cim magazine may 2013

TECHNOLOGIES THAT ARE TAILORED FOR YOUR OPERATION

y used herein, are trademarks of Caterpillar and maidentit” ,,welloY“Caterpillar All Rights R. 3 Caterpillar1© 20

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e logos,

Chromium Management for theMining Industry

Workshop Facilitators:

- Jim Higgins, Senior Executive Consultant, Stantec - Angus McGrath, Principal Geochemist, Stantec - Al Mattes, Sub-consultant, Stantec

Sunday, May 59:00 to 17:00

Operations & Maintenance Best Practices –Underground Mining Challenges in Saskatchewan

- Design and construction of the world’stallest structural steel headframe forground-mounted mine hoists

Presenters:

- Brian Mashford, Director, Engineering, Stantec- Timo Tikka, Senior Consultant, Stantec

Tuesday, May 710:30

Operations & Maintenance Best Practices – Underground Mining Innovations that arechanging the way we mine

Chair:

Mike Wilson, Senior Consultant, Stantec

Wednesday, May 88:30

*Please refer to the CIM 2013 program for the most recent location information for these sessions.

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CONTENTS|CONTENUCIM MAGAZINE | MAY 2013 | MAI 2013

NEWS 22 Industry at a glance 32 Is perception reality? Examining the methodology

and usefulness of the Fraser Institute’s mining surveyby V. Heffernan

34 The North comes of age Federal and territorialgovernment initiatives to increase northerners’ say inresource development by V. Danielson

36 A new plant in the Prairies SaskatchewanResearch Council rolls out pilot processing plant andQEMSCAN service by D. Neary

38 A taxing budget for miners Extension andelimination of tax incentives for mining loom large inCanada’s budget by H. Mathisen

40 Redevances : on se prépare pour latempête Le gouvernement du Québec proposed’augmenter le taux d’imposition du secteur minierpar P. Diekmeyer

42 Quebec proposes raising royalty ratesIndustry braces for impacts of further mining taxincreases by P. Diekmeyer

TOOLS OF THE TRADE 16 The best in new technology Compiled by H. Mathisen

COLUMNS 44 MAC Economic Commentary Mining and Canada’s North: build it and they will come by B. Marshall

46 Eye on Business Contemplating competitor collaborations by M. Katz

48 HR Outlook Mining sector must build and cultivate talent pool by R. Montpellier

50 Finance Enterprise value and new mining projects by M. Chiesa

52 Standards Introducing the CIM Definition Standards Consultation project by P. Bankes

54

6 | CIM Magazine | Vol. 8, No. 3

UPFRONT Award-winners and HR Leaders 54 Canada’s first Carlin-type gold discovery

How ATAC’s team located “no-seeum” deposits inYukon’s Rackla gold belt by G. Chandler

56 The right people at the right time Goldcorpestablishes a new graduate program by S. Rees

58 First place Finnish Finland has excellentgeology and business culture – but do not go inpoor by E. Moore

62 King of the mountain Copper Mountain CEOand recent hall of fame inductee Jim O’Rourke onhis life in mining by E. Moore

Fortis is a Saskatoon-based company that provides mining, engineering and manufacturing services to the mining and construction industries.

The company has a global focus and offers contracting, subcontracting and consulting services to a wide range of customers. Fortis is able to provide services that meet or exceed the customers’ delivery, safety and quality requirements by utilizing a highly skilled work force.

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PHONE: (306) 242-4427 FAX: (306) 242-3713

www.fortiscorporation.com

TECHNOLOGYShafts & Hoists 83 Lifeline of the mine Innovations in wire rope

construction and monitoring improve perform-ance and availability for deep mines by E. Moore

CIM COMMUNITY 86 It takes two in Toronto CIM Branches

thrive in Canada’s premier mining metropolisby A. Lopez-Pacheco

88 Exploring a world of newopportunities Incoming president RobertSchafer brings his professional and volunteerknow-how to CIM by K. Lagowski

Explorer de nouvelles possibilités Lenouveau président Robert Schafer mettra sonsavoir-faire professionel et ses connaissancesacquises à titre de bénévole au service del’ICM par K. Lagowski

90 Welcoming francophone Africa Canadasigns investment agreements with Cameroonand Zambia at CIM-hosted Franco-Mine 2013 by K. Korducki

Souhaitons la bienvenue à l’Afriquefrancophone Le Canada conclut des APIEavec le Cameroun et la Zambie à l’événementFranco-Mine 2013 organisé par l’ICM par K. Korducki

TECHNICALABSTRACTS 94 CIM Journal

IN EVERY ISSUE 12 Editor’s letter 14 President’s notes | Mot du président 92 Calendar 97 Innovation showcase 97 Professional directory 98 Mining lore by C. Baldwin

FEATURE |ARTICLE VEDETTE 66 No illusions In tough times, focusing on project definition and scoping is essential for

moving operations forward by I. Ewing

72 Aucune illusion Lorsque les temps sont durs, il faut bien définir les projets et leurportée pour développer vos activités par I. Ewing

PROJECT PROFILE |PROJET EN VEDETTE 76 Tungsten trailblazer Northcliff Resources intends to capture more value at its Sisson

project in New Brunswick by upgrading tungsten to marketable ammonium paratungstate– a Canadian first by G. Chandler

80 Les pionniers du tungstène Northcliff Resources compte accroître la valeur de sonprojet Sisson au Nouveau-Brunswick en transformant le tungstène en paratungstated'ammonium – une première au Canada par G. Chandler

66

76


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editor’s letterEditor-in-chief Ryan Bergen, [email protected]

Executive editor Angela Hamlyn, [email protected]

Managing editor Andrea Nichiporuk, [email protected]

Section editorsNews and Tools of the Trade: Peter Braul, [email protected] Mathisen, [email protected] and CIM Community:Herb Mathisen, [email protected] and Upfront: Peter Braul, [email protected] Profile and Technology: Ryan Bergen, [email protected] Section: Andrea Nichiporuk, [email protected]

Copy editor/Communications coordinatorZoë Koulouris, [email protected]

Web editor Nathan Hall, [email protected]

Editorial internMaria Olaguera, [email protected]

Contributors Correy Baldwin, Paul Bankes, Graham Chandler, MauroChiesa, Vivian Danielson, Peter Diekmeyer, Ian Ewing, VirginiaHeffernan, Mark Katz, Kelli Korducki, Krystyna Lagowski, AlexandraLopez-Pacheco, Brendan Marshall, Ryan Montpellier, Eavan Moore,Derek Neary, Simon Rees

Translations SDL and Erik Stout

Published 9 times a year by theCanadian Institute of Mining, Metallurgy and Petroleum 1250 – 3500 de Maisonneuve Blvd. WestWestmount, QC, H3Z 3C1Tel.: 514.939.2710; Fax: 514.939.2714 www.cim.org; Email: [email protected]

Subscriptions Included in CIM membership ($170.00); Non-members (Canada),$220.00/yr (PE, MB, SK, AB, NT, NU, YT add $11.00 GST, BC add$26.40 HST, ON, NB, NL add $28.60 HST, QC add $32.95 GST +PST, NS add $33.00 HST) Non-Members USA and International:US$240.00/year. Single copies, $25.00.

Advertising SalesDovetail Communications Inc.30 East Beaver Creek Rd., Ste. 202Richmond Hill, Ontario L4B 1J2Tel.: 905.886.6640; Fax: 905.886.6615; www.dvtail.com National Account Executives 905.886.6641Janet Jeffery, [email protected], ext. 329Neal Young, [email protected], ext. 325

This issue’s coverExploration planning at Antofagasta Minerals’ operations in ChileCourtesy of Antofagasta Minerals

Layout and design by Clò Communications Inc.www.clocommunications.com

Copyright©2013. 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 in articles or in any discussion appearing in its publications.

Printed in Canada

Investors’ faith in mining operations is notwhat it was even a year ago. Nor is their will-ingness to forgive ill-conceived projects,

production delays and cost escalation. The“production at any cost” mentality of a fewyears back now haunts operators, as minesand plants, rushed through the planning stage,have oversights and missed opportunities builtinto them. But the bright side of this is thatmany lessons have been learned and are nowbeing applied.

In “No Illusions,” (p. 66) the feature for thisissue, Ian Ewing details some of these

instances – both for projects that have already been built and those thatare still in the planning stage. Careful scoping and definition, and anunwavering focus on cash flow, he reports, must be the foundation if aproject or a series of them is to pay off.

With these ideas in mind, it is a nice coincidence to be able to reportin “No detours for Detour” (p. 24) that Detour Gold recently poured itsfirst gold bars and brought its second production line into operation. Thethorough, measured approach the company described to CIM Magazine inan article last August seems to be proving itself for the new producer.

This issue also corresponds with a changing of the guard as Robert(Bob) Schafer assumes the mantle of CIM president from Terence Bowlesat the annual convention in Toronto. I would like to thank Terry for histhoughtful contributions to CIM Magazine ’s “President’s notes,” as well asfor the vision, leadership and engagement he has brought to CIM.

For those of you who may not have crossed paths with Bob – an ener-getic volunteer in the industry who has worked alongside hall of fameminers and made some storied finds himself – I would encourage you toread our profile of him, “Exploring a world of new opportunities” (p. 88).

As I write this, the CIM National Office is vibrating with activity in thelead-up to our annual convention. And beyond this office tower, many ofyou have been volunteering your own time, expertise and energy to organ-ize and contribute to our flagship event, not to mention the many otherevents, activities and outreach that take place on behalf of CIM.Enormous thanks are due to all of you, as well.

Ryan Bergen,[email protected]

@Ryan_at_CIM_Mag

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How time flies! Once thelatest CIM Convention con-cludes this May, so too doesmy term as president.

As for the highlights of thepast year, the financial resultsfor 2012 are very positive, dri-ven by increased event andadvertising revenues. We hada very successful annual con-ference in Edmonton and arelooking forward to Toronto2013. Membership in CIM hasreached a record level of14,400 members and, over

the last two years, membership revenues have risen by 40 per cent.CIM continues to grow after more than 115 years of existence.

We continue to extend our international reach, accompanyingCanadian mining companies and CIM members seeking opportuni-ties abroad. For example, the Franco-Mine event, which was orga-nized in collaboration with the Trade Commissioner Service of theGovernment of Canada, as well as the Government of Quebec’sMinistry of Natural Resources, attracted a capacity crowd of morethan 150 representatives from business, financial institutions and

president’s notes | mot du président

government, including mine ministers from Burkina Faso, Gabon,Mali and Niger.

Speakers at the event included Ed Fast, Canada’s minister ofinternational trade, who highlighted CIM’s collaborative efforts withCanada’s foreign affairs and trade commissioner network in WestAfrica and the opening of CIM’s first African branch in Dakar,Senegal. Martine Ouellet, minister of natural resources of Quebec,also presented with regard to Quebec’s mining development model.

The past year has provided me the opportunity to appreciate thediversity and strength of the mining industry in Canada, and the rolethat CIM plays as the premier technical society for mining industryprofessionals, especially as they navigate these turbulent andchanging times.

Our past and ongoing success comes from our dedicated volun-teers serving in branches and societies, and on council, as well asour dynamic national office staff in Montreal. I thank you all. It hasbeen an honour and a privilege serving as CIM president, and I amlooking forward to seeing many of you at Toronto 2013.

Terence Bowles, CIM President

Comme le temps passe vite! À la clôture du congrès de l’ICM, enmai, mon mandat de président se terminera aussi.

Pour ce qui est des points saillants de la dernière année, nouspouvons dire que les résultats financiers de 2012 sont excellents,grâce notamment à l’accroissement des revenus des événements etdes recettes publicitaires. Le congrès annuel à Edmonton a été ungrand succès, et nous avons hâte à celui de Toronto en 2013. L’effectifde l’ICM a atteint le nombre record de 14 400 membres et, depuisdeux ans, les revenus tirés de cette source ont augmenté de 40 %.L’ICM continue de croître après plus de 115 ans d’existence.

Nous continuons d’étendre notre portée sur la scèneinternationale, en accompagnant les sociétés minières canadiennes etles membres de l’ICM à la recherche d’occasions à l’étranger.L’événement, organisé en collaboration avec le Service des déléguéscommerciaux du gouvernement du Canada et le ministèredes Ressources naturelles du Québec, a rempli ses salles avec plusde 150 représentants du milieu des affaires, d’institutions financièreset de gouvernements, y compris les ministres responsables des minesdu Burkina Faso, du Gabon, du Mali et du Niger.

Parmi les conférenciers à l’événement, mentionnons Ed Fast, leministre du Commerce international du Canada, qui a souligné lacollaboration de l’ICM avec le réseau des délégués aux affairesétrangères et des délégués commerciaux en Afrique occidentale; et

l’ouverture de la première section africaine de l’ICM à Dakar, auSénégal. Martine Ouellet, ministre des Ressources naturelles duQuébec, a également fait une présentation sur le modèle dedéveloppement minier du Québec.

La dernière année m’a donné l’occasion d’apprécier la diversité etla vigueur du secteur minier du Canada et le rôle que l’ICM y joue entant que société technique de première importance pour lesprofessionnels de l’industrie minière, en particulier en ces tempshouleux et changeants.

Nous devons notre réussite passée, présente et future à nosbénévoles dévoués dans les sections et les sociétés et au conseild’administration, de même qu’au personnel dynamique de notrebureau national à Montréal. Je vous remercie tous. Je suis honoré etprivilégié d’avoir servi comme président de l’ICM, et je suis impatientde voir bon nombre d’entre vous au congrès 2013 à Toronto.

Terence Bowles, Président de l’ICM

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TECHNOLOGY

TOOLS OFTHE TRADE the best in new technology

◢ Quick and easy 3DGeologists can save valuable time

when building mineral deposit

models or grade shells by using

Mintec Inc.’s new MineSight

Implicit Modeler. Mark Gabbitus,

business development manager,

says geologists typically load their

drill hole data in two-dimensional

(2D) sections before beginning this

task. “They work in a 2D section

and they make their own

interpretation around the drill holes

of where they think the ore body is,

or where the geology is, and then

they link those sections together to

make it solid,” he explains. “It’s a

very time-consuming process.”

While Gabbitus says his company’s

product does not reduce the role of,

or expertise required from, an

experienced geologist, it eliminates

much of the manual work. “What

the Implicit Modeler does is it uses

a mathematical function – a radial

basis function – and that takes the

raw data and builds a surface in

three dimensions directly from the

drill holes and some user points,”

he says. “It can save a geologist

months of time.” During exploration

work, companies conducting wide-

spaced drilling programs can also

use the program to determine

where to drill next.


◢ More breathing roomABC Industries Inc.’s

new TruOval MineVent

ducting has been

designed to increase

headroom and reduce

failure points for

underground mining

ventilation systems.

Unlike many other

ducting systems on the

market, the company

does not use solid

centre panels to hold

the oval lay-flat blower

ducting open. Will

Linnemeier, vice-president of sales, says panels cause air turbulence within

ducts and create potential for rips. “We actually use a cable system so that

there are no failure points with our product,” he notes. “The entire inside of

the duct is open, so you don’t restrict the airflow and you’ve got better air

movement throughout the length of the duct. The fittings are a lot smaller

and easier to handle as well.” The Indiana-based company can configure

its duct diameter sizes from 18 inches up to 66 inches. The ducting, used

in development tunnels and stopes, is made of a high-strength PVC fabric

that the company manufactures itself. The product is already in use at hard

rock mines in Nevada.

◢ Light headedThe Explosion-Proof Dual Function Headlight, designed by Larson

Electronics, is setting itself up to become the next generation in

headlamps. The light-weight headlights are class 1-, division 1-approved,

meaning they are certified for use in explosive environments. “It’s small

enough that you can actually roll it up and shove it in your pocket when

you’re done,” says Rob Bresnahan, co-owner of Larson Electronics. The

lights run on AAA-batteries and have a runtime of

between 13.5 and 18 hours, eliminating the

battery pack and cable required

with traditional halogen bulb

headlamps. The LED

headlight requires no

maintenance, and it has a

total expected life of

50,000 hours. The light

can also be adjusted

from 120 lumens to 70

lumens, depending on

the environment where

work is taking place. This

is particularly useful, says Bresnahan, when

working around panel boxes or other reflective material. “You don’t get so

much reflection in your face, so it makes it easier to work.”

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◢ Remote energyVolts Energies wants to help exploration companies

that operate off the grid reduce their fuel costs. The

Quebec-based company has been building custom

generators for exploration companies so they can

recoup and reuse the heat generators emit. This

co-generation captures energy typically lost from a

generator to heat a building or water. “Usually a

generator is around 34-per-cent efficient and we can

get up to over 80 per cent efficiency,” says Sébastien

Caron, company president. The company does energy

efficiency audits to monitor how a client uses energy

and also to gauge its needs. Caron says they specialize

in off-grid hybrid systems by using renewable energy

like windmills and photovoltaic panels to produce

electricity, along with diesel generators. He says their

hybrid model is fairly unique, since most energy

consultants side either with generators or renewables.

“One says, ‘Do not use generators, they pollute too

much,’ and the other says, ‘Solar power is not good

enough, it won’t give you enough energy.’ The best

thing to do is to combine both.”

◢ Productivity monitorsGeovia released its InSite 4.3 software in mid-March,

giving geologists, engineers and management the ability

to monitor operations and processing productivity. This

latest version has enhanced variance analysis, letting

customers discover what is causing actual production to

deviate from planned targets. “A large part of our focus

recently has been related to the variance analysis,” says

Marni Rabassó, vice-president of product management.

When companies understand where differences between

goals and reality occur, they can reconcile them, and

Rabassó adds the program can cut reconciliation work

down from weeks to mere days. “What you want to do with

that information is update your plans to make them more

realistic or more optimal,” she says. “You can use the

information about what’s happened in the past to plan or

to improve the production planning so that you get more

predictive plans, so you can actually hit your production

targets the next go around.” InSite 4.3’s user-interface

runs through a web browser and can connect to

automated fleet dispatch systems for data collection.

Mines without such systems can still use InSite 4.3, as it

also allows for manual data entry.

◢ Hands-free drillingLaunched in March, Boart Longyear’s LF120A Surface

Drill Rig allows operators to handle rods remotely from a

control panel as far as 15 feet away. Rod handling

usually means manually placing rods in a chuck, says

Sid Gaitonde, global product manager for surface

coring drills. “There are a lot of moving parts around

and inevitably somebody gets hurt. We wanted to get

away from that.” Boart Longyear’s new system also has a

PC-controlled drill monitor with an LCD touch screen

that will alert operators if a valve is not operating

properly, making troubleshooting easy. And it lets

supervisors plug in minimum and maximum RPM and

torque parameters to guide inexperienced drillers. This

optimizes drilling and, consequently, saves fuel. “It really

adjusts to the drilling conditions, so the engine is not

always running at high RPMs, pumping the maximum

horsepower,” says Gaitonde. The LF120A can drill to

dry depths of 1,200 metres and since the engine is

completely enclosed, noise is reduced to 76 decibels

from conventional drilling levels of 93 decibels.

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◢ Field laboratoryBy using Spectro’s new portable Spectroscout XRF

Analyzer, exploration geologists are able to acquire

laboratory-grade mineral analysis while they work in

remote locations. This avoids the weeks-long task of

sending samples to a lab for analysis. The portable XRF

analyzer gives geologists sample results in 10 seconds and

can measure for elements ranging from sodium to uranium

on the periodic table. In the field, the device can reveal

elements that are typically present in certain

concentrations around coveted deposits. The analyzer,

which weighs roughly 12 kilograms and can be carried

with a shoulder strap, has a battery life of five to six hours

and can even be powered using a vehicle’s 12-volt power

outlet. It has a weather-resistant, rugged design and is fully

contained with no external computers or other devices

required. The company

also makes an analyzer

focused on examining

soil compositions,

which is useful for

remediation work.

◢ Rock ripperDesigned in Spain by

Xcentric

Ripper, the

product of the

same name uses

a patented impact

vibration

accumulation

technology to break

rock at a single point of

contact. The ripper is

attached to the end of an

excavator, allowing workers

to use it to break rock on

steep slopes. “It vibrates

through to the tip of the unit and

basically allows it to penetrate and then shake

apart any of the surrounding areas,” says Tyler

Schell, territory manager with Shearforce

Equipment – the product’s North American

distributor. The ripper is used at a gold mine

near Kamloops, B.C., where it breaks extremely

hard frost and glacial till material. Schell says

before using the Xcentric Ripper, the company

tried to break the material with an excavator dig

bucket and it could barely scratch the surface.

The ripper is a closed system that uses bio-rated

fuels and, because it does not leak or weep oil,

it can run under water.

◢ Stacking up the time savingsSuperior Industries’ revamped Swing Axle

Telestacker Conveyor can cut down set-up times

associated with transporting or moving stacker

conveyors by as much as 80 per cent. Traditionally,

converting a conveyor for transport meant installing

multiple sprockets and power travel chains – steps

that could take as long as 30 minutes to complete.

Superior Industries has eliminated the use of chains

and sprockets, and power travel can now be

engaged by simply using a pre-installed t-handle

mechanism. “We updated the design to eliminate

more than 45 minutes from the set-up of this style of

radial stacker,” says Corey Poppe, marketing

manager. Some companies, Poppe says, move their

conveyors on a monthly or a weekly basis and the

improved design lets them do this in just five to 10

minutes. It also allows customers to align their tires more

effectively, which reduces scuffing.


Compiled by Herb Mathisen

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Imperial Oil and ExxonMobil Canada’s $12.9-billion joint venture Kearl oil sands mine near Fort McMurry hadproduced bitumen froth by early April.

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Kearl starts upThe massive $12.9-billion Kearl oil

sands mine produced its first bitumenfroth in early April and, as productiontrains started up, was expected to produce its first diluted bitumen soonafter. The project, located 70 kilometres

north of Fort McMurray, is a joint venture of Imperial Oil and ExxonMobilCanada, and is expected to produce110,000 barrels per day (bpd) during its initial development stage, and 345,000bpd by 2020.

“We continue to believe volumesfrom the Kearl initial development can

be accommodated in the existingpipeline system and the blended bitu-men market,” said Pius Rolheiser, anImperial Oil spokesperson. “However,volumes from Kearl will be subject tothe same forces currently constrainingother bitumen volumes. Imperial andExxonMobil’s own refineries in NorthAmerica provide us an additional degreeof flexibility and options not available toall producers.” – Herb Mathisen

A tale of two surveysLeading up to the Quebec govern-

ment’s mining royalties forum in March(see Quebec proposes raising royaltyrates, p. 42), surveys from two differentorganizations painted contradicting pictures of Quebecers’ willingness toincrease mining royalties.

La Fédération des Chambres deCommerce du Québec (FCCQ) releasedsurvey results in late February, reportingthat 80 per cent of Quebec respondentsopposed increases to mining royalties,

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with 57 per cent believing the industrypaid its fair share. A week later, theCanadian Boreal Initiative (CBI)released results from its own survey thatshowed little support for the province’smining industry, with 55 per cent ofrespondents indicating that the currentroyalty regime was too weak.

On closer inspection, FCCQ’s surveyemployed a mutually exclusive option,giving respondents a choice betweengovernment spending money morecarefully or raising taxes on all busi-nesses and mining companies in partic-ular. CBI, on the other hand, cited in apreamble to its question the fact that in2010 and 2011, $14.9 billion worth ofmaterials were extracted in Quebec and$667 million was paid in taxes and roy-alties by mining companies. It alsoexplained that companies pay royaltieson profits after deductions, before ask-ing respondents if they thought theregime was fair, too weak or too strong.

– H.M.



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production by the third quarter of2013.

“We are very excited about what wehave accomplished in six years, fromcompleting the acquisition of the prop-erty on January 31, 2007, to our firstgold pour,” stated Gerald Panneton,

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opened in 1964 and, over its 49 years,operators mined 136 million tonnesfrom the no. 12 ore body and produced148 million tonnes of zinc from its mill.The mine has outlived expectations.

“We’ve been able to stay productiveand cost-effective in mining essentiallylow-grade ore that was left behind andwas never part of any of the miningplans,” said James Cormier, superinten-dant for the environment and commu-nity affairs. The mine is currently

working throughits transition plan,hoisting all of itsu n d e r g r o u n dequipment to thesurface for recy-cling and re-use.

A third-party company will bedemolishing themine’s infrastruc-ture and the tail-ings basin will besecured. “All inall, it’s a five-yearproject for thereclamation of thesite, which thenbasically puts usinto a care-and-m a i n t e n a n c emode that will gointo perpetuity,”said Cormier.

“It’s a big loss,”said Yvon Godin,NDP member ofparliament forAcadie-Bathurstand a formerBrunswick mine

miner. “It was one of the biggest zincmines in the world. At one point in time,it was employing 1,700 workers.” – H.M.

Suncor grounds VoyageurIn late March, Calgary’s Suncor

Energy announced its intention to scrapthe construction of its planned Voyageurupgrading plant near Fort McMurray.The project, with a 2008 price tag ofabout $11 billion, was a joint venturebetween Suncor (51 per cent) andFrance’s Total SA (49 per cent). It pro-posed to upgrade product from Suncor’smines at a rate of 200,000 barrels per dayinto premium synthetic crude, ultra-lowsulphur diesel and low sulphur diluent.

“The global market has shifted,” saidSneh Seetal, spokesperson for Suncor.“A rise of tight oil has increased compe-tition for light sweet refining capacityand margins are decreasing.” Suncortook a writedown of $1.48 billion onthe project last February.

“We considered our commitment toallocate capital according to our priori-ties of funding the base business, devel-oping higher-return growth projectsand accelerating the return of cash toshareholders through dividends andshare buybacks,” said Seetal. – H.M.

Vote for mining in B.C.To prepare for British Columbia’s

May 14 election, mining organizationsin the province have teamed up to raisevoter awareness about mining issues.The Mining Association of BC (MABC),the Association for Mineral ExplorationBC, Mining Suppliers Association of BCand the Coal Association of Canada arebehind the VoteMining.ca website, aresource where residents can accessfacts and information about the impor-tance of a thriving mining industry tothe province and its economy.

“This is not intended to support theelection of a particular party,” said ZoëYounger, MABC vice-president of cor-porate affairs. “It’s intended to beentirely non-partisan but focused on theobjective of supporting the industry.”Younger added the election will featuremany first-time candidates and the web-site can inform those new candidatesabout the mining industry. It will


Detour Gold president and CEO, in arelease. “We are looking forward to thefuture as we move closer to becomingCanada’s leading intermediate goldproducer.”

Located roughly 260 kilometresnortheast of Timmins, Ontario, theDetour Lake operation is poised tobecome Canada’s largest operating goldmine, according to the company. Whileit expects to produce between 350,000to 400,000 ounces of gold this year, thecompany aims to produce 657,000ounces per year once the mine reachesfull-scale production. The mine life isprojected for 21.5 years, with open pitmineral reserves of 15.6 million ouncesof gold. – H.M.

Brunswick mine to close in May

After nearly 50 years of operation,Xstrata’s Brunswick mine near Bathurst,New Brunswick, has put the last of itsore through the mill. The zinc mine first

The Brunswick Mine will close its doors for good thismonth after operating for 49 years.

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provide party leaders with a collabora-tive list of the mining industry’s keyissues and priorities. The group will beactive on Twitter and other social mediaplatforms to engage voters and to dispelmurky perceptions about mining.

“It’s really about trying to helpinform the discussion and the thinkingabout our industry,” Younger said.“We’re not always looking for a positiveresponse to some of our proposed proj-ects, but we certainly want a well-informed, fact-based decision when weget to one.” – H.M.

Canadian mineralproduction value drops

After reaching record heights in2011, the overall value of Canada’s min-eral production fell last year due mainlyto weakened demand and lower com-modity prices brought on by the per-vading uncertainty in global markets. Innew numbers released by NaturalResources Canada (NRCan), mineral

production values in Canada fell 7.9 percent last year, from $50.9 billion in2011 to $46.9 billion in 2012, eventhough production decreases were farless significant.

Values for metals and non-metals fell7.7 and 5.9 per cent, respectively. Coalwas hit hard, with its value declining14.5 per cent year-on-year due to a dropin prices. Overall nickel productionvalue fell 28.6 per cent, diamondsdropped 20.1 per cent and uraniumshrank 20.4 per cent in 2012. Goldvalue, however, gained 9.3 per cent, asoverall production rose 1.7 per centfrom 2011. Potash remained Canada’stop commodity in terms of productionvalue, reaching $6.98 billion in 2012.

– H.M.

Polish copper minersrescued

An earthquake near the Rudna cop-per mine in Poland caused an under-ground collapse, stranding 19 miners

for nearly ninehours. When thetremor hit at10:09 p.m., 42miners were in theG-3 Rudna Cen-tral mine; 23 ofthe miners wereable to evacuatethe area and get tosafety. Accordingto KGHM, thecompany thatowns the mine,one of those whoescaped wasinjured, with a cutto the head.

For the nextseven hours, minerescue workerstried to reach thetrapped miners,who were cut offfrom communica-tions. Finally, at 5a.m., the rescueworkers made abreakthrough andby 7 a.m., ninehours after the

tremor, all 19 stranded miners wereaccounted for on the surface; only oneof them was injured.

The mine, located roughly 400 kilometres southwest of Warsaw, hasbeen in operation since 1974. The com-pany has set up a commission to lookinto the collapse. – H.M.

Uranium decision bad newsfor Strateco

Quebec uranium exploration com-pany Strateco came out swinging afterthe province decided to call for a pub-lic environmental review on uraniummining this fall. The process – knownin Quebec as a BAPE, or bureau d’au-diences publique sur l’environment –will put permitting on hold until it iscompleted.

Strateco is no stranger to govern-mental delays. In January, the companytook legal action against Quebec’s Envi-ronment Ministry, arguing it had beenwaiting since August 2011 for a deci-sion on whether it could proceed withits underground Matoush explorationproject. Guy Hébert, president andCEO of Strateco, said the government’slatest announcement, timed just prior tothe four-day Easter holiday, came as asurprise. “We are still working with ourlawyers regarding our legal options,” hesaid in early April.

To date, Strateco said it has invested$120 million into its project. TheMatoush project has faced oppositionfrom the Eeyou Istchee Cree, who havecalled for a moratorium on uraniummining in the region. Strateco’s shareprice dropped from $0.12 to $0.04 afterthe announcement, rebounding to$0.06 by the end of that week. – H.M.

Western Potash getsprovincial thumbs up

The Milestone Solution Potash proj-ect, located 30 kilometres southeast ofRegina, has cleared another hurdle afterSaskatchewan’s Ministry of Environ-ment approved owner Western PotashCorp.’s environmental assessment. “It’sthe culmination of two and a half yearsof work,” said Dean Pekeski, the com-pany’s executive vice-president. In early


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2010, Western Potash engaged GolderAssociates to assist with the environ-mental baseline study.

“Now that we have environmentalapproval, really, the project is techni-cally de-risked and is ready to com-mence construction subject to, andconditional on, financing,” Pekeskisaid. All exploration work, along withprefeasibility and feasibility studies –conducted by AMEC showing 2.8 million

tonnes over 40 years – has been com-pleted, he added.

Pekeski said the initial capitalrequired to build the project is $2.9 bil-lion. “In today’s economic times and thestate of the world economically, largecapital projects like this can be a littlebit challenging,” he said, adding thecompany was talking to various groupsfrom around the world about differentfinancing scenarios. “It’s taking some

time to do that, but ultimately we’resatisfied with the progress we’re mak-ing. We feel that when we do getfinancing in place, our project is goingto be very robust,” he said. Pekeskiadded that the payback period on themine is estimated at 5.6 years, sayingthe project construction period wouldbe roughly 3.5 years. A best-case sce-nario would see production begin bythe fourth quarter of 2016. – H.M.

Injured Canadian mineworker wins recordsettlement

It is probably not the way he wantedto make history, but 14 years afterbeing injured at work, Luciano Branco,62, has finally been compensated forhis injuries in what legal firm FaskenMartineau said is the largest punitiveaward against an insurance companyever in Canada.

In 1999, Branco was working as awelding supervisor at the then CamecoCorporation-owned Kumtor gold minein Kyrgyzstan, when a large steel platefell and landed on his foot. Accordingto court documents, Branco was con-cerned his toes may have beenchopped off, but he finished his shiftand when he removed his boot, hefound “his foot was still intact.” Brancohas had difficulty walking ever sinceand has also developed reflex sympa-thetic dystrophy, said Alex Kotkas, aFasken Martineau lawyer, who repre-sented Branco during the trial.

Kotkas said the insurance companiesreceived many medical reports indicat-ing that Branco was disabled – includ-ing reports from their own doctors – butthey just refused to pay him. Brancosued the two companies: AIG andZurich Life Insurance Company Ltd.“After he sued, one of the insurancecompanies [AIG] started to pay, butonly periodically, and then they wouldkeep cutting off his benefits for reasonsthat made no sense. Finally, they juststopped paying him altogether,” saidKotkas. “Zurich just never paid him.” Inearly April, the Court of Queen’s Benchfor Saskatchewan ordered AIG to payBranco $1.5 million and Zurich LifeInsurance to pay him $3 million. – H.M.


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The Fraser Institute’s annual surveyof mining companies was released inMarch, lauding Finland as the best andnaming Indonesia the worst of exam-ined jurisdictions for mining invest-ment. Since the first survey wasreleased in 1997, the document hasbecome essential reading for investors,policy-makers and regulators interestedin gauging the risk miners take whenthey operate in a chosen jurisdiction.

But just how reliable is a researchreport based solely on perception?

In evaluating the overall attractive-ness of mining investment in a jurisdic-tion, respondents to the surveyconsider taxation, the quality of itsgeological database, and uncertainty

Is perception reality?Examining the methodology and utility of the Fraser Institute’s annual mining jurisdictions survey

by Virginia Heffernan

over regulations and protected areas,among other factors. In the latest edi-tion, the institute contacted 4,100industry representatives directly, andseveral organizations distributed thesurvey among their members. Fromthat pool, there were 742 respondents,most of whom are company presidentsor vice-presidents.

The results have, at times, drawn theire of some regional organizations. Fol-lowing the release of the survey in 2011,Association for Mineral ExplorationBritish Columbia chair Michael McPhiechallenged the institute to adapt the sur-vey to implement “real facts and data” inorder to reflect the policies and invest-ment environment in each jurisdiction.

B.C. currently ranks 31st out of 96jurisdictions – still in the top third butconsiderably lower than other Canadianregions outside of Nunavut (37th) andthe Northwest Territories (29th), despitea 50 per cent increase in explorationspending to $600 million in 2012. “Thisis a perception-based survey and morefacts and figures would be useful,” saidRich Coleman, B.C.’s minister of energy,mines and natural gas. In the last year,the province has invested $7 million toimprove the permitting process for min-ing projects. “The fact that we are seeinghuge investments in mining and min-eral exploration in B.C. seems to beinconsistent with the survey result,” he said.

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In an ideal world, the survey would incorporate moredirect measures of policy impacts on mining investment,agreed Alana Wilson, a co-author of the survey and a pol-icy analyst at the Fraser Institute’s Centre for Energy andNatural Resource Studies. But the lag time between policychanges and shifts in investment, and the paucity ofinvestment data makes that goal difficult, if not impossi-ble, to achieve.

“It is, however, possible to capture changes in senti-ment among mining company executives in a timely man-ner, which is what our survey strives to do,” Wilson said.“And based on feedback we receive from those in themining sector, the extensive citation of our findings in themedia as well as in academic journals, and the attentionthat is paid to our survey by mining regulators, we believethat the survey does accurately capture the influence ofvarious policy factors.”

Robert Bassett, mining team leader for Colorado-basedHolland & Hart, said that for the most part, the survey isan accurate reflection of what the mining law communityexperiences in practice. “It’s a reasonably reliable measureof perception, and perception is reality a lot of the time.”

He said the survey is just one of many documents headvises his clients to investigate before they considerinvesting in a region. Government data and research,such as the U.S. State Department’s country commercialguides or the World Economic Forum’s global competi-tiveness report, are also invaluable resources.

Another source is the Behre Dolbear Group, whichproduces annual rankings similar to the Fraser Institutesurvey based on confidential sources, public databasesand political risk assessments of key players in the indus-try. The main difference is that only 25 countries are rep-resented compared to the Fraser Institute’s 96jurisdictions.

But, broadly speaking, the conclusions of the twogroups align. In the Behre Dolbear rankings, Canada,Australia and Chile come out on top. Although the FraserInstitute survey evaluates the provinces and territories ofCanada and the states of Australia as distinct jurisdic-tions, almost all of these regions rank in the top 40, andCanada has three (Alberta, New Brunswick and Yukon) inthe top 10. Chile is ranked 23rd. At or close to the bottomof the pack in both surveys are Russia, Bolivia and theDemocratic Republic of the Congo.

In this year’s Fraser Institute survey, Finland topped thecharts, up from number two last year. For more on Finland’smining investment climate, see “First place Finnish,” p. 58.

CIM

news


New legislation and a major powertransfer agreement are set to transformthe investment climate in Canada’sNorth. In March, after decades of nego-tiations, the Northwest Territories cameto an agreement with the federal gov-ernment to set devolution day for April1, 2014. The deal effectively transfersmanagement of land, water andresources to the territory, more than adecade after Yukon welcomed devolu-tion and greater control of its land andresources in 2003. Nunavut has alsohired a negotiator to begin its devolu-tion process. At the same time, Bill C-47, the Northern Jobs and GrowthAct, has passed Canada’s House of Com-mons and is poised for Senate approval,setting the stage for northerners to con-trol their own economic destiny.

Tom Hoefer, executive director of theNWT & Nunavut Chamber of Mines,said Bill C-47 is one of several initiativestargeted to improve northern regulatoryregimes. “It also fulfills outstanding gov-ernment obligations under land claimsand that’s a good thing,” he added.

Along with amendments to Yukon’sSurface Rights Board Act, Bill C-47 cre-ates the new Nunavut Planning andProject Assessment Act (NUPPAA) andthe Northwest Territories Surface RightsBoard Act. The Nunavut Planning Com-mission will serve as the single entrypoint into a more streamlined regula-tory process. In the N.W.T., the new sur-face rights board should help resolvecontentious land-access disputes.

The new legislation is a necessarystep as the federal government devolvesnon-renewable resources and land man-agement to northern jurisdictions, saidHoefer, adding that there is more workto be done. Both the Northwest Territo-ries and Nunavut are viewed lessfavourably by industry than Yukon –which has gone from no mines to threesince devolution and has experienced anexploration boom - due to less perceived

risk associated with regulatory and per-mitting processes.

Chris Hanks, vice-president of envi-ronmental affairs for Newmont MiningLtd., was involved in industry consulta-tion for Bill C-47 and views it as a majorstep forward. “None of us got every-thing we liked, but Canada listened toour concerns,” he remarked. Hanksworked most recently in Nunavut at theDoris gold project near Cambridge Bay.

The NWT & Nunavut Chamber ofMines and the Prospectors and Devel-opers Association of Canada supportBill C-47 with six proposed amend-ments: ensuring assessments are com-pleted within 24 months; defining typesof work exempt from screening; choos-ing a flexible approach to deal withminor variances; deleting offencesunder land-use plan provisions sincethey are more appropriate in permitissuing stages; clearing up how existinglicences or permits are grandfatheredinto the new system; and the planningof a five-year review of NUPPAA.

Ensuring clear timelines is essential,said Hanks, as northern projects facehigh costs and logistical and weather-related challenges that require diligentscheduling. “If you’re getting ready tomobilize and miss the schedule even bya few weeks, it could cost several mil-lion dollars and a year of time,” heexplained. Hanks also said the offencesprovision should be resolved as existingregulations already provide penaltiesand remedies for environmentaloffences. “We could not find anotherjurisdiction where it is an offence to bein violation of a land use plan.”

With C-47 in place, Hoefer saidamendments to modernize theMackenzie Valley Resource Manage-ment Act (MVRMA) are needed toimprove the N.W.T.’s investment cli-mate. “It’s the missing piece, but it’s inprocess, and we’re anxious to see itimproved.” Currently, four regional

boards grant permits to resource com-panies, all under MVRMA. Smaller pan-els tied to land claim settlements alsoexist, and the number of panels couldgrow as unresolved land claims are set-tled. (Nunavut, in contrast, has a singleland claim settled years ago). Aborigi-nal Affairs and Northern DevelopmentCanada proposes to consolidate theregional boards into one large all-encompassing board, although someN.W.T. Aboriginal groups are resistant.

Hoefer believes that regulatoryreforms are necessary to sustain miningas the largest private sector contributorto the northern economy, and thelargest employer of Aboriginal Peoples.Meadowbank, Nunavut’s only mine,contributes 15 per cent of GDP, whilemines in the N.W.T. contribute 30 percent of GDP (or 50 per cent indirectly).Since 1998, diamond mines alone havecontributed $8.5 billion to northernand aboriginal businesses.

“But people see these mines comingto an end,” Hoefer said, noting that thefirst closure, the Ekati diamond mine,is set for 2019. “They understand whywe need to look to the future.” CIM

news

The North comes of ageFederal and territorial government initiatives to increase northerners’ say in resource development

by Vivian Danielson

WIM’s Trailblazer Award for Espley

Women in Mining presented the sec-ond annual Trailblazer Award toSamantha Espley for her tireless effortsin advancing the careers of women inthe mining industry. Over the last 25years, Espley has been instrumental inclearing a path for herself and for otherwomen to excel in senior managementroles in mining. She received the awardat the WIM International reception, heldat the Prospectors and DevelopersAssociation of Canada InternationalConvention, Trade Show & InvestorsExchange in Toronto, in early March.

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Adding to its robust mining facilitiesin Saskatoon, the SaskatchewanResearch Council (SRC) launched a$2.2-million mineral processing pilotplant and a $1.4-million QEMSCANservice in April. The latter is an electronmicroscope that scans minerals and cre-ates data packages based on the oresample’s chemistry and mineralogy, saidCraig Murray, vice-president of SRC’smining and minerals division. Up tothis point, mining and exploration com-panies had to send samples to eitherBritish Columbia or Ontario for a QEM-SCAN analysis, making for a longer andpotentially costly wait for results.

“We’ve had several of our existingclients ask for it,” said Murray. “It helpsmineral processing engineers and scien-

A new plant in the PrairiesSaskatchewan Research Council rolls out pilot processing plantand QEMSCAN service

by Derek Neary

tists understand what’s in the sampleand, more importantly, how it’s distrib-uted and what else is in there. That pro-

vides some valuable information whenthey’re developing the process flowsheets and testing the process that

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Jack Zhang, senior process engineer with the Saskatchewan Research Council, operates a multi-stage mineralflotation machine at the new mineral processing pilot plant in Saskatoon.

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they’re going to use to extract the mineral. That will give thema leg-up in terms of knowing what process is going to work thebest, which one to try first or what things need to be tweaked.”

Bags of core samples from the QEMSCAN building are takento the mineral processing pilot plant, a 10-minute drive away.The plant occupies 2,000 square feet (186 square metres), shar-ing space with an existing diamond lab and pipe-flow technol-ogy centre. A portion of the cavernous room is filled withflotation cells, metallic mixers and tubes feeding chemicals andwater into the process. The plant will let companies fine-tuneand test methods to process extracted minerals, and customerscan use the pilot plant services independent of whether they usethe QEMSCAN service.

“The mineral processing pilot plant is used to scale up theprocesses determined in the laboratory to simulate the processesto be used in an industrial processing plant,” said BryanSchreiner, SRC minerals manager. “Modifications to the processesmay be made to improve recovery and plant performance.”

The pilot plant’s throughput varies, but it averages around100 kilograms per hour and can accommodate a wide range ofmetals and minerals, such as potash, uranium, gold, base met-als, diamonds, coal, oil sands and rare earth metals. Switchingfrom one commodity to another involves cleaning and inspec-tions that require a few days to a week, Murray said.

The first trial for the pilot plant was small scale, but the SRCbegan a more ambitious project involving rare earth metals inMarch. Demand will fluctuate, Murray acknowledges, but it isexpected to be substantial and could involve internationalclients. “We anticipate that it will go up and down a little bitwith the mining cycle, but there was an unfulfilled need forboth [the processing pilot plant and QEMSCAN], so we antic-ipate that they’ll be quite busy,” he explained. “We’ve alreadygot quite a few interested companies lined up to use the pro-cessing plant and that, in turn, drives some work for the QEM-SCAN as well.”

“We try to respond quickly to evolving industry demand,”Murray said. “QEMSCAN is a fairly new set of technologies andit’s really just getting a foothold in the industry, and people arestarting to see the benefit of it.”

The services are available to industry at competitive ratesdesigned to cover costs and leave enough to reinvest and stayon top of industry trends, according to Murray. It took$930,000 of SRC’s funds supplemented by the provincial andfederal governments to make the pilot processing plant a reality.“We’re not trying to be predatory or undercut the industry inany way,” he pointed out.

With these two latest additions, SRC, owned by the provin-cial government, now offers a range of services that can guideindustry from early days of exploration through to mineral processing. CIM

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Described as a snoozer by somenational media outlets, Canada’s federalbudget was anything but for the miningsector. While the mineral explorationtax credit was extended, and steps weretaken to address skills shortages affect-ing the mining industry, two taxchanges might have negative conse-quences on companies looking to openadditional mines or to expand theirexisting operations.

The budget eliminated the acceleratedcapital cost allowance (ACCA) and reclas-sified Canadian Exploration Expense(CEE) within the Canadian DevelopmentExpense (CDE) pool. “This is the secondbudget in a row where they’ve moved totake away some mining-specific taxmeasures that have been there for

A taxing budget for minersElimination of tax incentives for mining loom large in Canada’s budget

by Herb Mathisen

many years to incentivize mininginvestment,” said Pierre Gratton, pres-ident and CEO of the Mining Associa-tion of Canada. Last year’s budget gotrid of the 10 per cent investment taxcredit for pre-production miningexpenditures.

By recategorizing CEE into CDE, thededuction rate for developmentexpenses like shaft-sinking or overbur-den removal and stripping during pre-production drops from 100 per cent –the year the expense is incurred – to 30per cent on a declining balance basisover a number of years. This change willbe phased in until fully implemented in2018. Also, the phasing out of ACCAmeans that companies can no longerfully deduct mining equipment and

machinery purchased during pre-pro-duction. Only 25 per cent of these costswill be deductible. The budget, how-ever, extended ACCA for the slumpingmanufacturing sector and created taxincentives for the biomass and cleanenergy sectors. “In the budget, the gov-ernment was saying it was taking thesesteps on mining to make the tax systemmore neutral,” said Gratton, “but it’srather selective neutrality.”

John Gravelle, national miningleader with PricewaterhouseCoopers,said the government gets a failing gradefrom the mining sector for this budget.“The companies that it affects the mostare the ones that already have existingmines in Canada that are profitable and are then taking their earnings and

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get exploration in remote parts ofCanada, and jobs and opportunitiesfor northern remote Canadian com-munities, as well as for First Nations people.”

May 2013 | 39

putting them into developing a second,or third, or fourth mine in Canada,”said Gravelle. “I would have thoughtyou would have wanted to motivatethose companies to repeat rather thanrethink.”

In today’s difficult market, he con-tinued, miners are pursuing alternativesources of financing that can be expen-sive. “Because they are going to have topay taxes sooner rather than later, theyare going to leave these high costs offinancing outstanding longer, so that isgoing to hurt their balance sheets,” heexplained. “And some of the projectsare going to be made uneconomical. It’sgoing to impact the net asset value ofthe projects, so some of them that weremaking the grade, on a return oninvestment perspective, are not goingto meet that anymore.”

The budget was not all bad news,however. While Gratton said he didnot have high expectations for infra-structure investments, as the federalgovernment is facing a deficit, thebudget did address skills shortages inthe mining sector. “It was largely askills and training budget,” he said.Finance Minister Jim Flaherty announcedthe government would provide addedsupport for apprenticeships and agreedto partner with provinces and territoriesto subsidize training for in-demandpositions.

One bright spot for the junior sectorwas the extension of the Mineral Explo-ration Tax Credit for another year. “It’svery important to the sector,” said RossGallinger, executive director of theProspectors and Developers Associationof Canada.

While this measure costs the fed-eral government roughly $80 to $100million in net revenue, Gallinger said,studies have shown the tax creditraises about $800 million annually forminers. “That’s a pretty substantialpiece of capital raised for the sectorand it affords keeping exploration inCanada,” he pointed out. “It’s really to

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Power projects

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Gallinger said he also remains hope-ful about an extension of the Geo-mapping for Energy and Minerals program, as an announcement wasabsent in the budget. CIM


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Les membres de l’indus-trie minière québécoise ontsonné l’alarme sur uneproposition d’augmentationdes redevances touchant lesecteur lors de deux forumsdistincts tenus à Montréalen mars dernier. Le PartiQuébécois a fait campagnesur la promesse d’une aug-mentation des redevancessur le secteur minier lorsdes élections de l’automnedernier. Le parti maintenantau pouvoir a lancé deuxgrandes propositions aucours des semaines précé-dant le Forum sur les Rede-vances Minières, tenu àl’école des Hautes étudescommerciales (HEC) deMontréal le 15 mars.

La première option con-siste à imposer une rede-vance en pourcentage de la valeur totalede production, le taux suggéré étant decinq pour cent. La seconde propositionest de créer un impôt supplémentaire,progressif ou imposé à partir d’un cer-tain seuil de bénéfices, pour refléter lahausse de valeur des ressources.Actuellement, les sociétés minières duQuébec paient 16 pour cent d’impôtssur leurs bénéfices.

« Les régimes d’imposition et deredevances du secteur minier sont enréévaluation partout, indique YvanAllaire, président de l’Institut de gouver-nance des organisations privées etpubliques et conseiller de la provincesur la question. (Le défi) consiste à trou-ver le point d’équilibre entre le niveaumaximal de revenus fiscaux et d’avan-tages économiques durables pour lescitoyens et l’état, et le droit des entre-prises à un retour équitable. »

La réaction de l’industrie aux propo-sitions est négative presque partout. Lesjoueurs du secteur minier se sont réunisà l’occasion de leur propre forum public,

Redevances : on se prépare pour la tempêteQuébec propose d’augmenter le taux d’imposition du secteur minier

par Peter Diekmeyer

organisé par la Fédération des chambresde commerce du Québec et les firmesde conseil KPMG Secor et Fasken Mar-tineau quelques jours avant l’événementdu gouvernement, pour discuterpubliquement des conséquences deschangements proposés au système.« Créer de nouvelles taxes de cettemanière n’est pas une bonne idéeindique, Chuck Jeannes, président etchef de la direction de Goldcorp, qui esten plein développement de son projetd’extraction d’or Éléonore près de laBaie James. Un geste comme celui-làcauserait du tort aux intérêts de laprovince à long terme, car les entre-prises réévalueraient leurs décisionsd’expansion de mines et reverraientleurs évaluations comparatives de l’a-vantage concurrentiel de différentesrégions. »

« Les nouveaux impôts envisagésferaient du Québec l’endroit le plusimposé où nous sommes en activité,bien avant l’Ontario, le Mexique etmême l’Argentine, ajoute Jeannes. Je

dirais ceci au gouvernement : “Ne tuezpas le prochain projet Éléonore.” »

Nochane Rousseau, expert fiscalchez Pricewaterhouse Coopers, ajoutequ’il est difficile de comparer le fardeaufiscal des sociétés minières au Québec àcelui d’autres juridictions car lessociétés doivent aussi payer les impôtsfédéral et provincial ainsi que d’autrescharges comme l’impôt sur les salaires.Il ajoute cependant que les nouvellesmesures pourraient nuire à l’investisse-ment. « Nous nous retrouverons cer-tainement dans les derniers échelons, etles investisseurs exigeront des primes derisque de plus en plus élevées. »

Bryan Coates, vice-président desfinances chez Osisko, qui opère la mined’or Canadian Malartic en Abitibi-Témiscamingue au Québec, ajoute quel’augmentation des redevances pourraitavoir des conséquences imprévues.« Les gouvernements doivent faireattention avec de tels changements, cars’ils vont de l’avant, ils pourraient en faitperdre des revenus, conseille Coates.

Des travailleurs au projet de mine d’or Éléonore de Goldcorp au Québec

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May 2013 | 41

Les redevances ne représentent qu’une petite portion de ceque Québec récolte des sociétés minières : il faut aussicompter d’importantes sommes en impôts des sociétés et surles salaires. Et si le gouvernement s’accapare une trop grandepart d’un côté, il pourrait nuire à l’investissement et perdrebien plus globalement. »

Le gouvernement espère conclure une entente à longterme avec l’industrie mais, ironiquement, ce n’est pas lapremière fois que les règles du jeu changent. En 2010, legouvernement Charest a fait passer les redevances sur l’exploitation minière des sociétés québécoises de12 pour cent à 16 pour cent des bénéfices. Selon les Faitset chiffres 2012 de l’Association minière du Canada, cela aeu pour effet de faire passer le Québec du plus petitfardeau fiscal au troisième plus grand au Canada en 2011.Le fait que le gouvernement revienne à la charge si rapide-ment ajoute à l’incertitude, la principale bête noire desinvestisseurs.

Les augmentations d’impôt proposées arrivent au mau-vais moment. Les mineurs subissent beaucoup de pressionactuellement. Il est difficile pour les petites sociétés notam-ment d’obtenir du capital. Cela dit, la plupart des partici-pants au forum étaient plutôt optimistes quant au résultatdes propositions du gouvernement et ont rappelé qu’il estessentiel de sensibiliser le public.

Par exemple, si une part de la société croit que le gou-vernement peut hausser les impôts à l’infini, les représen-tants officiels qui ont participé au forum de l’industrie ontsouligné que même quand l’infrastructure minière estdéveloppée et payée, il n’y a aucune garantie qu’elle serautilisée au mieux. Agrandir les gisements de minerai exigeun apport constant d’investissement, mais les règles enconstante évolution compliquent l’évaluation de leurrentabilité.

Un autre défi important mentionné lors du forum del’industrie consiste à expliquer la structure fiscale actuelle.Peu de gens réalisent que l’impôt de 16 pour cent sur lesbénéfices des sociétés minières s’ajoute aux impôtsfédéraux et provinciaux que toutes les entreprises doiventpayer. En plus, cet impôt est calculé pour chaque mine demanière distincte. Ainsi, si une société perd de l’argent lorsdes stades de développement initiaux d’une mine, maisgénère des profits sur une autre, elle ne peut pas utiliser laperte du premier projet pour réduire ses bénéfices sur lesecond. En conséquence, les sociétés qui exploitent desmines peuvent devoir payer des impôts même si ellesaffichent des pertes.

Le gouvernement devrait décider d’un système de rede-vances au printemps, au moment de la publication del’ébauche de loi sur les mines. Traduit par SDLICM

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Members of Quebec’s mining indus-try raised the alarm over proposed roy-alty increases for the sector at twoseparate mining forums in Montreal thispast March. The Parti Québécois cam-paigned on the promise of raising min-ing royalties in last fall’s election. Nowin power, the party floated two mainproposals in the weeks leading up to itsForum sur les Redevances Minières,held at Hautes études commerciales(HEC) Montreal on March 15.

The first option is a royalty based on apercentage of total production value,with five per cent as the suggested rate.The second is a supplemental tax, whichwould either be progressive or kick inonce a certain profit threshold wasreached and would reflect rising resource

Quebec proposes raising royalty ratesIndustry braces for impacts of further mining tax increases

by Peter Diekmeyer

values. Currently, mining companies inQuebec pay 16 per cent on profits.

“Mining royalty and tax regimes arebeing reviewed everywhere,” said YvanAllaire, chair of the Institute for Gover-nance of Private and Public Organiza-tions and advisor to the province on thisissue. “[The challenge] is balancingmaximization of fiscal receipts anddurable economic benefits for citizensand the state with the right of compa-nies to a fair return.”

Industry reaction to the proposedchanges has been almost uniformly neg-ative. Players in the mining sector gath-ered at their own public forum,organized by La Fédération des cham-bres de commerce du Québec, and lawfirms KPMG Secor and Fasken Mar-

tineau, days before the province’s eventto publically discuss the impacts of pro-posed changes to the system. “Addingnew taxes in this way is not a good idea,”said Chuck Jeannes, president and CEOof Goldcorp, which is in the midst ofdeveloping its Éléonore gold project nearJames Bay. “Such a move would harm theprovince’s interests over time, as busi-nesses reassess mine expansion decisionsand make new comparisons regardingcompetitive investment locales.”

“The proposed new taxes wouldmake Quebec the highest tax place thatwe do business, ahead of Ontario, Mexico and even Argentina,” addedJeannes. “My message to the govern-ment would be: ‘Don’t kill the nextÉléonore project.’”

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profits from the second. Therefore, mine operators can be los-ing money but still be forced to pay taxes.

The government is expected to decide on a royalty systemthis spring, when it releases its draft mining law. CIM

Vale supports United Way Centraide campaign

Vale, in cooperation with the United Steelworkers Union, sup-ported the 2012 United Way Centraide Sudbury campaign bycontributing $700,000. The company matched donations offeredby employees and pensioners on a dollar-for-dollar basis. “TheUnited Way is a long-standing tradition at Vale,” said Kelly Strong,Vale’s vice-president of operations for Canada and the U.K. “Thesuccess of this campaign speaks to the incredible generosity ofour employees and of their commitment to making our commu-nity a better place to live.” The community raised over $1.9 mil-lion for the 2012 United Way campaign in the steel town.

GIVING BACK

Nochane Rousseau, a tax expert at PricewaterhouseCoopers,said ranking Quebec miners’ tax burden in comparison withthose in other jurisdictions is difficult because companies alsopay federal and provincial corporate taxes, along with otherlevies like payroll taxes. He added that new measures couldhamper investment, however. “We are definitely heading intothe higher end, where investors will be demanding increas-ingly significant risk premiums.”

Bryan Coates, vice-president of finance at Osisko, whichoperates the Canadian Malartic gold mine in the Abitibi-Témiscamingue region of Quebec, said increasing royaltiescould have unintended consequences. “Governments need tobe careful about making changes, because if they do, theycould actually lose revenues,” said Coates. “Royalties are justa small percentage of what Quebec collects from miningcompanies, which also includes significant payroll and cor-porate taxes. However, if they grab too much on one end,they could end up hampering investment, thus losing evenmore overall.”

Ironically, as the government calls for a long-term deal withindustry, this is not the first time that the rules of the gamehave been changed. In 2010, the Charest government raisedthe mining royalties tax that Quebec mining companies payfrom 12 per cent to 16 per cent of profits. According to theMining Association of Canada’s Facts and Figures 2012, thischange moved Quebec from the least to the third-most bur-densome jurisdiction in Canada in 2011. The fact that the gov-ernment is returning so soon to the trough creates additionaluncertainty, which many investors cite as a key bugbear.

The proposed tax increases come at a bad time. Miners havebeen under considerable pressure lately, with juniors in partic-ular experiencing capital access challenges. That said, mostforum participants were sanguine about how the government’spropositions will play out, noting that increased public educa-tion is key.

For example, while a certain percentage of the publicclearly believes that government can levy taxes ad infinitum,officials at the industry forum pointed out that even whenmining infrastructure has been set up and paid for, there is noguarantee that it will be optimized. Extending ore bodiesrequires consistent new investments; however, ever-changingrules make it hard to gauge how profitable they will be.

Another key challenge, highlighted at the industry forum,is explaining the existing taxation structure. Few realize thatthe 16 per cent tax that companies pay on mining profitscomes on top of existing federal and provincial taxes that allcompanies pay. Furthermore, this tax is calculated on a mine-by-mine basis. That means if a company is losing moneyin the initial development stages of one mine but makingmoney on another, it cannot use the loss from the first to offset


MAC research has identified more than $8 billion inpotential projects that could be developed over the nextdecade. This number is poised to grow due to the globalexploration interest in the region. Given the virtually unde-veloped terrain, mining companies have largely built, andcontinue to maintain, much of the infrastructure required tooperate. In the Northwest Territories, for example, mininghas made valuable and long-lasting infrastructure contribu-tions to the territory’s only railway, all three of its hydroelec-tric power facilities, and all-weather roads – suchinfrastructure is simply not factored into capital and opera-tional costs when determining the economic viability ofmany non-remote mining projects elsewhere in the country.

Some taxation measures had incentivized northern infra-structure development. However, the 2013 budget phasesout the mining industry’s eligibility for the Accelerated Cap-ital Cost Allowance (ACCA) and changes the eligibility ofmining activities for the Canadian Exploration Expense(CEE) and Canadian Development Expense (CDE) programs.These reforms make the development of certain projectsmore difficult.

Shifting the eligibility of expenses for “clearing, removingoverburden, stripping, sinking a mine shaft or constructingan adit or other underground entry” from CEE to the CDEprogram will reduce the tax deductibility of these expensiveactivities from 100 per cent to 30 per cent, costing miners anestimated $45 million each year. ACCA enables miners todeduct income for a taxation year of up to 100 per cent of theremaining cost of eligible assets acquired for use in a newmine or a new mine expansion. Although the program wasextended for manufacturers for two years, the mining sector’sACCA will be eliminated, beginning in 2017. Both of thesemeasures will make it more expensive for the developmentand construction of new mines, pushing potential opportu-nities for growth, partnershipand northern economic devel-opment further away. CIM

Brendan Marshall is director of economic affairs at MAC. He works to advancethe mining industry’s interests and understanding of key economic issues suchas taxation, transportation, innovation, international trade and investment, andenergy and climate change.

Our three northern territories are often touted as Canada’smining frontier, and the key to unlocking their largelyunrealized mineral potential is to address the region’s lim-

ited infrastructure. To date, government investment in infra-structure has been modest, and changes to the mining taxationregime in the federal government’s most recent budget intro-duce further challenges for miners with projects in this region.

Nunavut’s only operational mine, Agnico-Eagle’s Meadow-bank, required significant infrastructure investments. A float-ing dock system was installed in Baker Lake to receivesupplies. A tank farm, with an annual resupply capacity of 60million litres of diesel fuel for power generation and miningfleet supply, was built, along with a 110-kilometre all-weatherroad (including bridges) – by far the longest road in the ter-ritory. Other investments include the construction and main-tenance of a 1,500-metre air strip and the acquisition of sixlarge diesel generators. The lack of energy infrastructure –and resulting $70- to $80-million fuel bill for the company’soperations – has helped drive the price of electricity to$0.30KWh. There are also costs for shipping, local trans-portation and storage of the fuel on site.

For Meadowbank, the scale and the quality of the depositmerited the investment. That is not always the case, however,and the lack of infrastructure is the determining factor thatrenders the development of some high-quality deposits mar-ginal, or economically unviable.

Targeted and strategic infrastructure investment by the fed-eral government could reverse this, bringing employment ben-efits to northern communities and royalty revenues to Canada.Infrastructure spending would increase the economic viabilityof a host of mining projects and reduce the costs for existingoperations. For example, building a seasonal overland routefor the southernmost 156 kilometres of the N.W.T. winter roadto its three diamond operations would lengthen the truckingseason and provide more security against changing climateconditions. In Nunavut, the Bathurst Inlet Port and Road proj-ect would connect the Arctic coast at Bathurst Inlet to numer-ous precious and base metal projects, like Xstrata’s HackettRiver and MMG’s Izok Corridor, moving toward development.

Already, mining is the largest private sector contributor inthe North, contributing 30 per cent of GDP in the N.W.T. and15 per cent in Nunavut. Other sectors, like real estate, con-struction and transportation, also benefit from the miningindustry, through the purchase of land, the construction andmaintenance of roads, and the development of mine sites.These investments translate into significant business and com-munity benefits, including huge growth in aboriginal businessand employment, enhancing the overall quality of life for thoseliving in northern communities.

Mining and Canada’s North: build it and they will come

BY BRENDAN MARSHALL

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sulphuric acid. The Canadian and U.S. companies counteredthat the arrangement would actually reduce prices for U.S. cus-tomers, because it would allow the parties to take advantage ofthe Canadian mining companies’ lower production costs andthe U.S. producers’ distribution networks in the United States.

Much of the case revolved around the appropriate legal stan-dard against which the plaintiffs’s and defendants’ competingclaims should be judged. What is important is that the judgesin the case – both at first instance and on appeal – agreed thatthere was at least a plausible argument that the arrangementwould “increase competition” and promote “enterprise andproductivity.” Indeed, the judge who wrote the appeals opinionobserved that the law should not be used to discourage newand innovative ways of doing business.

Although some slight differences exist, the situ-ation in Canada is very similar to that of the UnitedStates. Under Canada’s Competition Act, joint ven-tures between competitors can be prosecuted ascriminal offences if they involve conduct such asprice-fixing or market allocation. Plaintiffs alsohave the right to sue parties for damages. On theother hand, Canadian law also recognizes the

potential benefit of joint ventures and thus provides for analternative civil review process where there is scope to defendthese arrangements, if challenged, on the basis of their pro-competitive effects. As in the United States, the difficult issueis where to draw the line between illegal and pro-competitivearrangements.

Because of the serious risks involved, it is very importantthat prospective joint venture partners carefully evaluate anypotential competition issues before proceeding with anarrangement.

The first questions that should be asked in making thisassessment are: what is the purpose of the joint venture, andwhat are the business justifications for any restraint on compe-tition it may involve? This is a key threshold consideration, andcoming up with a superficial explanation for what otherwisewould appear to be anti-competitive conduct will not suffice.Care should also be taken to reflect the legitimate and pro-competitive justifications in internal company documents so asnot to undercut the positive defence you may have to make.

Taking the time to address competition issues upfront canhelp avoid potential – and costly – problems down the road foryour joint venture or other collaborative arrangement. CIM

Joint ventures are very popular business arrangements, asthey offer participants the potential to share the risks indeveloping and commercializing new products, to facili-

tate expansion into new markets and to generate synergies inproduction and distribution. In the mining industry, jointventure arrangements can involve sharing the significantfinancial and operating risks in exploring and developingmining properties.

However, joint venture arrangements can raise seriouscompetition issues – and potentially lead to costly problems –when the collaborations are between industry competitors. Itis critical, therefore, that any prospective joint venture involv-ing competing entities be vetted for potential antitrust con-cerns as part of the planning and development process.

Joint ventures between competitors may yield anti-competitiveresults if, for example, they reduce the ability or incentive ofthe joint venture partners to compete against each other out-side of the arrangement, or involve information exchanges andother practices that could facilitate price-fixing and other typesof collusion.

Since competitor collaborations can be both pro-competitiveand anti-competitive, they present especially thorny challengesfor antitrust enforcement authorities and the courts. If toolenient an approach is taken by authorities, the joint venturecould restrain competition in the relevant industry; if theapproach is too strict, a beneficial economic arrangement maybe stifled or chilled.

A recent U.S. case, In re Sulfuric Acid Antitrust Litigation, is aperfect illustration of the conundrum represented by competi-tor collaborations.

Two Canadian mining companies that produce sulphuric acidas a byproduct of their operations entered into an arrangementwith several U.S. producers of sulphuric acid whereby the U.S.companies would stop producing and selling their own sul-phuric acid in the United States and instead serve as the exclusiveU.S. distributors of the Canadian companies’ sulphuric acid.

A group of industrial customers in the United States sued theparties, alleging that their “shutdown agreements” would eliminatecompetition between the Canadian mining companies and theU.S. producers, reduce the total amount of sulphuric acid availablein the United States and drive up the U.S. market price for

Contemplating competitor collaborations

BY MARK KATZ


Mark Katz is a partner in the Toronto office of Davies Ward Phillips & VinebergLLP, practising in the firm’s Competition and Foreign Investment Review group.He provides domestic and international clients with advice regarding theapplication of the Investment Canada Act and all aspects of Canadiancompetition law. He can be reached at [email protected].

columnsE Y E O N B U S I N E S S

“It is very important that prospective joint venture partners carefully evaluate

any potential competition issues beforeproceeding with an arrangement.”

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occupations. But this gap assumes “status quo” economic andlabour market conditions, and it will become increasingly dif-ficult to attract workers if the labour market heats up and othersectors start competing for the same talent.

The mining industry will have to do more than rely onlucrative wages to secure its future workforce. Addressing theseimpending skills challenges will require employers to retainand support leaders through leadership development and suc-cession planning. It will be important to acknowledge not onlythe loss of workers, but the knowledge and experience theytake with them. The retention of aging workers will be neces-sary, as they provide younger employees with the mentorshipand development support they need to be successful.

The new generation of leaders across the mining industrywill need to embrace strategies that encourage the hiring ofdiverse, yet largely untapped, groups such as women, immi-grants and Aboriginal Peoples. Women are broadly underrep-resented in Canadian mining, at just 16 per cent of theworkforce, falling short of other resource industries such asforestry, utilities, and oil and gas. In areas where the talent poolis too shallow to fulfill hiring needs, and talent attraction doesnot secure employees in the short term, the industry must lookto immigration. Attracting immigrants to remote locations andrecognizing foreign credentials will be important in such cases.

Finally, Aboriginal Peoples have the potential to become asignificant source of future labour for the industry. While min-ing in Canada generally outperforms other industries in termsof employing Aboriginal Peoples, they are predominantly hiredin entry-level and support roles. Employers must encourageand promote aboriginal employees to obtain mid- to high-levelpositions within their organizations. Doing so will ensuresound socio-economic development for aboriginal communi-ties and help manage gaps in knowledge worker roles.

Demand for workers will be widespread, but some occupa-tions will face greater supply issues than others. MiHR’s HRforecast helps quantify these issues, so that employers, educa-tors and governments can develop targeted strategies. As notedabove, a combination of approaches is the key to the futuresustainability and success of the Canadian mining industry.

For more information or to access MiHR’s HR Forecasts Report,please visit www.mihr.ca oremail [email protected].

CIM

The recent federal budget highlighted the pressing need toaddress future skills shortages – jobs without people andpeople without jobs – and the huge employment gap

that eligible retirees will soon create. The Mining IndustryHuman Resource (MiHR) Council’s 2013 labour marketreport, released in May, found that over the next 10 years, themining industry will need to fill more than 145,000 jobs. (Aneconomic upswing sees this number rise to 200,000 workers,while a contraction brings it down to 120,000 workers.) Alarge portion of this future workforce will not fill “new jobs”but will be replacements for forecasted retirements.

By industry request, this year the MiHR labour marketmodel added available talent and labour supply estimates for66 key occupations in mining. Having this new supply sideinformation has made gap analyses for each of these 66 occu-pations possible, and will subsequently enable companies tocreate targeted strategies specific to their hiring requirements.

Three underlying trends emerged from MiHR’s gap analysis.For certain occupations, a large talent pool is available but themining industry’s ability to attract new recruits falls short ofprojected needs. For example, mining has traditionallyattracted only 4.6 per cent of technical occupations like landsurveyors, civil engineers or chemical technologists – ourindustry will need to nearly double this number. The miningindustry must attract talent away from other sectors where thelabour pool exists but workers are not choosing mining jobs.

For other occupations, the projected talent pool will not belarge enough to meet the forecasted need. Many of these occu-pations are mining-specific and require highly skilled individ-uals with training and experience in the industry. Addressingthis issue requires a long-term talent attraction strategy, as wellas coordination with educators, training institutions, immigra-tion services and other sectors to grow the labour pool and toattract new talent.

The third trend revealed conditions where there will be justenough available talent to meet the industry’s need for certain

Mining sector must build and cultivate talent pool

BY RYAN MONTPELLIER

Ryan Montpellier is the executive director of the Mining Industry HumanResources Council (MiHR) in Canada. Among his accomplishments, he hasbeen a recipient of the Canadian Institute of Mining Bedford Young LeadershipAward, which recognized his achievements in addressing the industry’s humanresources and labour market challenges.

columnsH R O U T L O O K

Xstrata’s Dionne honoured

Dominique Dionne, vice-president of corporate affairs forXstrata Nickel, was recognized as a leading businesswomanin Canada, receiving a Royal Bank of Canada ChampionsAward in the 2012 Canada’s Most Powerful Women: Top 100program for her support of Xstrata’s plans to increase oppor-tunities for women in the industry. Dionne’s influence hashelped shape the next generation of female leaders.

ACHIEVEMENT

the public sector on infrastructure, tax flow-throughs, andenergy and training subsidies. Also, new projects have consis-tently lower mineral grades and are situated in more remotelocations that require more infrastructure and have higherenergy cost exposures. These projects may face a longer permit-ting process as well, thus compounding the inflationary impacton the capital budget outlay and the timing uncertainty offuture cash inflows from a project. As new greenfield operationscome on-stream, the perceived costs appear to climb, and theshareholder challenges management on its cost controls.

The new public sectorThe industry is now profitable, while the public sector

faces mounting deficits due to higher social financial obliga-tions and weaker revenue bases. This is the reverse of a gen-eration ago and it leads to less cost-sharing capacity from thepublic sector. As already noted, governments have more com-plex permitting processes and a need for increased taxesand/or royalties. The financing of restitution costs reduces theanticipated long-term cash inflows from a mining asset. Lastly,

Boards of mining companies today are often perplexed bythe loss of shareholder value under their watch. To addressthis issue, one must review the fundamental components

of shareholder value, or enterprise value (EV): capital outlays,capital inflows and their relevant discount rate. Shareholders arewell-armed with analysts and historical figures but seldomunderstand the changes that are occurring – often beyond man-agement’s control. In order to protect shareholder value in thefuture, it will be essential to understand the following new driv-ers, as they appear to be medium-term, if not long-term.

Asset replacement costsFinancial statements generally reflect current metal market

prices and historical fixed asset costs. These fixed assets may havebeen discounted due to past bear metal market prices (1995-2005) and the resulting asset sales, and then subsequentlyrestated upwards because of the recent rise in metal prices.

Even restated, however, the development costs of olderassets have remained attractive, relative to those of greenfieldassets. Many older assets come with cost-sharing supports from

Enterprise value and new mining projectsBY MAURO CHIESA


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May 2013 | 51

columns

with many new projects being developed in emergingeconomies with evolving policies, governments will bedemanding and securing back-in equity rights that may ormay not come with capital infusions into the projects. The neteffect is a higher up-front capital burden on companies and alower cash inflow from the asset during the operating years.

The circular capital market The capital markets are fragmented; they are pulled apart by

quantitative easing policies, the American fiscal cliff and ongoingeurozone issues. In tandem with pension funds looking forlower-risk investments and income rather than value growth onreturns and the cost of financing increases on two fronts.

First, as investors become risk-averse, the appetite for miningrisk fades and the share prices fall, thus raising the cost of capitalas the price-to-earnings ratio drops. Such risk-aversion alsoimpacts the bank lenders who have been hit by the bailouts andare reducing commitments to riskier project financings. The sec-ond is the cost of the search for capital. What was once a two-stop shopping process (first securing aggressive equity and thenthe project-recourse bank debt for completion financing) nowinvolves multiple continents and capital markets, including thetraditional sources and the limited-scope capital such as jointventure capital, export credit agencies, supplier credit financing,

international financial institutions and metal stream financiers.Each source has its own agenda and requires time to assembleand close. The net effects are delays and the resulting capexinflation, higher process costs and a higher cost of capital (anda higher discount rate applied to cash flows) for calculating EV.Given the circular nature of the relationship between cost of cap-ital and shareholder value, even established mining companiesmust now consider financing themselves first – be it with cashfrom existing operations or from asset sales of non-strategicexisting assets – before addressing the more difficult markets.

In summary, these higher cost uncertainties, public sectordeficits and ambiguous capital markets translates to moreupfront capital required, greater timing uncertainty, lower cashinflow streams and a higher discount rate applicable to thosestreams. Their aggregate effect will require operational and strate-gic adjustments by all companies to better manage their existingand prospective assets and their capital budgets. Many compa-nies will have to overhaul their capital budgets and to reassesstheir asset risk management practices and personnel.

Mauro Chiesa has over 33 years of experience in financing and advising

extractive and infrastructure projects around the world. He has worked with

multinational banks, the World Bank Group and EDC. Chiesa will chair a panel

discussing the shifting aspects of shareholder value at the 2013 CIM

Convention in Toronto on May 7.

CIM

confidence associated with an Inferred Mineral Resource andthat discouraged the use of Inferred Mineral Resources to“evaluate economic validity worthy of public disclosure.”

The committee has added the phrase, “It is reasonablyexpected that the majority of Inferred Mineral Resourcescould be upgraded to Indicated Mineral Resources with con-tinued exploration” to the definition, and has modified thedefinition guidance to include: “Inferred mineral resources canonly be used in economic studies as provided under NI 43-101.”The committee has provided additional guidance to theQualified Person when classifying Inferred Resources. Mineral Reserves: In 2012, the United Nations Expert Groupon Resource Classification noted the CRIRSCO template andmember definitions did not identify the “reference point” wherea Mineral Reserve is reported. This issue is particularly impor-tant when Mineral Reserves are reported as a product, such asclean coal, rather than as feed to a plant or concentrator. Thefollowing text has been included in the CRIRSCO and CIM def-inition: “…the reference point at which Mineral Reserves aredefined, usually the point where the ore is delivered to the pro-cessing plant, must be stated. It is important that, in all situa-tions where the reference point is different, such as for asaleable product, a clarifying statement is included…”Feasibility Study: In 2010, CIM added a definition for fea-sibility study to the CIM Definition Standards. CIM has sincereceived several notifications of industry concerns that theterm “proponent” within the definition was not adequatelydefined. The committee has added the following paragraphto the proposed definition:

“The term proponent captures issuers who may finance aproject without using traditional financial institutions. In thesecases, the technical and economic confidence of the FeasibilityStudy is equivalent to that required by a financial institution.”

Call for commentsThe standing committee has begun a 90-day consultation

period with industry and CIM members. To participate,please read the definitions displayed online (http://defini-tions.cim.org) and compare the proposed changes to the cur-rent definitions. Leave a comment if you feel inclined, and itwill be forwarded to our moderator, who will review the con-tents, strip out your personal information and post the sug-gestion online. The committee will request CIM councilapproval of final definitions in late-2013. CIM

Paul Bankes is a geologist with over 30 years of domestic and internationalexperience in project development, mine operations, geostatistics, mine designand business development. He chairs the CIM Standing Committee on MineralReserve and Mineral Resource Definitions and represents CIM on CRIRSCO andon the United Nations Experts Committee on Resource Classification.

Since it was created in August 2000, the CIM StandingCommittee on Mineral Reserve and Mineral Resource Definitionshas maintained all of the CIM definitions referenced byNational Instrument 43-101 Standards of Disclosure forMineral Projects.

The committee represents CIM on the Committee forMineral Reserve International Reporting Standards(CRIRSCO). With more international exposure, CRIRSCOmembers have agreed, as much as possible, to standardizethe organization’s 15 core definitions and to have themadopted by all CRIRSCO member codes and standards.However, a need for additional national codes or guidancefor each definition was recognized.

Summary of key changesIn most cases, the proposed changes recommended by the

committee are restricted to minor revisions in wording andsyntax to harmonize Canadian definitions with those of otherCRIRSCO members.

This section describes significant changes introduced bythe committee to reflect industry, Canadian SecuritiesAdministrators (CSA) and international requests for clarifica-tion and guidance. Mineral Resource: The 2005 and 2010 CIM Definition forMineral Resource has historically differed from otherCRIRSCO members due to two key phrases: “solid material”and “reasonable prospects for eventual economic extraction.”

The Canadian definition has always included the word“solid” that was not included by other CRIRSCO membercodes. In 2012, all CRISCO members agreed to include thephrase “solid material” in their respective codes.

In a similar fashion, the CIM definition has historicallyexcluded the word “eventual,” which has been adopted by allother CRIRSCO members. The committee has added theword “eventual” to the Canadian definition and providedguidance to clarify its meaning. Inferred Mineral Resource: Since inception in 2001, NI 43-101has allowed Inferred Mineral Resources to be included in aPreliminary Assessment (PA). On June 30, 2011, CSA changedthe name of a PA to a Preliminary Economic Assessment(PEA). PEA allows Inferred Mineral Resources to be includedin a mine plan, production schedule and financial analysis.However, CSA has extended the prohibition against disclosingthe results of a prefeasibility study, a feasibility study, or life ofmine plan at a developed mine, which includes Inferred Min-eral Resources in the mine plan, production schedule andfinancial analysis. While CSA’s decision did not materiallyimpact the previous CIM definition, it does contradict the2005 and 2010 CIM definition guidance that minimized the

Introducing the CIM Definition Standards Consultation Project

BY PAUL BANKES


columnsS T A N D A R D S


It was the summer of 2010 and geologist Bill Wengzynowskiwas fresh from a mine tour hosted by the Geological Society of Nevada, where he observed the vivid orangesand yellows of realgar and orpiment. The two minerals,

both sulphides of arsenic, are associated with Nevada’s Carlin-Trend gold deposits. But this day, he was thousands of kilometres north of there, in the eastern end of Yukon’s Racklagold belt, following up on a hunch from colleague Rob Carne.

“He found realgar within hours of stepping out of the hel-icopter,” says Carne, president of Vancouver’s ATAC Resources,which has the area staked. “By the end of the day, he had fol-lowed it up to a cliff face that became the Osiris zone.”

Gold grains in Carlin-type deposits are extremely fine andfound in sedimentary rocks. Popularly dubbed “no-seeum”gold, they are named after the Carlin Trend, which has pro-duced over 70 million ounces since the mid-1960s. Whilesimilar deposits occur in China, Serbia and Macedonia, nonehad been found in Canada until the ATAC discovery.

The team’s work has earned them accolades. In January,Carne, Wengzynowski and Doug Eaton were awarded theH.H. “Spud” Huestis Award for Excellence in Prospecting andMineral Exploration from the Association for Mineral Explo-ration British Columbia. Discovery is one key criterion for the

award, says Ed Kimura, chair of theawards committee. “The other is geo-science excellence and this groupexemplified that. They knew about aprospect that was showing way outin no-man’s land northeast of Mayo.They went out and found it, andidentified that very interesting min-eralization. We call it boots-on-the-ground type of exploration.”

Bringing data to lifeCarne, Wengzynowski and Eaton

had been partners in the past atArcher, Cathro & Associates (1981)Limited, a geological consulting firmthat has long been a leading force innorthern B.C. and Yukon explorationsuccesses. The three maintain a closeworking relationship. Wengzynowskiis now a consultant to ATAC andEaton is a principal at Archer Cathro.

In 2006, Eaton recognized that thewestern edge of the Rackla belt hadsignificant gold and tungsten geo-chemical anomalies in the govern-

ment database. Exploration over the next four years led to thedelineation of the Tiger zone, a limestone-hosted replacement-style gold deposit. While conducting reconnaissance geo-chemical surveys there three years later, though, the teamrecognized they were standing on a narrow band of largelyPaleozoic carbonate rock: shelf margin rocks that extendedsome distance to the east. So, guided by a Geological Survey ofCanada (GSC) interpretation that those rocks were similar tonortheastern Nevada, and that all the creeks sampled by theGSC were anomalous for arsenic 100 kilometres to the east, inanother isolated mountain range, they were soon looking east.“It didn’t discourage us that there were no gold anomalies inthose creeks because we knew Carlin-type gold is typically sofine-grained it was going to continue to move downstream,”says Carne. They were confident that if they sampled furtherupstream, they would find the source of the GSC’s arsenicanomalies.

In 2009, Carne, Wengzynowski and geologist SaraDreschler re-sampled three of those eastern drainages. “Theyall came back anomalous for arsenic and gold,” says Carne.The headwaters of the creek sampled by Dreschler have showna new discovery called Anubis, where a first drill hole last yearreturned a high-grade intersection of 8.51 metres at 19.85

upfrontA W A R D W I N N E R S & H R L E A D E R S

ATAC Resources’ president Rob Carne (above) won the H.H. “Spud” Huestis Award for Excellence in Prospecting and Mineral Exploration from the Association for Mineral Exploration British Columbia with colleagues Bill Wengzynowski and Doug Eaton.

Canada’s first Carlin-type gold discoveryHow ATAC’s team located “no-seeum” deposits in Yukon’s Rackla gold beltby Graham Chandler

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grams of gold per tonne. “The one I sampled became ourOsiris zone and the one Bill [Wengzynowski] sampled becamethe Conrad zone.”

The next year, after Wengzynowski’s surface finds of realgarand orpiment showed fairly definitive Carlin-type mineraliza-tion, they had to move quickly to stake. “We embarked on anambitious staking program,” recalls Carne. “We outlined alarge block of claims around the Osiris discovery showing andthen proceeded to connect between the Tiger and the Osiriszones, a 100-kilometre strike length by a width of about fourkilometres – that was a lot of staking.” Word was already leak-ing out. They’d staked to the east, but by the time they hadabout 8,500 claims, a prospector was staking towards them.“We kind of met about 30 kilometres east of the Osiris. Hesubsequently optioned that package to a Chinese companycalled Anthill Resources.” Last year, Anthill made a significantdiscovery of Carlin-type gold on those claims.

Claims spur cash flowThe discovery’s significance was quickly recognized by

the investment community. In June 2010, shortly afterWengzynowski’s spotting of realgar and orpiment, Michael Gray,senior vice-president of mining equity research at MacquarieCapital Markets Canada Ltd., visited the site and subsequentlyinitiated coverage in September. He focused on the Osiris goldtarget. “It’s the most similar geological setting to Nevada of anyother Carlin-type system in the world,” he says. “And that’s nota surprise because they are located on the same North Ameri-can continental margin. You’ve got a similar large-scale geolog-ical setting with a similar style of mineralization – sedimentaryhost rocks and importantly the same geochemical pathfind-ers.” Gray reckons the finds are potential new mineralprovinces, not just districts. Moreover, “they are finding thingsright on the surface.” Gray says there is still a long way to gobefore commercial viability can be established, but “it wouldimpress any of the Nevada guys.” Macquarie has managedpublic offerings of securities for ATAC over the past year.

Carne says these Canadian Carlin-type finds are significantbecause they are large. “The northern Carlin trend is, I think,only 40 kilometres long and has in various estimates between100 million and 200 million ounces of gold – both producedand defined,” he says. “Now it’s not a given that because it’s thesame type of deposit that we are going to find that much gold.But because we are in the same geological environment andpossibly the same age of mineralization, that invites the com-parison that potentially, maybe there is that endowment.”Carne adds that since the first Carlin find in Nevada 60 yearsago, most of it has only been discovered in the last 25 years:“And effectively, if you add up all of our days of exploration,it’s only 359 days so we are still very early in this story.”

With a mid-March private placement injecting $13 millioninto ATAC by Agnico-Eagle Mines, together with about $14million on hand, the company can forge ahead with a 2013drilling program. Some will be at a Carlin-type discovery closeto Osiris called Sunrise, different from Osiris in that it is afeeder fault system.

As for production prospects, Gray figures the crucialnext steps will be determining where the best concentra-tions are, and whether or not they are continuous. “They’vegot some good flashes of mineralization and some spectac-ular holes, but the continuity is not there yet,” he pointsout. “At the Conrad situation, they’ve drilled that off sys-tematically and they haven’t announced a resource, butwhat we published in Macquarie Equities Research Reportsis somewhere between three-quarters of a million ouncesand one million ounces.” However, Gray says, there is prob-ably more at depth and despite having some very highgrades, the Conrad zone probably averages close to six toeight grams per tonne. “For that part of the world, that’s notanywhere near critical mass [to justify developing a mine] –you would need a larger resource to justify infrastructurecosts and want high open pit and underground grades toprovide a high margin.”

Should economic factors materialize to justify building amine, infrastructure considerations would of course be critical.The Tiger gold deposit is 48 kilometres from the highway andit is another 100 kilometres to the Osiris zone. “So it’s 150 kilo-metres to the Carlin-type mineralization,” says Carne. “Wefully recognize that, and what we are trying to demonstratewith our program is that the ounces are there to justify thatsort of infrastructure investment.” CIM

May 2013 | 55

Dalhousie UniversityDepartment of Civil and Resource Engineering

Assistant Professor – Mineral Resource Engineering Program

The Department of Civil and Resource Engineering invites applications for an Assistant Professor in the general area of Mineral Resource Engineering. The appointment will be made at the rank of Assistant Professor (probationary tenure-track) with a starting date for the appointment of July 1, 2013, or later.

S/he will possess a PhD, in mining, geological or civil engineering. The candidate would also be expected to be eligible for professional engineering registration in the province of Nova Scotia. The successful candidate would be expected to have research strength in mineral processing, mine operations, mine planning, mine water treatment, mine waste remediation, rock mechanics or geotechnics.

Interested individuals should submit a single PDF file containing a letter of Application, a CV and a statement of teaching and research interests to: Chair of the Search Committee, Department of Civil and Resource Engineering – email: [email protected]. Three letters of reference should be sent directly by referees to the same e-mail address. The review process will commence on 1 May 2013 and continue until a candidate has been selected. Complete information regarding this position can be found at: http://civilandre-source.engineering.dal.ca/Files/Job_AD_March_13.pdf


“Goldcorp is on a major growth trajectory,” saysJenine Ellefson, director of recruitment and talentmanagement for the company. “We’re expected togrow production over the next five years and, as a

result, we need to monitor our talent pipeline.” The inflow oftalent will be essential for the company to reach its goal ofincreasing production from 2.39 million ounces of gold in2012 to about four million ounces by 2017. To make sure thishappens in a coordinated way, Goldcorp has designed a newgraduate recruitment program to develop groups of youngprofessionals together. Beginning in June, a cohort of around20 carefully vetted engineering, metallurgy and geology grad-uates from Canada and the U.S., will begin two years of skillsdevelopment within the company.

Paul Farrow, the company’s senior vice-president of peopleand safety, explains, “The individuals will either be placed atone of our operations or in one of the regional offices, depend-ing on where the need is. As a group, they will have a com-mon, baseline introduction to Goldcorp.” He hopes the changeaway from hiring one at a time will help maintain a morecoherent workforce as the company expands.

Graduates will be brought together twice over the two-yearperiod to take part in workshops and to discuss in detail vari-ous aspects of Goldcorp’s business. This includes the mining

industry in general, company values and strategies, careerdevelopment, systems-thinking, and in-depth work on safety.According to Farrow, the yearly get-togethers will give therecruits a forum to ask questions and bring fresh ideas to thecompany. He says he is hoping “to listen very clearly to whatthey have to say – not just about their experience in the pro-gram, but about opportunities for Goldcorp to grow, thingslike operating for excellence and continuous improvementactivities.”

University alliances“We partnered with universities that offer programs rele-

vant to our industry and with universities located close to ourmine sites,” Ellefson says. Goldcorp attended nine career fairsin Canada and five in the U.S., and also accepted resumes fromstudents at other Canadian and U.S. universities. Candidateshave now been chosen and are finishing their studies beforestarting work.

“We start the program by first identifying the technicalexperience a new graduate will need in whatever stream theyare in,” says Ellefson. “For engineers and geologists, this willhelp them progress towards their professional designation.”

After the first year, the graduates will have the opportunityto rotate to a different work environment. “They will have the


As the company expands, Goldcorp has hired the first in a series of cohorts of recent graduates in order to create a consistent business culture. The company is projecting a70-per-cent increase in gold production in the next five years, as projects like Éléonore (above) come online.

The right people at the right timeGoldcorp establishes new graduate hiring program by Simon Rees

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chance to either physically relocate to another geography orotherwise rotate within a large operation to a completely dif-ferent department,” says Farrow. But just like any otheremployee, Ellefson notes, “There is no guarantee of travel. Thismust be earned and make business sense.”

While at their respective operations, graduates will bolstertheir experience by performing several different roles and avariety of tasks. “We want graduates to gain exposure to differ-ent areas within their specialist field over the course of the pro-gram,” says Ellefson. “This will help them decide what role theywant to pursue with the company after the program ends.”

Ellefson expects the company will have its own learningcurve: “The first year will be a test in a sense. We are commit-ted to the program, but I imagine we will make some tweaksafter we receive feedback from the first year of the process.”

Farrow is taking the long view and anticipates the programwill only begin to truly flourish once the first cohort has hadthe chance to report their experiences back to their respectivealma maters. “It’ll take probably the second cycle before peoplestart talking about the program and spread the word throughalumni associations in universities,” he says. “And then thatwill be when the excitement starts.”

The company will likely see the biggest gains after a decade.“As they grow in the company, in perhaps 10 years, the grad-uates will begin to become managers or even progress higher,”Farrow explains. “And we are looking for that next wave ofleaders to come up through the organization. Our leadershipteam is interesting if you look at it currently; the people knoweach other from previous job experiences. With a program likethis, we’re increasing the odds of having that in the future.”

Leading the next leadersGoldcorps’ graduate program was tailored to emphasize

leadership. To develop and facilitate this, the company hasengaged the assistance of The Refinery Leadership PartnersInc., a consultancy firm headquartered in Vancouver, B.C., andwith offices in the U.S., Mexico and Chile. “This will be thefirst opportunity for many participants to consider aspects ofleadership and, while they won’t start their career leading ateam, it will be an opportunity for them to consider their lead-ership skills while they are contributing to a team,” explainsRefinery consultant Stephanie Ryan.

“We begin with a four-day workshop at the start of Julythat is followed up with 10 missions,” Ryan says. “These mis-sions are opportunities for the graduates to practise the lead-ership skills presented in the workshop. We want them toapply the knowledge acquired in their day-to-day workinglives. For example, if there is a mission on how to give orreceive feedback effectively, it won’t simply be a role-play sit-uation – it will be about engaging in a meaningful, real-lifeconversation.”

Ellefson highlights the need for mining companies to main-tain their graduate programs throughout the economic cycle.“The mining industry is cyclical, and these types of programstend to be backed when the sector is doing well,” she says.“But companies should ensure they have a long-term view of

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these programs and their value. They take time and effort, soyou won’t see rapid results; yet it’s important to maintainmomentum in order to ensure a company has the skills andthe talent available when needed in the future. As an industrywe all know there’s a skills shortage, especially in technicalareas. This is an industry-wide issue and we all need to do ourbit in training people.”

“The program starts in Canada and the U.S. first,” explainsEllefson, “although we hope to expand this to all the regionsin which we operate.” And as the program grows, specificallyinto Mexico and South America in the near future, Goldcorp’syearly crop of the best and brightest will increase in size to fueltheir business.

For now, the hiring has been limited to engineering, metal-lurgy and geology grads, but according to Farrow, that willchange. “We need finance people, we need people with HRbackgrounds, we need people with corporate social responsi-bility backgrounds, safety, all the usual disciplines you need fora company will eventually come into this graduate program,”he says. “It’s okay to hire one at a time, but the long-termimpact of bringing on board a group of like-minded, ambitious,talented individuals at the same time with the opportunity towork together as a team is exciting. One of these individualshas a great chance of being a future CEO or senior executive atone of the best mining companies in the world.” CIM


When Michael Hudson began his Nordic explo-rations 12 years ago, Finland and neighbouringScandinavian countries were not widely known fortheir mining. “I used to spend a lot of time telling

people that these were mining countries, that they had beenmining countries for hundreds of years, and it was more thanjust ABBA, IKEA and Nokia,” says Hudson, now president ofMawson Resources Ltd.

The rest of the world appears to have caught on. Finlandplaced first in the Fraser Institute’s 2012-13 survey of miningcompanies, as the world’s most investment-friendly miningjurisdiction. Its resource base, infrastructure, and clear-cutpolicies won praise from the 50 or so companies operatingthere, even as authorities struggle to accommodate both bur-geoning mineral development and a newly heated debate overminers’ social licence to operate.

Ancient historyIn a market especially wary of risk, Finland is a calming

destination. Its university-educated, English-speaking work-force makes hiring a relatively simple affair. Mining taxesremain low, government officials make themselves accessible,and there is no sovereign risk. Technology firms and equip-ment suppliers like Outotec, Metso, Sandvik and Atlas Copco

are easily accessible. Even high-latitude sites have road accessand mobile phone reception.The Geological Survey of Fin-land provides exceptional mapsand data.

This list goes on and on, butwhat puts Finland over the top isthat it possesses a rich geologythat invites comparison to Canadaand Australia. Gold is today’s top target; in particular, the Pro-terozoic greenstone of Laplandhosts abundant gold and nickeldeposits, according to KristerSundblad, professor of geology atthe University of Turku. On thatgreenstone belt, Agnico-Eagle’sseven-million-ounce Kittila minehas the largest gold resource inEurope. But the mines operatingin the Finnish sections of theFennoscandian Shield extractnumerous minerals, includingiron, nickel, copper, chromium,

uranium, and platinum group metals. Sundblad’s recent workhas explored indium deposits.

Although Finland’s mining history goes back 500 years, it still has some attributes of an emerging jurisdiction. “InCanada and Australia,” says Hudson, “we’re looking under200 metres of cover these days for the next generation ofdeposits, whereas projects like ours [in northern Finland] arebeing found at surface.”

Playing catch upOne reason for this is that, prior to 1994, when an

amendment to the mining act lifted a ban on majority for-eign ownership, only a few state-owned companies operatedin the country. The consequences of legislative changes onlybecame apparent relatively recently, when a spike in explo-ration projects driven by rising metal prices compelled thegovernment to revisit its mineral policies in 2006. “Theyweren’t that prepared for foreign investment, particularly inthings like mining,” explains David Pym, CEO of nickel andgold miner Belvedere Resources Ltd. “So their mining lawwas a little bit untested.”

The country’s response to its mining boom has been pro-ductive, if rocky. The Ministry of Employment and the Econ-omy introduced a public consultation mandate and began


Geologists for Mawson Resources Ltd. check drill core in the snow.

First place FinnishFinland has excellent geology and business culture – but do not go in poorby Eavan Moore

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taking a closer, longer look at permitapplications. The amended miningact, crafted over several years and putinto force in 2011, added numeroussafeguards for people and the envi-ronment; for example, explorationpermitting functions were split offfrom the pro-mining Ministry ofEmployment and the Economy, andreassigned to the Finnish Safety andChemicals Agency.

Unfortunately, the reorganizationmeant that 15 new employees, aswell as mining companies and thepublic at large, had to be brought upto speed on a brand new permittingprocess in short order. Meanwhile, abacklog of exploration permit appli-cations had grown since 2006. “Ithas been a very, very challengingtime,” says Riikka Aaltonen, senioradviser of mineral policy at the Ministry of Employment andthe Economy.

Corporate social responsibility and environmental issuesbecame hot topics in the country. A public newly aware of

mining and dismayed by a 2012 wastewater pond leak at the Talvivaaranickel-uranium mine has put pressureon environmental regulators and min-ers to tread cautiously. Those opposedto mining projects – mainly fortourism, conservation or health rea-sons – increasingly take the opportu-nity to appeal development, addingfurther time to the approval process.Government data show that explo-ration permits take an average of aboutthree years to make their way throughthe system.

The government’s goal is to cutdown the wait to six months by mid-2014. But for now this pileup of delayshas a significant impact on juniorexplorers, Hudson says. “It’s almostimpossible to come in to Finland todayand establish yourself if you haven’t

already got a foothold or the money to wait.” His company,while it can afford to wait, has been affected. “We’ve had a veryexciting gold discovery [at Rompas-Rajapalot],” he says. “It’sbeen getting a lot of attention, and of course we’ve been wanting

May 2013 | 59

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During a course he led, Krister Sundblad (right) explains thegeological setting of in-bearing veins his research teamdiscovered in southern Finland.

to move on this project. Ittook us three years to get ontothe ground to drill, and we’restill not through. A majority ofour better target areas are stillsubject to environmental per-mitting to allow a drill rig.”

Delays also hit Belvedere’sHitura nickel mine, whichonly recently received a min-ing lease extension to cover atailings expansion, after apply-ing for it four years ago.

Larger companies havenavigated the process moresmoothly. Ingmar Haga,vice-president for Europe at Canadian gold minerAgnico-Eagle, reported thatthe company’s Kittila projectwaited at most three years forits mining permits, and hadsecured every permit for which it applied. He notes, how-ever, that mining companies are now more focused on com-municating why mining is important. “I think that it’s good

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because the end result willmean that we will learn fromeach other,” he adds. Whilethe national governmentand local communities tendto support mining opera-tions, according to Haga, thepeople of southern Finlandknow less about the indus-try and are more inclined todistrust it.

Pragmatic peopleAgnico-Eagle represents

one of the larger firms oper-ating in Finland; surprisinglyfew major mining companieshave landed there. Pym ofBelvedere Resources thinksthe claim system detersmajors from operating overthe large land tenures they

would prefer. A company staking claims must notify and pay asteep fee to every individual out of perhaps hundreds or thou-sands of landowners. “It’s quite time-consuming and expensiveto stake large areas of land in Finland, and that tends to keepthe majors out,” he comments. “Anglo-American’s really theonly major that’s stuck in Finland and had big, consistentexploration.”

Haga explains that, in the Finnish view, staking off largetracts of land without working them misuses the resource. TheFinnish model encourages companies to do their work quicklyand move on, making exploration more efficient.

As a national characteristic, that tendency to get on withthings is a major source of the optimism felt by foreignersoperating there, who expect that Finns, focused on problem-solving, will find ways to untie their administrative knots.“Finland is a country with a very pragmatic approach tothings,” explains Casper Herler, an attorney at Finnish firmBorenius Ltd. He points out that the current government is afunctioning six-party coalition: “It’s possible to do things in thename of the general interest.” Legislators are, therefore,unlikely to make rapid policy shifts, according to Herler. Thenew mining law has room for discretion on the details but itremains generally mining-friendly. A proposed mining tax, putaside for at least the next two years, would be passed with cau-tion.

Despite his frustration, Hudson believes Finland is theanswer to soaring capital costs and an ever-riskier resourcebase. “What the world really needs is high-grade, permittabledeposits in good jurisdictions,” he says. “I think Finland hasalmost come into its own.”

For more on the Fraser Institute’s survey of mining companies, see“Is perception reality?” on p. 32.

CIM



A piece of nickel ore, fallen from the mucker at the Hitura mine, on the drift floor withdrainage water flowing around it

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Getting his start at Placer Development in 1962, engineerJim O’Rourke went on to help build a string of success-ful mines, including many of the best-known opera-tions in his native British Columbia. As president of

Princeton Mining Corporation, O’Rourke led the developmentof the Cassiar underground block cave mine, purchased andoperated by the Similco Mine, and formed an early Japanesepartnership to finance the Huckleberry copper project.O’Rourke tried retirement for a while but was unable to resistthe pull of old friends and an industry he finds as rewardingsocially as professionally. His latest endeavour, the CopperMountain Mining Corporation, started production in the sum-mer of 2011. In recognition of his considerable accomplish-ments and overall contribution to Canada, he was recentlyinducted into the Canadian Mining Hall of Fame.

CIM: You have focused on starting up and reviving mines. Whatinterests you about this work, and mining in general?O’Rourke: I find it exciting. Things happen extremely quickly,and there are lots of decisions to be made in a short period oftime. It’s just a very exciting time in the mining business. Youget to meet a lot of people from a lot of different disciplines andcommunities.

Whether you are in exploration, development or whatever,you’re completely reliant on people, including all your suppli-ers. You have to build relationships. And to build relation-

ships, I think you have to be honest. And I think you have tounderstand that everyone involved has to benefit, whether itbe the community, aboriginal groups, suppliers, or in our case,our partner, Mitsubishi Materials Corporation.

CIM: You are a pioneer of partnerships with companies in thePacific Rim. What do you think the influx of investors from China,Korea and Japan means to projects in Canada? O’Rourke: I think it’s a great opportunity for Canadian companies– particularly the more junior companies – that potentially havea good project but need financing and can partner up withsomebody who is willing to help. I think it’s a win-win situation.Now more than ever, companies have been seeking alternativemeans of funding and, in many cases, have been successful.These sources include looking oversees for strategic partnerships.

CIM: Junior companies all have high ambitions for their givendeposits. What is the key to dreaming big yet staying realisticabout the resource you have?O’Rourke: If you are a junior company with one project andyou have good geologists, it’s going to depend on what they’reseeing in the drill results. You may have results with only asniff of mineralization, but if the rock types and everythingindicate it’s part of a major porphyry system, you may have tokeep moving forward. But it’s going to be a decision based onthe geological interpretation.


King of the mountainCopper Mountain CEO Jim O’Rourke on his life in the businessby Eavan Moore

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CIM: As a CEO, how do you balance between taking risks, makinglong-term investments into your company and playing it safe sothat you have a quarterly or an annual profit to show yourinvestors?O’Rourke: I believe that if you’re running a company, you havean obligation to clearly specify your objectives – where you seethe company going in the future – and provide a clear pictureof the current focus. If you’re stepping out and taking a lot ofrisky leaps for potentially high gains, you’re going to attract adifferent group of investors.

In terms of our own company, Copper Mountain, our firstpriorities were to put the mine into production on scheduleand on budget, which we did, and then to bring it up to itsdesign capacity, which we’re in the process of doing. Unfortu-nately, we have hit some stumbling blocks there, but we believeit’s well in hand now. We’ve said that we want to demonstrateprofitability and then look for accretive opportunities that willadd value to the company.

CIM: Why is Copper Mountain considering a secondary crushernow, with the current dour economic conditions at play?O’Rourke: The tests and all the technical data to date indicatethat, with a secondary crusher, we would be assured of moresteady operations, less fluctuation in ore variability fromdifferent areas of the mine and, as a consequence, betterperformance in the flotation area and other parts of the plant.

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The addition of the secondary crusher would allow increasedthroughput at a cost of up to $40 million. The investment hasa very fast payback of less than a year. If we do decide toproceed with the secondary crusher, it would be paid out ofinternal cash flow from the operation.

CIM: Are there any circumstances in which poor economicconditions are actually to your advantage? O’Rourke: I’ve experienced that in the past, where even majorcompanies are shedding producers that aren’t as profitable asothers. They don’t see them adding a lot of value to theircompany, and as a consequence they may be willing to partwith them at a reasonable price. In our case, we are currently aone-mine company with positive cash flow. We’re alwayslooking at projects or at properties that would add value to ourcompany. And from that point of view, there is an advantage forus in a market downturn.

CIM: What do you consider your biggest success? O’Rourke: My biggest success would be pulling together strongteams of people that can work safely and in an atmosphere that theyreally enjoy. I look at a lot of people in our team as good friends.

CIM: And your biggest challenge?O’Rourke: Probably the biggest challenge has been reliance ongovernment decisions. They can make or break things, depending



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Saint-Hyacinthe, Quebec, native Pierre Lassonde’s career hasbeen one of the great mining successes in Canadian history.Educated in both engineering and business, he started Franco-Nevada Corporation with Seymour Schulich in 1982, andbrought the company to its $1.2-billion IPO in 2008 – at thetime the largest the Toronto Stock Exchange had ever seen.Besides his business wisdom, Lassonde is equally worthy ofpraise for his philanthropic endeavours. He has injected tensof millions of dollars into mining-related university programsin Canada and the United States. He is the namesake of YorkUniversity’s Lassonde School of Engineering, the University ofToronto’s Lassonde Institute of Mining and the University ofUtah’s Pierre Lassonde Entrepreneur Centre, and he has beenawarded the Order of Canada.

Gerald Grandey, who retired from his job as CEO of Camecoin 2011, led the company from difficult times in the early2000s to a market capitalization of $9.6 billion. A lawyer bytraining, he got his start opposing nuclear power plants in theGreat Lakes region. Since then, he has been involved withsome of the world’s most significant nuclear policy initiatives,including the Highly Enriched Uranium Agreement that wasaimed at disarming Russian nuclear weapons and fuellingnuclear power plants in the West with the salvaged uranium.Under his leadership, Cameco became Canada’s top employerof Aboriginal Peoples, while also growing to five mining oper-ations worldwide. Grandey currently serves on the boards ofmany organizations and is chairman emeritus of the WorldNuclear Association.

The father of diamond mining in Canada, Chuck Fipke’stenacity led him to the discovery of the kimberlite clusterthat became the Ekati mine. The Ekati discovery was the cul-mination of years of Fipke’s research – starting with his edu-cation in geology and evolving with his use of heavy mineralgeochemistry as a tool for exploration. He opened CF MineralResearch in 1977, further advancing his expertise in the sub-ject, and with Dia Met Minerals, brought it to bear in theNorthwest Territories – where he made his famous find. And,in order to help others make use of the tools he developed, hepublished the world’s first guide to diamond exploration usingindicator mineral geochemistry. He also founded the CharlesFipke Centre for Innovative Research at UBC Okanagan and iscurrently the chair of Metalex Ventures. CIM

Canadian Mining Hall of Famers 2013 By Peter Braul

From left: Pierre Lassonde, Gerald Grandey, Chuck Fipke and Jim O’Rourkewere inducted into the Hall of Fame this year.

on what their philosophy is, as governments change from one tothe other. A classic example would be Venezuela, where thegovernment changed and they basically confiscated projects. Ithink you see that in a number of places.

CIM: Do you think that same dynamic holds in British Columbia?O’Rourke: I’m not sure right now. It did in the 1970s. We had achange in government and they implemented a super-royaltyfor mineral projects, and it was very damaging. As a result, ittook a decade for B.C. to regain its credibility as a mining-friendly jurisdiction. I know of one mine in particular, wherethe royalty was 130 per cent of the profit. So government has atremendous influence on our business.

CIM: How long do you plan to stay on at Copper Mountain? Youcould have retired by now. O’Rourke: I have no idea. I guess until somebody wants to kickme out!

I did retire once. After I retired, I ran into people who I’dworked with, who were very competent, and I was willing toinvest with them. I ended up more involved than planned orig-inally, but if you enjoy it, then it’s much like a hobby. And I guessthat’s the way I feel about mining. It’s a great industry, there aregreat people, and it’s very sociable and enjoyable. From mypoint of view, I have a lot of fun doing what I do every day. CIM

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Antofagasta Minerals has created a staged approach todeveloping its Centinela district, which contains three operating

mines and four undeveloped deposits.

For those planning capital projects, it is important to exercisefiscal restraint, yet be prepared to splurge on a chance tocreate value. To plot the best course, a company must havethe vision to recognize its strengths and liabilities – a taskwhich history has proven difficult. Today, there are ways ofevaluating exactly what can move a business forward and whatthreatens to break the bank – but be ready to take a good hardlook in the mirror.


Rainy River Resources COO Mike Mutchler contendsthat the key to survival is managing capital costs andcapital estimates, and that all starts with good scoping

and project definition. “It’s making sure that we get the right fitfor our application,” he says. In particular, Mutchler criticizesother projects that he feels have overbuilt. “We’re making aconscious effort not to build a Cadillac plant,” he points out.“We’re building a fit-for-purpose plant. We don’t want to investmore capital than we need in our plant; we want to invest theright amount of capital.”

Kevin Bullock, president and CEO of Volta Resources, has asimilar opinion. Volta currently has nine projects at varyingstages of development in Burkina Faso and Ghana, and its flag-ship Kiaka project is moving towards the completion of a feasi-bility study. “You get to a point where people are saying, ‘Howbig could this be?’ and everybody’s excited,” Bullock says, “andthen all of a sudden, when the market turns, it’s too big andcosts too much to build.” Instead, he says, companies need tostay within themselves and not get caught up in their own hype.

For Rainy River, currently in the late stages of feasibility,that meant actually decreasing the size of its gold plant innorthern Ontario. Originally conceived as a 30,000-tonne-per-day mill, the company scaled it back to around 20,000 tonnesper day, bringing the capital costs down to a level that wasforecast to have a higher probability of success.

Gerald Whittle, managing director of the mine optimiza-tion firm Whittle Consulting, agrees with their approach. “Welike to give engineers credit for building the best plant,” hesays, “but what’s the best plant? The one that maximizes recov-ery? That minimizes cost? That has the lowest capital?

“I like the words, ‘fit-for-purpose,’ because that opens adiscussion. What is it we really need here? It doesn’t have tobe fancy or shiny or long-life or whatever. What’s the best outcome?”

The best defence is a strong offenceDetermining what is needed is never simple. Although

aggressive cost-cutting is a surefire way into an investor’s heart,the consequences can be devastating and often do not address

the real issue. “It makes me shudder,” says Whittle, “when I hearthis mindless chatter about reducing costs. What people reallywant when they’re in trouble is to improve their cash flow.

“You can reduce mining costs tomorrow,” he adds, “byparking half the trucks. But that would be an absolute disaster,because the revenue they would have produced would havemore than offset their costs.” This approach also presents someserious questions about an operation, he explains. “If you cando the same work at a lower cost, why weren’t you doing thatbefore?”

Whittle’s firm instead advocates the importance of aligningbusiness units towards a common purpose. In many compa-nies, each organizational silo has its own objectives and itsown key performance indicators. Geologists try to maximizereserves, mining engineers try to minimize costs or maximizeplant utilization, plant managers try to maximize recovery ormetal production, and marketing managers try to maximizethe sale price of the commodity.

“It’s chaos,” Whittle exclaims. The problem, he says, is notjust that those objectives conflict; it is that not one of them isright for a well-structured mining company.

“The ultimate objective of the company is to create eco-nomic value through better cash flows,” he says. That meansmaximizing net present value (NPV). Once the money is in theoperator’s bank account, they can do whatever they want withit: invest in new projects or expansions, return cash to share-holders, or sit on it in case of downturns, as Volta tries to do.

The best results of enterprise optimization attempts areobtained in new plants that can be optimized in every aspectto maximize NPV. Rainy River engaged Whittle to create astockpiling plan that will allow the company to go after higher-grade material more quickly, before going back to process thestockpiled material later in the life of the mine. Volta’s highlybanded Kiaka gold deposit in Burkina Faso will also benefitfrom phasing and stockpiling, according to Bullock.

Another option is staged development, which can involvebuilding a small mill and running a high-grade policy for several years, then building a second mill once the head grade starts to fall off. “That second one can be self-financed,”

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Above, left to right: Rainy River Resources worked with Whittle Consulting to create a stockpiling plan for their mine; Antofagasta’s Esperanza mine had problems that delayedits completion between 2007 and 2011, spurring the company to develop new procedures for quality control; Volta’s Kiaka gold deposit in Burkina Faso will benefit from thecompany’s use of phasing and stockpiling to maximize net present value.

Whittle says, “because you’ve made cash the first few years.And if the market goes bad, you don’t have to build it.” At thevery least, he adds, you are deferring a big chunk of your capitalexpenditures.

Antofagasta Minerals is using a staged approach to mini-mize upfront capital costs at its Centinela copper district inChile. The area contains three operating mines – Esperanza, ElTesoro and Mirador – and another four deposits. The companyis currently in the project definition stage for all of the Cen-tinela district, considering geology, resources, engineering andenvironmental studies. “It is a very large project but it will bein three phases, one after the other,” explains project managerFrancisco Walther. “We can check if we are moving in the rightdirection and control all aspects of the project.”

Walther says the first phase will include optimization andlife of mine extension of the El Tesoro and Esperanza opera-tions, and is targeted for completion in 2016. Phase 2, in2018, will see a new concentrator plant and, beyond 2020,the final phase will involve a second new concentrator.Antofagasta is also working to sequence mine planning withinthe district to maximize value and to minimize risk and capi-tal exposure.

These strategies can even help companies obtain financing,since investors look at cash flow profiles to see how quicklythey will get returns. And though most effective when newdeposits are about to come on stream, enterprise optimizationcan help many current operators too. “As long as you’ve gotfive or 10 years left on the life of the mine,” Whittle says, “thenthis analysis is still going to be valuable.” Variables such asphase design, mine schedule, cut-off grades, stockpiling,throughput, and product specifications can all be tinkeredwith to maximize NPV and front-load a mine’s returns – givingan operator more cash-in-hand almost immediately uponimplementation.

For a smaller company struggling to access capital in equity markets, it might be the difference between going broke or surviving until market conditions improve. “You can add, typically, a million dollars a week to your cash flows,” says Whittle.

Quality planning and strong teams requiredThe most important aspect of cost management, how-

ever, remains vigorous early planning and detailed prefeasi-bility and feasibility studies. Independent Project Analysis,Inc. (IPA), leaders at researching and benchmarking capitalprojects, preach the importance of good project definition.Their research indicates that better early planning drives

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Endless possibilitiesStochastic mine planning deals with the inherent uncer-tainty (stochasticity) of mine planning, design, productionforecasting and valuation of individual mining projects andoperations. It can also be applied to mining complexes withmultiple processing streams and products. The approachintegrates two core technical elements: stochastic simula-tion and, in turn, stochastic optimization. These provide anew mathematical framework that supports the direct inte-gration of uncertainty in the mathematical optimizationprocesses of life-of-mine planning and, more recently, minesupply chains.

Stochastic, or Monte Carlo, simulation methods for generat-ing scenarios of forecasted commodity prices, market volatil-ity and other variables are based on probabilistic conceptsand provide any number of possible predictions over a speci-fied time period. Different types of stochastic simulationmethods also exist to evaluate mineral resources. Based on

To maximize its probability of success, Rainy River Resources decreased the size ofits planned gold processing plant in northern Ontario from 30,000 tonnes per dayto 20,000 tonnes per day.

After a good team, Enthalpy’s Martinez notes, good checksand balances are the most important part of a strong planningprocess. “We strongly promote the stage-gate process,” he says,“where at the end of a stage, you have a gate you need to gothrough to make sure things were done properly.”

However, now that money is tight, many companies areagain skimping on – or skipping – their prefeasibility studies,according to IPA’s Kulkarni. “Doing a better job with feasibilityultimately lets you set a more competitive cost estimate, anddeliver against that estimate,” she says. “If saving money isyour goal, then it should be important.”

Antofagasta will not know the final impact of its proceduralchanges for several years, but Walther is hopeful the work willpay off: “We recognized that we needed better quality. Ourexpectation for these instruments is to have better results.”

Companies see value of new toolsBoth Rainy River and Antofagasta, among others, have also

embraced new techniques like stochastic mine planning meth-ods (see “Endless possibilities” below), which integrate uncer-tainty to make mine planning forecasts, and report mineperformance probabilistically. But broader uptake has beenslow. In such a conservative industry, notes Whittle, youwould expect to see a stronger focus on defining the uncer-tainty around estimates, but that has not happened. Althoughthe techniques have been proven effective, McGill Universityprofessor Roussos Dimitrakopoulos, a leader in the field, isstill fighting to get them adopted industry-wide.

“The consulting world is quite good at the Monte Carlosimulations on the ore body side, which are used to quantifygeologic uncertainty such as uncertainty in grades, metal con-tent and material types,” explains Dimitrakopoulos, a CanadaResearch chair and director of McGill’s COSMO StochasticMine Planning Laboratory. “But up to now, consultants havebeen very limited in what they can do with stochastic opti-

everything, from more competitive and predictable costs tobetter operability and fewer safety incidents. “The measure-ment of project definition is correlated with every outcomeyou could want,” says Phyllis Kulkarni, the plant-based sys-tems manager at IPA. They have a database of nearly 15,000projects worldwide, in every commodity, to back up theirassertion.

“The most powerful use of our approach is in defining theproject and in doing an option analysis,” agrees Whittle. With-out that, he says, “project managers will be meticulously exe-cuting the wrong strategy.”

Unfortunately, in boom times of the last decade, there wasa tendency to rush through prefeasibility and feasibility. “Therewas such great pressure to develop a new project very quickly,because the commodity prices were so high, that they startedto take shortcuts,” says Claudio Martinez, managing directorof Enthalpy Consulting. “And because of that poor definition,when they were in the middle of the project, they found theydidn’t do all the proper engineering, follow the properprocesses, and now they have to spend more money.”

Antofagasta learned that lesson the hard way. After rushingthrough feasibility on several projects between 2007 and2011, the company discovered during the execution of theirEsperanza project that they had significant problems in thequality of their engineering, delaying completion of the finalstages. “The ramping-up process has taken two years, insteadof half a year,” reveals Walther. “It’s costing us time andmoney.”

As a result, the company has spent the last two years devel-oping a standardized internal procedure for quality control,based on Enthalpy’s process, called the Asset Delivery System.A key component is the Functional Quality Assurance Review,a senior team that formally reviews projects and ensures min-imum standards are met. They have also made an effort tobuild stronger, dedicated project teams.

existing drilling data, these methods interpolate the grade,metal, material types and other properties of interest over the3D space of an ore body. Like market uncertainty quantifica-tion, groups of simulated scenarios of an ore body describe

May 2013 | 71

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the spatial uncertainty of pertinent attributes like grade,rock hardness and others. These spatial simulations requirevast computing power because ore bodies are described byhundreds of thousands to millions of 3D mining blocks. Asa result, their industry application only became common inthe last decade. The availability of stochastic modellingallows the development and implementation of stochasticoptimization approaches.

Stochastic optimization refers to various mathematicaloptimization approaches used to maximize net presentvalue of life-of-mine planning. Unlike conventionalapproaches, stochastic optimizers simultaneously usegroups of simulated scenarios of an ore body, costs and,more recently, simulated commodity prices as inputs, thusaccounting for uncertainty when generating life-of-mineplans, designs and production schedules. This is shown tolead to substantially higher net present value, greaterchances for meeting production forecasts, more metal pro-duction and larger pit limits.

mization that utilizes simulated ore body (or supply) uncer-tainty in generating life-of-mine predictions and can also inte-grate market uncertainty in the same process.”

Things are starting to change, however. Antofagasta usesMonte Carlo simulations for its economic and risk evaluationsduring feasibility, while Rainy River used them on its operatingand capital cost models.

“We wanted a very high probability of success, so we set anappropriate contingency to give us that,” says Rainy River’sMutchler. “It gives you a good level of comfort with your costsand the ranging you’ve chosen for your costs.”

Stronger markets, weaker memoriesFor now, companies will have to use every tool at their dis-

posal to survive. But they may not have to scrimp and save formuch longer. Ernst & Young’s global mining and metals leader,Mike Elliott, expects to see a gradual upturn by the second halfof 2013.

“We see some signs that suggest we may have already bot-tomed out,” Elliott says, “maybe in the fourth quarter of lastyear. In the second half of this year the availability of capitalwill free up a bit. It’s not going to bounce back up or anything,but we should see gradual improvement over the year.”

Having survived tighter conditions, many companies withbetter corporate memories will be well-placed for a recoveringmarket. The management team at Volta considers itself amongthat group. “I think we’re reminded of the lessons we’velearned in the past, more than anything,” says Bullock.

Others may face longer-term problems because of theircost-cutting measures. But the big question for the widerindustry will be whether we have really learned the hard les-sons about planning, project definition, and cost managementfrom this downturn.

“I would love to say yes,” sighs Enthalpy’s Martinez. “But Idon’t think so.” CIM


Mike Mutchler, chef de l’exploitation de Rainy RiverResources, soutient que le secret de la survie estde gérer les coûts d’investissement et le finance-

ment estimé, en commençant par un cadrage et une défini-tion de projet précis. « C’est s’assurer ainsi d’obtenir ce quiconvient à ce que nous nous proposons de faire », dit-il.Monsieur Mutchler critique en particulier les projets qui, àson avis, construisent au-delà de leurs besoins. « Nous

faisons un effort conscient pour ne pas construire la Cadillacdes usines, affirme-t-il, et bâtir plutôt une usine adaptée àl’usage prévu. Nous ne voulons pas investir plus de capitalque nécessaire dans cette usine, mais bien plutôt le capitalqui convient. »

Kevin Bullock, président-directeur général de VoltaResources, entretient une opinion similaire. Volta prépareactuellement neuf projets miniers au Burkina Faso et au

Aucune illusionPAR IAN EWING

Ceux qui prévoient des projets d’investissement doivent bien gérer leur budget, mais ne pashésiter à dépenser beaucoup lorsque se présente une occasion de créer de la valeur. Pourétablir une stratégie optimale, une entreprise doit être en mesure de reconnaitre ses forces etses faiblesses – ce qui n’est généralement pas facile. Il existe aujourd’hui des méthodes pourévaluer avec exactitude quelles dépenses favoriseront le développement d’une organisation,et lesquelles risquent de la ruiner – mais cela exige une solide autocritique.

Antofagasta Minerals a adopté une approche échelonnée pour le développement de son district Centinela,qui regroupe trois mines opérationnelles et quatre gisements inexploités.

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Ghana, qui en sont à diverses étapes de leur développement,son projet Kiaka s’apprêtant à terminer une étude de faisabil-ité. « Vous en arrivez à un point où tout le monde se demande,emballé, jusqu’où on peut aller, explique Kevin Bullock. Puisle vent tourne soudainement et il en coûte trop cher de con-struire l’usine en raison de sa taille. » Il est d’avis que les com-pagnies minières devraient rester égales à elles-mêmes plutôtque de se laisser prendre au jeu.

Pour Rainy River, qui en est à la dernière étape de son étudede faisabilité, cela signifiait une réduction de la taille de sonusine de traitement de l’or située au nord de l’Ontario. Conçueà l’origine en vue d’une extraction quotidienne de30 000 tonnes, l’usine a été réduite à une production de20 000 tonnes par jour, ramenant les coûts d’investissement àun niveau qui, selon les prévisions, avait de plus grandeschances de succès.

Gerald Whittle, directeur général de la firme d’optimisationdes mines Whittle Consulting, se dit d’accord avec cetteapproche. « Nous aimons faire confiance aux ingénieurslorsque vient le moment de construire l’usine idéale, dit-il,mais qu’est au juste l’usine idéale? Est-ce celle qui maximise lesretours sur l’investissement? Celle qui réduit les coûts au max-imum? Celle qui exige le capital le moins élevé?

« J’aime bien l’idée d’une usine adaptée à l’usage prévu, carcela donne lieu à une discussion, poursuit-il. De quoi avons-nous réellement besoin? L’usine n’a pas nécessairement à êtrespéciale ou brillante, ou même avoir une longue durée de vie.Quel est le meilleur résultat que nous puissions viser? »

La meilleure forme de défense est l’attaqueIl n’est jamais simple de déterminer ses besoins. Bien que la

chasse aux coûts soit la meilleure façon d’atteindre le cœurd’un investisseur, ses conséquences peuvent être dévastatricestout en ne répondant pas, bien souvent, aux véritables besoins.« J’ai des frissons chaque fois que j’entends tout ce papotageirréfléchi sur la réduction des coûts, affirme Gerald Whittle. Ceque veulent les gens lorsqu’ils sont en difficulté, c’est accroîtreleur flux de trésorerie.

« Vous pouvez certes réduire les coûts de votre exploitationminière dès demain en immobilisant la moitié de vos camions,ajoute-t-il Mais cela serait parfaitement désastreux, car lerevenu que ces camions auraient généré aurait plus que com-penser ce qu’il en aurait coûté pour les garder en opération. »Pareille approche donne d’ailleurs lieu à de sérieuses questionsquant à la méthode d’exploitation choisie, explique monsieurWhittle. « Si vous pouvez maintenant abattre la même quan-tité de travail à moindre coût, pourquoi ne le faisiez-vous pasauparavant? »

La firme de Gerald Whittle insiste plutôt sur l’importanced’harmoniser les unités d’affaires avec un objectif commun.Dans bon nombre d’entreprises, chaque unité poursuit sespropres objectifs en fonction de critères de rendement qui luisont propres. Les géologues cherchent à maximiser lesréserves, les ingénieurs miniers à réduire les coûts ou à utiliserl’usine à sa pleine capacité, les directeurs d’usine à optimiser leretour sur l’investissement ou la production de métal, et les

directeurs de marketing cherchent quant à eux à maximiser leprix de vente du produit.

« C’est le chaos! » s’exclame Gerald Whittle. Le problème,à son avis, n’est pas simplement que ces objectifs sont con-flictuels, mais qu’aucun d’entre eux ne convient à une compag-nie minière bien structurée.

« Le but premier de la compagnie est de mettre en placeune valeur économique grâce à de meilleurs flux de tré-sorerie », dit-il. Il s’agit donc ici de maximiser la valeur actual-isée nette (VAN, voir l’encadré). Une fois l’argent déposé dansle compte en banque de l’exploitant, celui-ci peut en faire cequ’il veut : l’investir dans de nouveaux projets ou prendre del’expansion, verser de l’argent aux actionnaires ou le gardertout simplement en prévision d’un ralentissementéconomique, comme tente de le faire Volta.

Les meilleurs résultats des efforts d’optimisation d’uneentreprise se traduisent par de nouvelles usines, qui peuventêtre optimisées à leur tour sous tous les angles en vue de max-imiser la VAN. Rainy River a fait appel à la firme de GeraldWhittle en vue d’élaborer un plan de mise en stock qui lui per-mettra d’exploiter plus rapidement un matériel à plus hauteteneur, puis de retourner au traitement du matériel emmagas-iné plus tard au cours du cycle de vie de la mine. Le gisementd’or extrêmement rubané de Kiaka qu’exploite Volta au Burk-ina Faso bénéficiera également d’une mise en phase et d’unemise en stock, de l’avis de Kevin Bullock.

Une autre approche encore est celle du développement éch-elonné, qui peut exiger la construction d’une petite usine pourle traitement sur plusieurs années d’un minerai à haute teneur,suivie de la construction d’une seconde usine lorsque la teneurde tête commence à diminuer. « Cette seconde usine peuts’autofinancer, dit Gerald Whittle, du fait de l’argent amassé aucours des premières années. Et vous n’avez pas à la construiresi l’économie se met à ralentir. » Vous reportez ainsi, à tout lemoins, une bonne part de vos dépenses en immobilisations,ajoute-t-il.

Antofagasta Minerals se sert du développement échelonnédans l’exploitation de sa mine de cuivre du district de Cen-tinela, au Chili, dans le but de réduire les coûts d’investisse-ment dès le début des opérations. La région compte troismines en opération, Esperanza, El Tesoro et Mirador, ainsi quequatre autres gisements. L’entreprise en est actuellement à l’é-tape de la définition de projet pour l’ensemble du district deCentinela, et effectue des études sur la géologie, les ressources,l’ingénierie et l’environnement. « C’est un projet de très grandeenvergure qui se s’effectuera toutefois en trois phases consécu-tives, explique le directeur de projet Francisco Walther. Nouspourrons ainsi vérifier que nous avançons dans la bonne direc-tion et contrôler chacun des aspects du projet. »

Francisco Walther indique que la première phase compren-dra l’optimisation et l’agrandissement des mines El Tesoro etEsperanza, prévues pour 2016. La seconde phase, qui prendrafin en 2018, comprendra l’érection d’une nouvelle usine deconcentration dans un premier effort d’expansion, suivie de laphase finale, au-delà de 2020, qui verra la mise en place d’unsecond concentrateur. Antofagasta travaille également à


ordonner la planification au sein du district de façon à en max-imiser la valeur tout en atténuant les risques.

Ces décisions peuvent même avoir pour effet d’aider lescompagnies à obtenir un financement, les investisseurs s’in-téressant aux flux de trésorerie qui leur permettent de recou-vrer rapidement leur investissement. Bien que ce soit lesnouveaux gisements qui s’apprêtent à entamer leur productionqui profitent le mieux de l’optimisation d’entreprise, celle-cipeut également aider les exploitants en cours d’opération. « Àmoins que la mine ne compte plus que cinq ou dix années devie utile, déclare Gerald Whittle, ce type d’analyse lui serad’une grande utilité. » Des variables telles que la conceptiondes phases, le calendrier de production, les teneurs decoupure, la mise en stock, la capacité de production et les spé-cifications du produit peuvent toutes faire l’objet d’ajustementsqui maximisent la VAN et un solide retour dans la phase ini-tiale, donnant ainsi accès à l’exploitant à des liquidités presquedès les débuts de la mise en chantier.

Pour ce qui est des petites entreprises qui luttent pouraccéder au capital des marchés boursiers, cela peut faire la dif-férence entre faire faillite et garder la tête hors de l’eau jusqu’àce que la conjoncture économique s’améliore. « Vous pouvez

ainsi ajouter un million de dollars en moyenne chaquesemaine à votre flux de trésorerie », affirme Gerald Whittle.

Planification de qualité et équipes solides exigées

L’aspect le plus important de la gestion des coûts demeuretoutefois une planification précoce rigoureuse ainsi que desétudes détaillées de préfaisabilité et de faisabilité. La firmeIndependent Project Analysis, Inc. (IPA), chef de file enrecherche et comparaison de projets d’immobilisations, insistesur l’importance qu’il y a à définir clairement un projet. Sesrecherches démontrent qu’une meilleure planification précoceest le fondement de tout ce qui suivra, depuis des coûts plusconcurrentiels et prévisibles jusqu’à la réduction des accidents,en passant par une exploitabilité améliorée. « Cette évaluationde la définition d’un projet est corrélée par tous les résultatsque vous pourriez souhaiter », dit Phyllis Kulkarni, directricedes systèmes d’usines chez IPA. La firme appuie son assertionsur sa base de données forte de plus de 15 000 projets répartispartout dans le monde et touchant tous les produits.

« L’aspect le plus important de notre approche repose surla définition du projet et l’analyse des options, précise GeraldWhittle, sans quoi, les directeurs de projet s’emploieront àmettre méticuleusement en application des stratégieserronées. »

Malheureusement, durant la période de boom de ladernière décennie, la tendance était de précipiter les études depréfaisabilité et de faisabilité. « Tous ressentaient cette pressionde développer un projet aussi rapidement que possible, tantles prix des produits étaient élevés, si bien qu’on en est venu àrecourir à des expédients, raconte Claudio Martinez, directeurgénéral d’Enthalpy Consulting. Et en raison même de cettepiètre définition, les exploitants se rendaient compte au beaumilieu d’un projet qu’ils n’avaient pas l’ingénierie voulue etn’utilisaient pas les bons procédés, et qu’il leur fallait main-tenant dépenser encore plus d’argent.

Antofagasta a dû payer un gros prix pour apprendre cetteleçon. Après avoir précipité les études de faisabilité deplusieurs de ses projets entre 2007 et 2011, l’entreprise adécouvert d’importants problèmes de qualité sur le plan del’ingénierie au sein de son projet Esperanza, ce qui a en retardél’exécution finale. « Il nous a fallu deux ans, au lieu de sixmois, avant de pouvoir commencer l’exploitation, avoue Fran-cisco Walther, ce qui nous coûte donc temps et argent. »

La compagnie a donc passé les deux dernières années àmettre au point une procédure interne normalisée d’assurancede la qualité, en s’aidant du processus d’Enthalpy nommé sys-tème de livraison des actifs. L’un des principaux composantsde ce système est la mise en place d’une équipe de hautsdirigeants qui examinent formellement les projets afin de s’as-surer qu’ils sont conformes aux normes de qualité minimales.L’entreprise a également pris des mesures pour bâtir deséquipes plus solidement engagées envers les projets.

De l’avis de Claudio Martinez, d’Enthalpy, une bonne équipedoit s’aider d’un bon système de freins et de contrepoids.

Pour optimiser ses chances de réussite, Rainy River Resources a réduit la tailleprévue de son usine d’extraction d’or au nord de l’Ontario, de 30 000 à 20 000tonnes par jour.

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« Nous recommandons très fortement l’éval-uation les jalons, dit-il, en fonction delaquelle vous devez vous assurer, à la fin dechaque étape, que tout a été fait correcte-ment. »

Mais maintenant que l’argent se fait plusrare, de dire Phyllis Kulkarni, d’IPA, de nom-breuses entreprises se sont remises à lésinersur les études de préfaisabilité, sinon à lesignorer complètement. « Une bonne étude defaisabilité vous permet de prévoir des coûtsplus concurrentiels et de travailler en fonctionde ces prévisions, dit-elle. Si vous souhaitezvraiment économiser de l’argent, vous devriezprêter attention à cette étude. »

Antofagasta ne connaîtra pas les répercus-sions finales de son changement de procé-dure avant plusieurs années, mais FranciscoWalther a bon espoir que cela réussisse.« Nous avons dû reconnaître qu’il nous fal-lait une meilleure qualité, dit-il. Nous nous attendons à ceque les instruments mis en place nous donnent de meilleursrésultats. »

Les compagnies reconnaissent la valeur de nouveaux outils

Tant Rainy River qu’Antofagasta, entre autres compagniesminières, ont adopté tout de go de nouvelles techniques, tellesque la méthode de planification minière stochastique, qui intè-gre l’incertitude aux prévisions relatives à la mine afin de pro-duire un rapport de probabilités sur le rendement. Maisl’industrie est plus lente à leur emboîter le pas. Dans uneindustrie aussi conservatrice, vous vous attendriez à ce quel’on définisse l’incertitude en termes d’estimation, mais cela nes’est pas encore produit, fait remarquer Gerald Whittle. Et bienqu’on ait démontré l’efficacité de ces techniques, Roussos Dim-itrakopoulos, professeur à l’Université McGill et chef de filedans le domaine, continue de lutter pour que ces techniquessoient adoptées à l’échelle de l’industrie minière.

« Le monde des consultants est très habile, dans sa modéli-sation des gisements de minerai selon la méthode MonteCarlo, à quantifier les incertitudes géologiques telles que lesteneurs, le contenu métallique et les types de matériau,explique le professeur Dimitrakopoulos, directeur de chaire derecherche du Canada et directeur du Laboratoire COSMO deplanification stochastique des mines de l’Université McGill.Toutefois, jusqu’à maintenant, les consultants demeurent lim-ités quant à ce qu’il leur est permis de faire au moyen de l’op-timisation stochastique, qui se sert de la simulation del’incertitude des gisements de minerai pour émettre des prévi-sions sur la durée de vie d’une mine, et qui peut égalementintégrer l’incertitude au processus.

Mais des changements commencent à se produire. Antofa-gasta se sert de la méthode de simulation Monte Carlo pourévaluer l’économie et les risques au moment de son étude de

faisabilité, tandis que Rainy River s’en sert pour ses modèlesd’exploitation et de coûts d’investissement.

« Nous visions une probabilité élevée de réussite et nousavons donc intégré l’impondérable voulu à nos calculs, déclareMike Mutchler de Rainy River. Vous avez ainsi un bon niveaude confiance face à vos coûts et à la fourchette que vous leurréservez. »

Marchés plus solides, mémoires plus courtesPour l’heure, les compagnies minières devront se servir de

tous les outils à leur disposition pour survivre. Mais elles n’au-ront peut-être pas à économiser encore longtemps. MikeElliott, chef des mines et métaux à l’échelle internationale chezErnst & Young, s’attend à une reprise graduelle d’ici la finde 2013.

« Des signes nous indiquent que nous avons peut-être passéle creux de la vague, dit-il, peut-être au cours du quatrièmede 2012. Au cours du second semestre de cette année, le cap-ital sera un peu plus disponible. Non pas qu’il amorcera uneremontée ou autre chose du genre, mais nous devrions êtretémoins d’une amélioration graduelle au cours de l’année. »

Ayant survécu à ces années de vache maigre, de nom-breuses entreprises qui en gardent souvenir seront très bienplacées pour profiter d’une économie qui reprend des forces.Les dirigeants de Volta considèrent qu’ils font partie de cegroupe. « Plus que tout, nous nous rappelons les leçonsapprises par le passé », dit Kevin Bullock.

D’autres seront peut-être aux prises avec des problèmes àlong terme pour avoir effectué des coupures de coûts. Ilimporte toutefois de se demander si la leçon sur la planifica-tion, la définition de projets et la gestion des coûts aura étéapprise à l’échelle de l’industrie en raison de ce ralentissementéconomique.

« J’aimerais pouvoir dire que ce sera le cas, soupire ClaudioMartinez d’Enthalpy, mais je ne le crois pas. »

Traduit par SDLICM

Rainy River Resources a collaboré avec Whittle Consulting pour établir un plan de stockage pour sa mine.

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return of 20.4 per cent – that means a payback of just overfour years based on a project cost of $579 million. These val-ues are calculated on long-term prices of US$350 per metricton unit (MTU, or 10 kg) of APT and US$15 per pound ofmolybdenum.

The decision to build an APT plant on site was a significantpart of the mine’s anticipated profitability.

“There is no getting around the fact that this is a lower-gradedeposit and we needed to make sure that, from a metallurgical

If all goes to plan, the Sisson project, a 100-kilometre drivenorthwest of Fredericton, New Brunswick, should be sup-plying world markets with refined tungsten in the form of

ammonium paratungstate, or APT, by 2016.The feasibility study, prepared under the direction of Den-

ver-based Samuel Engineering, details a 30,000-tonne-per-day open-pit operation with a mine life of 27 years.Northcliff says the pre-tax net present value is $714 millionat a discounted rate of eight per cent and an internal rate of

Tungsten trailblazerWith a positive feasibility study now complete, Northcliff Resources’ proposed tungsten-

molybdenum project is slated to become Canada’s premier tungsten producer, and the firstto generate ammonium paratungstate.

BY GRAHAM CHANDLER


Northcliff’s operations manager Drew Takahashi leads visitors on a tour of theSisson project.

S I S S O N | project profile

ent lithologic domains,” he adds. “Then we undertook metal-lurgical testing – a very extensive program in SGS Lakefield. Westarted off with batch tests, followed by locked cycle and evenran a pilot plant for a short period at Lakefield to inform thedesign of the concentrator for the Sisson operation.”

The open pit will be mostly standard fare. “We’ll do clearingand grubbing initially to take the vegetation off. Drilling andblasting will follow that to get rid of some of the bedrock, andthen we basically just work our way down,” says Zahovskis.Much the same as for a copper open pit mine, the pit designwill be based on the ore geometry, grade and production rate.According to Zahovskis, “The design was put together with thethought of optimizing ore grades and operating costs as muchas possible.

The primary crusher will be located adjacent to the pit,resulting in short trips for the 136-tonne capacity haul trucksexpected to deliver 10.5 Mt of ore each year. The concentratorplant is a kilometre away, and includes secondary cone crush-ing and tertiary high-pressure grinding rolls, followed by sin-gle-stage, two‐line ball mill grinding. “After grinding, it goesthrough flotation; the molybdenum is floated off first followedby tungsten flotation,” explains Zahovskis. Concentrates formolybdenum and tungsten will then be dewatered. Themolybdenum concentrate will be sold to other parties for fur-ther processing, while the tungsten concentrate will beprocessed into APT on site. The tailings storage facility willstore tailings from the processing plant and the APT plant,along with the mine waste.

Zahovskis explains that overall, there is not much new beingplanned that is not currently being used in the industry, eventhe APT process. “We have done sufficient testing with our ownmaterial to give us confidence that we would get a very goodrecovery of tungsten trioxide from this plant,” he says.

Location is keyThe site is well situated to get people and supplies in and

the product out. The main road runs 100 kilometres fromFredericton and a rail line is currently within 15 kilometres –and either option connects directly to the deep sea ports atSaint John to the south and Belledune to the northeast. Thereis a 345-kilovolt transmission line which crosses the Sissonproperty, and a separate 42-kilometre, 138-kilovolt transmis-sion line will be built to service the project exclusively.

Local labour at the ready will be a key aspect of the Sissonoperation. “It’s not a fly-in/fly-out,” says Zahovskis. “It’s closeenough to nearby communities and even Fredericton that peo-ple can come to work and go home at the end of their shift.”Fredericton, he says, is about an hour and 10 minutes away andthere are small towns all along the way. “So we think there isample opportunity for people not to have to endure long com-mutes.” Zahovskis says he knows of other mine workers endur-ing five-hour daily commutes in the area. And, he adds, “There’sa wealth of well-qualified mining people in the province.” More-over, this year’s scheduled closing of Xstrata’s Brunswick mine inBathurst, just to the north, may contribute to available supply of

standpoint, we could get rea-sonable metal recoveries,”explains Chris Zahovskis, pres-ident, CEO and director ofNorthcliff. “Most tungstenmines will produce a concen-trate and sell it to a refinery oran APT client. Our researchshows the discount off the APTprice – which is how tungstenis priced – ranges between 20per cent and 40 per cent.” So,rather than lose the value tothat discount over the mine’slife, Northcliff’s APT plant willcapture it. Moreover, Zahovskisadds, the combination of wherethe mine is situated, its low-cost nature and the deposit’slong life further supports theAPT plant decision.

Zahovskis says there havebeen small tungsten operationsin the region in the past, “butnothing appreciable.” The Sis-son deposit was identified inthe late 1970s, but “nothingmuch happened” because oflow prices, he points out. Geo-dex Minerals acquired therights to the property andbegan exploring further in2004. “In late 2010, Northcliffbecame a joint venture partnerwith Geodex with a majority

share, and in the spring of 2012 we acquired the remaininginterest,” Zahovskis adds.

Attention to metallurgyNorthcliff completed additional drilling in 2010 and 2011

to prepare for the feasibility study. The resource is a large,intrusion-related tungsten-molybdenum deposit. The com-pany’s fact sheet describes it geologically as “hosted bydeformed and metamorphosed Cambrian to Ordovician-agedvolcanic and sedimentary rocks that are associated withDevonian-aged granodiorite, gabbro and granite intrusions.Tungsten and molybdenum mineralization occurs mainly asscheelite and molybdenite in steeply dipping quartz veins, onfractures, and as disseminations.”

In light of the lower grade, extensive ore testing was done.“We spent a lot of time – in fact about 18 months – on a met-allurgical test program,” says Zahovskis. “In 2011, weembarked on a very significant sampling program. We collecteda 35-tonne sample from across the deposit and composited thatmaterial to represent different phases of the mining and differ-

May 2013 | 77

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couldn’t really talk too much about how everything was goingto work out – quantities, cost and so on,” says Zahovskis.“Now that it’s complete, we are in a position to continue dis-cussions with potential off-takers and others who have indi-cated a possible interest in participating in the project.”

Clearly the biggest competitor is Chinese production of themineral (see below). But Zahovskis is confident about the

tradespersons and operators. Zahovskis adds that many quali-fied people have left the province to work and would welcomethe opportunity to return to a job closer to home. “In addition,we’ll be training our own employees as we bring them on.”

There’s still a long way to go with a number of considera-tions – offtake agreements included – before the light turnsgreen for the project. “Obviously without a feasibility study we


project profile | S I S S O N

The economics of tungsten What are the distinctive properties of tungsten?

Tungsten, also known as Wolfram – hence its symbol “W” on the periodictable – is grey to white metallic in colour. Its melting point of 3,422degrees C is the highest of all metals and its thermal expansion is thelowest. The element is extremely hard and wear-resistant: about 100times that of steel. It is highly corrosion-resistant and does not breakdown or decompose. Because of these attributes, there is no real eco-nomic alternative in industrial applications.

So what are these applications? Due to its unbeatablehardness, tungsten is used in cemented carbide and high-speed steeltools, notably in manufacturing, construction, mining and oil and gasdrilling. It is also used in flat-screen and lighting technology (LCD andLED), electronics, power engineering, coating and joining technology, the automotive and aerospace industries, the nuclearindustry, medical technology, and the solar energy industry.

Where is most of the world’s tungsten produced? China produces about 80 per cent of world supply(and consumes almost 60 per cent), followed by Russia, Bolivia and Austria. The largest individual producer outside China, theCantung mine in the Northwest Territories, near the Yukon border, is Canada’s only major producer of tungsten. In its 2012 fiscalyear, it produced 273,000 metric tonne units (MTUs) of concentrate.

What are pricing trends? With world trade in concentrates diminished in recent years, the market is increasingly trend-ing to APT (ammonium paratungstate – the main tungsten raw material traded in the market) quotations as a price guide. Industryprices are normally based on biweekly quotations published by the Metal Bulletin in London. APT pricing has been up-trending overthe past two years: from US$200/MTU (or 10 kg) in January 2010 to US$450 in early 2012 on the European Free Market.

“Tungsten consumption tends to follow industrial activity and general economic trends,” according to Kim Shedd, mineral com-modity specialist for cobalt and tungsten at the National Minerals Information Center of the U.S. Geological Survey in Virginia,So tungsten hopefuls like Northcliff are particularly keen on a swift economic recovery.

Sources: Mining Journal, International Tungsten Industry Association, North American Tungsten Corporation Ltd. website, U.S. Geological Survey, InfoMine

The hardness and wear-resistance of tungsten make it a well suitedmaterial for drill bit buttons.

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PROJECT SPECS

AVERAGE ANNUAL LIFE OF MINE YEARS 1 TO 5

Tonnes Milled 10.5 M/a 281 M 10.2 M/a

Tungsten (WO3) 557,000 mtu/a 15.0 M mtu 689,000 mtu/aProduction

Mo Production 4.1 M lbs/a 111.3 M lbs 4.4 M lbs/a

Avg. WO3 Grade/ 0.073%/77% 0.073%/77% 0.093%/81%* Recovery

Avg. Mo Grade/ 220 ppm/82% 220 ppm/82% 240 ppm/82% Recovery

* after ramp-up of concentrator facility

COSTS:

CAPITAL COST SUMMARY $ M

Mine 34.1

Concentrator & APT Plant 247.9

Site Infrastructure & Ancillary 55.4

Owner’s Costs & Indirects 168.4

Contingency (15%) 73.0

TOTAL 578.8

May 2013 | 79

S I S S O N | project profile

The final important piece, the environmental impact assess-ment report, will be submitted around the end of the secondquarter of this year, says Zahovskis. “We expect approvalsometime in the second half of 2014.” Meanwhile Northcliffwill be preparing permits so upon EIA approval they will beready to build. CIM

Canadian project. “We actually expect ourselves to be in linewith Chinese production in terms of cost to APT because wehave our own plant,” he says. “Most Chinese exports go tothree main areas: Japan, North America and Europe – the bigusers of tungsten outside China.” Sisson is handily located foreasy access to North America and Europe, he reckons, and“once the product is on an ocean-goingvessel we can ship anywhere.” Off-takecontracts are expected to be in place byyear’s end.

With the positive feasibility study inplace, basic engineering will commencesoon. And serious financing negotiationscan now be approached. Stand-aloneproject financing for the $579-millionundertaking might be challenging, soZahovskis says he is looking at potentialjoint venture partners who would beinterested in investing in the project.Those partners may or may not be off-takers as well. “And then obviously therewill be a debt portion,” he explains.“Once we successfully secure the off-takes, then we can speak to the banksabout the debt financing and that woulddetermine what equity financing weneed to do.” Mid-2014 is his target forfinalization.

The resource is a large, intrusion-related tungsten-molybdenum deposit.

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projet en vedette | S I S S O N

Si tout se passe comme prévu, le projetSisson, situé à 100 kilomètres au nord-ouest de la ville de Fredericton, au Nou-

veau-Brunswick, devrait pouvoir fournir auxmarchés internationaux du tungstène raffinésous forme de tungstate(VI) d’ammonium.

Préparée sous la direction de la firmeSamuel Engineering, de Denver, l’étude de fai-sabilité fait état d’une exploitation à ciel ouvertproduisant 30 000 tonnes par jour et unedurée de vie de 27 ans quant à la mine. Nor-thcliff évalue la valeur nette avant taxe du pro-jet à 714 millions de dollars avec un tauxescompté de huit pour cent et un taux de ren-tabilité interne de 20,4 pour cent, ce qui signi-fie un délai de récupération d’à peine quatreans selon un coût de projet de 579 millions dedollars. Ces valeurs sont calculées en fonctiond’un prix à long terme de 350 $US la tonnemétrique (10 kg) de tungstate(VI) d’ammonium et de 15 $USla livre de molybdène.

La décision d’ériger une usine de tungstate(VI) d’ammo-nium sur le site même a tenu un rôle d’importance dans le cal-cul de la rentabilité prévue de la mine.

« Comme il s’agit d’un gisement à faible teneur, nous devionsnous assurer que nous pourrions en tirer des quantités raison-nables de métal sur le plan métallurgique, explique ChrisZahovskis, président-directeur général de Northcliff. La plupartdes mines de tungstène produisent un concentré qu’elles vendentensuite à une raffinerie ou à un acheteur de tungstate(VI) d’am-monium. Nos recherches ont démontré que l’escompte accordésur le prix du tungstate(VI) d’ammonium varie entre 20 et40 pour cent, ce qui est la façon dont est établie la tarification dutungstène. » Ainsi, plutôt que de perdre la valeur de cet escomptependant la durée de vie de la mine, l’usine de tungstate(VI) d’am-monium de Northcliff en profitera pleinement. Chris Zahovskisprécise que l’emplacement de la mine, son faible coût d’exploita-tion et la longue durée de vie du gisement ont égalementconcouru à la décision de bâtir une usine.

Il ajoute que de petits gisements de tungstène ont été exploi-tés dans la région par le passé, mais qu’ils n’avaient rien d’ap-préciable. Le gisement Sisson a été découvert à la fin desannées 1970, mais rien n’en est vraiment ressorti en raison desprix peu élevés de l’époque. L’entreprise Geodex Minerals s’estportée acquéreur de la propriété, qu’elle a commencé à exploi-ter plus à fond en 2004. « Vers la fin de 2010, Northcliff est

Les pionniers du tungstèneForte d’une étude de faisabilité favorable, Northcliff Resources s’attend à devenir le principal

producteur de tungstène du Canada ainsi que le premier producteur de tungstate(VI)d’ammonium, grâce à son projet d’exploitation de tungstène-molybdène.

PAR GRAHAM CHANDLER

devenue coentrepreneur de Geodex à titre d’actionnaire majo-ritaire, raconte M. Zahovskis, puis nous avons acquis les partsrestantes au printemps 2012. »

L’attention à la métallurgieNorthcliff a procédé à des forages supplémentaires en 2010

et 2011 en vue de l’étude de faisabilité. La ressource est un gise-ment d’un amas intrusif de tungstène-molybdène de grandetaille. Le feuillet de documentation de l’entreprise décrit cetamas comme étant « porté par des roches volcaniques et sédi-mentaires déformées et métamorphosées d’âge cambrien àordovicien, associées à des intrusions de granodiorite, de gab-bro et de granite de l’âge dévonien. La minéralisation du tung-stène et du molybdène produit principalement de la scheelite etde la molybdénite, que l’on retrouve dans des filons de quartzfortement inclinés et le long des fractures, ainsi que sous formede disséminations. »

Étant donné la faible teneur du minerai, celui-ci a été l’objetde nombreux tests. « Nous avons passé beaucoup de temps,près de 18 mois, à faire des essais métallurgiques, affirme ChrisZahovskis. En 2011, nous avons lancé un important programmed’échantillonnage. Nous avons extrait 35 tonnes d’échantillons àl’échelle du gisement et en avons fait un composite représentantles diverses phases d’extraction ainsi que différents domaineslithologiques. Puis nous avons effectué les essais métallurgiquesdans le cadre d’un programme complet avec SGS Lakefield.Nous avons commencé par des essais par lots, suivis d’essais

La découverte du gisement Sisson remonte aux années 1970, mais c’est l’apparition d’un marché dutungstène qui a rendu possible le développement du site.

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cycliques, et nous avons même exploité une usine pilote à Lake-field pendant une brève période de temps afin de concevoir leconcentrateur pour l’exploitation de Sisson. »

Les travaux à la mine à ciel ouvert seront pour la plupartd’exécution standardisée. « Nous commencerons par les tra-vaux de défrichement et d’essouchement en vue du retrait de lavégétation, explique M. Zahovskis. Le forage et l’abattage à l’ex-plosif viendront ensuite afin d’éliminer une partie du substratrocheux, puis nous nous mettrons simplement à creuser. » Àl’instar d’une mine de cuivre à ciel ouvert, la fosse sera fonctionde la géométrie et de la teneur du minerai, de même que dutaux de production. « Nous avons adopté cette conception par-ticulière dans l’idée d’optimiser autant que possible tant lateneur des minerais que les coûts d’exploitation », préciseM. Zahovskis.

Le broyeur principal sera adjacent à la mine afin de minimi-ser les déplacements des camions à benne d’une capacité de136 tonnes, qui seront appelés à livrer 10,5 tonnes métriquesde minerai par année. L’usine de concentration sera située poursa part à un kilomètre de la mine; elle abritera les cylindressecondaires de concasseur conique, les cylindres tertiaireshaute pression et un broyeur à boulets mono-étagé à deuxlignes. « Vient ensuite l’étape de la flottation, en commençantpar le molybdène, suivi du tungstène », explique M. Zahovskis.Des concentrés de molybdène et de tungstène doivent alors êtredéshydratés. Le concentré de molybdène sera vendu à des tiers,qui en poursuivront le traitement. Quant au concentré de tung-stène, il sera transformé en tungstate(VI) d’ammonium sur lesite même. Un entrepôt servira au stockage des résidus prove-nant de l’usine de traitement et de l’usine de tungstate(VI)d’ammonium, de même que des déchets de la mine.

M. Zahovskis indique qu’il n’y a rien de vraiment nouveau,dans l’ensemble, et que le processus correspond à ce qui se faitactuellement dans l’industrie, y compris le traitement du tung-state(VI) d’ammonium. « Nous avons effectué suffisammentd’essais à l’aide de notre propre matériel pour savoir que nouspourrions recouvrer de très bonnes quantités de trioxyde detungstène de cette usine », dit-il.

L’emplacement est primordialL’emplacement du site facilite l’arrivée du personnel et des

approvisionnements et l’expédition du produit. La route prin-cipale s’étend sur 100 kilomètres depuis Fredericton et uneligne ferroviaire se trouve à 15 kilomètres du site, toutes deuxconduisant directement aux ports de haute mer de Saint-Jeanau sud et de Belledune au nord-est. Une ligne de transportd’électricité de 345 kilovolts traverse la propriété de Sisson etune seconde ligne de 138 kilovolts, longue de 42 kilomètres,sera érigée expressément pour les besoins du projet.

Une main-d’œuvre locale qualifiée constitue un aspectimportant du projet Sisson. « Nous n’utiliserons pas de navetteaérienne, de dire Chris Zahovskis. Le site est suffisammentproche des localités environnantes, et même de Fredericton,pour que les gens puissent s’y rendre tout les jours et retournerchez eux après leur quart de travail. » Fredericton est à environ80 minutes de route et celle-ci est parsemée de petites villes.

« Nous sommes donc d’avis que les gens n’aurons pas à se taperd’interminables heures de navette. » M. Zahovskis dit connaîtredes travailleurs qui doivent endurer des navettes de cinq heureschaque jour pour pouvoir travailler dans les mines de la région.« La province regorge de main-d’œuvre qualifiée », ajoute-t-il.Qui plus est, la fermeture de la mine Xstrata de Bathurst, auNouveau-Brunswick, plus tard cette année, contribuera peut-être à grossir les rangs des personnes de métier et des opéra-teurs. Zahovskis indique que de nombreuses personnesqualifiées ont quitté la province et qu’elles seraient heureusesd’accepter un poste qui les rapprocherait de chez elles. « Etpuis, nous formerons nos employés au fur et à mesure que nousembaucherons. »

Il reste encore beaucoup à faire, notamment la signatured’ententes d’écoulement, avant que le projet n’obtienne le feuvert. « Avant l’étude de faisabilité, il était évident que nous nepouvions donner de détails sur les quantités, les coûts et ainside suite, dit M. Zahovskis. Mais maintenant que l’étude estachevée, nous pouvons poursuivre nos discussions avec desacheteurs potentiels et d’autres qui ont démontré un intérêtpossible face au projet. »

La concurrence la plus importante vient de toute évidencedu marché chinois de la production de minerai, mais Zahovs-kis se dit confiant face au projet canadien. Nous nous atten-dons en fait à ce que nos coûts de production de tungstate(VI)d’ammonium reflètent ceux de la Chine, puisque nous auronsnotre propre usine, dit-il. La plupart des exportations chi-noises visent les trois grands marchés du Japon, de l’Amériquedu Nord et de l’Europe, qui, avec la Chine, sont les principauxutilisateurs de tungstène. Sisson est idéalement situé par rap-port aux marchés nord-américain et européen, de l’avis deM. Zahovskis, si bien que lorsque le produit se retrouvera surun navire océanique, il pourra être expédié partout dans lemonde. La signature des contrats d’écoulement est prévuepour la fin de cette année.

Et maintenant qu’une étude de faisabilité est en place, lestravaux d’ingénierie de base commenceront sous peu. Desnégociations de financement sérieuses peuvent également êtreentreprises. Le financement autonome du projet de 579 mil-lions de dollars peut s’avérer difficile et Zahovskis avoue qu’ilcherche de possibles coentrepreneurs qui pourraient se mon-trer intéressés à investir dans le projet, ces associés pouvant ounon être liés à l’écoulement du produit. « Une part du finance-ment viendra évidemment d’un prêt, dit-il. Lorsque nousaurons signé les contrats d’écoulement, nous pourrons discuterde financement par emprunt avec les banques, ce qui nous per-mettra ensuite de déterminer le financement par actions qu’ilnous restera à établir. » M. Zahovskis prévoit finaliser cet aspectau milieu de 2014.

Il compte également remettre le rapport sur les répercus-sions environnementales du projet vers la fin du second tri-mestre de cette année. « Nous devrions avoir le feu vert aucours du second semestre de 2014. » Northcliff entend d’icilà se procurer les permis qui lui permettront d’entreprendrela construction dès l’approbation de l’étude d’impact surl’environnement. Traduit par SDLICM

May 2013 | 81

S I S S O N | projet en vedette

Registration Open! – Certification in Ore Reserve Risk andStrategic Mine Planning OptimizationSpread over a period of four months, this four-week course isdesigned for busy mining professionals who wish to update theirskills and knowledge base in modern modelling techniques for orebodies and new risk-based optimization methodologies forstrategic mine planning. Gain practical experience by applyingthe following hands-on concepts and technical methods: methodsfor modelling ore bodies; stochastic simulations, case studies andmodels of geological uncertainty; and demand-driven productionscheduling and geological risk.

INSTRUCTOR: Roussos Dimitrakopoulos, McGill University, Canada •DATE: Week 1: June 10-14, Week 2: July 2-5, Week 3: August 26-30,Week 4: September 16-19, 2013 • CITY: Montreal, Quebec, Canada •INFO: www.mcgill.ca/conted/prodep/ore

Strategic Risk Management in Mine Design: From Life-of-Mine to Global OptimizationLearn how you can have a significant, positive impact on yourcompany’s bottom line by utilizing strategic mine planningmethodologies and software; improve your understanding ofstrategic mine planning and life-of-mine optimization concepts, aswell as your understanding of the relationship of uncertainty andrisk, and how to exploit uncertainty in order to maximizeprofitability. Note: The strategic mine planning software used isWhittle. An optional half-day skills refresher workshop on Whittlemay be available.

INSTRUCTORS: Tarrant Elkington, Snowden, Australia; and RoussosDimitrakopoulos, McGill University, Canada • DATE: To be determined •CITY: Montreal, Quebec, Canada

An Introduction to Cutoff Grade: Theory and Practice in OpenPit and Underground Mines(with a new section on blending optimization strategy)

Cutoff grades are essential in determining the economic feasibilityand mine life of a project. Learn how to solve most cutoff gradeestimation problems by developing techniques and graphicalanalytical methods, about the relationship between cutoff gradesand the design of pushbacks in open pit mines, and theoptimization of block sizes in caving methods.

INSTRUCTOR: Jean-Michel Rendu, Newmont Mining Corporation, USA •DATE: September 4 - 6, 2013 • CITY: Montreal, Quebec, Canada

Geostatistical Mineral Resource Estimation and Meeting theNew Regulatory Environment: Step by Step from Sampling toGrade ControlLearn about the latest regulations on public reporting ofresources/reserves through state-of-the-art statistical andgeostatistical techniques; how to apply geostatistics to predictdilution and adapt reserve estimates to that predicted dilution; howgeostatistics can help you categorize your resources in an objectivemanner; and how to understand principles of NI 43-101 and theSME Guide.

INSTRUCTORS: Marcelo Godoy, Golder Associates, Chile; and RoussosDimitrakopoulos, McGill University, Canada • DATE: September 9 - 13,2013 • CITY: Montreal, Quebec, Canada

Quantitative Mineral Resource Assessments: An IntegratedApproach to Planning for Exploration Risk ReductionLearn about exploration risk analysis for strategic planning.Understand how to demonstrate how operational mineral depositmodels can reduce uncertainties; make estimates of the number ofundiscovered deposits; and integrate the information and examinethe economic possibilities.

INSTRUCTOR: Don Singer, USA; and David Menzie, U.S. GeologicalSurvey, USA • DATE: September 23 – 25, 2013 • CITY: Montreal,Quebec, Canada

May 2013 | 83

As miners dig deeper, their hoists must keep upwith the change in scale. The modern standard of dig-ital control gives systems built-in flexibility to copewith new conditions, but the greatest challenge, andthe frontier in research and development, is the ropeon which all else hangs.

“It’s a bit cliché to say it, that hoist ropes are thelifeline of the mine,” says Allan Guse, principal engi-neer, hoisting group, Vale Canada Ltd. “But the fact is,the rope really is the key element of the whole system,around which much of the rest of the system isdesigned and configured.”

Rope strength and longevity are the factors thatlimit the efficiency of a hoist system. Typical hoistrope designs surround a steel core or fibre with addi-tional clusters of steel wires. With use, the metal cor-rodes. On a drum hoist, the coils rub against eachother where they wrap around the drum, resulting inwear stresses. Deeper shafts – now extending beyond3,000 metres – put even more strain on hoist ropes.

It helps that staying on top of rope condition hasgotten easier. Canadian R&D firm C-Core developeda camera network that saves the hour or so each daythat a person would normally spend visually inspect-ing the rope on the shutdown hoist. The system,called RopeInspector, is marketed by Bestech. Elec-tromagnetic inspection systems have also advanced.Both CANMET and South African firm Ansys havedeveloped systems that provide ongoing monitoringduring normal operation. Ansys’ Continuous Rope

Monitoring System is installed at a number of mines, includingAngloGold Ashanti’s Moab Khotsong, which boasts the world’sdeepest continuous shaft at 3.5 kilometres. The system generates aconstant magnetic field to expose broken wires, corrosion andother problems. It shows a basic status display on the operator’sscreen, sends out an alert when it sees deviations from its desig-nated safety parameters, and stores more detailed data for refer-ence. “If you can [monitor] that continuously, then you can see

TECHNOLOGY >> Shafts & HoistsLifeline of the mineBy Eavan Moore

Underground mining has its ups and downs – and that is by design. Hoist systemsshoulder the burden of transporting people, equipment and ore kilometres underground,while meeting heavy production demands.

A construction crewinstalls a drum hoist, asystem well suited fortoday’s deep mines.

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technology >> Shafts & Hoists

little deteriorations starting to happen,and you can take maintenance actionahead of time,” says Guse, who thinksVale will likely invest in at least one testsystem in the next couple of years.

Longer rope lifeIdeally, of course, the ropes would

not break down. In contrast to the stan-dard flattened-strand design, Guse sayscompacted-strand ropes, used inXstrata’s Nickel Rim mine and CompassMinerals’ Goderich mine, offer betterwear protection properties and, by themanufacturer’s estimate, last twice aslong. The strands are drawn through adie tool to smooth the outer surface,reducing the indentation betweenstrands. “The outer surface of thestrands being compacted gives a verysmooth surface to the strand of therope, as opposed to conventional ropes,where each individual wire in the outersurface of the strand is exposed,” heexplains. “With the smooth outer surface of the compactedstrand, there are lower contact stresses.”

But configuration changes cannot change the fact thatsteel ropes are heavy, which limits their load-bearing capacity.A stronger rope ends up bearing the burden of its own extraweight. It also tends to have a shorter lifespan, since strongerwires seem to invite wire fatigue and age hardening. Inresponse, a design just reaching commercialization byCASAR Drahtseilwerk Saar GmbH uses a lightweight load-bearing core made from synthetic aramid or high-moduluspolyethylene fibres. The core is wrapped in the conventionalfashion, with steel strands. As a drop-in replacement forexisting steel ropes, the hybrid model could carry moretonnes per skip with no change to its external wear proper-ties. The downside is that electromagnetic testing wouldreveal nothing of the core.

A fully synthetic rope, notes Guse, is further down theroad. “Fifty years from now, we’ll probably be wonderinghow we ever hoisted with steel ropes before,” he says. Thedesign and testing could take another decade – and it couldbe longer before operators pin their fortunes on plastic – butthe all-synthetics would be lightweight and corrosion-free.

A better brakePaid out into the depths of a two- or three-kilometre

shaft, rope engages in risky behaviour. That is when electrical

engineers like Klaus Kacy, senior technical consultant at ABBCanada Inc., step in.

A hoist system built after the end of the 20th century willhave two key electrical components: a single alternating-cur-rent drive, and a programmable logic controller. While themechanics of hoisting have not changed drastically since the1930s, the controls are now software-based. Alongside thespace and energy efficiency gains, this means manufacturerscan easily program sophisticated cycle adjustments,allowances for rope stretching, and brake controls.

Agnico-Eagle’s LaRonde mine, which includes the 2.2-kilometre Penna shaft, was one operation that found itself inneed of better braking. At great depth, Kacy explains, a steelrope behaves like a spring: when stopped suddenly, itbounces. For a cage hoist, this has serious implications if thepeople in the cage are exposed to abrupt deceleration after anemergency stop. After noticing signs that safety catches on itsservice hoist had been activated, LaRonde called in ABB to doan accelerometer test that gauged excessive deceleration ofthe cage.

ABB developed and patented a control method that easesthe conveyance oscillations. “Controlled rollback” activateswhen an emergency stop occurs with an upward-movingload. At first, little to no braking torque is delivered; gravitydoes the braking work. The drum is allowed to roll back, let-ting the cage fall downwards. At that time, the braking

Advances in rope inspection technology have made careful

monitoring of wire rope condition more efficient. Co

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torque gently increases. But the fact that the cage is nowmoving downwards instead of upwards means that oscilla-tion energy dissipates first, and that the braking system canforce a gentler deceleration.

Safety firstAlthough controlled rollback can benefit friction hoists –

a relatively cheap design option effective at depths below1,600 metres – the technology was initially designed fordrum hoists, which are better suited to deep shafts applica-tions.

The factor of safety for rope, calculated by dividing thebreaking strength of the rope by the total suspended load,can determine not just the basic hoist design but the legal-ity of new technologies. Ryan Gough, manager of projectservices at Cementation Canada, remarks that this actuallyposes a non-technical challenge to deep mining: some-times industry innovates too fast for regulatory bodies tokeep up. It took years for Agnico-Eagle to persuade Que-bec regulators that switching from a rope safety factor offive to a factor of four would sacrifice no actual safety, solong as the stringent additional requirements alreadyadopted by the South African Bureau of Standards hadbeen met.

The Blair multi-drum hoist provides anotherworkaround for rope limitations. Designed for depth in the1950s, the Blair hoist uses two smaller ropes per con-veyance instead of one, dividing the weight. Xstrata used aBlair design for a service hoist at its Nickel Rim project inSudbury and Cementation Canada is preparing to installone in Freeport McMoran’s Grasberg mine. “I think we willsee more and more opportunities for the Blair hoist to beused than we have historically,” says Gough, noting thatmobile equipment is getting bigger and is demanding moreof service hoists.

Faster travelAmbitious underground mines have high capital costs,

which puts pressure on the mine to keep its productionrunning. If it can boost hoisting speed, so much the better.Gough thinks that the brake improvements of the lastdecade have helped, but he also sees interesting possibilitiesin the Levelok E-Brake system developed by Horne Group:a hydraulic mechanism that holds the cage steady at shaftstations and automatically brakes in a failed rope situation.“In jurisdictions where safety dogs are required on man-travel conveyances,” he explains, “we normally would oper-ate on wood guides to allow the dogging mechanisms tooperate properly, to give us acceptable deceleration rates.”The E-Brake meets Ontario’s deceleration standards forsafety dogs on steel guides, potentially allowing cages tooperate at higher speeds.

Better brakes, stronger ropes, and continuous safety mon-itoring are not the flashiest innovations. But they smooth theway for everyday operations, cutting costs and helping definethe new ordinary: deeper, faster and bigger. CIM

May 2013 | 85

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CIM community

With many of Canada’s and theworld’s major mining companies head-quartered in Toronto, the city is a hubfor people dedicated to the miningindustry. Canada’s largest city alsoowns the distinction of being the onlyCanadian centre with two CIMbranches. The CIM Toronto Branchhas, for years, brought the city’s miningprofessionals together to network,share knowledge and create a sense ofcommunity and an environment of col-laboration. However, to better servemembers of the sprawling metropolis,some of its constituents recently spunoff to form the Greater Toronto Area(GTA) West Branch.

Toronto branchThe Toronto branch hosts numer-

ous events throughout the year, includ-ing student networking sessions, minetours and monthly luncheons that feature guest speakers. It also holdsNetworking by Design events in col-laboration with CIM Mining Profes-sionals – The Next Generation, Womenin Mining, Hispanics in Mining (Hispanomine), Canadian Council forAboriginal Business (CCAB) and, morerecently, Women in Capital Markets.And, the branch’s 36-team FrankGrieco Golf Tournament, which willbe held at the world-renowned GlenAbbey Golf Club on August 28, remainsone of the biggest annual events in theindustry.

“One of the reasons we’ve been sosuccessful in having a very active mem-bership is that we’ve always attractedmany senior executives who bring thatcalibre of experience and who also areable to recruit from their own ranks,”says Tom Rannelli, chair of the Torontobranch. “And we’re constantly asking allof our members for feedback.”

By listening to and working with itsmembers, the branch has leveraged its

collective knowledge of best practicesand used it to continuously improve itsservices. It has set out a strategic planfocused on how to best serve thebranch’s membership and the miningindustry as a whole. Currently, Rannelliexplained, CIM Toronto is committed toincreasing its active participants from922 paid members today to all the1,500 people on its mailing list byensuring it is offering value to every sin-gle one of them.

The Toronto branch is also looking athow to better accommodate the needsof its executive members, who arestrong supporters but do not alwayshave the time to attend every get-together. Already, the revamped Taste ofToronto event, designed to give busyexecutives an opportunity to reconnectwith each other while enjoying interna-tional cuisine, has been successful, butthe branch plans to add other culturaland possibly sporting activities to its cal-endar to further address this need.

GTA West branchIn 2009, the Toronto branch’s focus

on serving its membership resulted insome members identifying a geographi-cal dilemma. The Greater Toronto Area(GTA) has grown exponentially over theyears, sprawling out particularly to thewest of Toronto, where some 30-oddmining companies are headquartered.“A small group of us got together andsaid there was a good opportunity tobring CIM to the west end of GTA,” saidCatharine Shaw, one of the foundingmembers of the CIM GTA West Branchand its past chair. “Part of that was thesuccess of the Toronto branch, whichhistorically was the hub of membershipfor the GTA. However, in recent years,from a logistics standpoint, Toronto hasbeen increasingly more difficult to reachfor those living or working outside ofthe city, due to travel, cost and time. Soa lot of potential members or people inthe industry from the west end were notalways able to attend events.”

B r a n c h P r o f i l e

It takes two in TorontoCIM branches thrive in Canada’s premier mining metropolis

by Alexandra Lopez-Pacheco

More than 200 students and industry professionals network over fine cuisine at the CIM Toronto Branch’s AnnualTastes of Toronto event held at the National Club on Thursday, October 18.

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In 2010, the GTA West branch wasborn; it now has 70 paid members anda contact database of more than 400people. “We wanted to address thoseneeds and wanted to establish a branchfor the GTA West. But we also wanted towork with the Toronto branch becausethey’ve had such great success and offereach other reciprocal membership cam-paigns to expand the CIM footprint,”Shaw said.

The branch offers monthly luncheonmeetings in Oakville, featuring expertspeakers on topics that include supplychain best practices, commodity out-looks, innovations in mining, and abo-riginal relations. This year, the GTAWest branch is launching its own golf

event at the Millcroft Golf Club inBrampton on June 13.

“Both branches share announce-ments, so all [of] our members have theopportunity to attend all the events,”said Shaw. “At GTA West, we try to fol-

low Toronto’s lead because they’ve beenat it a long time and are really good at it.We’re increasing CIM’s reach and pro-viding a venue for the companies thatparticipate to network and to promotethe industry in a very positive way.” CIM

2013 Toronto CIM Branch EventsAugust 28Frank Grieco Memorial Golf Tournament

September 19MES-CIM Toronto Joint Luncheon, National Club

October 17Taste of Toronto, networking event, National Club

December 12SNC-Lavalin Hamilton lectures series, National Club

Luncheons, National Club: May 23, June 6, November 21

Greater Toronto Area West CIM Branch EventsJune 13CIM GTA West Golf Tournament, Millcroft Golf Club, Brampton

September 4Canada-Southern Africa Chamber of Business/CIM GTA West – Cheese and wine cocktail atHatch, Oakville

Luncheon Meetings, Otello’s Banquet &Conference Centre, Oakville: May 29, October 23, November 27


CIM communityP r o f i l e

Le nouveau président de l’ICM est un habituédes longues journées de dur labeur. Tout au longde sa journée de travail, qui débute dès 6 h et nese termine pas avant 20 h, il assume conscien-cieusement ses nombreuses responsabilités àtitre de professionnel et de bénévole. L’ICM, laSME, l’ACPE et le Temple de la renommée du sec-teur minier canadien font partie des organisa-tions auxquelles il consacre ses énergies. « Jesouhaite rendre service à cette industrie qui m’aoffert une carrière si passionnante », explique-t-il.

Occupant actuellement le poste de vice-pré-sident directeur du développement commercialchez Hunter Dickinson Inc., Robert Schafer a trèshâte de commencer son prochain mandat à titrede président de l’ICM. Il a commencé sa carrièredans le secteur de l’exploration, ce qui l’a amené

à voyager dans près de 80 pays, et il espère pouvoir faire profiter l’ICMde son vaste réseau de contacts dans le secteur minier à l’échellemondiale. « Mon engagement auprès de nombreuses associationsminières dans plusieurs juridictions m’a permis d’obtenir une perspec-tive globale du domaine de la gouvernance et des relations coopéra-tives entre les organisations minières », explique-t-il.

Robert Schafer a déjà commencé la mise à jour du plan straté-gique de l’ICM, avec pour objectif de définir et de développer davan-tage les plans d’action visant à promouvoir les valeurs qui font de l’ICMla principale source d’expertise de l’industrie. Ce plan repose, selon lui,sur une communication accrue entre les divisions et les sociétés del’ICM. Le plan stratégique sera peaufiné au cours des prochains mois,et une version finale devrait être soumise à l’approbation du conseild’administration de l’ICM plus tard cette année.

Il a également des plans ambitieux visant à promouvoir la créationd’une alliance minière mondiale, qui inclurait à titre de membres fon-dateurs l’ICM, la Society for Mining, Metallurgy and Exploration (SME)établie aux États-Unis, le Australasian Institute of Mining and Metal-lurgy (AusIMM) et le Southern African Institute of Mining and Metal-lurgy (SAIMM). Robert Schafer attend avec impatience le 23e Congrèsminier mondial à Montréal, cet été. L’ICM accueillera le congrès avecles cinq principales universités spécialisées dans le secteur minier duCanada. Plus de 1 500 professionnels de l’industrie minière du mondeentier doivent y participer.

La carrière de Robert Schafer dans le secteur minier a débuté il y aplus de 30 ans, lorsqu’il s’est découvert une passion pour la géologiealors qu’il étudiait à l’Université Miami, en Ohio. « J’ai toujours aimé

Robert Schafer is no stranger to long daysand hard work. The incoming CIM presi-dent’s workday starts at 6 a.m. and does notend until 8 p.m., as he dutifully juggles hismany professional and volunteer responsi-bilities. CIM, SME, PDAC, and the CanadianMining Hall of Fame are just a few of theorganizations to which Schafer devotes hisenergies. “I want to give back to the industrythat’s given me a very exciting career,” hesays.

Currently the executive vice-president ofbusiness development at Hunter DickinsonInc., Schafer is excited about his upcomingterm as CIM president. His career began inexploration and has since brought him tonearly 80 countries, and he is hoping toleverage his vast connections in the global mining network toCIM’s benefit. “My involvement with many mining associa-tions in many jurisdictions gives me broad perspectives onboth governance and co-operative relationships among miningorganizations,” he explains.

Schafer is already engaged in updating CIM’s strategic plan,with the goal of further defining and developing action plansto advance the values that make CIM the community for lead-ing industry expertise. Central to this, he says, is increasedcommunication between CIM’s branches and societies. Thestrategic plan will be finessed over the next several months,with a final version scheduled to be ready for CIM Councilendorsement later this year.

He also has ambitious plans to advance the creation of aglobal mining alliance, which would include, as foundingmembers, CIM, the U.S.-based Society for Mining, Metallurgyand Exploration (SME), the Australasian Institute of Miningand Metallurgy (AusIMM), and the Southern African Instituteof Mining and Metallurgy (SAIMM). As well, Schafer is lookingforward to the 23rd World Mining Congress in Montreal thissummer. CIM will co-host the congress in conjunction withCanada’s top five mining universities. More than 1,500 miningprofessionals from around the world are expected to attend.

Schafer’s own career in mining began more than 30 yearsago, after he discovered his passion for geology while enrolledat Miami University (Ohio). “I’d always picked up rocks andenjoyed looking at mountain scenery, but I didn’t realize I was

Exploring a world ofnew opportunitiesIncoming president Robert Schafer brings hisprofessional and volunteer know-how to CIM

by Krystyna Lagowski

Explorer de nouvelles possibilités

Robert Schafer mettra son savoir-faireprofessionnel au service de l’ICM

par Krystyna Lagowski

May 2013 | 89

CIM community

interested in geology,” he recalls. “Within one semester, Iwas hooked.” He went on to study at the University of Ari-zona, where he earned graduate degrees in geology and inmineral economics.

Exploration work, Schafer explains, is like puttingtogether a puzzle with 60 to 80 per cent of the pieces miss-ing. “When you start with an exploration project, all yousee is what’s exposed on the earth’s surface, with much ofit camouflaged,” he says. “You’re putting together a puzzleone piece at a time and have to identify where those piecesare coming from – and not all of them fit together.”

Schafer is quick to credit the people who have pro-foundly influenced his work. He points to Barry Watson atRio Tinto, who gave him his first opportunity to plan,develop and carry out an exploration program – while stilla graduate student. Schafer is also grateful to David White-head, whom he worked with at Billiton, for teaching himthe economics of exploration and discovery, and to HugoDummett at BHP, for inspiring his drive and desire to suc-ceed. “I’ve been fortunate to have a strong support systemthroughout my entire career,” he says.

And, in turn, Schafer has proven his colleagues can relyon him for solid support. In 2000, while working for Kin-ross Gold as vice-president of exploration, Schafer wastasked with finding a deposit to feed the mill at the Kubakamine. Schafer and his team discovered the million-ounceBirkachan gold deposit in Russia’s Far East, through 100metres of glacial till. “By putting together the pieces ofgeology, geochemical and geophysical surveys, and focus-ing the exploration team to a specific area, we completedthe project in 15 months,” he recalls. “It was a great exam-ple of Canadian-Russian cooperation and one of the firstapplications of GIS [geographic information systems] tech-nology to make a virgin mineral discovery.”

A busy life discovering mineral riches never diminishedthe value of family for Schafer. After recognizing howmuch time exploration careers can take professionals awayfrom their families, he launched an annual Labour Dayfamily picnic while he was president of the GeologicalSociety of Nevada in the late 1980s. The tradition contin-ues to this day.

Schafer works in Vancouver but calls Salt Lake City,Utah, home, so he makes the trip between cities everyweek – flying to work on Sunday evenings and returninghome Friday afternoons. He’s been making the two-hourcommute for nine years. “I like being busy,” he says. “I likegiving back, so I volunteer a lot. I consider myself a veryfortunate person.” CIM

prendre en main des roches et contempler les paysages montagneux, maisje ne pensais pas avoir un intérêt pour la géologie, se rappelle-t-il. À la findu semestre, j’étais devenu un passionné. » Il a ensuite étudié à l’Universitéde l’Arizona, où il a obtenu son diplôme en géologie et en économie desminéraux.

Le travail d’exploration, explique-t-il, ressemble à l’assemblage d’uncasse-tête où il manque de 60 à 80 pour cent des pièces. « Lorsque vousdémarrez un projet d’exploration, vous ne pouvez voir que ce qu’il y a à lasurface du sol, une bonne partie de ce qui vous intéresse demeure cachée,ajoute-t-il. Vous assemblez le casse-tête morceau par morceau et vousdevez déterminer d’où proviennent ces morceaux; en outre, certains mor-ceaux ne vont pas ensemble. »

Robert Schafer est prompt à reconnaître les personnes qui ont profon-dément influencé son travail. Il mentionne notamment Barry Watson de RioTinto, qui lui a accordé sa première chance de planifier, développer etmettre en œuvre un programme d’exploration alors qu’il n’était encorequ’un étudiant diplômé. Il est également reconnaissant à David Whitehead,avec qui il a travaillé chez Billiton et qui lui a enseigné les aspects écono-miques de l’exploration et de la découverte, ainsi qu’à Hugo Dummett deBHP, pour l’avoir encouragé dans son désir de réussir. « J’ai été chanceux depouvoir profiter d’un réseau de soutien solide tout au long de ma carrière »,précise-t-il.

En retour, Robert Schafer a démontré que ses collègues pouvaient sefier à lui pour obtenir une performance exceptionnelle. En 2000, alors qu’iloccupait le poste de vice-président de l’exploration pour Kinross Gold, onlui a confié la tâche de trouver un gisement pour alimenter le broyeur de lamine Kubaka. Lui et son équipe ont découvert le gisement d’or d’un milliond’onces de Birkachan, à l’extrémité est de la Russie, à travers 100 mètres detill. « En compilant les résultats des levés géologiques, géochimiques etgéophysiques, et en concentrant les efforts de l’équipe d’exploration sur un site particulier, nous avons réussi à terminer le projet en 15 mois, se rappelle-t-il. Ce fut un bel exemple de coopération canado-russe et l’unedes premières utilisations de la technologie des SIG (systèmes d’informa-tion géographique) menant à la découverte d’un nouveau gisement deminéraux. »

Malgré sa vie trépidante consacrée aux richesses minérales, RobertSchafer n’a jamais négligé pour autant sa famille. Après avoir constaté àquel point une carrière en exploration peut prendre de votre temps et vousmaintenir éloigné de votre famille, il crée un pique-nique familial annuellors de la fête du Travail alors qu’il était président de la Geological Society ofNevada, à la fin des années 1980. Cette tradition continue jusqu’à présent.

Robert Schafer travaille à Vancouver, mais sa ville adoptive est Salt LakeCity, en Utah, et il voyage donc chaque semaine entre les deux villes; ilprend l’avion le dimanche soir pour se rendre au travail et à nouveau le ven-dredi après-midi pour rentrer chez lui. Il fait la navette entre les deux villesdepuis neuf ans. « J’aime être occupé, explique-t-il. J’aime aussi rendre ser-vice et c’est pourquoi je fais beaucoup de bénévolat. Je me considèrecomme une personne très choyée par la vie. » Traduit par SDLICM


CIM community

“Opportunity” was the mot du jour at Franco-Mine 2013, adaylong symposium held during the PDAC Convention inToronto, which explored Canadian mining interests in Fran-cophone West Africa and Quebec. More than 150 representa-tives from both jurisdictions, including federal ministers, alongwith financial and mining professionals, discussed growthpotential and investment obstacles in each region’s mining sec-tors. Co-hosted by CIM and the Canadian and Quebec govern-ments, the symposium was highlighted by the signing of aforeign investment protection and promotion agreement(FIPA) between Canada and Cameroon, and a second withZambia.

« Opportunité » était le mot du jour à l’événement Franco-Mine 2013, un symposium d’une journée entière qui a eu lieu lors de laconférence de l’ACPE à Toronto et portait sur l’exploration des intérêtsminiers canadiens en Afrique de l’Ouest francophone et au Québec.Plus de 150 représentants des deux gouvernements, y compris desministres fédéraux et des professionnels des domaines financier etminier, ont parlé du potentiel de croissance et des obstacles à l’investis-sement dans le secteur minier de chaque région. Le symposium organisé conjointement par l’ICM et les gouvernements canadien etquébécois a été couronné par la signature d’un accord sur la promo-tion et la protection de l’investissement étranger (APIE) entre le Canadaet Cameroun, puis avec la Zambie.

Welcoming Francophone AfricaCanada signs FIPA agreements with Cameroon and Zambia

at CIM-hosted Franco-Mine 2013

Souhaitons la bienvenue à l’Afrique francophoneLe Canada conclut des APIE avec le Cameroun et la Zambie

à l’événement Franco-Mine 2013 organisé par l’ICM

by/par Kelli Korducki

Canada’s Minister of International Trade Ed Fast, left, and Zambia’s high commissioner to Canada Bobby Mbunji Samakai sign a foreign investment protection and promotionagreement at Franco-Mine 2013. / Le ministre du commerce international du Canada, Ed Fast, à gauche, et le haut commissaire de la Zambie au Canada, Bobby MbunjiSamakai, signent un accord sur la promotion et la protection de l’investissement étranger à Franco-Mine 2013.

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“Taken together, these two new bilateral investment agree-ments will help provide Canadian companies with the trans-parency and predictability they look for when consideringexpanding their business beyond our borders,” said Ed Fast,Canada’s minister of international trade.

“Canada and Africa share a common goal,” said Fast. “Weall want to increase and enhance the quality of life and stan-dard of living for all of our citizens. We do that by allowingtrade and investment, which I believe are the twin engines ofeconomic growth, to generate long-term prosperity for Cana-dians and Africans alike.”

Fast praised CIM for its longstanding commitment toresponsible business practices, along with its facilitation of net-working and professional development in the internationalmining sector. Pointing to the recently launched CIM branchin Dakar, Senegal, he highlighted two research projects thebranch will oversee that aim to develop an analysis model forlocal and regional supply chain opportunities in West Africangold mining. “I am confident that CIM’s new branch will makea positive contribution in the region,” Fast said.

CIM executive director Jean Vavrek also expressed hisexcitement about the Dakar branch. “The launch of our firstbranch in West Africa, as part of the newly approved CIMAfrican District, is the first step towards establishing a stronglocal leadership team and will serve as a great platform foractivities that will encourage the expanding francophone min-ing community to come together,” he said.

A recurring theme put forth by West African mining repre-sentatives was the degree to which Africa’s considerable min-eral potential can be leveraged into increased economicindependence within African mining nations, thus supportingsustained political stability. Canadian investments in Africanmining firms could facilitate side-by-side economic growth forboth parties.

“We really are a mining economy,” said Omar HamidouTchiana, minister of mining and industrial development ofNiger. The mining industry generates 15 per cent of thenation’s revenue, he said, adding Niger boasts considerablemineral potential in uranium, phosphate, iron, platinum, sil-ver, cobalt and manganese. Hamidou Tchiana added thatJapanese, French, and Chinese investors have recently takennote of the country’s mining interests.

Salif Lamoussa Kaboré, minister of mines and energy ofBurkina Faso, boasted of his country’s 20-year political sta-bility and significant deposits of gold and other minerals. Hereported that private investments in the mining industryhave grown steadily in the past decade, to the degree wheregold has now surpassed traditional mainstay exports of cotton and cattle.

Quebec presenters, like Natural Resources Minister Mar-tine Ouellet, provided an overview of the state of mining inthe province. Robert Giguère, general director of the ministryof natural resources, said a key platform for reaching out toyoung people and potential mining professionals will be nextyear’s Québec Mines International conference, which aims to

« Ensemble, ces deux accords d’investissement bilatéraux contri-bueront à accorder aux sociétés canadiennes la transparence et la sta-bilité qu’elles recherchent dans leurs projets d’expansion de leursopérations au-delà de nos frontières », résume Ed Fast, ministre ducommerce international du Canada.

« Le Canada et l’Afrique ont un objectif commun, ajoute Fast.Nous désirons tous augmenter et améliorer la qualité et le niveau devie de tous nos citoyens. Nous y arrivons en favorisant le commerceet les investissements, qui sont selon moi les deux moteurs de lacroissance économique, pour mener les Canadiens et les Africains àla prospérité. »

Fast a félicité l’ICM pour son engagement de longue date enversdes pratiques d’affaires responsables et pour sa participation à la créa-tion de réseaux et au développement professionnel dans le secteurminier international. Faisant référence à la nouvelle succursale de l’ICMà Dakar au Sénégal, il a souligné deux projets d’études que celle-cisupervisera, qui visent à développer la chaîne d’approvisionnementdes mines d’or d’Afrique de l’Ouest. « J’ai confiance que la nouvellesuccursale de l’ICM participera au développement de la région », asouligné Fast.

Le chef de la direction de l’ICM, Jean Vavrek, a aussi exprimé sonenthousiasme quant à l’ouverture de la succursale de Dakar. « L’ouver-ture de notre première succursale en Afrique de l’Ouest, qui appartientau nouveau District africain approuvé de l’ICM, est la première étapevers le développement d’une équipe de direction solide au niveaulocal, et servira de plateforme parfaite pour des activités qui encoura-geront la communauté minière francophone grandissante à s’unir », a-t-il ajouté.

Un thème récurrent chez les représentants de l’industrie minièreouest-africaine concerne le niveau auquel l’important potentiel minierde l’Afrique peut contribuer à augmenter l’indépendance écono-mique des nations minières d’Afrique, ce qui contribuerait à rendre lastabilité politique plus durable. Les investissements canadiens dans lessociétés minières d’Afrique pourraient faciliter la croissance écono-mique pour les deux partis.

« Nous avons vraiment une économie basée sur l’extractionminière », indique Omar Hamidou Tchiana, ministre du développe-ment minier et industriel du Niger. L’industrie minière génère15 pour cent des revenus du pays, précise-t-il, ajoutant que le Nigeraffiche un potentiel minier considérable d’uranium, de phosphate, defer, de platine, d’argent, de cobalt et de manganèse. Hamidou Tchianaajoute que des investisseurs japonais, français et chinois ont récem-ment remarqué l’intérêt minier que représente le pays.

Salif Lamoussa Kaboré, ministre des mines et de l’énergie du Bur-kina Faso, a vanté les 20 ans de stabilité politique de son pays et larichesse de ses dépôts d’or et de métaux précieux. Il signale que lesinvestissements privés dans le secteur minier augmentent régulière-ment depuis dix ans, au point où les exportations d’or surpassentmaintenant celles des commodités traditionnelles que sont le cotonet le bétail.

Les présentateurs québécois, notamment Martine Ouellet, ministredes Ressources naturelles, ont donné un aperçu de l’état de l’industrieminière de la province. Robert Giguère, directeur général du ministèredes Ressources naturelles, souligne que la conférence internationalesur les mines qui aura lieu l’an prochain au Québec sera une plateforme


CIM community

build networks and also publicize events with FrancophoneWest Africa to provide collaborative opportunities for foreign governments.

In a discussion of challenges and opportunities from anindustry perspective, Mamoudou Diallo, general director ofSemafo’s operations in Guinea, said training was a primaryconcern for his company. Oumar Toguyeni of Iamgoldexpressed the need to “develop local entrepreneurship toempower the population.” In order to embark on local miningoperations in good faith, community engagement is essential,according to Toguyeni.

Navin Dyal of Teranga Gold put the optics of these negoti-ations succinctly: with patience and by employing good prac-tices, Canada is in a position to change the nature of Africanmining, with the net result being a higher standard of living forcitizens of host countries wherein the industry and host gov-ernments work together. CIM

essentielle dans la sensibilisation des jeunes et de la relève des profes-sionnels miniers. Cette conférence vise à bâtir des réseaux et présenterdes événements avec l’Afrique de l’Ouest francophone afin de créerdes occasions de collaboration pour les gouvernements étrangers.

Dans une discussion portant sur les défis et les occasions qui s’ou-vrent à l’industrie, Mamoudou Diallo, directeur général de l’exploita-tion de Semafo en Guinée, indique que la formation est une prioritépour son entreprise. Oumar Toguyeni d’Iamgold a exprimé le besoin« de développer l’entrepreneuriat à l’échelle locale afin d’ouvrir desportes pour la population. » Pour démarrer des exploitations minièresavec confiance dans la région, l’engagement des collectivités est pri-mordial, selon Toguyeni. Navin Dyal de Teranga Gold a résumé l’orien-tation de ces négociations : avec patience et en employant les bonnespratiques, le Canada est bien placé pour changer la nature du marchéminier en Afrique, avec pour résultat net de rehausser la qualité de viedes citoyens des pays hôtes, par la collaboration entre l’industrie et lesgouvernements de ces pays. Traduit par SDLICM

CALENDARUPCOMING EVENTS

ALTA 2013 Nickel-Cobalt-Copper, Uranium and GoldConferenceMay 25-June 1 | Perth, Western Australiawww.altamet.com.au

Critical Minerals Conference 2013June 4-5 | Perth, Western Australiawww.criticalminerals2013.org

The AusIMM International Uranium Conference 2013June 11-12 | Darwin, Northern Territory, Australiawww.ausimm.com.au/uranium2013

PASTE 2013: 16th International Seminar on Paste andThickened TailingsJune 17-19 | Belo Horizonte, Brazilwww.paste2013.com

EXPONOR 2013June 17-21 | Antofagasta, Chilehttp://www.exponor.cl/ingles

Computational Modelling ’13June 18-19 | Cornwall, United Kingdomwww.min-eng.com/modelling13

Physical Separation ’13June 20-21 | Cornwall, United Kingdomwww.min-eng.com/physicalseparation13

CICEME-2013: 9th China International Coal Equipment& Mine Technical Equipment ExhibitionJune 28-30 | Beijing, Chinawww.ciceme.com/en

The Australian Mine Ventilation ConferenceJuly 1-3 | South Australia, Australiawww.austminevent.com.au

METPLANT 2013July 15-17 | Perth Western Australiawww.ausimm.com.au/metplant2013

World Mining Congress 2013August 11-15 | Montreal, Quebec, Canadawww.wmc-expo2013.org

ISARC2013: The 30th International Symposium on Automation and Robotics in Construction and MiningAugust 11-15 | Montreal, Quebec, Canadawww.isarc2013.org

ICANM 2013: International Conference on Advanced & Nano MaterialsAugust 12-14 | Quebec City, Quebec, Canadaiaemm.com/ICANM2013

Modelling oil sand surface responsebelow an in-pit plant in theCanadian oil sandsT.G. Joseph, Alberta Equipment–Ground InteractionsSyndicate (AEGIS), University of Alberta, Edmonton,Alberta, Canada; and N. Shi, JPi, Edmonton, Alberta,Canada

ABSTRACT Before any large plant is moved onto an oil sands-dominated surface,particularly those surfaces encountered in-pit, it is imperative that the ground beevaluated for bearing capacity. A 2,230-tonne mobile in-pit hopper/crusher facilitydesigned for operation in the Canadian oil sands was modelled. This evaluationfocused on track and outrigger pad versus ground interactions as the key perform-ance indicators of appropriate ground performance below the unit in both operatingand repositioning propel modes. A study of cyclic oil sand behaviour was alsoinferred from laboratory cyclic plate load data as an extension of the simulationmodel indications.

RÉSUMÉ Avant de déplacer toute grande installation sur une surface dominée pardes sables bitumineux, surtout celles rencontrées dans une fosse, il est nécessaired’évaluer la capacité portante du sol. Une installation mobile trémie/concasseur de2 230 tonnes, conçue pour les fosses des sables bitumineux canadiens, a été mod-élisée. L’évaluation ciblait les interactions entre les chenilles et les assiettes desstabilisateurs et le sol comme principaux indicateurs de comportement adéquat dusol sous l’unité pour les modes de déplacement en opération et en reposition-nement. Une étude du comportement cyclique du sable bitumineux a aussi étéinférée à partir des données de chargement cyclique sur plaques en laboratoire entant qu’une extension des indications obtenues par le modèle de simulation.

ABSTRACT Northern Saskatchewan boasts some of the world’s largest known high-grade uranium deposits. The successful mining of these deposits, however, cannotbe accomplished without overcoming technical challenges that include high gradeof the uranium ore, specialized mining methods to deal with groundwater at highpressures, and poor ground conditions. This paper discusses the various mecha-nisms of inflows at three of Cameco Corporation’s sites in northern Saskatchewan.The risk of inflows is quantified in terms of unique challenges due to hydrogeologi-cal conditions, rock mass integrity, and uncertainty in geological conditions.Mitigation strategies in case of an inflow are also briefly described.

RÉSUMÉ Le Nord de la Saskatchewan peut se vanter d’avoir les plus gros gise-ments d’uranium à haute teneur au monde. Toutefois, il n’est pas possibled’exploiter ces gisements de manière efficace sans surmonter des défis techniques,lesquels comprennent la haute teneur du minerai d’uranium, les méthodes spécial-isées d’extraction qui tiennent compte de l’eau souterraine à pression élevée et lesmauvaises conditions du sol. Le présent article discute les divers mécanismes devenue d’eau à trois sites de la Cameco Corporation situés dans le Nord de laSaskatchewan. Le risque des venues d’eau est quantifié en termes des défisuniques dus aux conditions hydrogéologiques, à l’intégrité de la masse rocheuse età l’incertitude des conditions géologiques. Des stratégies d’atténuation en cas devenue d’eau sont aussi brièvement décrites.

ABSTRACT With the gold industry processing more complex ores, the online meas-urement and control of cyanide addition to the gold leaching circuit has becomemore critical. This paper compares the two commonly employed “free” cyanideonline analysis methods (amperometric and potentiometric endpoint silver nitratetitration) with the rhodanine endpoint silver nitrate titration and ion selective elec-trode methods common at site laboratories. Measurement differences betweenthese methods are presented and discussed for cyanide solutions containing cop-per and zinc with varying cyanide to metal ion ratios. The resulting cyanide availableto leach gold is also compared using these measurement techniques.

Inflows in uranium mines ofnorthern Saskatchewan: risks andmitigationR. Bashir, Golder Associates, Saskatoon,Saskatchewan, and Department of Civil & GeologicalEngineering, University of Saskatchewan, Saskatoon,Saskatchewan; and J.F. Hatley, Cameco Corporation,Saskatoon, Saskatchewan

Cyanide analysis for complexcyanide solutionsW. van der Merwe, Measurement and ControlDivision, MINTEK Randburg, South Africa; and P. Breuer, Parker CRC for Integrated HydrometallurgySolutions, CSIRO Minerals Down Under NationalResearch Flagship, CSIRO Process Science andEngineering, Australian Minerals Research Centre,Waterford, Western Australia

T E C H N I C A L A B S T R AC T S

CIM journalVO LU M E 4 , N U M B E R 2


Processing history at Vale Canada’s(Inco’s) iron ore recovery plantB.R. Conard, BRConard Consulting, Inc., Oakville, Ontario

Froth phase study of coal flotation in ahybrid mechanical flotation columnH. Wang, M. Cao, Z. Xu, and Q. Liu, Department ofChemical & Materials Engineering, University of Alberta,Edmonton, Alberta; and J.C. Sztuke and A. Stradling,Applied Research & Technology, Teck Metals Limited, Trail,British Columbia

RÉSUMÉ Alors que l’industrie de l’or traite des minerais de plus en plus complexes, lamesure en continu et le contrôle de l’ajout de cyanure au circuit de lixiviation de l’ordevient plus critique. Le présent article compare les deux méthodes d’analyse en con-tinu du cyanure « libre » couramment employées (titrage ampérométrique etpotentiométrique du nitrate d’argent par détermination du point de virage); le titrage dunitrate d’argent par détermination du point de virage (rhodanine comme indicateur) etles méthodes de sélection des ions aux électrodes communes aux laboratoires des sitesminiers. Les différences de mesures entre ces méthodes sont présentées et discutéespour des solutions de cyanure contenant du cuivre et du zinc avec des rapports cyanureà métal variables. Le cyanure résultant disponible pour lixivier l’or est aussi comparé aumoyen de ces techniques de mesure.

ABSTRACT An iron ore recovery plant was operated by Inco from 1955 to 1980 nearSudbury, Ontario. As exposures to specific nickel substances have been associated withadverse respiratory endpoints, it is important to understand processes that give rise tosuch substances. This manuscript discusses the process and equipment, the propensityfor aerosol formation, and the operational procedures used by Inco in roasting apyrrhotite concentrate, reducing the nickel in the formed oxide, leaching the nickel inammoniacal solution, purifying the resulting solution, making green or black NiO, andproducing iron oxide pellets. Industrial hygiene measurements are also reported.

RÉSUMÉ De 1955 à 1980, Inco a exploité une usine de récupération de minerai de ferprès de Sudbury en Ontario. Puisque l’exposition à des substances nickélifères spéci-fiques a été associée à des effets respiratoires indésirables, il est important decomprendre les processus qui conduisent à produire de telles substances. Le présentarticle discute des processus et des équipements, de la propension à la formationd’aérosols et des procédures opérationnelles utilisées par Inco dans le grillage d’unconcentré de pyrrhotite, la réduction du nickel dans l’oxyde formé, la lixiviation du nickeldans la solution ammoniacale, la purification de la solution résultante, la fabrication duNiO vert ou noir et la production de boulettes d’oxyde de fer. Des mesures d’hygièneindustrielle sont aussi présentées.

ABSTRACT The correlations between froth recovery of coal and air recovery were inves-tigated using a hybrid mechanical flotation column. The particle slurry was fed onto thesurface of air-water, two-phase froths to carry out the tests. Froth recovery was takenas the recovery of particles into the froth product, whereas air recovery was determinedby the froth height method. The relationships between froth recovery and air recoverywere nearly linear, with greater slopes for more hydrophobic particles. Inside the frothphase, the particles were stratified, with hydrophobic particles concentrated in the upperregion and hydrophilic particles in the lower region.

RÉSUMÉ Les corrélations entre la récupération de la mousse du charbon et larécupération de l’air ont été étudiées au moyen d’une colonne de flottation mécaniquehybride. Afin d’effectuer les essais, la boue de particules a été alimentée à la surface demousses air-eau à deux phases. La récupération de la mousse a été définie commeétant la récupération de particules dans la mousse alors que la récupération de l’air aété déterminée par la méthode de la hauteur de la mousse. Les relations entre larécupération de la mousse et la récupération de l’air étaient presque linéaires, avec deplus grandes pentes pour les particules plus hydrophobes. Dans la phase de la mousse,les particules étaient stratifiées; les particules hydrophobes étant concentrées dans laportion supérieure et les particules hydrophiles dans la partie inférieure.

May 2013 | 95

Simulation analysis model andequipment selection in continuoussurface mining systemsS.P. Upadhyay, Z. Lin, S. Sundararajan, and J. Szymanski, University of Alberta, Markin/CNRL NaturalResources Engineering Facility, Edmonton, Alberta; and R.S. Suglo, University of Mines and Technology, Tarkwa,Ghana

ABSTRACT Fierce market competition and demand have made it imperative for miningcompanies to achieve higher productivity and operational efficiency. The selection of thebest mining method and equipment combinations will enable companies to meet pro-duction and efficiency targets. Continuous mining is increasingly preferred bycompanies for its high efficiency and low unit costs. We developed simulation modelsfor two continuous mining systems: the continuous surface miner (CSM) system andthe at face slurrying (AFS) system. Considering two different case studies, the paperdiscusses application of developed models to determine the optimal number of trucksand equipment capacities for the two systems.

RÉSUMÉ La compétition et la demande féroces des marchés font que les compagniesminières doivent accroître leur productivité et leur efficacité opérationnelle. Le choix dela meilleure méthode d’extraction et des meilleures combinaisons d’équipements per-mettra aux compagnies de rencontrer leurs cibles de production et d’efficacité. Lescompagnies préfèrent de plus en plus l’exploitation minière en continu en raison de sonrendement élevé et de ses faibles coûts unitaires. Nous avons développé des modèlesde simulation pour deux systèmes d’exploitation en continue : les machines d’exploita-tion minière en continu et les systèmes de préparation des boues au frontd’avancement. En analysant deux études de cas, l’article discute de la mise en appli-cation des modèles développés afin de déterminer le nombre optimal de camions et lacapacité optimale des équipements pour les deux systèmes.

ABSTRACT Temperature, solute, texture and thixotropic effects on time domain reflec-tometry (TDR) measurements of water content in oil sands tailings are investigated.Results indicate that TDR water content measurements are influenced by temperature,residual bitumen and percent clay in the tailings. Apparent dielectric constant (Ka) cor-rection of 0.03-0.10/°C is required to account temperature effect. The Ka-volumetricwater content relationships of slurry significantly differ from the commonly used Topp’scalibration equation. The age of the tailings and the addition of Phosphogypsum did notinfluence TDR water content measurements.

RÉSUMÉ Le présent article traite des points suivants : la température, le soluté, la tex-ture et les effets thixotropiques sur les mesures par réflectométrie temporelle (TDR) dela teneur en eau des résidus de sables bitumineux. Selon les résultats, les mesures dela teneur en eau par TDR sont influencées par la température, le bitume résiduel et lepourcentage d’argile dans les résidus. Une correction de la constante diélectriqueapparente (Ka) de 0,03–0,10/°C est requise pour tenir compte de l’effet de la tempéra-ture. Les relations Ka-teneur en eau volumétrique de la boue diffèrent de manièresignificative de l’équation d’étalonnage de Topp, couramment utilisée. L’âge desrésidus et l’ajout de phosphogypse n’ont pas eu d’effet sur les mesures de teneur eneau par TDR.

Time domain reflectometrymeasurements of oil sands tailingswater content: a study of influencingparametersA.R. Sorta, D.C. Sego, and G.W. Wilson, University ofAlberta, Department of Civil & Environmental Engineering,Markin/CNRL Natural Resources Engineering Facility,Edmonton, Alberta

T E C H N I C A L A B S T R AC T S

CIM journalVO LU M E 4 , N U M B E R 2


To subscribe, to submit a paper or to be a peer reviewer—www.cim.org

May 2013 | 97

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Project Azorian: covert Cold War Ops disguised as deep-sea mining

by Correy Baldwin

It was April 1968, and something fishy was happening in theNorth Pacific Ocean. The U.S. navy had been monitoring alarge deployment of Soviet ships that appeared to be

conducting search operations over a known patrol routefrequented by Soviet submarines.

When the Soviet activity died down, the Americans sent outtheir own submarine from Pearl Harbor to look for wreckage.Zeroing in on readings of a possible explosion in the area earlierthat March, the Americans eventually located the sunken Sovietsubmarine K-129 on the ocean floor, nearly 3,000 kilometresnorthwest of Hawaii.

This was the middle of the Cold War, and a sunken Sovietsubmarine was a considerable asset to American intelligence –K-129 undoubtedly contained nuclear torpedoes, equipmentand Soviet code books and coding machines. The problem washow to salvage the submarine without attracting the Red Bear’sattention.

The solution came in the form of a commercial deep-seamining operation, dubbed Project Azorian.

The project began with the CIA approaching industrialmagnate Howard Hughes, who agreed to provide his name asa cover for the operation. Hughes owned a deepwater offshoredrilling company called Global Marine, which the CIAcontracted to design, build and operate a high-tech recoveryship. From the outside, the ship would simply appear to be adeepwater mining vessel and would therefore not arouse Sovietsuspicions. Defence contractor Lockheed was brought in toconstruct the necessary equipment.

Work on the ship – the Hughes Glomar Explorer – began inlate-1972. Hughes casually informed the media of his latestproject: mining polymetallic nodules in the Pacific Ocean.

The idea was genius. It was well-known that the Pacificseabed contained polymetallic nodules at the same depths(roughly 4,000 to 5,000 metres) at which the K-129 wreck lay.There was also growing interest in the small nuggets – whichcontain manganese, nickel, copper, cobalt and rare earthelements – although mining them had, to that point, appearedtoo great a challenge. Only an eccentric entrepreneur likeHughes would fund such an outlandish operation.

Mining polymetallic nodules would technically involvelowering and raising a bucket using a string of steel pipes from


a mining platform, and the Hughes Glomar Explorer wouldappear to be doing just that. Instead of a bucket, though, therecovery ship would be equipped with a large, heavy-liftgrappling claw that could grab hold of the submarine and raiseit directly into a massive compartment in the middle of the ship.

At a cost of $200 million, the project was one of the mostexpensive intelligence operations of the Cold War. It was also,at 4,900 metres, quite possibly the deepest salvage operationever attempted.

The Hughes Glomar Explorer was completed in 1974 and itarrived at the recovery site that summer. When the claw waslowered, it latched on to a 138-metre section of the wreck thatthe CIA was especially interested in. Despite meticulous planning,the operation did not go smoothly. The mechanical clawmalfunctioned during the lift, causing the submarine section tobreak apart and much of it to sink back to the ocean floor. Still,38 metres of the submarine made it into the ship’s hold.

What was actually recovered is not entirely known. The CIAhas long acknowledged the covert operation but still refuses tocomment on its success. It did recover the bodies of six Sovietcrewmen, who were buried at sea in metal caskets due toradioactivity concerns.

The Hughes Glomar Explorer fell into disuse for decades buthas recently found new life as a deep-sea drilling vessel. In1997, Global Marine Drilling leased it from the U.S. navy andmodified it for its new, legitimately commercial life on the openocean.

Mining polymetallic nodules remained economicallyunfeasible until recently. Lockheed Martin is now using the dataobtained during Project Azorian to begin deep-sea miningexploration, this time off Mexico’s Pacific Coast. That is, if weare to believe the official story. CIM

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