalways observed to be less than the conventional uncovereddetonating cord system. However, the detonation of a cov-ered trunk line detonating cord reduced the magnitude ofAOP/noise. It was observed that covering the trunk line deto-nating cord (10 gm/m) with clay reduced the magnitude ofAOP/noise by 2.685 KPa and 18 dB(L), when measured at adistance of 300 m and 175 m, respectively.

Detonating cord consisting of a high-performance explo-sive (1.5 to 120 g/m) and a high velocity of detonation (6,000m/s) produces a higher magnitude of AOP, with respect toNONEL tubes comprising ~20 mg/m of explosive having aVOD of ~2,000 m/s. Therefore, to avoid confrontationbetween mine management and people residing around amine, blasting operations in heavily populated areas shouldbe carried out using the NONEL system. When covered withsand or moist clay, low-charge trunk line detonating (1.5 to 5g/m) can be effectively used as a suitable initiation system, asit produces a lower magnitude of AOP. On detonation of ashielded cord, more than a million small minute particles col-lide with each other and reduce the magnitude of AOP priorto the release of energy (pressure or impulsive force) into theenvironment. The reduction in AOP magnitude due to collisionof millions of particles, also termed as coefficient of elasticityof restitution or resilience (e), can be determined with thehelp of the following equation:

(Pa)1 – (Pa)2e = ——————— (1)(Pa)1

(Pa)1 = pressure before covering detonating cord, Pa(Pa)2 = pressure after covering detonating cord, Pa

The fundamental characteristics of structural responseare the parameter of mass, spring stiffness constant, and thecharacteristics of damping or energy dissipation. The impactof AOP, travelling by compression and rarefaction, has a pro-found influence on structures, and can be reduced by orient-ing the construction in such a manner that it experiencesminimal impact, minimizing the exposed surface area orstrengthening the structure by reinforcing it in both thedimensions exposed to AOP, ie. in horizontal and verticaldirections or by placing brick and cement layers in such amanner that the hade joint does not continue in the samelevel and is interfered by brick structures at intervals.

S.K. Mandal, M.M. Singh, Central Mining Research Institute,Barwa Road, Dhanbad, India, andS. Dasgupta, Director, Technical Education, West Bengal, India

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executive summaries

Online monitoring system for miningshovels focused on vibration analysis

Online condition monitoring of machines through vibra-tion and complementary magnitude analysis has been used inmany industries for monitoring critical machines. Most on-linevibration-monitoring systems are based on conventional pro-cessing techniques, which work very well on machines thatoperate under conditions of constant speed and load. How-ever, these systems are not useful for online monitoring ofmining shovels that operate under transient conditions withvariable load and speed. Reliable early fault detection onthese large and complex systems remains problematic. Thispaper describes an online monitoring and diagnosis system,SiAMFlex, which is capable of solving these problems.

This paper analyzes some new vibration techniques thatoffer tools for the analysis of signals measured under tran-sient conditions—the order spectrum analysis (OSA) and therevolution-order transform (ROT).

SiAMFlex is an online monitoring system customized fora specific type of machine that considers its own peculiarities.Unlike other commercially available systems that have beendeveloped for general rotating machines, the shovel versionof SiAMFlex is the first monitoring system specially designedfor mining shovels.

SiAMFlex-shovel is a multi-channel system that cansimultaneously monitor vibrations measured on the maintransmission gears, bearing temperatures, strain on criticalpoints of the frame, angular speed and angular accelerationof the motors, and operational variables. The system consistsof two principal modules: surveillance and analysis modules.

The surveillance module consists of an industrial com-puter, signal conditioning devices, analogue-to-digital con-verters, and SiAMFlex-surveillance software. This softwareperforms shovel monitoring, manages the recorded data,warns the shovel’s operator when any of the parametersunder monitoring surpass the pre-established values, andtransmits data via wireless to the central computer in the pre-dictive maintenance office.

P.N. Saavedra and C.J. Molina Vicuña, Concepción University,Concepción, Chile

In the central computer, the vibratory data can be ana-lyzed in the analysis module using some of the followingtechniques: Fast Fourier Transform amplitude spectrum (FFTspectrum), OSA, cascade spectra, waveform, extended timewaveform, and ROT. This data can be correlated with the rota-tional speed of transmissions during the measured time.

The paper also presents two case histories. In the firstone, the analysis of one bearing fault detected in the hoisttransmission of a Bucyrus 395 BIII shovel is presented. Thecommon practice of taking measurements during the change-of-cables periods of the transmissions is analyzed, andthrough real data, it is shown that the only way to detectthese kinds of problems at an early stage is by taking meas-urements during the working cycles of the shovel and at highrotational speed of the motors. In the second case history, thecontinuous strain monitoring capability of the SiAMFlex-shovel system is presented. The purpose of the monitoringwas to determine the real stresses and loads acting on theshovel structure in order to validate a finite elements model(FEM). Thus, the continuously and simultaneously monitoredparameters were the strains and rotational speeds of thehoist, crowd, and swing transmission motors. The analysis ofthe complete load cycle of the shovel is presented and themaximum strains are determined.

The development of a flexible online monitoring systemfor mining shovels is presented. With this system, measure-ments are taken during the normal operation of the shovel, bywhich several disadvantages of using the common measuringpractice are overcome. This system uses the OSA and ROTtechniques, among others, which are appropriate and neces-sary techniques for diagnosis on machines that work undervariable speed and/or load conditions.

Through a case study, it is demonstrated that the identi-fication of a bearing fault at an early stage requires the acqui-sition of the signal under working conditions of the shoveland at high rotational speed of the motors.

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executive summaries

Exploration and Mining Geology JournalVolume 15—Numbers 3 and 4

The Brunswick No. 6 Massive Sulfide Deposit, Bathurst Mining Camp, Northern NewBrunswick, Canada: A Synopsis of the Geology and Hydrothermal Alteration System

D.R. Lentz, Department of Geology, University of New Brunswick, and S.R. McCutcheon, NewBrunswick Department of Natural Resources, Geological Surveys Branch

The 12.1 Mt Brunswick No. 6 Zn-Pb-Cu-Ag massive sulfide deposit (New Brunswick, Canada)lies between two subaqueous felsic volcanic formations near the base of the Middle OrdovicianTetagouche Group. The Brunswick No. 6 deposit is a proximal autochthonous deposit with a well-zoned massive sulfide body and a basal Cu zone that, at depth, develops into a stockwork stringersulfide (feeder) system. The massive sulfides are capped sharply by a layered magnetite-chert unitthat extends regionally beyond the deposit. The (Fe2O3T+MgO)/(Na2O+K2O) and base metal alter-ation indices are the best practical lithogeochemical vectoring tools at this deposit.

Chemostratigraphy at the Brunswick No. 6 Volcanic-Sediment-Hosted Massive SulfideDeposit, New Brunswick: Resolving Geometry from Drill Core in Deformed Felsic Volcanic Rocks

A.O. Wills, D.R. Lentz, Department of Geology, University of New Brunswick, and G. Roy, XstrataZinc plc., Exploration

Diamond-drill hole DDH-B357, located 1.5 km north of the Brunswick No. 6 Zn-Pb- Cu-Ag vol-canic-sediment-hosted massive sulfide (VSHMS) deposit, intersects three exhalative horizons withinvariably altered felsic volcanic rocks of the Nepisiguit Falls and Flat Landing Brook formations. Ironformation geochemistry and felsic volcanic rock chemostratigraphy from drill core sampling can pro-vide an effective mineral exploration tool for the structurally complex rocks of the Bathurst MiningCamp.

Petrology, Geochemistry, and Genesis of the Copper zone at the Brunswick No. 6 Volcanogenic Massive Sulfide Deposit, Bathurst Mining Camp, New Brunswick, Canada

K.L. MacLellan, D.R. Lentz, and S.H. McClenaghan, Department of Geology, University of NewBrunswick

A Cu-rich pyrrhotite-pyrite zone that occurs at the base of the Brunswick No. 6 Pb-Zn massive-sulfide lens is part of a south-plunging synclinal sheath fold. Pyrite, pyrrhotite, chalcopyrite, spha-lerite, and magnetite are the major opaque minerals. The interpreted zone refining is consistent with:(1) the relatively high pyrrhotite-to-pyrite abundance and the higher abundance of chalcopyrite; (2)lower sphalerite, galena, tetrahedrite-tennantite, arsenopyrite, and cassiterite abundances in the Cuzone; and (3) the low S/Se ratio typical of other Cu-rich zones. This interpretation is consistent withthe similarity of ‰34S values for the Cu and Pb-Zn zones.

A Physical Volcanological, Chemostratigraphic, and Petrogenetic Analysis of the LittleFalls Member, Tetagouche Group, Bathurst Mining Camp, New Brunswick

W.S. Downey, Department of Geology, University of New Brunswick, S.R. McCutcheon, NewBrunswick Department of Natural Resources, Geological Surveys Branch, and D.R. Lentz, Depart-ment of Geology, University of New Brunswick

The Little Falls member of the Nepisiguit Falls Formation is situated in the northern part of theBrunswick Belt of the Bathurst Mining Camp and has been interpreted as the distal equivalent ofproximal tuffaceous rocks that host the stratiform Brunswick No. 12 and No. 6 Pb-Zn massive sulfidedeposits. The relationship of volcanic facies within the Nepisiguit Falls Formation and the geochem-istry of these facies indicate strongly that fine grained,reworked tuffaceous rocks are not associated with themajor ore-bearing horizons of the Bathurst Mining Camp.

Excerpts taken from abstracts in EMG, Vol. 15, Nos. 3 and 4.Subscribe—www.cim.org/geosoc/indexEMG.cfm

emg abstracts


Upcoming 2007 Seminars• Applied risk assessment for ore reserves and mine planning: conditional

simulation for the mining industryMay 16-18, MontrealRoussos Dimitrakopoulos, McGill University, Canada

This three-day course presents a new generation of applied conditional sim-ulation technologies for assessing orebody uncertainty and effects on riskanalysis and cash flow considerations. Emphasis is placed on the down-stream practices pertinent to the feasibility, design, development, and plan-ning stages of mining ventures, as well as in the financial optimization ofrelevant aspects of operations and production.

• Strategic risk management and applied optimization in mine designMay 23-25, MontrealDavid Whittle, BHP Billiton, Australia; Roussos Dimitrakopoulos, McGillUniversity, Canada; and Manuel Arre, Gemcom Software Int., Canada

Learn how you can have a significant, positive impact on your company’sbottom line by utilizing strategic mine planning methodologies and soft-ware:

– Find out how mining professionals minimize risks and produce optimal pitdesigns by using strategic mine planning processes, next generation opti-mization methods, and Whittle software.

– Discover how new developments in multi-pit optimization and stockpilingwill help you capture the “upside potential” in mine designs and minimize“downside risks” through a better understanding of the effect of the min-ing sequence on optimal pit limits.

STRATEGIC RISK QUANTIFICATION

and MANAGEMENT for ORE RESERVES

and MINE PLANNING

Upcoming 2007 Seminars

• Computer simulation and animation for the mining industry: minedesign, mine planning, and equipment selection June 6-8, MontrealJohn Sturgul, University of Idaho, USA

• Geostatistical mineral resource/ore reserve estimation and meeting thenew regulatory environment: step-by-step from sampling to grade con-trolSeptember 24-28, MontrealMichel Dagbert, Geostat Systems International, Canada; Jean-MichelRendu, Consultant, USA; and Roussos Dimitrakopoulos, McGill University,Canada

• Theory and practice of sampling particulate materials October 1-3, MontrealDominique François-Bongarçon, AGORATEK, USA

Upcoming 2008 Seminars

• Mineral project evaluation techniques and applications: from conven-tional methods to real options April 24-27, MontrealMichel Bilodeau, McGill University, Canada, and Michael Samis, AMEC,Canada

2007PROFESSIONALDEVELOPMENTSeminar Series

For information please contact:Delores LaPrattDepartment of Mining, Metals and Materials EngineeringMcGill University, Montreal, QCEmail: [email protected]: 514.398.4755, ext. 089638Fax: 514.398.7099Website: www.cim.org

For registration please contact:Chantal MurphyMeetings Coordinator, CIMSuite 855, 3400 de Maisonneuve Blvd., WMontreal, QC H3Z 3B8Email: [email protected]: 514.939.2710, ext. 1309Fax: 514.939.2714Website: www.cim.org

Mining Engineering


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New books available from MetSoc

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The Iron Control Technologiesvolume contains 62 papers which cover all aspects of thebroad iron control problem in hydrometallurgy andillustrate that innovation is very much alive in theindustry. Overviews of the iron control problem indifferent industries are provided, and focused sectionsdeal with the iron control technologies used in the zinc,copper, and nickel industries. One part deals with thetreatment of pickle liquors generated in the steel andstainless steel industries, and another discusses the role ofiron for stabilizing arsenic. Several papers present newconcepts in ion exchange and solvent extraction thatcould impact on the development of future iron controltechnologies.

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Mineral Agreementsand Royaltiesby Karl Harries

Special Volume 55, a two-volume set, is a generic guideintended to assist anyoneinvolved directly or indirectlyin the mineral explorationindustry.

The Geology,Geochemistry, Mineralogy and Mineral Beneficiation of Platinum-Group ElementsSpecial Volume 54 provides newinformation and insights onplatinum-group element depositsworldwide in terms of theirgeological setting, ore controls,mineralogy, geochemistry, mineralprocessing, and beneficiation.

CIM Bulletin TechnicalPapers—February2006 to January 2007A compilation of peer-reviewed technical paperspublished in the CIM Bulletinfrom February 2006 toJanuary 2007.

Exploration and MiningGeology—Volume 15, Numbers 3 and 4Special issue on volcanic-hostedmassive sulfide deposits andtheir geological settings in the Bathurst Mining Camp,New Brunswick

Contact [email protected] topurchase a copy today.

www.cim.org/publications/specialvols.cfm.

CIM

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professional directory& product files

May 2007 81

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23 Industrial Equipment13 Klohn Crippen Berger Ltd.3 Komatsu Canada

28 Luff IndustriesIFC Metso Minerals51 MTU Detroit Diesel11 Syncrude Canada

81 Professional DirectoryCorriveau J.L./ 3D Survey & ScanFirwin Corp

81 Product FilesE S & S CompanyJet-Lube of Canada

In next month’s issueGet ready for summer with CIM

The June/July issue of CIM Magazine will include

the official program of the Conference of Metallur-

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voices from industry


Continuing the mining traditionby Carol Plummer, mine manager, Lapa Division, Agnico-Eagle Ltd.

CIM recently asked Carol Plummer what drew her to a career in mining, and how hergender has had an impact on her career development. We felt Carol’s response had to beshared—she represents the passion for this industry and the strength of character com-mon throughout industry’s leaders.

I have always known that I would work in the mining industry. My family has beenin mining for generations and mining was part of discussions around the dinner table foras long as I can remember.

The first time I visited underground with my father I was 10 years old. I loved thenoise, the equipment, and even the smell of diesel. The visit just reinforced my convictionthat I would work underground. My parents have the attitude that if you want to dosomething badly enough you will work hard enough to make it happen. Thus, I neverheard “you can’t do that - you’re a girl” growing up. I suppose that has largely con-tributed to my “can do” attitude and my career success to date.

Throughout my life, I have witnessed examples of triumph over barriers and thepower of determination. To me, the will to take on challenges and strive towards a goalwas simply part of life, and the ability to think outside the box—to embrace change—anasset. For example, when we were living in northern Manitoba in the 1970s, the companymy father worked for was opening a new mine in a nearby town. They wanted to minean open pit while developing the shaft. They didn’t have enough workers available andsolved the problem by recruiting the miner’s wives. These ladies worked alongside theirmen and brought the mine into production. Most of them chose not to transfer under-ground, but for a short period, the percentage of female employees was much higherthan the national average.

Throughout my career, I have worked with great people that allowed me to developas an engineer and a leader. When I went underground as a supervisor at Brunswick Minesin 1989, the person who was training me as his replacement was quite a joker. The crewdecided to play a joke on him shortly into the training. They refused to listen to him,claiming he was no longer their boss - I was. He huffed and argued but they pretendedhe didn’t exist in order to pull his leg. In addition, they would follow any instruction Igave them immediately and to the letter. This went on for a couple of days and by thetime they tired of the joke, they had become accustomed to having me as a boss andeverything went smoothly from there.

Any new worker in the mining industry, male or female, will succeed and be happierif they can approach their day with a sense of humour. Afterall we all have “one of thosedays” sometimes. Occasionally, a tough skin is necessary until people start to see whatyou can do instead of your gender. I think that my positive attitude has helped me alongthe way.

If I had one piece of advice, it would be for women who are already in the industryand welcoming in others. Just because you had to be “better” in order to be accepteddoesn’t mean that you should apply an unreasonably high standard to newcomers.Sometimes it pays to sit back and ask yourself if you would have the same expectationsof a new male employee. Be patient, lend a hand, and be supportive. Afterall, 50 per centof the world’s available workforce is female. n

Carol Plummer is chair of the Women in Mining Forum at the CIM Conference andExhibition—the first such session encouraging women to exchanges ideas and sharestrategies with the minerals industry HR personnel and leaders to help foster a growingnumber of female workers in mining.

TEAMWORKMOVES

MINING

When you work with the Cat Global Mining team, you get more than quality productsand services; you get a team solely focused on the mining business.

Recently, when the global tire shortage threatened mining operations all over theworld, Cat Global Mining, Cat Global Purchasing and our Dealer Network workedclosely with suppliers and customers to develop alternatives—like bias tires insteadof radial, alternate tire sizes, retread options and bringing on new suppliers.

Together, we also developed ways to extend tire life—like adjusting loads, improvinghaul roads and training drivers on how their driving can decrease wear. Throughthese practices, mine sites documented up to 15% improvements in tire life.

Teamwork provides results. Teamwork keeps the mining industry moving forward.

CAT GLOBAL MINING www.cat.com

© 2007 Caterpillar All Rights ReservedCAT, CATERPILLAR, their respective logos, “Caterpillar Yellow” and the POWER EDGE trade dress, as well as corporate and product identity used herein, are trademarks of Caterpillar and may not be used without permission.

cim magazine may 2007

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